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Company Law Reform Bill [HL]

Other clauses in the Bill establish the duty for companies to send to the registrar copies of any document that makes an alteration to their articles and a copy of the amended articles themselves. I very much share the view that these are important provisions, and it is right that there should be appropriate penalties if they are contravened. That is why under Clause 27(3) failure to comply with the requirements is an offence. Clause 28 introduces an additional procedure for the registrar to use to encourage a company in default of the requirements to comply with them, without resorting to a criminal prosecution in the first instance. You can issue a notice requiring compliance with the requirements, and failure to comply results in a civil penalty of £200. I cannot agree with the noble Lord that the one-off penalty should be raised to the amount suggested in the amendment. We consider that £200 is the right amount for the one-off civil penalty. It is not our intention to overpenalise companies through that route but rather to encourage compliance with the law. In particular, the suggestion that there should be a daily default fine of £100 for each day of continued contravention would risk penalising companies very heavily. It would weigh particularly heavily on smaller firms with a lesser turnover and could rapidly come to have a significant consequence for their business. Such a penalty is unnecessary because the registrar could, if necessary, seek to prosecute the company for failure to comply with the duty. For those reasons, I believe that the Bill as it stands takes the right approach to penalties in this area.