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Company Law Reform Bill [HL]

I will not repeat the general side-swipe at political opponents that I started with, but I will summarise where I had got to in my argument. As the noble Lord, Lord Freeman, said, although the relevant part of the general duty is plainly based on a particular rule or principle, the words used to describe a director’s obligation are quite different from those used by common law or equity. Because of the importance of this for the future interpretation of this section, and because the noble and learned Lord, Lord Goldsmith, is here, I shall go beyond what the noble Lord, Lord Freeman, has said and mention the clauses highlighted by the Law Society as those that will cause a problem. I will not repeat what the noble Lord, Lord Freeman, said about Clause 156, other than to agree with him, but I will detail the other specific provisions where there could be a problem. Although Clause 157 broadly reflects the common law, it is couched in such different terms that it is hard to see how Clause 154(4) could be used in relation to it. On Clause 159, the current common law rules on directors’ interests are generally regarded as giving rise to a disability rather than imposing a duty, so it is not clear what the effect of this change will be or how Clause 154(4) will apply. There is at present no exactly corresponding duty to that in Clause 160, although it is based on the existing obligation to account for secret profits. There is no common law equivalent to Clause 161, which introduces a new duty on directors to declare interests in transactions with the company; rather, disclosure is a means of overcoming the disability under which the directors are placed in relation to conflicts with their companies. Those are five examples of where the Law Society finds a problem where the general duties are different from existing common law rules and equitable principles. The Conservative and Liberal Democrat Opposition fear that if this section goes through in its current form, we will have—