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Company Law Reform Bill [HL]

These are all elements of the enhancement of shareholder value which the review and the consultation demonstrated was desirable. With respect, I should have thought that it was pretty plain why it is desirable to say to directors, ““One of the things to which you must have regard is the likely consequences of any decision in the long term””. One would hope that they would do that, and it is something that it is absolutely right they should have in front of them and have regard to. Amendment No. 161 then introduces a different concept—that of relevance. I understood this to be the preferred formulation of the noble Lord, Lord Freeman. The difficulty of including an express reference to ““relevance”” is that it takes away from the fundamental point that these are all matters which the directors should consider. It suggests that sometimes these things are not relevant at all. If they are not and if the directors, having considered the impact on the environment as required by Clause 156(3), for example, say, ““Well, this decision will have absolutely no effect on the environment whether we take it or not””, that is the end of the consideration. You do not need to write in ““in so far as relevant””. You send a bad message if you do that, because it looks as if you are putting in a loophole or escape clause to enable people to disregard those considerations. Amendment No. 164 approaches this in yet another way, by permitting directors to make a judgment,"““having regard to the size and complexity of the business””." I have no doubt that there will be cases where, when the directors have regard to the factors in Clause 156(3), the significance of those factors will vary depending on the size and complexity of the business. The environmental impact from a small business is different from that of a large industrial concern, for example. By putting in a reference to the size and complexity of the business, would we not be sending a message that, if you are not a big, complex business, you do not really need to be concerned about those issues? I understand that there is wide agreement that we should go for enhanced shareholder value. In that case, do we not want all those factors to be considered? What is meant by ““have regard to””? It means what it says. You have to have regard to the considerations. As I have indicated, however, it may be a rapid consideration in certain circumstances, leading to the conclusion that that particular factor does not change the decision at all—there is no effect on the environment, or whatever it may be. It is right, however, that such matters should be considered; regard should be had to them. Other speakers have proposed that, rather than going too far—as the noble Lord, Lord Freeman, was perhaps saying—we are not going far enough. The noble Lord, Lord Avebury, spoke in that way to amendments that are not grouped. I shall identify them for the record: I understood him to be speaking also to Amendments Nos. 162A, 162B, 162C and 165A. Were they the amendments to which he was speaking?