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Company Law Reform Bill [HL]

moved Amendment No. 301CC:"Page 152, line 8, at end insert—" ““and who were, in either case, directly responsible for the same (having caused or procured such donation, or having acquiesced in the same)”” The noble Lord said: The amendment takes us back to the point raised by the noble Lord, Lord Razzall, but in a slightly different way. I will endeavour not to go over the ground he has just covered. Our concern is that the Bill would confer liability for any unauthorised political donation or expenditure on any director of the company that made the donation, and, where that company is the subsidiary of another company, any director of the relevant holding company. This liability is strict and has no reference to the level of involvement or responsibility of the unauthorised action—a point just made by the noble Lord, Lord Razzall. We sense that there is a good argument to say that the provision is too harsh. A director may find that he is liable for the unauthorised actions of another director, about which he has no knowledge, nor could reasonably be expected to have knowledge. The argument obviously gets even stronger, as the noble Lord, Lord Razzall, pointed out, when talking about directors of a holding company, who are not involved in the day-to-day running of the holding company, let alone the subsidiaries that might have made the unauthorised donation or expenditure. So the amendment seeks to limit the liability of all directors of holding companies, or otherwise, to those who are actually responsible for the unauthorised donation or expenditure. I point out that it also covers directors who acquiesce in such an unauthorised act, rather than simply those who caused the act. So it would cover directors who were aware of the act and who did nothing to prevent it. I agree with the view expressed by the noble Lord, Lord Razzall, and would only underline it by saying that such open-ended commitments are not how we will get high-quality men and women to serve on the boards of British companies. They will say, ““Who needs all this potential hassle and potential exposure, about which I know nothing?””. I beg to move.