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Lord Sharman: I am grateful for that very full and detailed explanation. I shall reflect on it. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 688 agreed to.

Clause 689 [Public notice of receipt of certain documents]:

[Amendment No. A190 not moved.]

Clause 689 agreed to.

Clause 690 [Documents subject to Directive disclosure requirements]:

Lord McKenzie of Luton moved Amendments Nos. A190A to A190D:


". The statement of proposed officers required on formation of the company."
Page 334, line 3, leave out "section 95(1), (2) or (3) of that Act" and insert "section 544 or 545 of this Act"
Page 334, line 5, leave out "that Act" and insert "the Companies Act 1985 (c. 6)"

On Question, amendments agreed to.

Clause 690, as amended, agreed to.

Clause 691 agreed to.

Clause 692 [The register]:

Lord Hodgson of Astley Abbotts moved Amendment No. A190DA:

The noble Lord said: I shall be very brief in speaking to the amendment. We believe that there is potential for confusion between the references to "the register" as defined in this clause and the references to "the register"—that is, the company's register of members—in Clauses 122 to 125. To avoid any confusion, we suggest that "the register" in Clause 692 should be referred to as "the records register".

Subsection (2) states:

We suggest it should be "the records register". I therefore beg, in the spirit of clarity, to move Amendment No. A190DA.

Lord McKenzie of Luton: It is true that "register" appears on numerous occasions in this Bill, as it does in the existing Companies Act, and that it can bear more than one meaning. However, I do not think there is ever any real difficulty about what it refers to in any given instance. The clause we are considering is headed "The register", and makes clear that the records relating to companies as kept by the Registrar of Companies are known as "the register". It is the commonly accepted use of "register" among all those with an interest in company law, and I suspect it would introduce an unhelpful potential for misunderstandings if
 
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we were now to decide that what users are accustomed to calling the register was henceforth to have a different, and indeed longer, formal title. I am not sure what would be served by this, as other uses of "register" in the legislation—for example, the register of members that we have discussed in Part 8—seem clear in context. I therefore invite the noble Lord to withdraw the amendment.

Lord Hodgson of Astley Abbotts: I think I am convinced by the Minister's remarks, other than the fact that he says the alternative title is longer. A single word is hardly that much longer, but we will not fall out over "records" or "register" tonight. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 692 agreed to.

Clause 693 [Annotation of the register]:

Lord McKenzie of Luton moved Amendment No. A190E:

The noble Lord said: In moving this amendment I shall speak to Amendments Nos. A190F, A191C and A195A. Clause 706 enables the registrar to remove items from the register, even where they have no legal consequences in certain respects, provided there has been an order from the court to that effect. It is clearly possible that there will be circumstances where the court decides that the right approach is for the material simply to be removed from the register, rather as if it had never existed. However, as it stands, the clause provides that the court order itself must be registered in all cases. Thus, while all trace of the original material may be removed, the fact that the court has ordered it to be removed, and thus that it once existed, will be revealed. In many instances this will be appropriate, but in some cases perhaps not. This amendment allows the court itself to determine whether, and to what extent, its own order should appear on the register in light of the circumstances of the particular case, and that must surely be right. I beg to move.

On Question, amendment agreed to.

Lord McKenzie of Luton moved Amendment No. A190F:


"(5) Any duty or power of the registrar with respect to annotation of the register is subject to the court's power under section (Powers of court on ordering removal of material from the register) (powers of court on ordering removal of material from the register) to direct—
(a) that a note be removed from the register, or
(b) that no note shall be made of the removal of material that is the subject of the court's order."

On Question, amendment agreed to.

Clause 693, as amended, agreed to.

Clause 694 [Allocation of unique identifiers]:

Lord McKenzie of Luton moved Amendment No. A190G:


 
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"( ) is secretary (or a joint secretary) of a public company,"

The noble Lord said: In moving this amendment I will speak to Amendments Nos. A191A and A191. As your Lordships will recall, the 1985 Act requires the home addresses of company secretaries to be entered on the public record, both at Companies House and on companies' own registers. As recommended by the Company Law Review, the Bill does not retain that requirement. Clause 254 specifies that only a service address is required for the secretary of a public company. One side effect of abolishing the requirement for a company secretary's residential address to be on the public record is that it makes it harder to distinguish between individuals with the same name, or very similar names. One M Smith becomes very like another. This would be a significant loss of public information. Amendment No. A190G addresses that problem. It provides that secretaries of public companies, like the directors of companies and the representatives of overseas companies with UK places of business, be allocated a unique identifier. This will make it easier to obtain a list of all an individual's notified appointments. Amendment No. A191A then clarifies what any such position in Clause 694(1)(c) is supposed to refer to.

Amendment No. A191 provides for unique identifiers for statutory auditors. As I mentioned, the provisions about unique identifiers are supposed to assist the registrar and searchers in finding all a particular individual's notified appointments. We do not think there is the same interest in finding a list of all the companies whose accounts have been audited by a particular firm. Even if there were, there is probably less scope for confusion between firms than for confusion between individuals with similar names. I therefore hope the noble Lord will withdraw the amendment. I beg to move.

Lord Hodgson of Astley Abbotts: I would like to spend a moment on Amendment No. A191; not only does it concern the matters the noble Lord, Lord McKenzie, has been addressing but the issue has been raised with us by the Institute of Chartered Accountants in England and Wales.

The amendments are intended to assist the prevention, detection and correction of fraudulent filings with Companies House. In recent years, there has been a growing number of instances of corporate identity theft, generally involving a fraudulently submitted notice of a change of address of the registered office or a change of the directors—or both—of a company, followed by misuse of its credit history and its good name. We know that Companies House has implemented several reforms to try and prevent such fraud. We understand that these initiatives are helping to reduce the incidence of this class of fraud and will be supplemented by the new offence in Clause 719, entitled "General false statement offence".

However, the notification system introduced by Companies House can currently be used only to monitor filings relating to a company. This means that it cannot be used by directors to monitor whether their
 
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good name has been fraudulently linked to an unknown company to improve the apparent standing of such company as the director is unlikely to have any knowledge of the company concerned.

We note that there are measures in the Bill to assist in the detection of such director identity theft, where a reputable person's name is fraudulently registered as a director of a company. Clause 694 contains an enabling provision allowing for unique identifiers for directors. This unique identifier could be used by directors to keep track of filings relating to them and thus check whether they are being registered for other companies without their authority.

However, we are increasingly aware of reports of firms claiming that they have been victims of auditor identity theft, where the name of a registered audit firm is fraudulently added to a company's accounts without an audit having been carried out by that auditor or, indeed, by any auditor. As with director identity theft, this can be used to improve the apparent standing of a company for fraudulent purposes. In these cases, as for a director, the audit firm is unlikely to have any knowledge of the company concerned. Therefore, the amendment extends to auditors the measures to enable directors to monitor fraudulent findings.

We acknowledge that companies which add an auditor's name illegally are committing an offence. However, we do not believe that this will deter those who set out to commit these frauds, which we presume is why the unique identifier is necessary for directors. Although cases of auditor identity theft are so far not as widespread as director identity theft, the accountancy trade press has reported many cases over the past 12 months. Given the current upsurge in identity-related fraud, we think that these enabling provisions should be included in the Bill, with consultation and regulatory impact assessment carried out if appropriate before implementing the new system for auditors to determine whether the potential benefits outweigh the additional bureaucracy.


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