---

Company Law Reform Bill [HL]

: I am grateful to the noble Baroness, Lady Noakes, for initiating this debate on the operating and financial review clauses. I am sorry that she thought that my remarks lacked warmth. We are neither warm nor cold about this; we want to consider the argument because, as she and the noble Lord, Lord Sharman, well know, it raises very serious implications. We need to work those out before we start to be warm or cold on the issue. The noble Baroness also said that the consultation was a farce, but then said that we should say what our views are before the consultation starts. I would consider that to be a very good description of a farcical consultation. We are genuinely consulting. We want to consider both the question of the social objectives that we want to achieve and, at the same time, the question of costs. I reiterate that the Government are committed to improving strategic, forward-looking narrative reporting by companies and to enhanced dialogue with shareholders based on such reporting. We recognise that the matter of narrative business reporting requirements, following the repeal of the OFR, is important to companies, their shareholders, investors and wider stakeholders. As I have explained, we are currently consulting on the whole range of options for narrative reporting, and we will take a decision on whether to make changes to the requirements in the Bill in the light of that consultation. We hope to bring forward amendments as appropriate in time for Report. Noble Lords will be aware that the repeal of the OFR regulations has been prayed against in the other place. We will, of course, note carefully the views expressed in the debate, which is scheduled to take place on 16 March, and take those very much into account in our consideration of what provision to make in the Bill. The noble Baroness raised the question of uncertainty for business on this very key issue. The question is—where does this leave companies for the current financial reporting period? The current legal requirement is for quoted companies to prepare a business review, and the DTI has produced guidance on the requirements of the business review. If companies are producing an OFR in line with the previous statutory requirements, our clear view is that this will comply with the statutory reporting requirements for the business review, as long as there is appropriate cross-referencing. We have made it explicit in our guidance that companies can cross-reference other documents in their business review. I should make clear that whatever the decision on future narrative reporting requirements, companies affected will only have to change their reporting on financial years starting after the changes are made. That will ensure that companies have certainty about their current reporting requirements and adequate time to prepare for those changes. We will certainly pay close regard to the remarks made today by the noble Baroness, Lady Noakes, in debating both the clauses and her proposed amendments on the issue of safe harbours. I hope, therefore, that she will agree that Clauses 393, 394, 395, 442 and 484 should still stand part of the Bill. Clause 393 agreed to. Clauses 394 and 395 agreed to. Clause 396 [Duty to prepare directors’ remuneration report]: