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

I am grateful to the two noble Lords for their questions, which I shall attempt to answer. I was interested by the opening remarks of the noble Lord, Lord De Mauley, about how lay people running companies will understand these provisions. The noble Lord, Lord Teverson, said that it was unfair that this was how they were going to be told what is happening. Companies are run by professional people who have professional advisers, whether they are lawyers or accountants. We had lengthy discussions on the Companies Bill and, with the other place, produced a major Act that was welcomed by the business community. I was asked about the target date for implementation. It is our intention to commence all parts of the Act by October 2008. Both noble Lords asked why the Act was introduced in stages rather than in one fell swoop. The commencement timetable seeks to strike a balance between early introductions of benefits for business, such as those on resolutions and meetings, and the need for companies, their legal advisers, auditors and accountants to familiarise themselves with its provisions and make proper preparation for full implementation. We also wish to ensure that we implement EU company law requirements falling due during the implementation period, while implementing the Act in a way which minimises the number of changes for business. I was asked when the department will lay the commencement orders for April 2008 and October 2008. We aim to make all secondary legislation, including commencement orders, or lay it in draft if parliamentary approval is required, by the end of this year. The noble Lord, Lord De Mauley, raised a number of interesting questions on derivative claims. Derivative claims are brought by a member or shareholders against a director on behalf of the company. If the action is successful, damages are paid to the company, not the individual member or members who brought the action. They are therefore not equivalent to an American class action. I was asked whether, if we put derivative action on a statutory footing, it would lead to more claims against directors. It is important that there is greater clarity about how a shareholder may bring a derivative action, but we do not believe that this will lead to a significant increase in the number of actions brought. Shareholders will still want to consider very carefully the case for bringing such actions. The noble Lord, Lord De Mauley, argued that derivative claims might be used by malcontents. This risk is anticipated by Sections 262 to 264 by requiring the permission of the court for a derivative action. Permission must be refused if a person acting in the interests of promoting the success of the company would not continue the claim. A very interesting point was raised on investigations, but the answer is long and complicated and we will have to write to noble Lords on that. We will also put a copy in the Library. I was asked why we have commenced only Sections 116 to 119 and not the rest of Part 8. We have been asked to implement as soon as possible the safeguards for companies’ members which these sections provide. In so far as the remainder of this part involves changes to the law, we consider that those affected should have more time to adapt their procedures. Why is Section 811(4) not being commenced yet? The rest of Section 811 was commenced in January this year; subsection (4), however, must await the commencement of other provisions relating to the inspection of information held by companies, which will be covered by the fourth commencement order we will table. I hope that I have answered all noble Lords’ questions. On Question, Motion agreed to.