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Companies Act 2006 (Commencement No. 3, Consequential Amendments, Transitional Provisions and Savings) Order 2007

I thank the Minister for introducing the order. I declare interests as a shareholder and a director of companies. While it is not controversial, the order is complicated, as the Minister said, and I have some concerns about the ability of lay people who run companies to interpret it without expensive legal advice. I suspect that the problem has been exacerbated by the Government’s decision to activate the Act in stages, some but not all of which is due to causes outside their control. The consequence is a very complicated order. With the benefit of hindsight, would the Minister ideally have done it like this? I ask this in the hope that he can use the experience from the No. 3 order to the benefit of everyone when bringing forward the No. 4 order. He might also let us know when that one is coming. It is perhaps unfortunate that the Minister, the noble Lord, Lord Jones of Birmingham, is not here today to speak to the order. I think I am right in saying that the position of the CBI when he was its director-general—particularly, for example, on Section 172, which deals with the duty of directors to promote the success of the company—was directly contrary to that of the Government. Many noble Lords would benefit from his explanation of how he has reconciled his personal position on this point. Although I do not object to the order, which in many ways is a good piece of work, it is worth dwelling on one or two other points it deals with, resulting from an enormous Act introduced by a Government who, I observe, claim to be in favour of deregulation. I am talking, for instance, of Section 261, relating to derivative claims—or class actions, as they are called in the United States. The Minister referred to that. Our principal concern was that this section might be used by malcontents to obtain publicity for their causes which did not genuinely have anything to do with a particular company. An example might be where a group of activists pursued a company’s directors under Section 172(1)(d) when the company was operating perfectly legitimately and in good faith in the Amazon basin, or some such place, on the basis that it was possible to imply that its actions somehow had an impact on the habitat of the aboriginals. During the progress of the Bill, the Government showed some worrying innocence about how sophisticated groups of campaigners used legislation like this, for instance, in the United States. It was only after sustained pressure from the Conservative and Liberal Democrat parties that the Government accepted the introduction of some safeguards into the Act. Nevertheless, it must be more than coincidence that the major US law firm Cohen, Milstein, Hausfeld and Toll, which specialises in class actions, has recently set up a London office, publicly stating that it is lining up huge British-based class-action lawsuits. It would be helpful to hear from the Minister what action the Government intend to take if there is a flood of derivative claims, which could threaten Britain’s attractiveness as a place to do business. I have a question relating to investigations under Section 1035. What information gateways exist to permit information gathered in the course of an investigator’s work to be passed on to other government departments and elsewhere? This section is not as clear as Section 948, which deals with the analogous point regarding investigations by the Takeover Panel, under which it became clear during the passage of the Bill that information might be—and, apparently, is—passed, for example, to takeover authorities in other EU countries where privacy standards are noticeably slacker than here. Our concerns focus on commercially sensitive information that companies legitimately conceal from their competitors, which from time to time comes into the possession of investigators. Is there a risk that such information might, for example, find its way into the hands of overseas authorities? My only other question is rather technical, for which I apologise. Am I right in thinking that, while Section 116(4), dealing with transitional arrangements relating to disclosures of the register of a company’s members, is activated under the order, Section 811(4), which deals with the almost exactly analogous provisions relating to disclosures of the register of interests, is not? I may be wrong; if so, I apologise. If not, should not the two sections have been synchronised, and is there a genuine reason for this difference? Having said all that, the Companies Act has detained your Lordships quite long enough already, and despite the fact that not all the concerns expressed from these Benches have been wholly satisfied, I do not propose to detain the Committee further today.