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Company Law Reform Bill [HL]

Clause 838 defines the meaning of the term ““third country auditors””. A requirement of the eighth company law directive on audit is the registration and oversight of auditors who carry out statutory audit on companies incorporated in a third country that are listed on a UK-regulated market. This would, for example, include the US auditor of a company incorporated in New York with a listing on the London Stock Exchange. The directive, however, permits an exemption for auditors of companies that issue only debt securities in the UK in excess of certain monetary limits. This enables us to exclude companies such as those that issue Eurobonds so that they would not be discouraged from continuing to trade in UK markets. The inclusion of Clause 838(2)(c) allows the Secretary of State to exempt these types of entities from the requirements of the Bill. It is right that this flexibility should be available. We have done this to ensure that we fully meet but do not exceed the requirements of the eighth company law directive on auditing. In doing so, we aim to minimise the burdens on companies trading on UK-regulated markets. The proposed amendment would remove the possibility of providing any such exemption. I hope that has given some explanation.