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Company Law Reform Bill [HL]

The short answer to the noble Lord’s question is, ““No””. The Company Law Review recommended that we provided for authorisations by directors and we followed that recommendation. So far as private companies are concerned, the default position is that the directors may authorise the matter unless there is a provision in the company’s constitution saying otherwise. In the case of a public company, I am in a position to answer the question of the noble Lord, Lord MacGregor—catching him just in his place. Directors may authorise the matter only if the company’s constitution includes provisions saying that they can do so. It must follow that if the constitution does not do so, steps will have to be taken to amend it to that effect and the members of the company will be able to take a view about whether they think that is a good move. I suggest that that is right and proper. Clause 164(4) preserves any rule of law enabling the company to give authority for anything to be done by the directors that would otherwise be a breach of duty. That means that where a matter could presently be authorised by the members under the general law, it will continue to be possible. There was some consideration of whether it would be wise simply to allow the constitution to provide for this. The final conclusion of the Company Law Review, which the Government find persuasive, is that it is far better for this to be the subject of approval by directors or shareholders rather than being cleared in advance through the constitution. For those reasons, we are not in favour of this amendment.