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| | Tuesday 17th October 2006 |
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| | Company Law Reform Bill [Lords]
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| | | To move, That the Companies Bill [Lords] be considered in the following order: new |
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| | | Clauses relating to Chapter 2 of Part 10; Amendments relating to Chapter 2 of Part 10; |
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| | | new Clauses relating to Chapter 1 and Chapters 3 to 9 of Part 10; Amendments relating to |
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| | | Chapter 1 and Chapters 3 to 9 of Part 10; new Clauses relating to Part 11; Amendments |
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| | | relating to Part 11; new Clauses relating to Chapter 5 of Part 16; Amendments relating to |
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| | | Chapter 5 of Part 16; new Clauses relating to Chapters 1 to 4 and 6 to 12 of Part 16; |
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| | | Amendments relating to Chapters 1 to 4 and 6 to 12 of Part 16; new Clauses relating to |
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| | | Part 8; Amendments relating to Part 8; new Clauses relating to Part 12; Amendments |
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| | | relating to Part 12; new Clauses relating to Part 13; Amendments relating to Part 13; new |
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| | | Clauses relating to Part 4; Amendments relating to Part 4; new Clauses relating to Part 5; |
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| | | Amendments relating to Part 5; new Clauses relating to Part 15; Amendments relating to |
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| | | Part 15; new Clauses relating to Part 14; Amendments relating to Part 14; new Clauses |
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| | | relating to Part 44; Amendments relating to Part 44; Amendments relating to Clauses 521 |
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| | | to 523; new Clauses relating to Part 17; Amendments relating to Clauses 483 to 520 and |
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| | | 524 to 553; remaining new Clauses; remaining amendments to Clauses; new Schedules; |
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| | | amendments to Schedules; remaining proceedings on consideration. |
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| | NEW CLAUSE RELATING TO CHAPTER 2 OF PART 10 |
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| | | Duty to promote the success of the company (No. 2) |
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| | To move the following Clause:— |
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| | | ‘(1) | A director of a company must act in the way he considers, in good faith, would |
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| | | be most likely to promote the success of the company for the benefit of its |
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| | | (2) | In fulfilling the duty imposed by this section, a director must endeavour to— |
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| | | (a) | have regard to the likely consequences of any decision in the long term, |
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| | | (b) | promote the interests of the company’s employees, |
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| | | (c) | foster the company’s business relationships with suppliers, customers |
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| | | (d) | minimise any significant adverse impact of the company’s operations on |
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| | | the community and the environment, |
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| | | (e) | maintain a reputation for high standards of business conduct and ethics, |
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| | | (f) | act fairly as between members of the company. |
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| | | (3) | Where or to the extent that the purposes of the company consist of or include |
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| | | purposes other than the benefit of its members, subsection (1) has effect as if the |
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| | | reference to promoting the success of the company for the benefit of its members |
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| | | were to achieving those purposes. |
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| | | (4) | The duty imposed by this section has effect subject to any enactment or rule of |
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| | | law requiring directors, in certain circumstances, to consider or act in the interests |
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| | | of creditors of the company.’. |
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| | AMENDMENTS RELATING TO CHAPTER 2 OF PART 10 |
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| | Page 78, line 23 [Clause 171], leave out subsection (3). |
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| | Page 78, line 24 [Clause 171], leave out from ‘directors’ to end of line 25. |
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| | Page 78, line 26 [Clause 171], leave out subsection (4). |
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| | Page 79, line 1, leave out Clause 173. |
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| | Page 79, line 2 [Clause 173], after ‘faith’, insert ‘and as appropriate for the size of |
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| | Page 79, line 4 [Clause 173], leave out from ‘whole’ to end of line and insert |
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| | ‘having regard, insofar as he considers them relevant, to the following factors (amongst |
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| | Page 79, line 4 [Clause 173], after ‘to’, insert ‘what he considers, in good faith, to |
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| | Page 79, line 13 [Clause 173], at end insert ‘, and |
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| | | (g) | all common law duties of directors.’. |
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| | Page 79, line 20 [Clause 173], at end insert— |
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| | | ‘(4) | The duties implied by this section shall not apply to small and medium sized |
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| | Page 79, line 20 [Clause 173], at end insert— |
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| | | ‘(4) | None of the duties set out in or implied by this section shall take priority over any |
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| | Page 79, line 20 [Clause 173], at end insert— |
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| | | ‘(4) | The duty to promote the success of the company shall be paramount.’. |
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| | Page 79, line 20 [Clause 173], at end insert— |
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| | | ‘(4) | The Secretary of State must issue a non-statutory set of guidelines concerning the |
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| | | application of this section, which must be updated annually.’. |
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| | Page 79, line 36 [Clause 176], after ‘must’, insert ‘take all reasonable steps to’. |
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| | Page 79, line 37 [Clause 176], leave out ‘, or possibly may conflict,’. |
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| | Page 79, line 38 [Clause 176], at end insert ‘at the time when he seeks |
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| | authorisation pursuant to subsection (5) below.’. |
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| | | Negatived on division 402 |
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| | Page 80, line 4 [Clause 176], leave out paragraph (a) and insert— |
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| | | ‘(a) | if the director reasonably and in good faith believes the situation is not |
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| | | likely to give rise to a conflict of interest; or’. |
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| | Page 80, line 14 [Clause 176], at end insert— |
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| | | ‘(5A) | The authorisation may, in either case, be given by them (unconditionally, or |
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| | | subject to such conditions or limitations as they may specify), either in relation to |
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| | | a particular matter or generally, following receipt by them of a general notice in |
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| | | accordance with section 183.’. |
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| | Page 80, line 22 [Clause 176], at end insert— |
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| | | ‘(8) | Where a conflict or potential conflict arises because of multiple directorships, the |
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| | | duty is not infringed if the director ensures there is no disadvantage to the |
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| | | interests of the company.’. |
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| | Page 83, line 11 [Clause 182], leave out ‘Company Law Reform’ and insert |
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| | NEW CLAUSES RELATING TO CHAPTER 1 AND CHAPTERS 3 TO 9 OF PART 10 |
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| | | Loans to directors: requirement of members’ approval |
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| | To move the following Clause:— |
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| | | (a) | make a loan to a director of the company or of its holding company, or |
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| | | (b) | give a guarantee or provide security in connection with a loan made by |
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| | | any person to such a director, |
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| | | | unless the transaction has been approved by a resolution of the members of the |
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| | | (2) | If the director is a director of the company’s holding company, the transaction |
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| | | must also have been approved by a resolution of the members of the holding |
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| | | (3) | A resolution approving a transaction to which this section applies must not be |
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| | | passed unless a memorandum setting out the matters mentioned in subsection (4) |
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| | | is made available to members— |
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| | | (a) | in the case of a written resolution, by being sent or submitted to every |
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| | | eligible member at or before the time at which the proposed resolution is |
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| | | sent or submitted to him; |
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| | | (b) | in the case of a resolution at a meeting, by being made available for |
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| | | inspection by members of the company both— |
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| | | (i) | at the company’s registered office for not less than 15 days |
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| | | ending with the date of the meeting, and |
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| | | (ii) | at the meeting itself. |
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| | | (4) | The matters to be disclosed are— |
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| | | (a) | the nature of the transaction, |
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| | | (b) | the amount of the loan and the purpose for which it is required, and |
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| | | (c) | the extent of the company’s liability under any transaction connected |
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| | | (5) | No approval is required under this section on the part of the members of a body |
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| | | (a) | is not a UK-registered company, or |
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| | | (b) | is a wholly-owned subsidiary of another body corporate.’. |
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| | | Quasi-loans to directors: requirement of members’ approval |
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| | To move the following Clause:— |
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| | | ‘(1) | This section applies to a company if it is— |
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| | | (b) | a company associated with a public company. |
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| | | (2) | A company to which this section applies may not— |
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| | | (a) | make a quasi-loan to a director of the company or of its holding company, |
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| | | (b) | give a guarantee or provide security in connection with a quasi-loan made |
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| | | by any person to such a director, |
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| | | | unless the transaction has been approved by a resolution of the members of the |
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| | | (3) | If the director is a director of the company’s holding company, the transaction |
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| | | must also have been approved by a resolution of the members of the holding |
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| | | (4) | A resolution approving a transaction to which this section applies must not be |
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| | | passed unless a memorandum setting out the matters mentioned in subsection (5) |
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| | | is made available to members— |
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| | | (a) | in the case of a written resolution, by being sent or submitted to every |
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| | | eligible member at or before the time at which the proposed resolution is |
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| | | sent or submitted to him; |
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| | | (b) | in the case of a resolution at a meeting, by being made available for |
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| | | inspection by members of the company both— |
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| | | (i) | at the company’s registered office for not less than 15 days |
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| | | ending with the date of the meeting, and |
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| | | (ii) | at the meeting itself. |
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| | | (5) | The matters to be disclosed are— |
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| | | (a) | the nature of the transaction, |
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| | | (b) | the amount of the quasi-loan and the purpose for which it is required, and |
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| | | (c) | the extent of the company’s liability under any transaction connected |
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| | | (5) | No approval is required under this section on the part of the members of a body |
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| | | (a) | is not a UK-registered company, or |
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