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Lord McKenzie of Luton moved Amendment No. 229:
The noble Lord said: In moving Amendment No. 229, I shall speak also to Amendments Nos. 232, 233, 234, 235, 236 and speak in opposition to the Motion of whether Clause 225 should stand part of the Bill. It may be helpful if I first explain why the Bill replaces the current confidentiality order regime with one based on non-disclosure certificates.
The crucial difference between the two regimes is that the existing regime is discretionary: all directors' home addresses are on the public record except for those who show they are at serious risk of violence or intimidation. Under the new regime, any director will be able to have his, or her, home address kept off the public record. The existing scheme works well—there are more than 8,000 individuals with confidentiality orders—but it is not possible always to predict who will be at risk before it is too late. Furthermore, a discretionary scheme is likely to make it difficult for companies in sensitive sectors to recruit experienced directors from less controversial companies as their addresses will already be on the public record. And it is possible that the requirement for their home address to be made public may deter some from accepting appointment.
The Government have therefore accepted the recommendation of the Company Law Review that all directors be given the option of: either, as now, providing only their home address for the public record; or providing both a service address and their home address, with the service address being on the public record and the home address being on a separate register to which access would be restricted.
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There are three pre-requisites for the new scheme. First, that a serving director's current home address is available to the enforcement authorities, and secondly, that the address on the public record is an effective service address for a serving director. This means that, while there will be no discretion in the granting of non-disclosure certificates, it will be possible to revoke a certificate if the current home address is not provided or if the service address is not effective. Following revocation, the home address will be placed on the public record. The third pre-requisite is that there is a system whereby for each director it is easy to discover what other directorships he holds or has held. To this end, the Bill includes a power, in Clause 694, to give "unique identifiers" to directors.
Under the Bill, by contrast to the current confidentiality order regime, a director can have a different service address for each directorship. A director with a non-disclosure certificate will have to notify each company of the service address for that directorship, together with the protected address, his unique identifier and the country or state or part of the UK in which he is usually resident. The company will then omit the protected address from both its register of directors and from its notification of the director's particulars to the registrar.
I turn now to the individual amendments. Amendments Nos. 229 and 232 simply ensure that there is no ambiguity in Clauses 218 and 222 respectively. The former makes clear that the company has no obligations to the holder of a non-disclosure certificate unless the certificate relates to the holder's current usual residential address. The latter is more in the nature of a technical correction. Amendment No. 233 retains the requirement in Clause 222 that the holder of a non-disclosure certificate notifies not only every company of which he or she is a director, but the registrar of any change to his or her address. But it makes the obligation to notify the registrar apply only when the person is a serving director.
Clause 223 provides power for the registrar to revoke a non-disclosure certificate. It requires the registrar to give advance notice of the proposed revocation and to take account of any representations that she receives. Amendment No. 234 requires the registrar to send the advance notice not only to the holder of the non-disclosure certificate but also to every company of which, according to the notifications to the registrar, the holder is a director. This will be a safeguard against inappropriate revocations. Clause 224 provides that, where a non-disclosure certificate is revoked, the registrar must put what used to be the protected address on the public record and inform the holder's company, or companies. Amendments Nos. 235 and 236 ensure that this applies only in respect of current, notified directorships.
Clause 225 provides that in certain circumstances a non-disclosure certificate will cease to have effect. In those circumstances, the residential address information related to the certificate will be removed from the registrar's records. We think that it is more appropriate for the registrar to retain that information
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indefinitely, as she does all other information. It will, of course, continue to be protected unless the non-disclosure certificate is revoked. For this reason, we oppose Clause 225 standing part of the Bill. I beg to move.
Lord Freeman: It might be convenient to the Committee if I raise our one concern at this stage, so that other noble Lords can express their views. First, I very much welcome all these amendments. They improve the wording of the Bill and its operation. One central concern remains. Perhaps the Minister can alleviate my concerns. In Clause 219(4)(b) the registrar is not obliged,
"to omit from the material that is available for public inspection anything registered before the certificate was issued".
It may be that my concerns are ill-founded, but this has caused a good deal of concern among directors of companies that at present are either under siege—literally in some cases—or being criticised and where they might be pursued, either physically or in writing at their home addresses. I am seeking some reassurance that the registrar will take all practical steps to remove existing addresses from the record.
One appreciates that there is an enormous amount of information, and that not all of it is stored electronically. A lot of it dates back many years. The lingering doubt remains with many directors, although they welcome the new simplified, responsive, excellent system, that they still may be hostages to fortune. I would be grateful if the Minister, in response to this brief debate, could provide some assurances.
5.15 pm
Lord Sharman: I endorse most strongly the words of the noble Lord, Lord Freeman, on the issue of protection. I speak from rather bitter personal experience. Although I have not sat on the board of any company that has had a direct involvement in action, I have sat on the board of companies where there has been an indirect relationship. Threatening letters and threats of violence are really rather wider spread than one would want. Anything that can be done to remove the availability of those addresses would be entirely helpful. I am not seeking to do anything other than where it is justified through the issue of a certificate.
Lord MacGregor of Pulham Market: I am obviously also in favour of what my noble friend Lord Freeman said. I have some personal experience of this too, and I have for some years been trying to get something of this nature into Companies House registrations, so I am delighted and I very strongly welcome this chapter. When I was a Minister, my address was made available when the security authorities were saying that you should not make your address available at all. Particularly in relation to nomination forms for standing at elections, there was a real loophole, and I was adversely affected as a result, so I feel strongly about this issue.
As my noble friend and the noble Lord, Lord Sharman, said, with the arrival of political activists and animal welfare extremists, it is important.
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I cannot therefore understand why Clause 219(4)(b) and the other points dealt with in Amendments Nos. 230A and 231 are in the Bill. It is not just a case of those who are directly affected; I am sure that the noble Lord, Lord Sharman, and others know of other instances. I know of directors in companies which you would not think had anything to do with those activist areas who have been threatened quite seriously. It is becoming a widespread issue. It is a very strong protection, and it would be helpful if the Bill could be amended to remove what looks like a loophole that undermines it.
Lord McKenzie of Luton: The underlying concern that has been expressed is taken note of and appreciated by the Government. It might be better if I spoke in detail to it when the next group of amendments is moved, because it covers the point that has been raised. Perhaps if those can be moved, I can deal with it at that stage.
On Question, amendment agreed to.
Clause 218, as amended, agreed to.
Clause 219 [Effect of non-disclosure certificate: the registrar]:
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