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Companies Bill [Lords]

I was interested in the speech of the hon. Member for Huntingdon (Mr. Djanogly) because it is fairly typical of the Opposition’s approach throughout the Bill, which is to trot behind the Government, nagging and niggling, trying to turn themselves into the political arm of the Law Society—which is a powerful position—but not answering the crucial question, which is: do the Opposition feel so strongly that they will push any of the matters to a vote? That is what everybody has been waiting to hear and what the hon. Gentleman failed to tell us. We will not have such a clear answer from the Liberals, because they will be saying that they will vote for it and against it, in their usual way. As the only author of an amendment that is at all controversial in this group of amendments, amendment No. 682, I felt that I should reply to some of the aspersions that the hon. Gentleman cast on it to give some substance to his speech. This is an issue of shareholder democracy. There are three ways of managing and regulating corporations and bringing them under some degree of accountability so that they fulfil the corporate purposes that we would like. One is openness in reporting, which we have argued for in previous amendments. The second is effective regulation of the kind that the Securities and Exchange Commission offers in the United States, and which we should offer here, and for which I will continue, as will my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins), to push. The third is shareholder democracy. The main weakness of shareholder democracy, which we all want to encourage, is essentially that it is vetoed by the enormous power of the directors in casting proxy votes, because that puts the directors in a position of intolerable power. It is a steamroller driving over and crushing shareholder democracy. The enormous power of the proxy is used to suppress discontent; to force through higher rewards for the people at the top of the company—the increasing shower of money that is falling on them; and to prevent the shareholders asserting any power in the company, where, even when things are going wrong, it is very difficult for the shareholders to do anything about it. Why should we accept the fact that directors should have the power of the proxy, which they can mobilise, when it is difficult for shareholders to mobilise against them? Why not simply do as our amendment says, and that is proscribe the power of holding proxy votes that is held by the directors at present? Stop them using proxy votes. Give the shareholders a real voice; a real alternative. That is the purpose of the amendment.