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Companies Bill [Lords]

Amendment No. 671A refers to a clause put into the Bill by the Government in this House, which was then—confusingly—opposed by the Government in the other place, with the agreement of the Opposition. The right thing has been done in the end. In brief, its purpose was to provide the Secretary of State with new powers to amend the rules on distributions under delegated legislation subject to the affirmative procedure. As Lord Sainsbury said in the other place, there has been much criticism of the rule on distribution following the introduction of the international financial reporting standards and changes need to be made, we believe that delegated legislation is not the appropriate way to amend the rules. I join the Minister in commending the Delegated Powers and Regulatory Reform Committee on its speedy work in this area. The Committee indicated strong concern that amendment No. 671, as was, would provide the Secretary of State with extraordinarily wide Henry VIII powers, permitting the Government to amend general principles and detailed issues alike. The subject of distributions has not been properly debated in either House and we agree with the Committee’s recommendations in that instance. The Committee also highlighted two other aspects—share capital maintenance and company purchases of own shares—on which it had the same concerns, but in those instances we felt, with the Government, that the subject matter was narrow and the subject clear enough to allow for powers to be given. However, we believe that the complex area of distributions must be revisited by Parliament and I was happy to hear the Minister agree. Primary legislation is needed and we welcome Lord Sainsbury’s and the Minister’s statements to that effect, although we note that no timetable has been given, so if the Minister could give some indication about that—if only for the start of the consultations that will be needed before legislation can be introduced—it would be of help. On the basis of what we have heard this evening and the situation we have reached, we shall not be asking for a Division on the amendment.