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Company Law Reform Bill [HL]

The Bill introduces important changes to the rules on ratification and liability in cases of unauthorised donations or expenditure. In particular, Part 14 does not repeat the prohibition on ratification in Section 347C(5) of the 1985 Act; directors liable under these provisions will not be precluded from seeking relief from the court under what is currently Section 727 of the 1985 Act and Clause 759 of this Bill as they are at the moment under Section 347F(8) of the 1985 Act. In view of these changes, we believe that these amendments are unnecessary. It is our intention—and we believe the effect of these clauses—that members will be able to ratify an unauthorised donation or political expenditure and that, in such cases, the directors will not continue to have any liability for the failure to obtain authorisation. Similarly, Part 14 will not prevent a director applying for relief under Clause 759 from the court.