Information Sharing (Disclosure by the Registrar) Regulations 2024

Considered in Grand Committee

16:01:00

Moved by

That the Grand Committee do consider the Information Sharing (Disclosure by the Registrar) Regulations 2024.

My Lords, in speaking to the information-sharing regulations, I shall also speak to the Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024. These regulations are part of a series of statutory instruments designed to implement the reforms introduced by the Economic Crime and Corporate Transparency Act 2023, which I will refer to as the 2023 Act. This Government are committed to holding accountable those who exploit our open economy. For instance, in the past few weeks, we have outlined our new anti-corruption agenda and our goal to make the UK a hostile environment for all forms of corruption. Corporate transparency is vital in tackling such corruption and economic crime. The 2023 Act enhances corporate transparency in the UK by reforming Companies House, granting it greater powers to verify information, tackle economic crime and improve the reliability of the companies register. At the same time, the Act introduces reforms to Companies House processes and increases protections for individuals at risk of fraud and other harms. Work to implement the changes at Companies House is well under way. Since March, stronger checks on company information have allowed the organisation to cleanse the register of false and suspicious information. In parallel, Companies House is undergoing a significant organisational transformation to support the delivery of these reforms. Although considerable progress has been made, there is still much to do. We are here today to consider the next set of regulations to the Companies House reform programme. I will start with the Information Sharing (Disclosure by the Registrar) Regulations 2024. The 2023 Act enhanced the registrar’s ability to share non-public information with enforcement agencies and other public authorities to support their functions. Additionally, the 2023 Act empowered the Secretary of State to make regulations enabling the registrar to share information with designated persons for specified purposes. For example, there may be situations where it would be advantageous for the registrar to share information with certain officeholders tasked with managing insolvency proceedings. These officeholders are typically insolvency practitioners but could also include the official receiver or, in Scotland, the Accountant in Bankruptcy. While the Companies Act 2006 permits the registrar to share information with agencies when carrying out a public function, the work of these officeholders generally pertains to private matters. These include identifying and recovering assets during insolvency proceedings. Therefore, the registrar currently lacks the power to share information with officeholders for such purposes. These responsibilities often extend beyond asset sales to legal actions. They could involve applying to the court to reverse transactions made before the insolvency took place that disadvantaged creditors. Where a director has allowed a company to continue trading while insolvent, this could also involve seeking an order making that director liable for the additional losses incurred by creditors. The information-sharing regulations will enable the registrar to share crucial information with insolvency officeholders, enhancing insolvency processes and helping to maximise returns for creditors. I turn to the Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024. It is key that individuals running companies and other entities register their details so that they can be held accountable for the entity’s affairs. However, having one’s personal information publicly displayed can increase the risk of harm, such as fraud, identity theft or cases of domestic abuse. Currently, an individual can already apply to protect their residential address from the public register in certain cases. Protection means that the address is not publicly visible. However, the law does not allow protection of a residential address that was previously used as a company’s registered office address. Companies House regularly receives requests for protection of these residential addresses from many individuals. These include those at risk of harm because of the public availability of their residential address as a registered office address—for example, those in witness protection, judges and parliamentarians. These regulations are the first of several reforms to enhance the protection of personal information. They will allow applications to protect a residential address where it was previously used as a company’s registered office address. The regulations also make specific provisions for the scenario of dissolved companies. There are a number of reasons why a party would want to apply to court to restore a dissolved company to the register: for instance, to claim assets or pursue legal claims. To do this, the applicant requires the company’s former registered office address. To support this, these regulations ensure that an application to protect a residential address that was a dissolved company’s last registered office address can be made only from six months after the company’s dissolution. The registrar will also be able to disclose a protected residential address to certain persons who require the dissolved company’s registered office address to make a restoration application. Lastly, the instrument amends legislation that applies company law to limited liability partnerships, following changes to company law made by the 2023 Act and this instrument. In conclusion, these regulations strike the right balance between privacy and transparency. Individuals will benefit from greater protection of their personal information, while protected information will be available for law enforcement, public authorities and others with a legitimate reason to access it. Together, these instruments build on the 2023 Act, strengthening our commitment to support legitimate business and tackle economic crime. I hope the regulations will be supported, and I beg to move.

My Lords, we will support both of these instruments, and I will be brief. The first instrument is a straightforward and necessary increase in the disclosure powers of Companies House and, as the Minister has made clear, the SI extends disclosure powers to cover non-public organisations and specifies to whom information may be disclosed and under what circumstances. All this seems clear and with obvious benefits, although I confess that I am not at all clear what a “judicial factor”, mentioned in Regulation 3(g), is or does. Perhaps the Minister could enlighten us. We are generally happy with measures that improve the utility or performance of Companies House. Appropriately increased and targeted disclosure powers are definitely a good thing, but arguably more important is the ID-checking regime at Companies House. In that context, it was good to see Companies House quoted in last Wednesday’s Times, saying: “We take fraud seriously and all allegations are fully investigated. We are preparing to introduce compulsory identity verification checks. This will provide greater assurance about who is setting up, running, owning, and controlling companies”. That is welcome news, if a little overdue. Can the Minister say when Parliament will see these new and obviously vital proposals? The second SI essentially, as the Minister said, deals with the disclosure of residential addresses on the public companies register. It proposes new circumstances in which these addresses may be protected from exposure via Companies House registration details. Here, I declare a kind of interest: I have, for the past nine years, benefited from a Companies House exemption, under the existing regime, from disclosure of my residential address. The circumstances surrounding my exemption were clear and compelling enough to qualify for non-disclosure, but they would not serve to protect from exposure any address currently or formerly used as a company’s registered office. This instrument will allow an application to protect a residential address when it was previously the registered address for the company, and this will apply, mutatis mutandis, to LLPs. There are appropriate protections against using this new power to frustrate challenges to the dissolution of a company, as the Minister mentioned. This all seems very sensible, and the EM notes in paragraph 5.8: “Companies House has for a long time been inundated with requests for this kind of protection, as the previous law prevented many people from protecting publicly available address information that put them at risk, for example in cases of domestic abuse”. In paragraph 6.5, the EM says: “Further regulations will be made in due course to introduce additional measures preventing the abuse of personal information on the companies register”. I encourage the Minister to make rapid progress on these new proposals. Companies House needs all the help it can get.

My Lords, I apologise for missing the first SI. I meant no discourtesy; it was an administrative error entirely of my own making, and I particularly apologise to the noble Lord, Lord Leong. However, I would have welcomed the regulations because, as Conservatives, we believe in good governance, personal responsibility and safeguarding our economy from exploitation. We believe that the measure delivers exactly that. On information-sharing and companies, we welcome the Information Sharing (Disclosure by the Registrar) Regulations 2024. This legislation is a clear and necessary step in strengthening the integrity, transparency and security of our systems. At its core, these regulations empower the registrar to share critical information with designated bodies. This will enhance co-operation between government departments, regulatory agencies and enforcement authorities, ensuring a more joined-up approach to tackling crime, fraud and misconduct. For too long, bad actors have exploited the gaps in our information-sharing framework, hiding behind outdated systems and fragmented oversight. The result has been criminal networks, fraudulent companies and rogue entities syphoning off resources, undermining fair competition and eroding public trust. We owe it to law-abiding businesses and citizens to level the playing field and close these loopholes. Furthermore, these regulations are proportionate and pragmatic. They strike the right balance between enabling necessary disclosures and protecting sensitive data. Conservatives have always championed individual freedom and privacy, and this legislation respects those values while enhancing national security and economic resilience. This is not just a technical reform; it is about ensuring confidence in our institutions, trust in the free market and the rule of law. By empowering the registrar, we are sending a clear message that the UK will not be a haven for those who flout our laws and/or exploit our systems. I also welcome the draft Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations. This legislation marks an important step in safeguarding our economic landscape, while enhancing the transparency and integrity of our corporate structures. These regulations are critical for addressing two fundamental challenges: the protection of sensitive information and the facilitation of responsible disclosure. By ensuring that data held by companies and limited liability partnerships is appropriately safeguarded, we are protecting businesses, individuals and the integrity of the UK’s economic infrastructure. At the same time, targeted and necessary disclosures will empower regulators, enforcement bodies and government agencies to act decisively in identifying wrongdoing and preventing abuse.

16:15:00

As Conservatives, we have always supported the free market, but we know that with freedom comes responsibility. When loopholes exist, they are exploited by those who seek to manipulate our systems, to evade accountability and to engage in criminality. This legislation tackles that head-on. It provides a balanced framework that protects honest enterprise, improves trust in our corporate sector and ensures that those who break the law cannot hide behind anonymity or inadequate oversight.

Moreover, these regulations address emerging challenges in our globalised and digitised economy. They bring clarity and modernisation to the way information is handled, ensuring that the UK remains a trusted place to do business. This not only strengthens our economic reputation but reinforces the principle that integrity is non-negotiable.

In conclusion, I commend this draft legislation. Let me ask: can we allow our businesses and partnerships to remain vulnerable to exploitation, and do we not have a duty to ensure that the UK remains the gold standard for transparency, integrity and fair competition?

My Lords, I am very grateful for all contributions and I thank especially the noble Lord, Lord Sharpe, for supporting these regulations. As he knows, the work was undertaken by the previous Government and we have made it a legal entity and brought forward the power to implement the legislation. I am sure there is common ground here. We all want to fight economic crime and ensure that privacy and transparency are balanced. I will respond to the questions from the noble Lord, Lord Sharpe. On the use of the judicial factor, this basically relates to Scotland. The judicial factor is an officer of the court whose role is to protect the estate itself. This applies only in Scotland. On the issue of identity verification, work is being done and we hope to see proposals at some point next year. On the wider question of Companies House reform, let me share with noble Lords what has been done so far. From March 2024, the registrar has to be able to query a request for information, remove material from a register of their own volition or on application in a more timely way, analyse information for the purpose of crime prevention or detection, disclose information from anyone for the purpose of the exercise of the registrar’s function, and move the registered office address, service address, and principal office address to default addresses. Companies now have to comply with the new rules about company and business names. A company must not be registered by a name that is intended to facilitate criminal purposes and Companies House has greater powers to direct a company to change its name or to change the name if the company is not compliant, to declare its lawful purpose, notify and maintain an appropriate registered office address and registered email addresses and confirm new information in annual confirmation statements. Companies House has commenced a process to remove names and addresses used without consent. This includes the removal of officers and people with significant control, where previously those wishing to have their details removed would have had to apply to the courts. So far, Companies House has removed 50,400 registered office addresses, 39,600 office addresses and 36,700 PSC addresses, redacted 37,100 incorporation documents to remove personal data used without consent and removed 7,800 documents from the register, including 800 false mortgage satisfaction filings that would have previously required a court order. So Companies House has done a lot, but there is further to go. The reform of Companies House is ongoing and more instruments will be brought to the House, I hope, next year. In summary, today’s debate has highlighted the importance of getting the Companies House reforms in the 2023 Act right. These regulations mark another vital step towards realising these goals and I commend them to the Committee.

Motion agreed.