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Company Law Reform Bill [HL]

moved Amendment No. 301ZZB:"Page 149, line 17, leave out subsection (2)." The noble Lord said: The six amendments in this group deal, from my perspective as a former party treasurer, with what are in practice real issues faced by companies in the conduct of their business. By way of introduction, I say that Members on these Benches support entirely the objectives of the Government in implementing the recommendations made by the Committee on Standards in Public Life with regard to the funding of political parties, although we regret that the Treasury vetoed its expenditure recommendations. However, the Minister does not always have sway with the Treasury, as we are all well aware. Indeed, the only bit left out was that which related to the funding of political parties by the taxpayer. Although I note that various members of the noble Lord’s party appear to advocate it, he will—given that he was a member of that committee—remember it with sadness as a missed opportunity. The Treasury was not to be moved. We also do not want to go back to the days of the 1980s, when companies in the FTSE 100 made a donation to the Conservative Party and, within a year or 18 months, the chairman or chief executive received the appropriate honour in response to their generous donation, but did not get the honour if they failed to make a donation. We are very glad that those days are long behind us. No doubt the representatives of Her Majesty’s Government will confirm that again today. Through this group of amendments, my noble friend and I have been trying to deal with the practicalities of behaviour by companies, as the noble Lord, Lord Hodgson, said. It would be very regrettable if, as a result of the form in which the Bill is passed, we end up with the company secretary saying to a board of a public company, ““I think that we need to deal with the question of political donations””. In the current climate, the board will say, ““We are certainly not giving any political donations””. Therefore, no resolution will be passed authorising the company to engage in what are perfectly reasonable and legitimate activities that could possibly be covered by the definition of political donations. That is the thrust of the series of amendments tabled by my noble friend. It seems unacceptable that the law should become a mechanism under which perfectly legitimate activities for companies should be caught by technicalities. That is the spirit in which the amendments have been tabled. The lead amendment, Amendment No. 301ZZB, which removes references to the Political Parties, Elections and Referendums Act, is one that the Law Society feels strongly about. Bearing in mind my earlier general comments about companies and board resolutions, it is very difficult under that Act for any board of directors to be advised what action is a political donation. A number of examples have been given, one or two of which I have dealt with in later amendments, but the Law Society has produced three examples that cause uncertainty. First, under the 2000 Act, is corporate entertainment provided by a company to persons, some of whom are members of registered political parties, a political donation? Secondly, what about amounts paid to the noble Lord, Lord Sainsbury, at commercial rates, for him to address a conference or seminar? Is that a political donation by the company? Thirdly, is it a political donation to allow a leading politician to attend a conference free of charge because his or her presence is beneficial to the company? Amendment No. 301ZZB is designed to remove the reference to the Political Parties, Elections and Referendums Act and leave the question of what is a political donation to its natural meaning. I suspect that any court taking any of my three examples would say that the natural meaning of a political donation did not catch any of them. Amendments Nos. 301ZZC and 301ZZD are drafting amendments, which I should be grateful if the Government would consider, to make clear what rate of exchange will be used to translate donations not made in pounds sterling. As Part 14 applies to donations made by non-UK subsidiaries, it is likely that donations will be made in a currency other than sterling, but it is not clear what rate of exchange should be used to translate such amounts into pounds sterling. That is obviously important bearing in mind the £5,000 exemption, so I should be grateful if the Government had a look at whether it is necessary to clarify that point. Amendments Nos. 301CF and 301D both relate to anomalies. Again, perhaps the Government will consider whether they cover issues that should be covered, especially paid leave for employees who are local councillors. It is enshrined in other legislation that employees who are local councillors are allowed time off to perform their civic duties and we wonder whether it should be clarified that, when a company allows that, that does not count as a political donation. Amendment No. 301DZA, which, again, covers a subject that has been dear to my heart as a party treasurer, is an attempt to draft a provision that covers a point of principle—I entirely accept that the drafting may be infelicitous. The point of principle is this. As the noble Lord, Lord Sainsbury, will remember from his days at Sainsbury’s—I use that as an example because it is day-to-day and relevant—it is absolutely normal for supermarket groups, whether Tesco, Sainsbury’s or Asda, to stage events and political party conferences. They do that not because they support the political party—because they do it for all three political parties—but to advertise, especially to local councillors present, the benefits of their supermarket. That is of commercial advantage to those supermarket groups, especially because those local councillors will be sitting on planning committees determining planning applications regarding those stores. Supermarket groups also try to get involved in activities in local communities. I know, because this has been a practical issue that I have faced as party treasurer, that there is conflicting advice about whether, if supermarket groups do that, they are providing a political donation to the political party. I take that example not because the noble Lord, Lord Sainsbury, is the Minister but because it is a common example of the kind of company that does this. Some airlines do that; the British Airports Authority does it. Then, some boards of directors say, ““If it is a political donation, we do not want to do that because we do not think that our company should be making political donations””, despite the fact that the company does that for all three political parties. As I said, I have attempted to draft an amendment that deals with that point. I am entirely happy to accept that it is infelicitous, but the point of principle that I am trying to get at is clear. Could it be made clear in the Bill that it is not a political donation where a company provides a service or sells something to a political party at a perfectly arm’s-length price, and that the object of the company doing that is not to make a political donation but to advertise its wares to the members, MPs and councillors of that political party? I beg to move.