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Company Law Reform Bill [HL]

It is important that donations and expenditure are authorised by the company’s members, not by the board of directors. The reforms introduced in 2000 that implemented a recommendation by the Committee on Standards in Public Life reflected the view that it is important to regulate political donations that might be seen to reflect the director’s personal viewpoint rather than the interests of the company. That is the nuisance that we are seeking to avoid, and the requirement for member authorisation is needed to achieve that. In our view, although we welcome the acknowledgement by the noble Lord of those issues, it would not be sufficient to require that the resolution of the board of directors states that it is the view of directors who are in favour of the resolution that the authorisation of donations or expenditure is made in accordance with their duties under Clause 156 to promote the success of the company. The directors should, of course, comply with their general duties to the company in everything that they do as directors, but it has long been accepted that where the possibility of a conflict of interest is particularly acute there should be a requirement for shareholder consent. The noble Lord referred to the trade unions. I make it clear that the exemption for trade unions was particularly requested by companies because of the issue around facilities for trade unions—meeting rooms and so on. It is also right that trade unions have to go to their members to be able to set up a political front.