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Company Law Reform Bill [Lords]

We are already holding discussions with sections of the industry, and there will be discussions in the House with a view to trying to address people’s understandable desire that the franchise should be widened, without imposing an unjustified burden on companies by causing them to go to huge expense for no obvious purpose. In keeping with what I said earlier, it is important that we get a system that is workable. Part 10 of the Bill will tighten up the law on child directors. Many people will find it strange that in this country a director need not be a person, so long as it is a legal person, and that anyone of any age can sit on a board. It may be novel to stick a toddler on a company’s board of directors, but that can be done at present. We propose to change the law so that a director must be over 16. There will be regulations to provide for exemptions—for example, a charitable company might want a young person as a director—but I think that the change to the law is welcomed. We are also simplifying the decision-making process and making changes on accounts and auditing, especially regarding auditors’ liability, which people think are sensible. There will be a new offence for those who knowingly or recklessly cause misleading, false or deceptive material to be included in audit reports. There are measures in the Bill on the raising of share capital and takeovers. There are also provisions that preserve the independence of the takeover panel, which has worked well in this country. On the regulatory framework, there are provisions to provide for the greater use of electronic communications. Part 36 of the Bill includes changes that will make procedures a bit more transparent. A measure on institutional shareholders’ voting was discussed in the other place. I think that I am right in saying that both Conservative and Liberal Members of the other place voted to remove a provision that would have allowed the Government to make it compulsory for institutional investors to reveal how they voted. I am not sure why they did that, but the Government believe that transparency is important. I can think of no reason why companies’ institutional investors should withhold such information. The provision would have allowed us to introduce measures to make such transparency mandatory—albeit at some point in the future, because we would like to encourage a voluntary approach. As the Bill stands, institutional investors who do not wish to disclose what they do could remain in such a position for ever, but that would not be in keeping with the modern view that companies should be as open as possible. Although there is no Member representing a Northern Ireland constituency in the Chamber at present, I should say that the Bill does extend company law to the whole of the United Kingdom, which I think will be welcomed by Northern Ireland businesses. Until now they have always had to wait to get what the rest of the United Kingdom has been getting. This is an important Bill. It may be lengthy, but if we pass it I believe that it will add to the value that people see in investing in this country. The Bill is deregulatory; it aims to simplify. It also aims, crucially, to give investors a greater say and greater access to what companies are doing. As I have said, the changes that we are making in relation to directors’ duties are, I believe, a major step forward and should be accepted. I hope that we shall be able to continue to discuss the Bill in a largely consensual way. It will make a difference not only to corporate Britain, but to Britain’s well-being overall. I commend it to the House.