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Company Law Reform Bill [HL]

My Lords, with all respect, where one is talking about performance indicators, it will become clear. That is partly what the business review is about: what is due to external circumstances, and what is due to key performance indicators showing how the business is run. On the point of the noble Baroness, Lady Noakes, subsection (2) of new Clause 395 is quite clear. The purpose of the business review is to inform members of a company and to help them assess how the directors have performed their duty under Clause 156, providing information showing how well they have done. As regards SMEs, the criteria are that an SME must not have turnover of more than £5.6 million, a balance sheet of not more than £2.8 million and not more than 50 employees. I am not certain that I can cross-reference that exactly to the number of companies in each category, but it is important that we simply exclude those companies. The noble Lord, Lord Phillips of Sudbury, raised a question about ““understanding””. It is a rather limp phrase, coming straight from Article 46 of the fourth directive, as amended. We do not need to gold-plate that, or go into great detail. It gives the answer we need. We have dealt with the cross-referencing. A lot of work has been done on reporting standards. In fact, we found that it did not greatly add to what was already set out and, to the extent that it did, it simply seemed to be adding on responsibilities rather than clarifying the situation. We want to avoid that. I hope that has dealt with the main issues that noble Lords have with this clause.