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Company Law Reform Bill [HL]

We will give further thought to that issue and the extent of it, but I have been assured that there is seen to be a problem here. We will look at what evidence there is for this. Clearly, if there is no problem there is no point in producing a remedy for it, but if there is a problem we need to take account of it. The CLR recognised that its proposals would not fully address all failures in the vote execution process occurring at stages between indirect investors and the custodian or nominee down often complex investment chains. However, the CLR’s objective was to deal with what was perceived to be a problem in lodging with registrars proxy forms containing voting instructions. There has been extensive consultation on the policy through the Government’s White Papers of July 2002 and March 2005 and publication of further draft clauses in September 2005. As a result of this, the clauses were refined further to be less prescriptive and provide more flexibility. I shall turn to Amendments Nos. 300UA and 300UB tabled by the noble Lords, Lord Sharman and Lord Razzall, and the wider question raised by the noble Lords, Lord Hodgson and Lord De Mauley, opposing the Questions that Clauses 316 to 325 stand part of the Bill. We believe their concerns are misconceived. Clause 316 gives members of a quoted company the right to require an independent report on any poll taken, or to be taken, at a general meeting. Members may make their request in advance of the meeting if they wish. It is true that the request could come before it is certain that there will be a poll. However, as at most five members are required to demand a poll on a substantive resolution, members who have enough voting rights to request an independent report are more than likely to win enough support to demand a poll. In most cases therefore, we would expect a request for an independent report on a poll made in advance of a meeting to go hand-in-hand with a demand for a poll. However, as subsection (4)(d) provides, the members’ request can be made up to one week after the meeting where the poll is taken. This allows members to decide after a poll is taken whether they wish to have an independent report on, for example, a controversial resolution or where there appears to be a problem relating to voting procedures. This provision is intended to help members avoid making a pre-emptive demand needlessly just in case a poll is called or could be contentious. This should minimise the occasions when an independent assessor is required to be appointed before it is known whether a poll will be taken. Clause 317(2) requires that the independent assessor be appointed within one week of the members’ request. This means that the appointment could be made either before or after the meeting depending on when the members’ request is made. If the appointment of the independent assessor is made before the meeting, Clause 322 gives the assessor rights to attend the meeting. These new provisions form part of the Government’s wider objective to promote greater transparency and improve shareholder engagement. We recognise that this may result in some additional costs for quoted companies. But we believe that the clauses provide sufficient flexibility to avoid imposing unnecessary burdens on companies and that the benefits to be gained in investor confidence justify the new requirements. As the noble Lord, Lord Hodgson, says, of course an action may be possible under common law. The report will highlight the availability of that action and highlight the company’s inadequate practice.