Companies (Audit, Investigations and Community Enterprise) Bill [HL]

House of Commons

Session 2002 - 03
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Companies (Audit, Investigations and Community Enterprise) Bill [HL]

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts and investigations
Chapter 2 — Accounts and reports
22

(7)
Omit section 256(3) of the Companies Act 1985 (c. 6) (grants to bodies
concerned with issuing accounting standards etc.), which is superseded by this
section.
17
Levy to pay expenses of bodies concerned with accounting standards etc.
(1)
For the purpose of meeting any part of the expenses of a grant-aided body, the
5
Secretary of State may by regulations provide for a levy to be payable to that
body (“the specified recipient”) by bodies or persons which are specified, or are
of a description specified, in the regulations.
(2)
For the purposes of this section—
(a)
“grant-aided body” means a body to whom the Secretary of State has
10
paid, or is proposing to pay, grant under section 16; and
(b)
any expenses of any body carrying on subsidiary activities of the grant-
aided body (within the meaning of that section) are to be regarded as
expenses of the grant-aided body.
(3)
The power to specify (or to specify descriptions of) bodies or persons must be
15
exercised in such a way that the levy is only payable by—
(a)
bodies corporate to which the Secretary of State considers that any of
the activities of the specified recipient, or any of its subsidiary activities,
are relevant to a significant extent, or
(b)
bodies or persons who the Secretary of State considers have a major
20
interest in any of those activities being carried on.
(4)
Regulations under this section may in particular—
(a)
specify the rate of the levy and the period in respect of which it is
payable at that rate;
(b)
make provision as to the times when, and the manner in which,
25
payments are to be made in respect of the levy.
(5)
In determining the rate of the levy payable in respect of a particular period, the
Secretary of State—
(a)
must take into account the amount of any grant which is to be or has
been made to the specified recipient in respect of that period under
30
section 16;
(b)
may take into account estimated as well as actual expenses of that body
in respect of that period.
(6)
Any amount of levy payable by any body or person is a debt due from the body
or person to the specified recipient, and is recoverable accordingly.
35
(7)
The specified recipient must—
(a)
keep proper accounts in respect of amounts of levy received, and
(b)
prepare in relation to each levy period a statement of account relating
to such amounts in such form and manner as is specified in the
regulations.
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(8)
Those accounts must be audited, and the statement certified, by persons
appointed by the Secretary of State.
(9)
The power to make regulations under this section is exercisable by statutory
instrument.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts and investigations
Chapter 3 — Investigations
23

(10)
Regulations to which this subsection applies may not be made unless a draft of
the regulations has been laid before, and approved by a resolution of, each
House of Parliament.
(11)
Subsection (10) applies to—
(a)
the first regulations under this section, and
5
(b)
any other regulations under this section that would result in any
change in the bodies or persons by whom the levy is payable.
(12)
Otherwise, any statutory instrument containing regulations under this section
is subject to annulment in pursuance of a resolution of either House of
Parliament.
10
18
Exemption from liability
(1)
Where a grant has been paid by the Secretary of State to a body under section
16, this section prevents any liability in damages arising in respect of certain
acts or omissions occurring during the period of 12 months beginning with the
date on which the grant was paid.
15
(2)
In this section—

“the exemption period” means the period of 12 months mentioned in
subsection (1);

“a relevant body” means the body mentioned in that subsection or a body
carrying on any subsidiary activities of that body (within the meaning
20
of section 16);

“section 16(2) activities” means activities concerned with any of the
matters set out in section 16(2).
(3)
Neither a relevant body, nor any person who is (or is acting as) a member,
officer or member of staff of a relevant body, is to be liable in damages for
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anything done, or omitted to be done, during the exemption period for the
purposes of or in connection with—
(a)
the carrying on of any section 16(2) activities of the body, or
(b)
the purported carrying on of any such activities.
(4)
Subsection (3) does not apply—
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(a)
if the act or omission is shown to have been in bad faith; or
(b)
so as to prevent an award of damages in respect of the act or omission
on the grounds that it was unlawful as a result of section 6(1) of the
Human Rights Act 1998 (c. 42) (acts of public authorities incompatible
with Convention rights).
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Chapter 3
Investigations
19
Power to require documents and information
For section 447 of the Companies Act 1985 (c. 6) substitute—
“447  Power to require documents and information
40
(1)
The Secretary of State may act under subsections (2) and (3) in relation
to a company.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts and investigations
Chapter 3 — Investigations
24

(2)
The Secretary of State may give directions to the company requiring
it—
(a)
to produce such documents (or documents of such description)
as may be specified in the directions;
(b)
to provide such information (or information of such
5
description) as may be so specified.
(3)
The Secretary of State may authorise a person (an investigator) to
require the company or any other person—
(a)
to produce such documents (or documents of such description)
as the investigator may specify;
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(b)
to provide such information (or information of such
description) as the investigator may specify.
(4)
A person on whom a requirement under subsection (3) is imposed may
require the investigator to produce evidence of his authority.
(5)
A requirement under subsection (2) or (3) must be complied with at
15
such time and place as may be specified in the directions or by the
investigator (as the case may be).
(6)
The production of a document in pursuance of this section does not
affect any lien which a person has on the document.
(7)
The Secretary of State or the investigator (as the case may be) may take
20
copies of or extracts from a document produced in pursuance of this
section.
(8)
A “document” includes information recorded in any form.
(9)
In relation to information recorded otherwise than in legible form, the
power to require production of it includes power to require the
25
production of a copy of it in legible form or in a form from which it can
readily be produced in visible and legible form.”
20
Protection in relation to certain disclosures
After section 448 of the Companies Act 1985 (c. 6) insert—
“448A
Protection in relation to certain disclosures: information provided to
30
Secretary of State
(1)
A person who makes a relevant disclosure is not liable by reason only
of that disclosure in any proceedings relating to a breach of an
obligation of confidence.
(2)
A relevant disclosure is a disclosure which satisfies each of the
35
following conditions—
(a)
it is made to the Secretary of State otherwise than in compliance
with a requirement under this Part;
(b)
it is of a kind that the person making the disclosure could be
required to make in pursuance of this Part;
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(c)
the person who makes the disclosure does so in good faith and
in the reasonable belief that the disclosure is capable of assisting
the Secretary of State for the purposes of the exercise of his
functions under this Part;

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts and investigations
Chapter 3 — Investigations
25

(d)
the information disclosed is not more than is reasonably
necessary for the purpose of assisting the Secretary of State for
the purposes of the exercise of those functions;
(e)
the disclosure is not one falling within subsection (3) or (4).
(3)
A disclosure falls within this subsection if the disclosure is prohibited
5
by virtue of any enactment.
(4)
A disclosure falls within this subsection if—
(a)
it is made by a person carrying on the business of banking or by
a lawyer, and
(b)
it involves the disclosure of information in respect of which he
10
owes an obligation of confidence in that capacity.
(5)
An enactment includes an enactment—
(a)
comprised in, or in an instrument made under, an Act of the
Scottish Parliament;
(b)
comprised in subordinate legislation (within the meaning of the
15
Interpretation Act 1978);
(c)
whenever passed or made.”
21
Power to enter and remain on premises
After section 453 of the Companies Act 1985 (c. 6) insert—
“453A  Power to enter and remain on premises
20
(1)
An inspector or investigator may act under subsection (2) in relation to
a company if—
(a)
he is authorised to do so by the Secretary of State, and
(b)
he thinks that to do so will materially assist him in the exercise
of his functions under this Part in relation to the company.
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(2)
An inspector or investigator may at all reasonable times—
(a)
require entry to relevant premises, and
(b)
remain there for such period as he thinks necessary for the
purpose mentioned in subsection (1)(b).
(3)
Relevant premises are premises which the inspector or investigator
30
believes are used (wholly or partly) for the purposes of the company’s
business.
(4)
In exercising his powers under subsection (2), an inspector or
investigator may be accompanied by such other persons as he thinks
appropriate.
35
(5)
A person who intentionally obstructs a person lawfully acting under
subsection (2) or (4)—
(a)
is guilty of an offence, and
(b)
is liable on conviction to a fine.
(6)
Sections 732 (restriction on prosecutions), 733 (liability of individuals
40
for corporate default) and 734 (criminal proceedings against
unincorporated bodies) apply to the offence under subsection (5).
(7)
An inspector is a person appointed under section 431, 432 or 442.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts and investigations
Chapter 3 — Investigations
26

(8)
An investigator is a person authorised for the purposes of section 447.
453B
  Power to enter and remain on premises: procedural
(1)
This section applies for the purposes of section 453A.
(2)
The requirements of subsection (3) must be complied with at the time
an inspector or investigator seeks to enter relevant premises under
5
section 453A(2)(a).
(3)
The requirements are—
(a)
the inspector or investigator must produce evidence of his
identity and evidence of his appointment or authorisation (as
the case may be);
10
(b)
any person accompanying the inspector or investigator must
produce evidence of his identity.
(4)
The inspector or investigator must, as soon as practicable after
obtaining entry, give to an appropriate recipient a written statement
containing such information as to—
15
(a)
the powers of the investigator or inspector (as the case may be)
under section 453A;
(b)
the rights and obligations of the company, occupier and the
persons present on the premises,

as may be prescribed by regulations.
20
(5)
If during the time the inspector or investigator is on the premises there
is no person present who appears to him to be an appropriate recipient
for the purposes of subsection (8), the inspector or investigator must as
soon as reasonably practicable send to the company—
(a)
a notice of the fact and time that the visit took place, and
25
(b)
the statement mentioned in subsection (4).
(6)
As soon as reasonably practicable after exercising his powers under
section 453A(2), the inspector or investigator must prepare a written
record of the visit and—
(a)
if requested to do so by the company he must give it a copy of
30
the record;
(b)
in a case where the company is not the sole occupier of the
premises, if requested to do so by an occupier he must give the
occupier a copy of the record.
(7)
The written record must contain such information as may be prescribed
35
by regulations.
(8)
If the inspector or investigator thinks that the company is the sole
occupier of the premises an appropriate recipient is a person who is
present on the premises and who appears to the inspector or
investigator to be—
40
(a)
an officer of the company, or
(b)
a person otherwise engaged in the business of the company if
the inspector or investigator thinks that no officer of the
company is present on the premises.
(9)
If the inspector or investigator thinks that the company is not the
45
occupier or sole occupier of the premises an appropriate recipient is—

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts and investigations
Chapter 4 — Supplementary
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(a)
a person who is an appropriate recipient for the purposes of
subsection (8), and (if different)
(b)
a person who is present on the premises and who appears to the
inspector or investigator to be an occupier of the premises or
otherwise in charge of them.
5
(10)
A statutory instrument containing regulations made under this section
is subject to annulment in pursuance of a resolution of either House of
Parliament.”
22
Failure to comply with certain requirements
After section 453B of the Companies Act 1985 (c. 6) (inserted by section 21)
10
insert—
“453C  Failure to comply with certain requirements
(1)
This section applies if a person fails to comply with a requirement
imposed by an inspector, the Secretary of State or an investigator in
pursuance of either of the following provisions—
15
(a)
section 447;
(b)
section 453A.
(2)
The inspector, Secretary of State or investigator (as the case may be)
may certify the fact in writing to the court.
(3)
If, after hearing—
20
(a)
any witnesses who may be produced against or on behalf of the
alleged offender;
(b)
any statement which may be offered in defence,

the court is satisfied that the offender failed without reasonable excuse
to comply with the requirement, it may deal with him as if he had been
25
guilty of contempt of the court.”
Chapter 4
Supplementary
23
Minor and consequential amendments
(1)
Schedule 2 (minor and consequential amendments relating to Part 1) has effect.
30
(2)
That Schedule has effect subject to the modifications set out in subsection (3)—
(a)
in relation to England and Wales, in the case of an offence committed
before section 154(1) of the Criminal Justice Act 2003 (c. 44) comes into
force, and
(b)
in relation to Scotland.
35
(3)
The modifications are—
(a)
the amendment in paragraph 10(2) has effect as if for “12 months” there
were substituted “6 months”;
(b)
the amendment in paragraph 10(3) has effect as if for “12 months”, in
both places where it occurs, there were substituted “3 months”;
40
(c)
the amendment in paragraph 10(4) has effect as if for “12 months” there
were substituted “6 months”;

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
28

(d)
the amendment in paragraph 26(2) has effect as if for “12 months” there
were substituted “6 months”; and
(e)
the amendment in paragraph 26(3) has effect as if for “12 months” there
were substituted “6 months”.
Part 2
5
Community interest companies
Introductory
24
Community interest companies
(1)
There is to be a new type of company to be known as the community interest
company.
10
(2)
In accordance with this Part—
(a)
a company limited by shares or a company limited by guarantee and
not having a share capital may be formed as or become a community
interest company, and
(b)
a company limited by guarantee and having a share capital may
15
become a community interest company.
(3)
A community interest company established for charitable purposes is to be
treated as not being so established, and accordingly—
(a)
is not a charity, and
(b)
must not be given such intimation as is mentioned in section 1(7) of the
20
Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40)
(Scottish charities).
25
Regulator
(1)
There is to be an officer known as the Regulator of Community Interest
Companies (referred to in this Part as “the Regulator”).
25
(2)
The Secretary of State must appoint a person to be the Regulator.
(3)
The Regulator has such functions relating to community interest companies as
are conferred or imposed by or by virtue of this Act or any other enactment.
(4)
The Regulator must adopt an approach to the discharge of those functions
which is based on good regulatory practice, that is an approach adopted
30
having regard to—
(a)
the likely impact on those who may be affected by the discharge of
those functions,
(b)
the outcome of consultations with, and with organisations
representing, community interest companies and others with relevant
35
experience, and
(c)
the desirability of using the Regulator’s resources in the most efficient
and economic way.
(5)
The Regulator may issue guidance, or otherwise provide assistance, about any
matter relating to community interest companies.
40