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HOME DEPARTMENT
Youth Justice Board
The Parliamentary Under-Secretary of State for the Home Department (Fiona Mactaggart): The Youth Justice Board's Annual Report and Accounts for 2004–05 has been laid before Parliament today. Copies have been placed in the House Library.
Investigatory Powers Tribunal
The Secretary of State for the Home Department (Mr. Charles Clarke): I am pleased to announce that Her Majesty the Queen has reappointed members to the Tribunal (including a President and Vice President) by Letters Patent for a period of five years, as provided for by the Regulation of Investigatory Powers Act 2000.
The reappointed Tribunal members are:
The Tribunal considers proceedings brought under section 7 of the Human Rights Act 1998 against the intelligence agencies and in respect of the investigatory powers covered by the Regulation of Investigatory Powers Act 2000, by all public authorities. It also considers all complaints against the intelligence agencies and all complaints against public authorities in respect of the powers in the Regulation of Investigatory Powers Act 2000. The Tribunal, which is independent of Government, has full powers to investigate and decide any case within its jurisdiction.
Anti-social Behaviour Orders
The Minister for Policing, Security and Community Safety (Hazel Blears): I am announcing today statistics relating to anti-social behaviour orders (ASBOs).
An ASBO is a civil order that protects the community from behaviour that has caused or is likely to cause harassment, alarm or distress to one or more persons not of the same household as the perpetrator.
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ASBOs were introduced under the Crime and Disorder Act 1998 and have been available since April 1999. They can be issued to anyone aged 10 years or over. They impose restrictions on the behaviour of individuals who have behaved in an anti-social way and protect communities from often longstanding and highly intimidating activity.
Breach of an ASBO is a criminal offence and can lead to custody. The maximum penalty for breach of an ASBO is five years imprisonment or a fine of up to £5,000 for an adult offender. Data on the number of ASBOs issued are updated quarterly.
New figures for the period up to March 2005 are now available. These figures show that for the period between April 1999 and March 2005 the number of ASBOs issued (as reported to the Home Office) was 5,557. The number of ASBOs issued in the quarter January to March 2005 is 897 and represents 16 per cent. of the total number of ASBOs issued over all quarters. Of those ASBOs issued, 53 per cent. were to adults and 44 per cent to juveniles (3 per cent. of ASBOs are age unknown). Some 50 per cent. were orders on application and 50 per cent. were orders on conviction.
The Home Office is notified by courts of ASBOs issued. However, evidence is emerging of some under-reporting of the number of ASBOs issued. The courts are requested to provide the Home Office with statistical information concerning all ASBOs. This has not happened in all cases, and the Home Office is currently working with Her Majesty's Courts Service to address this under-reporting.
A new single standard IT system (LIBRA) is planned to be implemented in all magistrates' courts during 2006 onwards and this will improve the quality and timeliness of data. Where data are not currently reported by the courts on time, data for previous quarters are reconciled to take account of any late court returns.
I have placed in the House Library a briefing note containing information about ASBOs and the ASBO statistics issued today.
PRIME MINISTER
Chief Surveillance Commissioner
The Prime Minister (Mr. Tony Blair): I have today laid before both Houses the annual report for 2004–2005 of the Chief Surveillance Commissioner, the right hon. Sir Andrew Leggatt.
I am grateful to the Commissioner, and his office, for this report and the work that has gone into preparing it.
Interception of Communications Commissioner and the Intelligence Services Commissioner
The Prime Minister (Mr. Tony Blair):
I have today laid before both Houses the annual reports for 2004 of the Interception of Communications Commissioner, the right hon. Sir Swinton Thomas, and the Intelligence Services Commissioner, the right hon. Lord Brown of Eaton-Under-Heywood. Some sensitive information has been excluded from the reports of the Interception of Communications Commissioner and the Intelligence Services Commissioner in accordance with Section 58(7) and 60(5) of the Regulation of Investigatory Powers Act.
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I am grateful to the Commissioners for their reports and the work that has gone into preparing them.
TRADE AND INDUSTRY
Company Law Reform
The Minister for Industry and the Regions (Alun Michael): The Government are very grateful for the continuing involvement of the whole range of interested parties in the development of the Company Law Reform Bill. Development of the Bill has proceeded on as consultative a basis as possible throughout, and has relied crucially on the close involvement of a wide range of businesses, business organisations, and other individuals and bodies.
Publication of the White Paper "Company Law Reform" in March this year was a key stage. The White Paper set out the Government's policy proposals in almost all areas of the Bill, and included draft clauses in many of these areas. Many further clauses were subsequently published on the website, along with further explanatory material, including a Government statement published on 19 July 2005.
Consultation has revealed continued broad support for the underlying thrust of the Bill, and for the great majority of the specific policies within it. Many comments of detail were received on the draft clauses. The Bill as introduced takes account of these comments and benefits very significantly from the suggestions made.
The full range of the Government's proposals is now set out in the Company Law Reform Bill, introduced to Parliament on 1 November. This statement sets out the main areas where, in the light of the consultation process or of other recent developments, the Government have made more substantial policy decisions in key areas since July.
There were many detailed and helpful responses on the proposed statutory statement of directors' duties. In the light of those responses, the Government have decided:
that it is still fully committed to an approach based on "enlightened shareholder value", but wants to ensure that this adequately reflects wider expectations of responsible business behaviour. The duty to promote the success of the company will therefore place greater emphasis on the long-term consequences of business decisions, and on the need for directors to take account of factors such as the interests of employees and the impact of the company's operations on the community and the environment so far as reasonably practicable.
to make it clearer that the statutory statement is (with two exceptions in respect of the duties on conflicts of interest) a codification of the current law and does not change the current position on authorisation.
to make it clearer that most of the duties continue to be fiduciary. This is important in respect of the remedies for breach of the duties.
to make clear that the clauses on directors' liabilities change the law on ratification so that the necessary majority to ratify a wrong has to be reached without the support of the wrongdoers.
It is a very clear common sense principle that the auditor's role is to ensure that accounts give a true and fair view of the company's financial position. Whilst some of the terminology differs, this is the aim both of our own UK company law traditions and modern International Accounting Standards.
The current law reflects this basic principle. However, the statutory framework is complicated and has become more so over time, combining both UK and Community law provisions. The Government is therefore taking the opportunity in the Bill to restate s.235 of the Companies Act to express the principle more clearly in the legislation.
To underline the point, the Bill also includes a new clause providing an express duty on Directors to ensure accounts give a true and fair view. We are requiring that auditors take this new duty of the directors into account when they conduct their audits, to underline the point that directors and auditors should approach the accounts with the same common sense objective of ensuring that accounts give a true and fair view of the company's financial position.
Minimum_notice_period_for_AGMs
The Government had originally proposed reducing the statutory minimum notice period to 14 days, as a simplificatory measure. But several stakeholders have commented that the original CLR recommendation may have been overtaken by EU developments. The proposed EU Shareholder Rights Directive is currently consulting on introducing a minimum notice period of 21 "business" days for quoted companies AGMs.
Some stakeholders have also argued that such a change could conflict with the increasingly important "shareholder engagement" agenda. In the light of these concerns, the Government have decided to retain the current law (21 days for AGMs and 14 days for other general meetings), at least pending further clarity at EU level.
This White Paper proposal was intended to foster shareholder engagement, by giving shareholders a 15 day "window" where they can act upon the information disclosed in the company's annual accounts and report and lay resolutions for the general meeting. But stakeholders raised significant concerns that it might cause practical difficulties and thus impose additional costs in implementation, particularly in conjunction with our other proposal to shorten the timeline between the financial year-end and holding the AGM to six months.
The Government are still keen to foster the underlying policy of shareholder engagement. The Bill will therefore ensure that shareholder resolutions requisitioned before the end of the financial year-end should still be circulated at the company's expense.
The White Paper said that the Government were continuing to explore the proposal that institutional investors should disclose how their voting rights had been exercised, as had been recommended by the Company Law Review. The Government published
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draft clauses on this on 14 October 2005. The proposal has attracted considerable stakeholder comment with views polarised. Some consultees argue that such a mandatory disclosure regime will be costly for industry and that the benefits are unclear. Others strongly support the measure. The Government believe it is important that institutional investors take an active part in the governance of companies in which they invest and disclosing how they have voted is a helpful measure in this context. The Government would prefer disclosure to become the norm without statutory action but recognises that a voluntary approach may fail to deliver this outcome. Our approach is therefore to encourage disclosure without compulsion in the first instance but we consider that a power should be contained in the Bill against the possibility that sufficient disclosure does not take place on a voluntary basis. If it becomes necessary to exercise the power, the Government will consult fully with interested parties on any mandatory regime which might be considered, paying regard in particular to possible costs and benefits.
The White Paper consulted on changes to the framework of liability attaching to breaches of Companies Act requirements. These proposals attracted a good deal of comment. In particular, consultees were concerned about an apparent extension of liability beyond those officers of the company who are currently held to be liable for breaches. These comments focused on two specific White Paper proposals, namely that the definition of "officers in default" should be redefined and to some extent extended more widely within the company by the use of a new definition of "senior executive"; and the proposed inclusion of a category of persons, "responsible delegates", who would be newly liable in certain circumstances.
Concerns focused both on the desirability of the underlying policy, which many felt risked diluting the essential focus on the responsibilities of the directors themselves; and on the technical difficulties of defining these new categories of persons in ways which met the overall objective of increasing clarity. The Government share these concerns, and therefore does not now propose to take forward these specific measures.
The White Paper proposed to increase the maximum penalty for the offence of directors approving defective accounts to seven years imprisonment; and the July consultation proposed the same maximum penalty for the new offence for auditors who knowingly or recklessly issue an incorrect audit report. Stakeholders felt that these proposed penalties were excessive, and the Government have decided to remove the threat of imprisonment for both offences, for which the maximum penalty will therefore be an unlimited fine. Serious offences can still be pursued eg through a prosecution for theft or false accounting, each of which carries a penalty of up to seven years in prison.
On 19 July the Government launched a consultation seeking views on the economic impact of the recommendations of the Law Commission and the Scottish Law Commission in respect of company charges. The timing of this consultation ensured that it would be possible to include a sufficiently wide power in
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the forthcoming Company Law Reform Bill to enable them to be enacted if there was firm support expressed for the Law Commission's proposals.
It was clear from the consultation that there is not a consensus of support for the proposals. The Bill will therefore not include a specific power to implement charges measures but the Bill will include a new power to make company law reform orders (as discussed in the White Paper), and this will provide a mechanism for implementing certain changes in respect of company charges, on matters of company law (as against property law) if wished. The Government will continue to consider and to discuss with interested parties exactly what changes should be implemented.
Paper free holding and transfer of shares
The White Paper said that the Government will be willing in principle to include provisions in the Bill which would permit companies to stop issuing paper share certificates. Many respondents argued that only a mandatory approach would achieve cost savings and wider business benefits, but they also agreed that it is too early to take a blanket approach and that more information is needed on the costs and benefits of a paper free approach. The Government believe it would be premature to take a decision on the case for a mandatory approach until there has been wider public consultation, but it does not wish to rule out the option for reform. The Bill will therefore extend the existing power relating to transfer of securities (section 207, Companies Act 1989) so that it can be used either to permit or to require the paper free holding and transfer of shares.
On 7 September the Parliamentary Under-Secretary of State for Northern Ireland, my hon. Friend the Member for Basildon (Angela E. Smith) launched a consultation on the proposal that the new companies legislation should extend automatically to companies in Northern Ireland (as well as, as now, Great Britain). This proposal reflected the fact that legislation in Northern Ireland, though technically a separate matter, generally follows very closely the precedent of legislation in Great Britain, but with a distance in time which means that Northern Ireland companies do not generally get the advantages of new legislation until some time after their English, Welsh and Scottish counterparts.
Consultation revealed substantial support for this proposal, and for the suggestion that certain other aspects of law which relate closely to company law (for example, limited partnerships and limited liability partnerships) should be legislated for on a UK-wide basis. The Bill reflects this position.
Company law will remain a transferred matter, and a future Northern Ireland Assembly could decide to resume responsibility for drafting separate Northern Ireland companies legislation if it considered it desirable.
In the light of a recent decision of the House of Lords (Buchler and another v Talbot and others, re Leyland Daf [2004] UKHL 9) there may be an anomaly between liquidation and administration as regards the recovery of insolvency practitioners' expenses, raising concerns about whether or not companies will be advised to
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follow the most appropriate form of insolvency procedure. The decision is to the effect that for companies in liquidation the payment of the general expenses of the winding up cannot be paid out of assets which are subject to a floating charge ahead of the floating charge holder.
There may also be implications for both the general body of creditors and employees because floating charge holders may be attracted by the better returns that the more terminal liquidation procedure offers, as opposed to administration, which is more aimed at fostering company "rescue." For these reasons, the Government will change the law to ensure that for companies in liquidation general expenses of the wind-up can be paid out of assets subject to a floating charge ahead of the floating charge holder.
Part 9 of the Enterprise Act 2002 creates a gateway for the disclosure of information relating to specific consumer and competition matters. In addition, it creates a gateway to allow certain information to be disclosed for certain civil investigations and proceedings overseas. The current Part 9 gateways do not in general allow information to be released by public bodies to business and individuals for the purpose of civil proceedings.
The Government launched a consultation on this area on 23 August 2005. This consultation does not close until 18 November 2005 and the Government look forward to responses. No decisions will be taken until the Government have had the opportunity to consider all such responses. However, without prejudice to the outcome of that consultation, in the event that the Government were to decide that some relaxation of the gateways was appropriate, it would be necessary to provide some legislative route to implement the specific measure. The Bill will therefore include a power for the Secretary of State to prescribe through secondary legislation circumstances in which such disclosures might be made.
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