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Company Law Reform Bill [HL]

moved Amendment No. 167:"Page 69, line 35, leave out subsection (2)." The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 168, which is essentially a part of Amendment No. 167. Amendment No. 167, which deals with the whole of Clause 158(2), is to leave out the test that equates to Section 214 of the Insolvency Act 1986, which is to do with wrongful trading. It appears to add a new level of severity. However, such a test either codified or applied by the courts is inevitable. The extent of a director’s duties, failings and liabilities are bound to be addressed on the particular facts. Most important among those are the director’s actual position and functions—for example a non-executive would be potentially less at risk than the finance director—and his own attributes; so a lawyer or an accountant on the board may be treated more harshly in certain circumstances. After all, the board is meant to provide a variety of skills, and a lawyer or an accountant may have been appointed because of his expertise. In any event, any directorship is voluntary. Amendment No. 168 is a probing amendment seeking to elicit from the Minister an explanation of the practical effect of the clause. It would be helpful if the Minister could clarify whether the effect of Clause 158(2)(b) would be to require a professional—for example, a lawyer or an accountant—who is also a director, whether executive or non-executive, to advise to the same standard as he would in his professional capacity. We are trying to probe whether there is a different basis for making a judgment about responsibilities and discharge of duties for a director with specific professional skills who may be put in a position of having to defend himself or herself. Because of the nature of their responsibilities, their training and their professional life, would they be ““singled out””, as it were, from among the other directors on the board. It is an important issue of concern. I beg to move.