NOTIFICATION OF CHANGES IN DIRECTORS AND SECRETARY, ETC. (Hansard, 19 October 1976)

§ Mr. Peter Morrison
I beg to move Amendment No. 45, in page 23, line 15, after 'company' insert 'other than a private company'.

Mr. Deputy Speaker
With this we may take Amendment No. 46, in page 23, line 16, after 'days', insert 'and in the case of a private company within three months'.

§ Mr. Morrison
We have tabled these amendments for similar reasons to those which we have been rehearsing throughout the evening regarding small businesses. We believe that they need a little 1372 leeway, because 14 days to register a change of director or secretary is not long enough.
I was always brought up to believe that ignorance of the law was no excuse. But some small family business far away from Whitehall or Westminster which is taking on a new director—a son or daughter who has grown up and been in the business for some time—may not know of this provision. It may not have its accountant or solicitor permanently peering into its books. Therefore, through no fault of its own, it may fall foul of the law if this provision goes through as it is. We believe that the time allowed for the registration of a new director or secretary should be substantially more than 14 days. Therefore, in Amendment No. 46 we have suggested a period of three months.

§ Mr. David Mitchell
I support my hon. Friend the Member for the City of Chester (Mr. Morrison) in moving this amendment. We have had a long night—it is nearly 5 o'clock in the morning—and I do not think that the Government have given way on any amendment. Therefore, I am sure that we can look forward to a happy event towards the end of this night, because this is obviously an amendment that the Government ought to accept.
The position as the Bill stands is that penalties are incurred if any change in directors or secretary is not notified within 14 days. But "any change" includes death, and even in the dying weeks of this Government surely they must recognise that death cannot always be foreseen.
Earlier, I introduced Mr. and Mrs. Bloggs holding their annual general meeting across the kitchen table. There are such companies, but the Government do not seem to recognise the fact. Perhaps it would be appropriate to change the name now to "Mr and Mrs. Oppressed Limited." Mrs Oppressed's husband dies. She does not know anything about the 14-day rule and is scarcely back from the funeral before she is incurring penalties. On grounds of common sense as well as humanity, the Government should specify three months in the case of private companies.

§ Mr. Higgins
There is a point here which the Minister should consider carefully. We debated at considerable length 1373 in Committee the difficulties which small companies face where perhaps only one or two people may be involved actively and may have problems in meeting the deadlines set out in the Bill. The Bill specifies 14 days, and my hon. Friend the Member for Upminster (Mr. Loveridge) wants three months. I am sure that at this stage he would be prepared to comprise on a slightly shorter period.
This is a serious point. The Government have made a concession on the length of time companies are required to retain documents. I hope they will feel able to agree to a somewhat longer period than 14 days in the case of smaller companies for the notification of these changes.

§ Mr. Arthur Davidson
As the hon. Member for Worthing (Mr. Higgins) has said, this matter was debated at considerable length in Committee when a similar amendment was moved in relation to all companies. I understand the concern expressed by hon. Members about the difficulties of private companies but at this stage the Government do not consider that there is justification, even in relation to private companies, for extending the period.
It is important that information on file at Companies House relating to a company's officers should be as up to date as possible, and companies should therefore regard it as their duty to notify changes as soon as possible. Notification of a change in the directors or secretary is a very simple task. I think that even the well known firm of Bloggs & Company should have no difficulty. We think that 14 days is a very reasonable period to allow. I do not consider that even the smaller companies—the "mini-Blogglets"—should have difficulty in complying with it.
Three months would be far too long to allow, but I repeat that in the longer term the Government are giving serious consideration to the establishment of a new form of incorporation for certain smaller bodies. For the moment, however, all the Companies Acts provisions, including this Bill, can be applied practically only to all companies, subject to some variation between public and private companies. Companies are already required to notify changes in their direc- 1374 tors and so on within 14 days. I am not aware that this requirement in Section 200 of the 1948 Act has caused any particular problems.
While I would have liked to cause a happy event at precisely 5 a.m.—I am not a hard man and do not like having to resist the hon. Member's blandishments—I must do so for the reasons I have given.

§ Mr. David Mitchell
The reply is very unsatisfactory. The Minister has read the brief prepared for him before he heard the debate. The question of death had not occurred to those who framed the clause. It was not mentioned in the brief that he read. The Minister totally failed to deal with the circumstance. To say that there are 14 days and that a company director will have time to notify is to assume that all directors have the qualifications required of a qualified company secretary. People as unskilled as myself are company directors. That is the reality. We cannot be expected to know. If there is a husband and wife company and the husband dies, he might have known the position but his wife certainly will not. Therefore, penalties will be incurred. The Minister's answer is wholly unsatisfactory in the circumstances.

§ Mr. Arthur Davidson
I beg to move Amendment No. 47, in page 23, line 20, leave out from "register" to end of line 22.
The amendment deletes one of the provisions of Clause 20(1) which would have relieved companies of the need to submit a return to Companies House each time one of its directors took on or relinquished a directorship in another company.
It will be recalled that concern was expressed about this matter in Committee. The hon. Member for Worthing (Mr. Higgins) will know that concern was also expressed privately before the Committee.
The Government had originally felt that this requirement, imposed by Section 200 of the 1948 Act, was an unnecessary burden on companies and that it was not justified by the benefit to users of the files at Companies House.
1375 Reservations were expressed, when the clause was discussed in Committee, as to the desirability of abolishing the requirement, and the Government offered to re-examine the clause. It was suggested that it was desirable that every company file should contain up-to-date information about the other directorships held by the directors of the company. The clause, as originally drafted, would have resulted in a diminution in the information available at Companies House as no changes since the latest annual return was made would have had to be notified. On reflection, the Government have decided that there is substance in the point.