Small Business, Enterprise and Employment Bill

Written evidence submitted by The Newspaper Society (SB 01)

I am writing on behalf of the Newspaper Society and the Newspaper Publishers Association to bring forward some concerns about Parts 7 and 8 of the Small Business, Enterprise and Employment Bill which received its second reading on 16 July 2014.

1. The Newspaper Society represents regional and local news media companies which publish around 1100 local newspapers, read by 30 million people a week, together with 1700 local media websites, attracting 79 million unique users each month and ever developing digital information services. The Newspaper Publishers Association represents the national print media. The members of both organisations take their responsibilities to report accurately and responsibly seriously, and to that end oppose any legislative measures which inhibit access to publicly held information.

2. In broad terms, our members welcome the provisions contained in Part 7 of the Bill relating to transparency and the new provisions requiring UK companies to keep a register of people with significant control over the company. Our concerns are in relation to Clause 3 of Part 7 (laid out in Schedule 3 to the Bill) and specifically the proposed amendments to s790ZE and s790ZF of the Companies Act 2006. These provisions provide that the residential address and full date of birth of those with significant control over the company should not be made available for inspection. As your explanatory notes make clear at paragraph 380 this information is necessary for the unique identification of individuals in the vast majority of cases. Similar provisions are contained in Part 8 Clause 84, which provides for the full of date of birth of directors to be withheld from the public.

3. These provisions will seriously impede public scrutiny of business matters. The purpose of a publicly available register of directors, and the proposed new public register of people with significant control over the company, is to enable the public, via the media where necessary, to discover who runs and controls the business affairs of organisations. Their aim is not just to contribute to transparency and facilitate public scrutiny, but also to maintain probity. By withholding the address and full date of birth of individuals this aim is wholly subverted. Our members will be deprived of the ability to verify the identity of individuals to assist them in their detection, investigation and reporting of issues of legitimate public concern, and to report these issues identifying the individuals concerned with adequate specificity to avoid the accidental defamation of others with the same name. (In the same way that the law recognises that publication of address and age in court reports are necessary and our members are careful ensure their inclusion to ensure that defendants are not confused with individuals of the same name.) The local and regional press in particular play a large role in protecting its readers by revealing dishonest, fraudulent or otherwise misleading or untrustworthy conduct by business, and by exposing phoenix companies. The exposure of Phoenix companies cannot be done if the journalist cannot access anything other than the name of the director or person with significant control. Unique identifiers are also required. These facilitate financial, business and consumer journalism. We would strongly urge you to reconsider these provisions on public policy grounds.

4. Our second area of concern relates to Schedule 3 of the Bill and the proposed amendments to sections 790O and 790R of the Bill. These provisions require any person who wants to inspect a company’s PSC register to make an application specifying the reason why they wish to see register and the use which will be made of the information, and impose criminal penalties on anyone using such information for any other purpose or disclosing the information to any third party. As drafted, these provisions could prevent a newspaper from publishing a series of articles over a period of time relating to a company and its ownership without applying on each separate occasion to inspect the register and giving the company advance notice of the nature of the article it proposes to publish. This is both time consuming and unnecessarily bureaucratic but also carries a high risk that our members will be declined permission to use the information in the register for a contentious expose (which information may already be well known to the member because of an earlier inspection of the register for a different article). We would respectfully suggest that this section, if it operates in this way, would be contrary to our members’ article 10 rights to freedom of expression and would create the famous "chilling effect" on publication of stories in the public interest. We would therefore suggest that a journalistic exemption to these two sections is required.

5. The NS therefore hopes that the government will reconsider these parts of the proposed Bill to remove these obstacles to the open reporting of business and commercial matters by the media.

July 2014

Prepared 15th October 2014