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Company Law Reform Bill [Lords]

I beg to move, That the Bill be now read a Second time. In a world of change and competition, the Government work to create the conditions for business success, helping the United Kingdom to respond to the challenge of globalisation. We support successful firms by working with business to identify and tackle market failures and to overcome barriers to growth. We promote world-class science and innovation by supporting our science base and by ensuring that those ideas can be turned into high-value products and services. We also encourage a competitive energy market to deliver reliable, sustainable and affordable energy for business as well as for domestic consumers. We ensure fair markets by promoting open markets and creating the frameworks within which companies can compete freely and fairly, giving UK consumers more choice and better value. It follows that the corporate law framework is a fundamental aspect of all that and the strengths of our company law have helped make this country a prime location for incorporation by companies. Indeed, since 1997, new incorporations have risen by 60 per cent. and the number of EU firms incorporating in the United Kingdom has more than quadrupled in the same period. I note that a recent World Bank survey found that it was quicker and cheaper for companies to set up in the UK than in any other part of the EU. We want to continue investment in the UK and we want investors to retain their confidence in our system of corporate governance. We have been extremely successful in attracting our share of global business because overseas investors recognise those strengths, as well as our macro-economic stability, our science base, high skill levels, high rates of enterprise and our competitive markets. Our overall objective is to ensure that the country remains an excellent place to do business. As many hon. Members will know, the Bill is designed to consolidate and update company law. It is the result of a great deal of thinking done by the company law review in the late 1990s and early part of the present decade. It was followed by two White Papers in 2002 and 2005 and a great deal of consultation. The Bill has also benefited from close scrutiny in the other place, which has improved it in many respects. I pay tribute to my right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael). When he was a Minister in the Department of Trade and Industry, he made a substantial contribution to the legislation. It may help if I set out the general approach that we have taken. Over many years, existing company law was built up by layers of additions that often obscure its meaning. Any student of company law will know that it is often less clear than it should be. The Bill thus restructures and redrafts, in clearer language, about two thirds of the Companies Act 1985 and the Companies Act 1989, which had, in turn, consolidated the 1948 legislation, including all the provisions most frequently used by small companies. We said in the other place that we hope to restate without substantive change those parts of the Companies Act 1985 that have not until now been incorporated in the legislation during the passage of the Bill through this House. We do so simply because it has been put to us that it would be convenient for practitioners to have as much of our corporate law in one place as possible. I understand from discussions between the Minister for Industry and the Regions and the major Opposition parties that there is broad agreement with proceeding in that way. If we can—I do not think that it is a matter of any controversy—those who have to implement the law would appreciate it if what I hope will become the Company Law Reform Act before the end of the year codifies as much law as possible in one place.