---

Company Law Reform Bill [HL]

I follow the argument the Minister makes, but I still do not understand why the liability for an unauthorised donation by a subsidiary company does not lie with the directors of that subsidiary company. Every company has to have directors. Why should the director of a subsidiary company who makes an unauthorised donation not be liable to make good that donation to the company? Why is that individual any different from the director of a holding company? If the holding company makes an unauthorised donation, the directors are responsible for it; if the subsidiary company makes a donation, the directors of the subsidiary company are responsible for it. I do not see why that drives any coach, let alone the horses, through the purposes of the Bill. The subsidiary is just as responsible. It is a company, a legal entity in its own right with its own board of directors. Why should that board of directors not be responsible, as opposed to the holders of the holding company, who may be completely unaware of the donation; and, indeed, when it is unauthorised, are, by definition, likely to be unaware of it?