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Company Law Reform Bill [HL]

moved Amendment No. 301ZZG:"Page 150, line 25, at end insert—" ““(   )   alternatively, in either case, by a resolution of the board of directors of the company”” The noble Lord said: In moving Amendment No. 301ZZG, I wish to speak also to Amendments Nos. 301AB and 301CA. These three amendments concern Clauses 339, 340 and 341. All three clauses are concerned with the procedure to be followed to authorise political donations or expenditure. The whole thrust of the recent changes to the law, as included in this Bill and a number of other enactments, has been to make it more difficult for companies to make political donations. The definition of political donation in the 2000 Act is very wide, covering, for example, printing or other services or benefits in kind. Yet there is a wide exemption concerning trade unions. As I said at Second Reading,"““what is sauce for the corporate goose must also be sauce for the trades union gander””.—[Official Report, 11/1/06; col. 192.]" Trade unions are apparently to be permitted to make donations to political parties which they believe will benefit their members. In fulfilling their newly codified duties—which we discussed at length in Part 10—if directors decide that it is in the best interests of their company to make a political donation to a party whose policies they believe will benefit their company, and therefore their shareholders, why should they not be allowed to commit the company in that way? The newly codified duties which—as the Government have said repeatedly—will make it very clear what directors’ duties are and to whom they are owed, will surely be sufficiently tightly drawn to prevent any abuse and avoid inappropriate decisions. These amendments seek to allow for the process that I have just described. Amendment No. 301ZZG would insert a new paragraph at the end of Clause 339(2), which would give the directors the power to authorise the relevant measure. The proposed new paragraph states,"““alternatively, in either case, by a resolution of the board of directors of the company””." The second amendment in this group, Amendment No. 301AB, would insert a new subsection (5) into Clause 340, which is entitled, ““Form of authorising resolution””. This would make it clear that directors must have considered their duties as laid down in Clause 156 and must believe that the donation or expenditure is in accordance with their duties under that clause. In other words, the directors cannot just nod it through. Amendment No. 301AB states:"““A resolution of the board of directors of the company must state that it is the view of the directors of the company who are in favour of the resolution that the authorisation of donations or expenditure is made in accordance with their duties under section 156””." There would be no question of people not being aware of what they had to do; it is made explicit in the amendment. The final amendment in the group, Amendment No. 301CA, would insert the appropriate procedure into Clause 341, which is entitled, ““Majority required for authorising resolution””. The proposed new subsection would make it clear that a simple majority of directors at a board meeting is the level of authorisation required. These amendments are an attempt to regularise and even out the position, and to make it perfectly clear that directors’ newly codified duties under Clause 156 have to be taken into account. These three amendments lay out the procedure to be followed. I beg to move.