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Have your say on the the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

29 June 2021

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Do you have relevant expertise and experience or a special interest in the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill 2021-22, which is currently passing through Parliament?

If so, you can submit your views in writing to the House of Commons Public Bill Committee which is going to consider this Bill.

The first sitting of the Public Bill Committee is expected to be on Tuesday 6  July. Written evidence can now be sent in to the Public Bill Committee. The Committee is scheduled to report by Thursday 8 July. However, please note that when the Committee concludes its consideration of the Bill it is no longer able to receive written evidence and it can conclude earlier than the expected deadline of 5.00pm on Thursday 8 July. You are strongly advised to submit your written evidence as soon as possible. The sooner you send in your submission, the more time the Committee will have to take it into consideration.

Aims of the Bill

The Bill consists of four clauses. Clause 1 concerns the impact of the coronavirus pandemic on business rates. Clauses 2 and 3 would amend existing legislation to make it easier for the Government to investigate misconduct by directors of dissolved companies. Clause 4 covers the extent and commencement of the Bill.

Business rates are devolved to Scotland, Wales and Northern Ireland. Clause 1 extends to England and Wales but has effect in England only. Company law matters are reserved to the UK Parliament in Great Britain so clause 2 extends to England, Wales and Scotland. Clause 3 makes equivalent amendments for Northern Ireland, for which a legislative consent motion has been sought.

Clause 1 of the Bill provides that rateable values for business rates may not be altered to take account of the economic impact of the coronavirus pandemic, subject to a number of exceptions set out in the clause. It prevents appeals against rateable values on the basis of a ‘material change of circumstances’. Ordinarily, this is a ground of appeal that is available outside of the Valuation Office Agency’s regular general business rates revaluations. The type of appeal prevented by this Bill normally allows rateable values – and thus business rates bills – to take account of changes in economic circumstances.

Clauses 2 and 3 amend existing legislation to make it easier for the Government to investigate misconduct by directors of dissolved companies.

Dissolution is a quick and cheap way of removing a company from the Companies House register. There were over 170,000 company dissolutions in the first quarter of 2021.

The Company Directors Disqualification Act 1986 (CDDA) grants the Government powers to investigate the conduct of directors of insolvent companies by requiring the provision of information and documents. It also allows the Government to apply for a court order (or seek a disqualification undertaking) disqualifying a director who engaged in misconduct from serving as a director for up to 15 years.

However, because of what the Government considers to be a loophole, these powers in CDDA do not extend to former directors of dissolved companies. Investigating the conduct of directors of dissolved companies is currently a complex process requiring a court order to restore the company to the register.

The Government consulted on proposals to give the Insolvency Service powers to investigate directors of dissolved companies in 2018. This Bill brings forward these proposals.

Clause 2 extends the scope of powers in CDDA to apply to directors of dissolved companies. It allows easier investigation (and if necessary, enforcement through disqualifications) of dissolved company directors who have engaged in misconduct. Directors will no longer be able to dissolve companies to impede investigations into their conduct.

CDDA extends to England, Wales and Scotland. Clause 3 makes equivalent amendments in Northern Ireland. The Government believes the changes will act as a deterrent to directors who might seek to dissolve their companies to obstruct investigations into them for fraudulently avoiding the repayment of Government-backed loans during the pandemic.

Follow the progress of the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill 2021–22 was introduced to the House of Commons on 12 May 2021. This Bill was debated at second reading on Monday 28 June 2021 and has now been sent to a Public Bill Committee which will scrutinise the Bill line by line and is expected to report to the House by Thursday 8 July 2021.

Oral evidence sessions are expected to be held on Tuesday 6 July.

Guidance on submitting written evidence

Deadline for written evidence submissions

The first sitting of the Public Bill Committee is expected to be on Tuesday 6 July. Written evidence can now be sent in to the Public Bill Committee. The sooner you send in your submission, the more time the Committee will have to take it into consideration and possibly reflect it in an amendment. The order in which amendments are taken in Committee will be available in due course under Selection of Amendments on the Bill documents pages. Once the Committee has dealt with an amendment it will not revisit it.

The first sitting of the Public Bill Committee is expected to be Tuesday 6 July and the Committee is scheduled to report by Thursday 8 July. However, please note that when the Committee concludes its consideration of the Bill it is no longer able to receive written evidence and it can conclude earlier than the expected deadline of 5.00pm on Thursday 8 July. You are strongly advised to submit your written evidence as soon as possible.

Your submission should be emailed to scrutiny@parliament.uk

Further guidance on submitting written evidence can be found here.

Image: Parliamentary Copyright

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