---

Company Law Reform Bill [HL]

In discussing this amendment, I think it is important to be clear what the role of the registrar consists of. There are many public bodies which intervene in the life of the individuals or organisations to which they provide a service. These bodies make judgments and take discretionary actions which have effects on their customers. Companies House is not, on the whole, a body of this sort. It is a registry. Its basic function is to take receipt of information and place that information, which it accepts in good faith, on the public register. Of course, this requires Companies House to perform actions promptly and accurately and, on occasions, to carry out certain checks—for example, that information is complete and properly delivered on the right form, and so on. But it does not on the whole require Companies House to enter into any more substantial checking or a verification exercise in respect of the contents of the information. Generally, therefore, where a company suffers damage as a result of an error or omission on the public register, it will be because the original information was wrong or was wrongly delivered—not because of anything Companies House does or does not do. I understand the points that the noble Lord made and the cases in which he may have been involved, but obviously I cannot comment on the detail. Any general notion of liability for the registrar therefore seems a little beside the point. The registrar has an obligation to register the information which she receives. It is a fact of life that, on occasions, mistakes will be made, given that more than 7 million documents are handled each year. I do not believe that mistakes are common, but they do happen. That is why there is a thorough and accessible complaints mechanism; Companies House can be alerted quickly to any problem and can take steps to rectify it. My understanding is that in the great majority of cases this leads to a satisfactory conclusion for all parties before any material loss is sustained. However, in a very limited number of cases, where the registrar has made an error which has caused a company to incur real costs, I understand that she operates an ex gratia payments procedure to reimburse the company. I understand that around 140 payments of this nature were made in the most recent 12-month period. I think that the position I have outlined is robust and works well. I am not convinced that the case has been made to establish an express, formal and across-the-board indemnification arrangement of the sort proposed in the amendment. We would need to be aware of the consequences if we did so. If Companies House were under an express obligation to indemnify in all cases, it would need to be sure that it had arrangements in place to fund the unquantifiable contingent liability that would be created. Whatever the precise nature of that arrangement, it would most obviously involve passing the costs on to all companies in the form of higher transaction fees. Companies House would also, I suspect, feel obliged to institute additional checking and risk-management processes within its organisation, involving increased resource and, again, the prospect of higher fees across the board to fund it. I do not believe that the scale of any problem that may exist at the moment would justify going down this route.