§ [No 117]
§ After Clause 37, insert the following new clause—
§ (".—(1) For references in section 425 of, and Schedule 14 to, the principal Act to Schedule 12 to that Act there shall be substituted references to Schedule (Fees to be paid to the registrar of companies) to this Act.
§ (2) The Board of Trade may by regulations made by statutory instrument alter the said Schedule (Fees to be paid to the registrar of companies) so as to increase or decrease the amount of a fee payable to the registrar, and any reference in the principal Act to that Schedule shall be construed as a reference to that Schedule with any alterations made by regulations for the time being in force under this subsection.
§ (3) No regulations shall be made under the last foregoing subsection increasing a fee unless a draft of the instrument containing the regulations has been laid before Parliament and has been approved by resolution of each House of Parliament.
§ (4) A statutory instrument containing regulations made under subsection (2) of this section none of which increases a fee shall be subject to annulment in pursuance of a resolution of either House of Parliament.")1229
§ LORD BROWN
My Lords, in moving Amendment 117, I should like also to discuss Amendments 126, 128, 129, 265, 318 and 343 to 345 inclusive. These Amendments are all concerned with financial matters, changing the scale of fees. I will simply confine myself, so far as possible, to an explanation of how the new fees differ from the current fees. Amendments 117 and 318 set up a new Schedule, and they raise the fees payable to the Registrar of Companies as follows. Registration fees: the old minimum fee was £2 and applied to capital of companies up to £2,000. The new minimum is £20, and there is thus a basic addition of £18. The old scale of fees increased by decreasing increments as the amount of the capital was raised. These increments remain unchanged, so where the maximum registration fee was £50, under the current scale, for capital of £525,000 and over, it has now become £18 more; that is, £68. So, although the scale has gone up very largely for the companies of very small capital, it has cone up only, I submit, to a trifling extent for the larger companies.
In the case of companies registering without a share capital, perhaps it is only necessary to say that the basic fee has gone up again by £18. That makes a minimum fee of £20 as against £2, and the maximum fee has become £38 as compared to the current figure of £20. There are a number of complex situations, such as that where a company reregisters under Clause 33 and is limited by guarantee, but which also has a share capital. This company will pay whichever is the highest registration fee.
A limited company re-registering as unlimited pays £5. For the registration of the annual return of companies the fee is increased from 5s. to £3. Registering a change of name by a special resolution is increased from 5s. to £10—and perhaps a word of explanation is needed here. This sharp increase is to prevent the registration of companies wholesale under the 5s. fee while this Bill is in passage through the House, and selling these cheaply-bought registrations to others when the Bill has passed, when, of course, the registration fee will be much higher. Those who bought them would probably want to change the name and the £10 fee for the registration of the change of name will, we hope, inhibit the whole forestalling 1230 practice to which I have referred. I should add that no fee will be required by the Registrar if, by inadvertence, the first name that a company chose to register itself by has to be changed for reasons under the Companies Act.
The remaining Amendments, Nos. 343, 344 and 345, are all consequential on the introduction of the new scale of fees, and make additions to the list of enactments for repeal in Schedule 7 of the Bill. I beg to move Amendment No. 117.
§ Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Brown.)
§ LORD DRUMALBYN
My Lords, I should like to thank the noble Lord for that explanation. Of course, reading it just on the figures, this is about as wonderful an example of regressive taxation as one could possibly find. However, we quite understand the reasons for it: that the Government wish to cut down the extent to which companies are, shall we say, unnecessarily, and sometimes even deviously, formed, and that they want to reduce so far as possible the abuses of transferring the purchase of companies and so forth. We have no objection to this at all. I simply wish to ask one question, and that concerns the powers to alter the fees from time to time. I understand that this is to be done by Statutory Instrument, subject to Affirmative Resolution of the House. I do not think there are any further comments I wish to make on this Amendment, except a question that we shall be coming to, about the re-registration of companies—unlimited as limited, or limited as unlimited. I did not quite follow whether or not the noble Lord said that these fees would apply in both cases.
§ 4.55 p.m.
§ LORD CHORLEY
My Lords, I should like to say a word or two on this, because it is an important matter. One quite understands and agrees with the view that these registration fees, which have remained at the same figure ever since the great Companies Act of 1861, require revision. That is good. But it seems to me that there is an element of taxation in this. I do not know what are the costs that have to be met, but these fees 1231 for registering companies and other commercial documents ought to be calculated simply to meet the costs. In the old days I think it was the accepted policy that commercial transactions should be taxed, and bills of exchange were taxed. In the great commercial currency which was provided by the business community itself one had, in effect, to pay a tax to the State for providing it with the currency by means of which the commerce of the country was conducted. It was the same with bills of lading and charterparties, by means of which the great marine trade of this country—the greatest in the world—was conducted.
However, during the last twenty years or so, very properly, this outlook has been completely changed. These taxes on bills of exchange and on charterparties and bills of lading, marine insurance policies and many other types of commercial activity—which, as I say, had been taxed on the basis of the documents that were essential to the proper carrying on of these businesses—have been removed, and it seems to me that the element of taxation contained in this is a regressive step, I do not know what are the costs involved, and it might be rather difficult to break down the costs of the actual business of registering companies and re-registering the changes; but on any basis it seems to me that the fees now being imposed will bring in twice as much as the costs are likely to come to.
This step is defended on another ground; namely, that if these much higher fees are charged they would frighten people off from forming limited liability companies; and the Jenkins Committee suggested that this should be done. I think it is a very clumsy method of dealing with these companies, in which both the noble Lord, Lord Hawke, and I are interested. Trying to stop people from forming these smaller companies in this way, by taxing them out, is in my submission the wrong way of going about it. I am sorry that this clumsy method has been adopted in this case, rather than the much more sensible one, in my contention, of altering the structure of the trading organisations on which the business of this country is carried on. I think these are points of some substance, although I am not prepared to object to the actual figures contained here, since 1232 it is extremely difficult to analyse them when one is confronted with them in a hurry.
I should like to ask the noble Lord who is in charge of this Bill about a point to which I have not been able, in a very cursory glance at these new fees to discover the answer. There are many companies which are formed, particularly companies formed by guarantee, which are are in effect charitable. Some years ago I had a part in forming a company limited by guarantee for the purpose of running a law periodical, which I think has been much esteemed by the law schools in this country. That could be done very cheaply indeed, because the registration fees were small. I am not sure whether the situation is still the same now, or whether, under these new arrangements, it will be made onerous for small groups of people who wish to form companies limited by guarantee and who wish to get the advantage—and it is a very real advantage for many charitable and semi-charitable objectives of this kind—of this sort of organisation. I should like to ask how far they will be prevented by much larger fees, or whether the result of this is that there is not very much change. I should be grateful if the noble Lord would inform me on that point.
§ LORD BROWN
My Lords, to deal first of all with Lord Chorley's point, the further investigation into the whole structure of Company Law may indeed throw up different means of limiting the registration of large numbers of small companies, but in the meantime this new scale of fees is at least a deterrent to a practice which I think all concerned agree is objectionable. This Amendment deals simply with scales of fees, and does not basically in any way alter the structure of the law with regard to who shall be charged, in what proportion. It alters the whole proportion of all the fees, rather than altering differential charges between one type of company and another. The noble Lord, Lord Drumalbyn, asked what the fees are for re-registering a limited company as unlimited. I am sorry I was not able to give the answer straight away. It is difficult to grasp the details of this long series of Amendments. The answer is that the fee for re-registering a limited company as unlimited is £5 and the fee for re-registering an unlimited company 1233 as limited is the same as for a new company.
§ LORD CHORLEY
My Lords, is the noble Lord able to tell me about the charge for registering a company limited by guarantee?
§ LORD BROWN
My Lords, the charge for registering a company limited by guarantee is the same as it has always been under the Companies Act, except for the fact that the scale of fees has gone up basically from £2 for up to 25 members to £20, and correspondingly at the top of the scale, where the fee has become £30 instead of £20. There is no difference in the governing principle: simply a basic change in the fees.
§ LORD CHORLEY
My Lords, it is a very substantial increase. It is ten times higher and it could make quite a difference to some people wishing to establish an organisation of this kind.
§ LORD DRUMALBYN
My Lords, in relation to what the noble Lord, Lord Chorley, was saying may I ask the noble Lord whether he would confirm that the amounts of the receipts had fallen far short of the costs? And would he also confirm that by far and away the bulk of the increases come from increases of the registration of the annual returns—I think it is in the ratio of something like three to one, as compared with the registration of companies. In so far as the Government are carrying out the recommendations, therefore, of the Jenkins Committee—or in fact they are a little short of that, because the Jenkins Committee recommended £25 for registration and the figure here is £20—the revenue raised would not go far enough. It is true that they are increasing by a very large proportion the fee for the registration of annual returns, which they may be able to justify by the time it has remained at that for some time; but all the same it does seem rather more than necessary for the purpose.
§ LORD BROWN
My Lords, I am grateful to the noble Lord for giving the indications he has. I confirm that the present situation is that the income from the fees for registration of companies falls substantially short of the expense of carrying out the duties of the office. It is also true that the revenue from new fees will be greater than the expense of the 1234 office, but until we get a provision in these Bills which enables us to alter figures automatically the expenses of running the register of companies will probably rise, while the fees meanwhile will remain stable, so that it is a wise provision for the future.
§ On Question, Motion agreed to.