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

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

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Schedule 1 — New Schedule 7B to the Companies Act 1985
51

Schedules
Schedule 1
Section 12

New Schedule 7B to the Companies Act 1985
In the Companies Act 1985 (c. 6), after Schedule 7A insert—
“SCHEDULE 7B
5
Section 245G(3)

Specified persons, descriptions of disclosures etc. for the purposes of
section 245G
Part 1
Specified persons
1
The Secretary of State.
10
2
The Department of Enterprise, Trade and Investment for Northern
Ireland.
3
The Treasury.
4
The Bank of England.
5
The Financial Services Authority.
15
6
The Commissioners of Inland Revenue.
Part 2
Specified descriptions of disclosures
7
A disclosure for the purpose of assisting a body designated by an
order under section 46 of the Companies Act 1989 (delegation of
20
functions of Secretary of State) to exercise its functions under Part
2 of that Act.
8
A disclosure with a view to the institution of, or otherwise for the
purposes of, disciplinary proceedings relating to the performance
by an accountant or auditor of his professional duties.
25
9
A disclosure for the purpose of enabling or assisting the Secretary
of State or the Treasury to exercise any of their functions under
any of the following—
(a)
this Act;
(b)
the insider dealing legislation;
30
(c)
the Insolvency Act 1986;

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Schedule 1 — New Schedule 7B to the Companies Act 1985
52

(d)
the Company Directors Disqualification Act 1986;
(e)
the Financial Services and Markets Act 2000.
10
A disclosure for the purpose of enabling or assisting the
Department of Enterprise, Trade and Investment for Northern
Ireland to exercise any powers conferred on it by the enactments
5
relating to companies or insolvency.
11
A disclosure for the purpose of enabling or assisting the Bank of
England to exercise its functions.
12
A disclosure for the purpose of enabling or assisting the
Commissioners of Inland Revenue to exercise their functions.
10
13
A disclosure for the purpose of enabling or assisting the Financial
Services Authority to exercise its functions under any of the
following—
(a)
the legislation relating to friendly societies or to industrial
and provident societies;
15
(b)
the Building Societies Act 1986;
(c)
Part 7 of the Companies Act 1989;
(d)
the Financial Services and Markets Act 2000.
14
A disclosure in pursuance of any Community obligation.
Part 3
20
Overseas regulatory bodies
15
A disclosure is made in accordance with this Part of this Schedule
if—
(a)
it is made to a body within paragraph 16, and
(b)
it is made for the purpose of enabling or assisting that body
25
to exercise the functions mentioned in that paragraph.
16
A body is within this paragraph if it exercises functions of a public
nature under legislation in any country or territory outside the
United Kingdom which appear to the authorised person to be
similar to his functions under section 245B of this Act.
30
17
In determining whether to disclose information to a body in
accordance with this Part of this Schedule, the authorised person
must have regard to the following considerations—
(a)
whether the use which the body is likely to make of the
information is sufficiently important to justify making the
35
disclosure; and
(b)
whether the body has adequate arrangements to prevent
the information from being used or further disclosed other
than for the purposes of carrying out the functions
mentioned in paragraph 16 or any other purposes
40
substantially similar to those for which information
disclosed to the authorised person could be used or further
disclosed.”

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Schedule 2 — Minor and consequential amendments relating to Part 1
Part 2 — Amendments relating to accounts and reports
53

Schedule 2
Section 23

Minor and consequential amendments relating to Part 1
Part 1
Amendments relating to auditors
Companies Act 1989 (c. 40)
5
1
The Companies Act 1989 has effect subject to the following amendments.
2
In section 30(5), for “Parts I and II” substitute “Parts I, II and III”.
3
In the following provisions, for “established” substitute “designated”—
(a)
sections 40(1)(a) and 47(3)(c);
(b)
section 87(4) in the entry relating to bodies established by order
10
under section 46 of the Act.
Companies (Northern Ireland) Order 1990 (S.I. 1990/593(N.I. 5))
4
In the Companies (Northern Ireland) Order 1990, omit Article 49 and
Schedule 14 (supervisory and qualifying bodies: restrictive practices).
Part 2
15
Amendments relating to accounts and reports
Companies Act 1985 (c. 6)
5
The Companies Act 1985 has effect subject to the following amendments.
6
In section 249E(2)(d) (rights to information)—
(a)
for “section 389A(1) and (2)” substitute “sections 389A(1) and 389B(1)
20
and (5)”; and
(b)
for “the auditors” substitute “an auditor”.
7
In section 732(1) and (2)(a) (prosecution by public authorities), after “210,”
insert “245E, 245G,”.
8
In section 733(1) (offences by body corporate), after “216(3)” insert “, 245E(3),
25
245G(7)”.
9
In section 734(1) (criminal proceedings against unincorporated bodies)—
(a)
after “under” insert “section 245E(3), section 245G(7),”; and
(b)
omit “section 389A(3) or”.
10    (1)
Schedule 24 (punishment of offences) is amended as follows.
30
      (2)
After the entry relating to section 234(5) insert—

“234ZA
Making a statement
1. On indictment
2 years or a fine; or
—”.

(6)
in a directors’ report

both

as mentioned in
2. Summary
12 months or the

section 234ZA(2)

statutory maximum;

35

which is false

or both

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Schedule 2 — Minor and consequential amendments relating to Part 1
Part 2 — Amendments relating to accounts and reports
54

      (3)
After the entry relating to section 241A(10) insert—

“245E(3)
Using or disclosing
1. On indictment
2 years or a fine; or
—

tax information in

both

contravention of
2. Summary
12 months or the

section 245E(1) or (2)

statutory maximum;

5

or both

245G(7)
Disclosing
1. On indictment
2 years or a fine; or
—”.

information in

both

contravention of
2. Summary
12 months or the

section 245G(2) and

statutory maximum;

10

(3)

or both

      (4)
For the entries relating to sections 389A(2), 389A(3) and 389A(4) substitute—

“389B(1)
Person making false,
1. On indictment
2 years or a fine; or
—

misleading or

both

deceptive statement
2. Summary
12 months or the

15

to auditor

statutory maximum;

or both

389B(2)
Failure to provide
Summary
Level 3 on the
—

information or

standard scale

explanations to

20

auditor

389B(4)
Parent company
Summary
Level 3 on the
—”.

failing to obtain from

standard scale

subsidiary

undertaking

25

information for

purposes of audit

Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6))
11
The Companies (Northern Ireland) Order 1986 has effect subject to the
following amendments.
30
12
In Article 680(1) and (2)(a) (prosecution by public authorities), after “218,”
insert “253E,”.
13
In Article 680A(1) (offences by bodies corporate), after “224(3),” insert
“253E(3),”.
14
In Article 680B(1) (criminal proceedings against unincorporated bodies),
35
after “Articles” insert “253E(3),”.
15
In Schedule 23 (punishment of offences), after the entry relating to Articles
249(2) and 250(2) insert—

“253E(3)
Using or disclosing
1. On indictment
2 years or a fine; or
—”.

tax information in

both

40

contravention of
2. Summary
3 months or the

Article 253E(1) or (2)

statutory maximum;

or both

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Schedule 2 — Minor and consequential amendments relating to Part 1
Part 3 — Amendments relating to investigations
55

Part 3
Amendments relating to investigations
Companies Act 1985 (c. 6)
16
The Companies Act 1985 has effect subject to the following amendments.
17
After section 447 insert—
5
“447A  Information provided: evidence
(1)
A statement made by a person in compliance with a requirement
under section 447 may be used in evidence against him.
(2)
But in criminal proceedings in which the person is charged with a
relevant offence—
10
(a)
no evidence relating to the statement may be adduced by or
on behalf of the prosecution, and
(b)
no question relating to it may be asked by or on behalf of the
prosecution,

unless evidence relating to it is adduced or a question relating to it is
15
asked in the proceedings by or on behalf of that person.
(3)
A relevant offence is any offence other than the following—
(a)
an offence under section 451,
(b)
an offence under section 5 of the Perjury Act 1911 (false
statement made otherwise than on oath), or
20
(c)
an offence under section 44(2) of the Criminal Law
(Consolidation) (Scotland) Act 1995 (false statement made
otherwise than on oath).”
18
For section 449 substitute—
“449
Provision for security of information obtained
25
(1)
This section applies to information (in whatever form) obtained—
(a)
in pursuance of a requirement imposed under section 447;
(b)
by means of a relevant disclosure within the meaning of
section 448A(2);
(c)
by an investigator in consequence of the exercise of his
30
powers under section 453A.
(2)
Such information must not be disclosed unless the disclosure—
(a)
is made to a person specified in Schedule 15C, or
(b)
is of a description specified in Schedule 15D.
(3)
The Secretary of State may by order amend Schedules 15C and 15D.
35
(4)
An order under subsection (3) must not—
(a)
amend Schedule 15C by specifying a person unless the
person exercises functions of a public nature (whether or not
he exercises any other function);
(b)
amend Schedule 15D by adding or modifying a description of
40
disclosure unless the purpose for which the disclosure is
permitted is likely to facilitate the exercise of a function of a
public nature.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Schedule 2 — Minor and consequential amendments relating to Part 1
Part 3 — Amendments relating to investigations
56

(5)
An order under subsection (3) must be made by statutory instrument
subject to annulment in pursuance of a resolution of either House of
Parliament.
(6)
A person who discloses any information in contravention of this
section—
5
(a)
is guilty of an offence, and
(b)
is liable on conviction to imprisonment or a fine or to both.
(7)
Sections 732 (restriction on prosecutions), 733 (liability of individuals
for corporate default) and 734 (criminal proceedings against
unincorporated bodies) apply to the offence under subsection (6).
10
(8)
Any information which may by virtue of this section be disclosed to
a person specified in Schedule 15C may be disclosed to any officer or
employee of the person.
(9)
This section does not prohibit the disclosure of information if the
information is or has been available to the public from any other
15
source.
(10)
Nothing in this section authorises the making of a disclosure in
contravention of the Data Protection Act 1998.”
19
For section 451 substitute—
“451  Punishment for furnishing false information
20
(1)
A person commits an offence if in purported compliance with a
requirement under section 447 to provide information—
(a)
he provides information which he knows to be false in a
material particular;
(b)
he recklessly provides information which is false in a
25
material particular.
(2)
A person guilty of an offence under this section is liable on
conviction to imprisonment or a fine or to both.
(3)
Sections 732 (restriction on prosecutions), 733 (liability of individuals
for corporate default) and 734 (criminal proceedings against
30
unincorporated bodies) apply to an offence under this section.”
20
In section 451A (disclosure of information by Secretary of State or inspector),
for subsection (1) substitute—
“(1)
This section applies to information obtained—
(a)
under sections 434 to 446;
35
(b)
by an inspector in consequence of the exercise of his powers
under section 453A.”
21
In section 452—
(a)
for subsection (1) substitute—
“(1)
Nothing in sections 431 to 446 compels the disclosure by any
40
person to the Secretary of State or to an inspector appointed
by him of information in respect of which in an action in the
High Court a claim to legal professional privilege, or in an
action in the Court of Session a claim to confidentiality of
communications, could be maintained.”
45

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Schedule 2 — Minor and consequential amendments relating to Part 1
Part 3 — Amendments relating to investigations
57

(b)
for subsections (2) and (3) substitute—
“(2)
Nothing in sections 447 to 451—
(a)
compels the production by any person of a document
or the disclosure by any person of information in
respect of which in an action in the High Court a claim
5
to legal professional privilege, or in an action in the
Court of Session a claim to confidentiality of
communications, could be maintained;
(b)
authorises the taking of possession of any such
document which is in the person’s possession.
10
(3)
The Secretary of State must not under section 447 require, or
authorise a person to require—
(a)
the production by a person carrying on the business
of banking of a document relating to the affairs of a
customer of his, or
15
(b)
the disclosure by him of information relating to those
affairs,

unless one of the conditions in subsection (4) is met.
(4)
The conditions are—
(a)
the Secretary of State thinks it is necessary to do so for
20
the purpose of investigating the affairs of the person
carrying on the business of banking;
(b)
the customer is a person on whom a requirement has
been imposed under section 447;
(c)
the customer is a person on whom a requirement to
25
produce information or documents has been imposed
by an investigator appointed by the Secretary of State
in pursuance of section 171 or 173 of the Financial
Services and Markets Act 2000 (powers of persons
appointed under section 167 or as a result of section
30
168(2) to conduct an investigation).
(5)
Despite subsections (1) and (2) a person who is a lawyer may
be compelled to disclose the name and address of his client.”
22
In section 732 (prosecution by public authorities)—
(a)
in subsection (1), for “447 to 451” substitute “448, 449 to 451, 453A”;
35
(b)
in subsection (2)(b), for “447 to 451” substitute “448, 449 to 451 and
453A”.
(c)
in subsection (3), after “privilege” insert “or, in Scotland,
confidentiality of communications”.
23
In section 733 (offences by bodies corporate)—
40
(a)
in subsection (1), for “and 447 to 451” substitute “, 448, 449 to 451 and
453A”;
(b)
in subsection (4), for “447 to 451” substitute “448, 449 to 451 and
453A”.
24
In section 734(1) (criminal proceedings against unincorporated bodies), for
45
“447 to 451” substitute “448, 449 to 451 or section 453A”.