Select Committee on Regulatory Reform Fourteenth Report


The Regulatory Reform Committee has agreed to the following Report:






Report under Standing Order No. 141

  1. The Regulatory Reform Committee has examined the Draft Regulatory Reform (Removal of the 20 Member Limit) Order 2002 in accordance with Standing Order 141. We recommend unanimously that the draft order be approved.
  2. Introduction

  3. On 24 October 2002, the Secretary of State for Trade and Industry (the responsible Minister) laid the draft order before Parliament, together with an explanatory statement from the Department of Trade and Industry (the Department). We have already reported on the proposal for this order, which would amend the Companies Act 1985 and the Limited Partnerships Act 1907 to remove the prohibition on the formation of partnerships, limited partnerships, unregistered companies and associations with more than 20 members. This would effectively enable those bodies to have an unlimited number of members.
  4. The House has instructed us to examine the draft order against such of the criteria specified in Standing Order No. 141(6) as are relevant. We are also required to consider the extent to which the responsible Minister has had regard to any resolution or report of the Committee or to any other representations made during the period for parliamentary consideration. Our discussion of matters arising from our examination is set out below.
  5. Findings of our previous report

  6. We were satisfied that the proposal met the criteria against which we are required to judge it, and we recommended that a draft order in the same terms as the proposal be laid before the House.
  7. However, we considered that the House should note the Government's commitment to introduce changes to disability discrimination law in October 2004. Our concern arose from a response made to the Department's consultation paper by The Honourable Mr Justice Lindsay, President of the Employment Appeals Tribunal. Mr Justice Lindsay raised concerns about the proposal in terms of its potential effect on the application of the Disability Discrimination Act 1995 (the 1995 Act). Mr Justice Lindsay raised the possibility that, if the 20 member limit is removed, an organisation may choose to designate some or all of its employees as "partners", which could enable it to avoid the 15 employee threshold that triggers the application of the 1995 Act.
  8. In responding to Mr Justice Lindsay's concerns, the Department stated that the Government:
  9. ... intends to bring partnerships into coverage when legislative time allows and [intends to ensure] that partners in partnerships of any size, as well as prospective partners are protected from disability discrimination.[1]

    When we asked the Department for further detail about this statement, it explained that the Government intends to bring forward the relevant legislation in October 2004.

  10. Although it is not within the scope of the present draft order to address issues of discrimination law, we considered that it was possible that the removal of the 20 member limit would result in a more urgent need to introduce the changes to disability discrimination law to which the Government has already made a commitment. It is for this reason that we considered that the House should note the Government's commitment to introduce changes to disability discrimination law in October 2004 .


1   Explanatory memorandum, p B-11. Back

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Prepared 8 November 2002