---

Company Law Reform Bill [HL]

moved Amendment No. 2:"Page 4, line 7, leave out subsection (2) and insert—" ““(   )   In the case of private companies and small companies the memorandum must be in the prescribed form and must be authenticated by each subscriber. (   )   For all other companies the form of the memorandum shall be as prescribed by regulations made under section 3 of Companies Act 1985 (c. 6) (forms of memorandum).”” The noble Lord said: Amendment No. 2 concerns Part 2, ““Company Formation””, and Clause 8, ““Memorandum of association””. We wish to probe the Government’s thinking on this fundamental corporate document. Paragraphs 18 to 21 of the memorandum, sent by the DTI to the Delegated Powers and Regulatory Reform Committee, state that, in future, regulations prescribing the form of the memorandum of association will not be subject to any form of parliamentary scrutiny. I can see why that would not be necessary for smaller companies where the document is unlikely to be very contentious or affect a great number of people. However, despite the intention to reduce the importance of this document, there must be an argument for parliamentary scrutiny of the format to be prescribed for larger companies. Its impact could be very great. In a company with many shareholders, it could consequently affect many people. The memorandum lays out the fundamental issues concerning a company and, therefore, its shareholders. Our amendment will allow private companies and small companies to follow the standard non-scrutinised format, while for the larger, in particular, public companies, the regulations proscribing the format will be subject to the negative resolution procedure as currently required by Section 3 and/or Section 744 of the Companies Act 1985. I beg to move.