DIRECTORS' HOME ADDRESSES
Company Law and Investigations Directorate
Department of Trade and Industry
30 October 2001
Our view overall on this matter is that, subject to certain conditions, there is no pressing public need for company directors to have to make details of their residential addresses available to the public. This is especially so given the current security climate. We support the recommendation put forward in the final report of the Company Law Review Steering Group that all directors should be entitled to give a service address for public consumption with their personal residential details confined to a separate, secure register to which only authorised persons would have access.
The DTI's present proposals, being dependent for their operation on an official assessment of whether individual applicants (and members of their families) are likely to be at risk of serious violence or intimidation, are necessarily highly subjective. Directors will have to present an argument to support their belief that they are at risk, and this will have to be critically assessed, with input from the police. We suspect that, even if Companies House and the DTI have the resources to perform this function, the police might be reluctant to get involved, particularly if the number of applications for confidentiality orders turned out to be high.
Conceivably, the range of circumstances in which directors might have a well-founded fear of violence or intimidation could be much wider than those that have been mentioned hitherto, viz activities in the field of animal research. For example, directors could be concerned about likely or actual reaction to operational decisions for which they are responsible, such as decisions on redundancies, or fatal accidents in which their company has been involved. Directors who have been responsible for past corporate failures could also be fearful of reaction. We welcome the indication in paragraph 4.1 that guidance will be produced to define the circumstances in which an order might be obtained but, if the essential test is to be the successful presentation of a case to the authorities, it will be open to any director to make an application and each such application will have to be treated on its merits.
Making confidentiality orders subject to a process of risk assessment also gives rise to the sort of questions and issues posed in the document, including the appropriate duration of an order. These problems would be avoided if a straight choice were made available to all directors.
Our responses to specific questions raised in the document are as follows:
Q2
Is it appropriate to apply to LLPs the same benefits and similar Regulations as those now proposed?
We see no reason in principle why members of LLPs, being of comparable status to directors of companies, should not be entitled to take advantage of the proposed procedure. LLPs are not likely to be carrying out the sort of activities on which the Department has focused its attention, viz animal research, but professional advisers, particularly in fields such as insolvency, can and do find themselves in situations in which threats to their personal security are made. It is conceivable therefore that some members of LLPs will be able to present a plausible case to the DTI for the right to assume a service address. Should they be able to present such a case, they should enjoy the same treatment as directors.
Q3
Is it necessary to prioritise?
We consider it would be impractical to adopt a wholly sectoral approach in the proposed Regulations. The same individual may be a director of several companies which present no obvious threats to personal security and another which does attract the attention of activists. There would be nothing to prevent the DTI assembling an informal list of potential problem sectors but each application would thereafter have to be treated on its merits.
Q4
Draft Application Form
The box at the head of Part C of the proposed form, prompting applicants to indicate in which of a number of given sectors their company operates, is unnecessary and should be deleted.
Q5
Should a confidentiality order be signposted?
We accept that an indication, on a company's file, that an individual director has registered a service address rather than his residential address could give rise to questions about why he applied for, and was granted, a confidentiality order. This in itself, though, would not compromise the director's personal security and is not an adequate reason to deprive members and others of this information. It would serve the interests of transparency, in our view, to require a simple indication that the address listed is a service address. Interested parties would thereby be made aware that if, for any reason, they wished to track down an individual director, this would have to be done via an authorised person.
Q6
Should a confidentiality order last for five years?
The fixing of a standard duration for a confidentiality order will again require an arbitrary choice to be made. There is no sure way of fixing a time period which will be appropriate for all circumstances in which directors are likely to find themselves vulnerable. We accept that it would not be sufficient simply to rely on directors' annual assurances that they remain under threat. Accordingly, we accept that some finite period be attached to an order. Five years appears rather long; we suggest that three years, with the possibility of renewal, would be more appropriate.
Q7
Should service addresses have to be a physical location?
Yes.
Q8
Should a confidentiality order be capable of revocation?
We agree that, once made under the proposed regime, a confidentiality order should continue until its expiry.
To conclude, we would make the point that the proposed regime, based on a subjective assessment of an individual director's potential exposure to physical violence, would require extensive new administrative arrangements to be put in place. Given that the Government is committed to considering the recommendation of the Company Law Review to introduce an 'address regime' which was not dependent on a director's exposure to violence or intimidation, it would be preferable, in our view, to delay new regulations on this matter until such time as the Government has reached its decision on the Review's proposal. Since the practice of filing 'service addresses' is currently common, if not officially sanctioned, practice among directors of larger companies, we do not believe that there is an urgent need to proceed with the present proposals.