The register

Clause 692: The register

1326.     This clause imposes an obligation on the registrar to keep a record of the material she receives. It gives her discretion as to the form in which the record is kept. Subsection (3) makes clear that this discretion will be subject to the terms of the First Company Law Directive (68/151/EEC), Article 3.2 of which requires any documents and particulars it covers which are delivered on after 1st January 2007 to be retained in electronic form. The documents covered by this obligation are those already set out in clause 690.

Clause 693: Annotation of the register

1327.     It is important that the register is as useful and transparent a source of information as possible for users. Hence, the clause sets out certain circumstances in which the registrar will be obliged to annotate the information on the register to gloss it or provide supplementary information. Annotations must for example be provided to show the date of delivery of information; and in the event that information has been replaced, corrected or removed. This clause responds to a specific recommendation of the CLR (as summarised in their Final Report, paragraph 11.48).

1328.     Subsection (5) makes clear that, where a court orders the removal of information, any related annotation may in some circumstances also be removed, and that the removal itself will not be the subject of annotation.

1329.     The Secretary of State has power to make provision by regulations extending the circumstances where the registrar can or should make annotations.

Clause 694: Allocation of unique identifiers

1330.     This clause is new. It provides that the Secretary of State may make regulations so that individuals, for example company directors, are allocated a unique identifier. This provision supports those that enable any director to opt for his home address to be kept off the public record (see clauses 217 to 225). The unique identifier will enable searchers to distinguish between different persons of the same name.

Clause 695: Preservation of original documents

Clause 696: Records relating to companies that have been dissolved etc

1331.     Clause 695 replaces section 707A(2) of the 1985 Act. However, the obligation on the registrar to keep the originals of documents received will now only apply for three years (as opposed to ten in the existing provision). The clause also makes clear that the obligation to retain originals does not extend to an original document provided electronically (provided of course that the information itself has been placed on the register).

1332.     Clause 696 replaces sections 707(3) and (4) of the 1985 Act, and provides that records may be transferred to the Public Records Office two years after a company has been dissolved. It also makes equivalent provision for certain oversea companies which, for example, by ceasing to have any connection with the UK, are no longer caught by UK regulatory requirements.

Inspection etc of the register

Clause 697: Inspection of the register

1333.     This clause makes clear that any person may inspect the register. Searchers will however have a right to inspect the original of a hard copy document only where the registrar still retains it and where the public record kept by the registrar and derived from it is illegible or unavailable.

Clause 698: Right to copy of material on the register

1334.     This clause makes clear that any person is entitled to a copy of material on the register. Consistent with the provisions of the First Company Law Directive (68/151/EEC), Subsection (2) provides that the fee for a copy may not exceed the administrative cost of providing the service.

Clause 699: Material not available for public inspection

1335.     This clause sets out a number of exceptions to the above rights to inspect and copy material on the register. These are listed in subsections (1)(a)-(h) and include, for example, "protected addresses" - the residential addresses of company directors, where they have chosen to make use of the new option to obtain a non-disclosure certificate under clause 217.

1336.     Subsection (2) makes clear that the fact that certain material (for example, an address), which has been placed on the register as a result of the filing of two or more different types of document, is confidential in one of those contexts, does not mean that it cannot be made public in its other context.

Clause 700: Form of application for inspection or copy

Clause 701: Form and manner in which copies to be provided

Clause 702: Certification of copies as accurate

1337.     These clauses enable the registrar to specify the form and manner in which applications for inspection of the register, or for copies of material on it, must be made, and to determine the form and manner in which copies are provided.

1338.     They are subject to important exceptions, arising from the First Company Law Directive (68/151/EEC), in respect of the documents listed at clause 690. Clause 700(2) makes clear that applications must be capable of being submitted in hard copy or in electronic form, as the applicant chooses. Clause 701(2) similarly makes clear that the applicant is entitled to insist on receiving the copies themselves in hard copy or in electronic form (subject to an exception in respect of documents delivered before 1st January 2007).

1339.     Clause 702, again responding to provisions of the First Company Law Directive (68/151/EEC), makes clear that, unless the applicant chooses otherwise, copies of information provided in hard copy must be certified as true copies; but electronic copies must not be so certified. Subsection (3) provides for the evidential status of certified hard copies in legal proceedings. The Secretary of State will have a power to prescribe by regulation methods of certification for copies provided by electronic means.

Clause 703: Issue of process for production of records kept by the registrar

1340.     This clause restates section 709(5) of the 1985 Act and provides that no-one can take proceedings against the registrar for production of records without first obtaining the permission of the court.

Correction or removal of material on the register

Clause 704: Registrar's notice to resolve inconsistency on the register

1341.     This clause enables the registrar to notify a company of an apparent inconsistency in the information on the register. An example might be where a document is received notifying the removal of a director where there is no record of his appointment. In such circumstances, the registrar may give notice to the company requiring them to resolve the inconsistency within 14 days by providing additional or replacement documents. Failure to do so on the company's part will be an offence (subsection (3)).

Clause 705: Administrative removal of material from the register

1342.     The registrar will have a power to remove from the register information which she had a power but no duty to enter. Under subsection (4), the registrar will need to send a notice to the presenter of the information in question, or to the company to which the material relates, on or before removing the material.

1343.     The registrar will not however be able to remove information from the register where registration has had legal consequences for the company as regards certain key events, as set out in subsection (3), including for example its formation or a change of registered office. In such a case, only a court will be able to remove the information, under the remedy provided for in clause 706.

Clause 706: Rectification of the register under court order

1344.     The court's rectification power will apply where material on the register derives from something (e.g. a print of a resolution) that is declared to be invalid or ineffective or something which is declared to have been done without the authority of the company (this would cover forms filed without authority). In addition, the power will deal with material which is factually inaccurate or forged or derives from something which is factually inaccurate or forged.

1345.     The court will be able to make an order to remove such material from the register where its presence on the register has caused damage or may cause damage to the company and the company's interests in removing the material outweigh the interests of others in it continuing to be on the register.

1346.     The court will be able to make such orders to remove information as appear just regarding the period that the information was on the register and the effect of the information being on the register during that period.

1347.     The court's rectification power will not operate where the court has other rectification powers (e.g. in relation to accounts or charges).

The registrar's index of company names

Clause 707: The registrar's index of company names

1348.     This clause replaces and updates section 714 of the 1985 Act. It provides for the registrar of companies to keep an index of the names not only of companies incorporated under Companies Acts but also of business entities formed under other legislation and oversea companies with a UK branch or place of business.

1349.     This clause also provides power for regulations to update the categories of business entities that are included in the index.

Clause 708: Right to inspect index

1350.     This clause retains the public right to inspect the index (it can be searched online, without charge, at www.companieshouse.gov.uk). The index of company names is important not only as the means of access to the information on the public record of companies incorporated in Great Britain but also as the list of names with which every proposed new name is compared to ensure that the public is not confused by the simultaneous appearance on the register of two names that are very similar.

Clause 709: Power to amend enactments relating to bodies other than companies

1351.     This clause provides power for the Secretary of State to amend the rules for the names that can be adopted by other business entities on the index of company names (see clause 707). Each category of business entity is subject to its own rules which include various safeguards to minimise the risk of public confusion. These rules differ from those that apply to companies in particular as regards the adoption of a name the same or very similar to one already on the index. This lack of reciprocity is a weakness of the existing system which this clause provides power to address.

Language requirements: translation

Clause 710: Application of language requirements

Clause 711: Documents to be drawn up and delivered in English

1352.     These clauses set out language requirements. Clause 711 sets out the general rule that all documents must be in English (subject to the exceptions in the following clauses). Clause 710 provides that this general rule, and its exceptions, applies automatically to documents required under the Companies Acts and Insolvency Act 1986 (and its Northern Ireland equivalent).

1353.     There are however a variety of other pieces of legislation which may require companies in certain circumstances to supply material to the registrar. Depending on the nature of the particular requirement and its origin (for example, whether it responds to European law), it may or may not be appropriate to apply the language provisions of this Bill unchanged to such material. Clause 710(2) therefore enables the Secretary of State to make regulations to set out detailed provisions covering non-Companies Act requirements.

Clause 712: Documents relating to Welsh companies

1354.     This clause provides an exception to the general rule in clause 711: that documents relating to Welsh companies may be drawn up and filed in Welsh (and sometimes only in Welsh). It replaces, without any substantive change, section 710B of the 1985 Act.

Clause 713: Documents that may be drawn up and delivered in other languages

1355.     This clause sets out the circumstances in which documents may be drawn up and filed in other languages, but requires them to be accompanied by a certified translation into English. These documents are listed in subsection (2): agreements affecting the company's constitution, documents relating to group accounts for companies in a group, and instruments relating to company charges. For some companies, documents of these sorts may well originate in languages other than English, and there may be an interest in ensuring that the original version is registered with the registrar. Subsection (2)(d) also allows the Secretary of State to extend the categories of documents to which this clause applies.

Clause 714: Voluntary filing of translations

1356.     The main purpose of this clause is to implement aspects of the amended First Company Law Directive (68/151/EEC). It provides that companies may send the registrar certified translations of documents relating to the company, and subsection (2) enables the Secretary of State to set out in regulations those languages and documents in relation to which this facility is available. Subsection (3) provides that these regulations must as a minimum specify the official languages of the EU, and the documents covered by the amended First Company Law Directive (68/151/EEC) (see clause 690), to ensure compliance with that directive. However, other languages (and categories of document) may be covered by regulations.

Clause 715: Certified translations

1357.     This clause provides that a "certified translation" is one which has been certified in a manner prescribed by the registrar. It also makes clear that, where there is a discrepancy between an original and a translation, the company may not rely on the translation as against a third party, but the third party may rely on the translation (unless the company can show that the third party had knowledge of the original). This implements article 3a. 4 of the amended First Company Law Directive (68/151/EEC).

Language requirements: transliteration

Clause 716: Transliteration of names and addresses: permitted characters

1358.     This clause is a new provision. It deals with the possibility that the name and address of a director or of an oversea company may use a character set (for example, that of Urdu or Japanese) which is different from those with which the bulk of Companies House's users are familiar. This clause restricts the characters that are permitted for names and addresses in a document delivered to the registrar to those specified in regulations. The regulations, which are subject to negative resolution procedure, may also provide for names and addresses to be delivered in their original form.

Clause 717: Transliteration of names and addresses: voluntary transliteration into Roman characters

1359.     This clause is a new provision. It provides for the possibility that the Regulations made under clause 716 may permit letters and characters that are not drawn from the Roman alphabet, for example Greek letters. The requirement for transliteration under that clause will not apply to names using such letters and characters. This clause permits these names to be transliterated provided that certain requirements are met.

Clause 718: Transliteration of names and addresses: certification

1360.     This clause is a new provision. It confers power on the Secretary of State to make regulations relating to transliteration of names and addresses. The regulations may distinguish between compulsory transliteration under clause 716 and voluntary under clause 717.

Supplementary provisions

Clause 719: General false statement offence

1361.     This clause provides for a new offence of knowingly or recklessly delivering to the registrar information which is misleading, false or deceptive in a material particular. It responds to a recommendation of the CLR (Final Report, paragraph 11.48).

1362.     This new general offence makes it unnecessary to reproduce specific offences covering false information or false statements in respect of specific legislative requirements that were a feature of the 1985 Act.

Clause 720: Enforcement of company's filing obligations

1363.     This clause (which restates section 713 of the 1985 Act) provides the mechanism for ensuring that companies can be compelled to comply with their obligations to file documents or give notices to the registrar. Where a company has defaulted on an obligation, the registrar herself, any member of the company, or any creditor, may serve a notice on the company requiring it to file. If the company continues the breach after 14 days, the applicant may apply to the court for an order requiring the company, or any specified officer of it, to make good the default. The court order may ensure that costs are borne by the company or its officers.

1364.     Subsection (5) provides that this process is separate to any specific offence and penalty that may relate to the original requirement and the company's failure to carry it out.

Clause 721: Application of provisions about documents and delivery

Clause 722: Meaning of "hard copy", "electronic form" and "electronic means"

1365.     These clauses provide definitions of terms used frequently in this Part of the Bill. Clause 721, which replaces section 715A of the 1985 Act, provides that "document" means information recorded in any form, and that "delivering" a document includes forwarding, lodging, registering, producing or submitting it, or giving a notice. It also makes it clear that requirements relating to "documents" also apply (unless otherwise provided for) to information passed to the registrar in some other way. This caters for the possibility that information may not be "recorded" in any form, for example (arguably) when it is sent via a website.

1366.     Clause 722 defines "hard copy" and "electronic form" and "electronic means". The definition of "electronic means" reflects the definition in the amended First Company Law Directive (68/151/EEC), many provisions of which are implemented in this Part of the Bill.

Clause 723: Supplementary provisions relating to electronic communications

1367.     This clause (which replaces section 710A of the 1985 Act) allows the registrar to require those who choose to file electronically to accept electronic communications from the registrar.

1368.     It also makes clear that, where a document is required to be "signed" by the registrar, or authenticated by seal, she may determine by rules how it is to be authenticated when it is in fact sent by electronic means.

Clause 724: Alternative to publication in the Gazette

1369.     The registrar is currently required to publish certain statutory notices in the Gazette. The objective is to ensure that such notices are well-publicised and made available to all those who might wish to take notice of them.

1370.     The Gazette is a long-established and well-understood mechanism for ensuring such publicity. However, it is possible that developments, in particular in electronic publishing, will mean over time that alternative mechanisms are equally or more appropriate as ways of meeting the underlying policy objective. The CLR envisaged that the registrar should be able to make use of such mechanisms (Final Report, paragraph 11.48). This clause therefore provides a power for the Secretary of State to specify alternative means which the registrar may then approve for use. To ensure that any such change is itself well-publicised in advance, subsection (5) provides that the change must itself be announced in the Gazette.

1371.     Subsection (6) makes clear that some other mechanism may be in addition to the continuing use of the Gazette.

Clause 725: Registrar's rules

1372.     Other provisions in this Part enable the registrar to make provision or impose requirements in relation to certain matters. For example, clause 680 enables the registrar to specify the form and manner of delivery of documents to her; clause 685 similarly enables her to determine the form and manner of any company instructions as to informal correction of the register. This clause provides that the registrar's rules in these circumstances can make different provision for different cases, and may allow her to modify or disapply the rules.

1373.     This clause also ensures that the registrar must publicise any such rules in a way designed to make sure that those who will need to know about them get to hear of them (which might in practice, for example, be by using the Companies House website); and must make copies of the rules publicly available.

Clause 726: Payments into the Consolidated Fund

1374.     This clause ensures that nothing in this or other companies legislation affects the continued operation in relation to the registrar of the Government Trading Funds Act. (Companies House is and remains a Trading Fund.)

Clause 727: Contracting out of registrar's functions

1375.     This clause largely restates subsections (7) and (8) of section 704 of the 1985 Act. The Deregulation and Contracting Out Act 1994 envisages that some of the registrar's functions may be contracted out. This clause provides for this possibility by saying that where a contractor is processing documents the registrar can provide for them to be sent directly to the contractor.

1376.     The Deregulation and Contracting Out Act 1994 does not permit the function of making subordinate legislation to be delegated. Subsection (3) provides that registrar's rules are not regarded as subordinate legislation for this purpose, permitting the contractor to make rules about form and manner of delivery, for example.

Clause 728: Application of Part to oversea companies

1377.     This clause provides that, except where the context otherwise requires, the provisions of this Part of the Bill apply equally to oversea companies.

Clause 729: Application of Part to functions under other enactments

1378.     This clause provides that, except where the context otherwise requires, the provisions of this Part apply equally to the functions of the registrar under certain other enactments (specified in subsection (2)) which similarly relate to, for example, the filing of documents with the registrar

PART 27: OFFENCES UNDER THE COMPANIES ACT

1379.     The CLR sought to draw out the basis on which criminal liability for a breach of Companies Act requirements is allocated under existing legislation. They stated in their final report that a reformed Companies Act must be underpinned by effective and proportionate sanctions and enforcement.

1380.     The key changes in the Bill are:

• refinements to the "officer in default" framework to make it clearer which individuals in which circumstances may be liable for a breach; and

• removal of criminal liability from the company itself in certain circumstances.

1381.     The general principle adopted as to whether a company should be liable for a breach of the requirements of Companies Acts is that where the only victims of the offence are the company or its members, the company should not be liable for the offence and the members of the company should not suffer twice from the commission of the offence. On the other hand, where shareholders or the company are potential victims, but not the only ones, then the company should be potentially liable for a breach.

1382.     All the offences in the Companies Acts, both those in the Bill and those that remain in the 1985 Act, have been reviewed in the light of this principle.

Liability of officer in default

Clause 730: Liability of officer in default

1383.     This clause specifies which persons may be liable as an officer of a company for an offence under the Bill or the other Companies Acts.

1384.     An "officer" of a company is defined as including a director, manager or (company) secretary, and any person who is to be treated as an officer of the company for the purposes of the provisions in question. An officer is liable for an offence when he is "in default", meaning he authorises or permits, participates in, or fails to take all reasonable steps to prevent the offence being committed.

Clause 731: Liability of company as officer in default

1385.     Under this provision, where a company is an officer of another company, liability for a breach of company law can be fixed upon the company as an officer only if one of its officers is in default.