COMMONS AMENDMENT (Hansard, 27 July 1967)

§ LORD HUGHES
My Lords, this Amendment has associated with it Amendment No. 121. Amendment No. 115 is the insertion of a new clause, and Amendment No. 121 leaves out Clause 42. This has to do with requiring a company to abandon a misleading name. Clause 42 was inserted in this House and widened the existing limited powers of the Board of Trade to direct a company to change the name by which it had been registered. This was deleted in another place and replaced by a new clause designed to remedy some of the drafting weaknesses which were discovered in the original Clause 42. The Board of Trade have, under Section 18(2) of the Companies Act 1948, the limited power to direct a company to change the name by which it is registered. The direction must be made within six months of the date on which the company was registered by the name it is required to change, and the ground for the change must be that the name is too like that of another company that was registered before the company whose name is to be changed so registered.
The Jenkins Committee made a number of recommendations about names, including, in paragraph 456 of their Report, a recommendation that the Board of Trade should be empowered to direct a company to change its name at any time if the name has become misleading in such a manner that it is likely to cause 1226 harm to the public, but there should be a right of appeal to the court. The Jenkins Committee envisaged that the power would be used very sparingly. That is in paragraph 454. The new clause implements the Jenkins recommendation in paragraph 456. The remaining recommendations in the Jenkins Committee's Report on names will be considered in the context of the next Companies Bill.
The new clause differs in the following ways from the original Clause 42. This referred to a name which conveyed a false or misleading indication of a company's activities or of the nature of the goods supplied or the services performed. The new clause refers only to a company's activities, since it is thought these words are sufficiently wide to embrace giving a misleading impression of the goods or services supplied or performed. The original clause provided for a statutory notice of intention to make a direction to a company to change its name, and a statutory right to the company to make representations. Since the company is to be allowed to appeal to the court, it seems unnecessary to provide a statutory right to make representations to the Board of Trade. The Board of Trade would never, of course, make a direction without communicating with the company concerned. The original clause provided for appeal to the High Court. This would mean that the appeal would have to be heard by the Divisional Court. The new clause provides for the appeal to be made to the court having jurisdiction to wind up the company, usually a Chancery Court of the High Court.
The new clause makes some changes in the time allowed for a direction to take effect, and the time during which any appeal must be lodged. The original clause imposed a fine of £5 a day for default. This could have been read as a mandatory fine of £5. The new clause follows the more usual form of permitting a fine not exceeding £5 a day.
The clause also makes a change of substance by requiring there to be harm to the public before the Board's directions may be made. The requirement that a company name must give so misleading an indication of its activities as to cause harm to the public was added for the simple reason that names of many 1227 existing companies could be held to convey a misleading indication of their activities: for example, Army and Navy Stores, Limited; British Electric Traction, Limited. It would be unreasonable to require such companies to change their name merely because they were out of date, or to empower the Board of Trade to force them to do so. The clause therefore gives the Board a more limited power to give a direction to a company to change its name only if it is so misleading as to cause harm to the public. My Lords, I beg to move.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Hughes.)

§ LORD CHORLEY
My Lords, I think the words are "likely to cause harm", which is rather different.

§ LORD DRUMALBYN
My Lords, perhaps I may be allowed to say a word about this Amendment which, as the noble Lord says, substitutes a new clause, and puts it in a slightly different place, for a clause introduced from this side of the House in the earlier stages of the Bill. I can say on behalf of my noble friend Lady Elliot of Harwood and myself that we are very glad indeed that the Government have agreed to retain this clause, which was so strenuously resisted by the noble and learned Lord on the Woolsack at an earlier stage, not on its merits, but because he thought that it was not suitable to this Bill. I am very glad, and I thank the Government very much for including this clause. I think they have done right to put it in. It was there, and obviously it would have been a mistake to take out a clause which can do some good between now and when the next Companies Bill appears. With the re-drafting of it, I have no quarrel. I only wonder whether, when we come to the Protection of Consumers Bill, regard will be had to these words: so misleading as to cause harm to the public", which seem to me quite a good formula. I quite agree with the Government that merely to mislead, if no harm results, is not a particularly odious thing to do, and certainly ought not to be followed by any heavy penalties.
I have no other comments on the Amendment, except to say that I was very glad that the noble Lord was able to 1228 give the assurance that, in cutting out the requirement in the existing clause, the Board of Trade should allow the person against whom it is proposed to make a direction to make representations to them before the direction is made. The noble Lord has given an assurance that the Board of Trade would never make a direction without communicating first—I take it that he meant "first"—with the company concerned. I welcome this, and I thank the noble Lord for his careful explanation of it.

§ LORD HUGHES
My Lords, I am very grateful for the way the noble Lord has received this clause. Of course, the Government have never maintained that the Opposition is always wrong. All we have said is that, in our opinion, they are much more frequently wrong than right.