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Company Law Reform Bill [HL]

I bring up a situation that I am sure arises quite commonly in this age when many companies are involved in many different sectors, acquire other companies and so on. What happens when a director is involved in two companies in the same sector that had no conflict of interest when he first became a director of that company, but a situation arises when there is a possible takeover, merger or acquisition, which might involve a conflict of interest if he were involved in the discussion? In practice what has happened sometimes is that that director will withdraw from any discussion of the board where that arises. Is that still the answer? Does subsection (4) deal with that situation? The situation referred to in Clause 159(4)(a) might be regarded as likely to give rise to a conflict although that is very unlikely. Is the answer in such a situation—if we do not have a provision like my noble friend’s amendment—that the directors authorise the relevant person to withdraw and paragraph (4)(b) applies? I certainly do not think that we want to exclude that possibility. As my noble friend says, it can be very much in the interests of a company to have a director who has much wider interests in a particular sector. I hope that that issue can be resolved in the way in which it has been in the past.