Companies House should retain company documentation for at least 20 years and maintain free public access

It is a sad fact of life that any change, however successful, will bring cries of woe from a minority of Luddites, who object to any change on the basis that it is a change, and those who feel that they have somehow been adversely affected. A minority with a disproportionately loud voice who create unnecessary concern over a relatively minor issue. Sometimes that is unimportant – it just wastes time – but on other occasions it may have serious adverse consequences. The brouhaha about record-storage at Companies House is an example of the latter.

Since 1844, Companies House has maintained records of UK businesses and their directors. As at 31 March 2015, the latest date for which statistics are published, the records covered 3,678,860 companies of which 399,736 were dissolved. Records on dissolved companies are retained for 20 years after their dissolution. All these records are digitised and available online for public access.

Record digitisation

The digitisation of Companies House records is a success story. A great deal of work has been done at Companies House to implement change and this has been done successfully, on time and to budget. All this at a time when it was also having to address changes to company records as a result of the Small Business, Enterprise and Employment Act 2015.

However, every silver lining must be accompanied by a cloud and the recently published annual report of Companies House notes that 'the success of free data has led to a number of concerns being raised regarding the availability of personal data. We have received 2,151 complaints from customers about the availability of data online.'

Privacy complaints

Let me put that into perspective. The same report reveals that the register has been accessed for free information on 1,285,966,526 occasions – and that does not include 3,620,596 paid for searches or any of the searches made through the commercial Application Programme Interface. They have received 2,151 complaints. Even comparing the number of complaints against the number of dissolved companies for which records are held (399,736) the percentage is tiny, less than 0.5%. That is, by any definition, a tiny minority.

Yet Companies House panders to this minority. The report explains exactly why this information should be publicly accessible, but goes on to say that Companies House will have to waste time and money reviewing the position: 'the public availability of certain data is the trade-off for limited liability and we are legally required to make the data on the register available, and the response to free data indicates that this is an overwhelmingly positive step. However, in the coming year we will look again at how data relating to dissolved companies is handled, particularly where that data relates to individuals'.

Data protection

Why? Could it be that the sacred concept of data protection has been invoked? In whose interests would it be for this information to disappear? There is a data protection gloss being given to the tiny number of complaints that Companies House has received, with a spokesman reportedly telling the press that complainants 'believe that retaining, and making available, information relating to long-dissolved companies is inconsistent with data protection law'.

Data protection law requires that personal information should not be held for longer than necessary, but does not go on to specify what that period might be. It has been reported that Companies House has not yet discussed the issue with the Information Commissioner, which suggests that discussions on this subject are at an early stage.

Right to be forgotten

However, the information held by Companies House is held in the public and national interest. This should override any individual challenge on data protection grounds – notwithstanding the European Court of Justice decision in 2014 that a Spanish man, who had previously been declared bankrupt, was entitled to have Google links to reports of this fact deleted. This has led to thousands of requests for information to be removed from the internet on the basis of a 'right to be forgotten'.

It has been an important principle of UK public policy for many years – at least since 1844 – that the benefit of limited liability enjoyed by companies is counter-balanced by public access to details of their shareholders. This has been enhanced by the introduction of the Register of People with Significant Control (the PSC Register). The 'right to be forgotten' is therefore balanced under UK law by a 'right to know'.

Who benefits from a proposal to delete all this historic corporate information? Well, Companies House may save a bit of computer memory, but the real beneficiaries will be those who would like details of their historic business failures to disappear into the mists of time. For example, media reports have noted that access to this information revealed the past company failures associated with Dominic Chappell, who bought BHS from Sir Philip Green and oversaw its collapse this year.

Research facility

This information is not only used by journalists and conspiracy theorists. It is good business practice to research organisations with which you plan to do business. Who are the owners? What kind of track record do they have? How solvent does it appear to be? Past company failure is not necessarily an indicator of future difficulties, but it can be, particularly if there is a pattern.

Were this proposal to go ahead, businessmen with a track record of corporate failure would be able to reinvent themselves every six years.

The absence of records can also indicate a slipshod approach to compliance which might extend to the company's commercial activities – including those for which you are proposing to pay them.

Many organisations are required by law to carry out anti money-laundering checks on organisations and individuals with whom they do business. This would still be necessary and, without readily available information at Companies House, companies and individuals would have to resort to more expensive methods of finding the information. For example, by using forensic accountants, who might be beyond the means of smaller companies.

Corporate transparency

The last two governments have done a lot of work to increase corporate transparency in the UK. There is further to go, but making Companies House data free to users and introducing the PSC Register to ensure that the control of companies is in the public domain have been important steps. A persuasive argument for the latter was that it would help law enforcement agencies to investigate crime as fraudsters open and close businesses as they commit crimes.

Theresa May has argued for greater corporate transparency and for more responsible corporate behaviour. Reducing the public availability of information about dissolved companies goes against these aims by protecting the small minorities of the incompetent and, in even fewer cases, the downright fraudulent. Companies House should retain company documentation for at least 20 years, maintain free public access and ignore the tiny but vocal minority.

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