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Mr. Stephen O'Brien (Eddisbury): I apologise to the House for arriving slightly late. For the first time, I discovered the perils of having an office at 7 Millbank--when I read the annunciator screen and had to run to the Chamber.

I declare an interest as recorded in the Register of Members' Interests. Since last month, I have been parliamentary adviser to the Institute of Chartered Secretaries and Administrators--I have been a member of the institute since 1988 and a fellow since 1997. Before I became a Member, among various roles in management and manufacturing industry, I was assistant company secretary from 1988, and group company secretary from 1991 to 1998, of Redland plc, then a multinational UK FTSE 100 building materials company. Furthermore, between 1983 and 1988, I practised as a solicitor in a City of London firm. Although I remain on the roll of solicitors, I have no declarable interest, as I am non-practising. That qualification enabled me to hold the post of company secretary of a public limited company under the Companies Acts.

I welcome the Bill and congratulate my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) on a positive and supportive speech and on his identification of issues that remain to be addressed by the Government. That will ensure that the House improves the Bill so that it is of the quality that our professional and business community has a right to expect from us.

I pay tribute to the calibre of debate on the Bill in another place. I studied the proceedings in detail in Hansard. Their lordships dealt responsibly and forensically with a range of issues. I am happy to offer my support from the Opposition Benches. As has been mentioned, the previous Conservative Government proposed such a measure.

From my business experience in this country and abroad, I see the Bill as an important step in acknowledging the reality of the professional and commercial world--in the context of today's multinational companies and partnerships. The Bill is necessary not only to retain competitiveness, but to maintain and increase confidence in the corporate and legal structures for professional and commercial enterprises in the UK--whether large, medium or small--so that they can continue to take on all comers.

In response to the hon. Member for Great Grimsby (Mr. Mitchell), plc status is not the answer. Llp status best enables the retention and enhancement of the special culture of partnerships which is not a hallmark of plcs. It is important to understand the essential business ingredient that such a culture represents.

Mr. Mitchell: In that case, there will be a rush to give us maximum disclosure--as would be appropriate for a plc. If llps want to retain a special culture, the Government are allowing them to do so. There would thus be no objection to further disclosure on, for example, remuneration or internal company accounts--all the information that plcs have to provide.

Mr. O'Brien: I know that the hon. Gentleman has a long track record in favour of that argument. However, it is based on the false premise that disclosure goes hand in hand with the genuine interest of those who need the

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information. The whole point about partnerships and about llps is that they are a collection of members--they will hold that information among themselves. A plc has many shareholders who have a right to the information. The analogy is not a proper one.

Mr. Burnett: Does the hon. Gentleman agree that it is in the interests of the public, creditors and clients that, when they deal with a firm with limited liability--because there will be some limited liability--full disclosure should be made?

Mr. O'Brien: Of course. The hon. Gentleman makes a valid point. However, that matter is covered by general rules, regulations and laws that will apply as well as the specific provisions of the Bill.

I shall focus my remarks on one aspect of the Bill, for the very good reason that all the other points have been fully covered in our debate and in the debate in another place, and I do not want to take up the time of the House by rehearsing those arguments. First, however, I offer a mild, general warning. As has been said, the drive for the Bill came mainly from firms or partnerships of accountants, solicitors and other professional services firms--especially larger, often international, firms. This country can rightly boast of our track record of global, competitive success in those fields. However, in our increasingly litigious and insurance-focused society, the pressures and inappropriateness of partners being responsible--down to the shirt on their backs--for liabilities, acts and omissions of other parties are neither competitive nor sensible. It is increasingly unrealistic and unreasonable for partners to have sufficient knowledge to be held personally responsible. I understand that and thus support the Bill.

However, I draw the House's attention to experience in the United States, where llps have existed for some time. The equivalent corporate structures apply under Californian legislation, as well as under Texas and Delaware law--a point not lost on the hon. Member for Great Grimsby. In large part, they are similar to the structure promulgated under the Bill.

I have personal knowledge and experience of how rapidly the llp structure came to be widely used for joint ventures such as those between manufacturing companies. There were many advantages, especially when non-US international companies came together in a joint enterprise for no premium. The structure offered relatively favourable tax advantages, as compared with the traditional company.

The Government should take advice on the matter from their specialist advisers, to ensure that the Bill has been reviewed in the light of the American experience. There must be no unexpected consequences flowing from the Bill if the llp structure is applied beyond the professional partnerships that the Government appear to have had in mind throughout their approach to its drafting and introduction.

I shall restrict my remaining remarks to matters of which I have experience and know a little about. Clause 8

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deals with designated members. On Second Reading in another place, my noble Friend Baroness Buscombe questioned

the provisions for service as a designated member of the partnership given, we believe, that the provisions, as drafted, could be open to abuse; for example, as we understand it, an llp could assume as partners one or more offshore companies and register them as designated members, thus making it difficult for the regulatory authorities to ensure compliance or impose penalties.

I do not agree with my noble Friend's suggestion that

the concept of designated members be removed from the Bill, making all the partners equally responsible for the llp's conduct, including compliance with the registers.--[Official Report, House of Lords, 9 December 1999; Vol. 607, c. 1424.]

Lord McIntosh of Haringey replied that

the noble Baroness was afraid of the role of the designated member. That is very specific and similar to the role of the company secretary. It includes a number of the powers placed on the company secretary under the 1985 Act such as the signing and filing of the annual return . . . It is desirable to keep the concept of a designated member for those purposes so that the authorities know who to approach.--[Official Report, House of Lords, 9 December 199; Vol. 607, c. 1443.]

He added that it was equivalent to the provisions in the Companies Act 1985.

I understand my noble Friend's concern. I agree with Lord McIntosh's response in terms of the desirability of keeping the requirement, but the matter was developed in Committee in another place, when my noble Friend Baroness Buscombe tabled an amendment to clarify the role of the designated member. She said that the Bill did not appear to explain what a designated member was. Lord McIntosh answered that he understood the difficulty with clause 8:

It sets up all the conditions under which designated members are to be appointed and changed and how notification is to be given, but it does not state what they will do. I apologise for that . . . but it would be wrong to limit his role in that way.--[Official Report, House of Lords, 24 January 1999; Vol. 608, c. 1387-88.]

I believe that that problem has not been overcome. The House must ensure that all the terms of good corporate governance that have been learned and applied over the past 15 years are imported into the Bill. One solution, given the broad scale of business most likely to take advantage of llp status, would be to look at the role of secretary for limited companies, as defined under the Companies Acts, and to consider whether those provisions could be imported helpfully and efficiently into the Bill.

The role of the company secretary is under consideration as part of the Department of Trade and Industry's company law review, and is a matter for consultation. I acknowledge that parallel thinking is going on about the matter.

I suggest that a designated secretary need not be a member of an llp, just as the Cadbury reforms of corporate governance mean that a company secretary need not be a director of a company. That designated secretary could be appointed--and removed--by all the members.

I hope that the Minister will consider providing that every llp and its members should have recourse to the advice and support of a named, UK-resident llp secretary. That might meet the concerns expressed by Baroness Buscombe in another place. That llp secretary should be suitably qualified to assist members in safeguarding the llp's rights, advancing its interests and meeting its obligations. The secretary should be able to provide the

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necessary advice and guidance to members about their obligations and responsibilities under relevant laws and regulations.

The company secretary is often said to act as the conscience of a limited liability company. Under current company law, company secretaries do not have to be chartered secretaries or members of the Institute of Chartered Secretaries and Administrators. The secretary of a small company can be any person. The secretary of a plc can be a qualified lawyer or accountant, as well as a chartered secretary, so I am not making an exclusive or special plea for chartered secretaries--and in any case the rules of the House would prevent me from doing so, given the interests that I listed at the beginning of my remarks.

I hope that the Government will consider the proposal that an llp must have a secretary. That would help meet the concerns expressed by the hon. Member for Great Grimsby. More important, it would enable the members of the llp to give proper regard to the interests of the company as a whole. They would be able to monitor the internal activities of the llp, safeguard the interests of all members and ensure that the interests of employees, creditors and other stakeholders were properly taken into account.

Llp members, in addition, could be confident that the members were being properly informed, advised and supported, individually and collectively. They would be able to help avoid some of the potential for factionalism that can develop in such firms, and be satisfied that there was someone available to take responsibility for internal disclosure in the llp.

The proposal could also ensure that the llp's decisions were properly made, recorded and implemented throughout the organisation, and that the decisions of the llp executive were properly interpreted and disseminated. Above all, it would ensure proper compliance with all statutory requirements.

I have listed my caveat, request and recommendation with regard to the Bill, but I am very happy to support what is a very welcome measure.

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