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Companies (Political Expenditure Exemption) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Companies (Political Expenditure Exemption) Order 2007. The noble Lord said: As part of the implementation of the Companies Act 2006 the Government have laid the draft Companies (Political Expenditure Exemption) Order to replace the existing order, SI 2001/445. This order is drafted in simpler language to correspond with the simpler format and drafting of the 2006 Act. It is being made under Section 377 of the Companies Act 2006, and its content was debated in a previous form in this House in 2001 in a very short debate. I am hoping that we will be able to follow the same form today. I make it absolutely clear that this is not an order relating to party funding or party governance. It relates to corporate governance and how companies manage their affairs between the shareholders and the directors. Under Section 366 of the Companies Act 2006, companies must seek prior authorisation from their shareholders for political expenditure. This draft order exempts companies such as newspapers and other companies whose ordinary business includes the preparation, publication or dissemination of news material from having to seek authorisation. The only substantive change from the existing order is to extend the exemption to independent election candidates. Political expenditure under the 2006 Act is defined as any expenditure incurred on any publicity material or activities that may be intended to affect public support. This now includes public support for independent election candidates as well as political parties and political organisations. The exemption applies only to political expenditure. Companies that fall under this exemption will remain subject to the full requirements of the Act in respect of political donations. The Companies Act 2006 has simplified and modernised company law. It has substantially rewritten company law to make it easier to understand and more flexible, especially for small businesses. This exemption order supports the objective of the Act, which is to pursue the principles of better regulation. It would be impractical to expect companies involved in journalism and news to pass resolutions to publish editorials or comment of a political nature. This draft order maintains a framework of company law that is proportionate and does not impose unnecessary burdens on business. As was also highlighted several times in the debates held on the existing order in 2001, the draft order supports the important principle of press freedom enjoyed in British public life. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Companies (Political Expenditure Exemption) Order 2007. 20th report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)