Company Law Reform Bill [Lords]


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Mr. Vara rose—
Margaret Hodge: If the hon. Gentleman will give me a chance, I am responding to his previous point. The idea that we are doing anything by stealth is ludicrous. All the parties with which we have engaged since 1998 in taking forward the review of that intricate area of company law have been clear that it was an inclusive and open process.
If the hon. Member for North-West Cambridgeshire failed to see that or to have it drawn to his attention as he prepared for the Committee, I am sorry. I shall ensure that the articles that have been placed in the Library are circulated. On any other matters, it would be sensible probably to draw the Committee’s attention to the location of the relevant papers, rather than to distribute them. That way people will know where on the website or in the Library they can get them. I hope that that will be sufficient for hon. Members—in order to save a few trees.
Mr. Blunt: The Minister and her Department have proceeded with good intentions over a long consultation process, but she needs to differentiate between Members. My hon. Friends behind me, like her hon. Friends behind her, will not have known that they were going to be selected for the Committee until the Selection Committee met. My hon. Friend the Member for Huntingdon will have had some idea that the Bill was coming down the tracks and an opportunity to follow it in detail. However, I ask her to give as much assistance as she can to Back Benchers by identifying and producing documents to make their job as easy as possible. They have not been involved in the process since 1998 like officials in her Department.
Margaret Hodge: This might help the Committee; I have just been informed that there is a list of the relevant websites at the back of the House of Commons Library note on the Bill. That might be of further assistance to the Committee.
Mr. Davies: Briefly, the Minister now seems to be going back on the promise that she gave me a moment ago, for which I was grateful. The Government should give us the documents, not say, “Go and look at websites”, so that we spend our time looking at websites. We need to have the documents. The Government have them, or claimed to have them, and she was gracious enough to say that she would make them available. I take it that that undertaking is still valid. I am still grateful for it and look forward to seeing the documents.
Margaret Hodge: I was simply reflecting the fact that I would like to save a little bit of paper. But if Members feel strongly about having all the bits of papers, rather than references to them, I am happy to help out. I know how much paper we get through, and how much we bin before even looking at it, so it seemed sensible just to provide the relevant references. However, if the Committee so wishes, I shall provide the documents. It is no great problem.
Mr. Vara: The Minister should speak for herself on the amount of material that is binned. The Opposition take the Bill seriously and certainly will read through all the material that comes our way.
The Minister has repeatedly made the point that there has been a lengthy consultation process, that many organisations have been consulted and that the Bill has been debated in the House of Lords. I point out to her that many of those organisations have put forward conflicting views, and it would not be right for the Committee simply to accept all those views; it is not possible to do so because of the conflicts. It is the purpose of the Committee therefore to try and—
The Chairman: Briefly.
Mr. Vara: Certainly, Sir. The Committee must ensure that we arrive at a proper decision, so constant reference to previous organisations is perhaps not appropriate.
Margaret Hodge: After that debate, I cannot remember all the points that have been raised. Opposition Members are not the only people in the Committee taking the Bill seriously. This Government instituted the review of company law; we did it thoroughly, and it is insulting, yet again, for him to suggest that he and his colleagues are the only ones who take the matter seriously.
Of course there are conflicts. We have just spent considerable time discussing one such conflict, to which we shall return—whether there should be regulation and we should insist that every company, be it public or private, have a company secretary. That is a contentious issue, on which the Government have taken a view. No doubt the hon. Gentleman will also reflect on what is right, rather than what has been requested by a certain group of people lobbying him at a certain time.
I wrote, I hope, to all members of the Committee when welcoming them to the Committee and in that letter I highlighted other information available on the various DTI websites. It might help hon. Members if they return to that information. I asked them to contact me for further information if they so wished and it would be helpful if they did that.
I was asked about the status of the model articles, as I recall. I hope that hon. Members will come back to me if I forget something. I was asked whether the model articles were advisory, I think by the hon. Member for Huntingdon—[Hon. Members: “No.”] Sorry, I should have said the hon. Member for Grantham and Stamford. The model articles are advisory. They are not in any way required; no company is required to adopt them. However, they operate in default, so if a company has not adopted articles, these can be used if the need so arises. It is because of the default provision that they are prescribed; that is why the term “prescribed” is used in the clause.
In discussions that I have had with companies recently, there has been quite a lot of support for the development of the advisory articles. That means that people do not have to reinvent wheels and think through themselves what they have to put into articles. They can look at these articles and see whether they need to adopt them.
I was also asked—I think it was indeed by the hon. Member for Huntingdon this time—whether there was an intention to adjust existing articles. No, it has never been the case that successive Governments have replaced the articles of existing companies. I hope that what I have said deals with the issues that Opposition Members have raised about the clause, that I have convinced them that the Bill makes sense and that we can approve the clause.
Mr. Djanogly: I am grateful to my hon. Friend the Member for Grantham and Stamford for initiating the debate, to which several of my hon. Friends have contributed. It has highlighted the importance of the model articles for companies—that is an essential part of what we are doing with the Bill—and the need to consult fully on the matter.
There has been some confusion about when the model articles were put forward in the White Paper and when they were consulted on. I have just seen in a pile of paper that the consultation started on 8 June, so it has not being going on for long. My first point is that the consultation is ongoing. The fact that a White Paper was published, however long ago that was, is unrelated to the fact that the consultation has been going on for only a couple of weeks. On that basis, my hon. Friend the Member for Grantham and Stamford made an important point.
Margaret Hodge: There is a misunderstanding. There was a consultation on draft articles, which was initiated when we published the White Paper in 2005. We then commenced a further consultation on articles for public companies; the one in 2005 related to private companies. We commenced a consultation relating to public companies on the articles that we published before the Committee sat. It is those that I have agreed to distribute around the Committee.
Mr. Djanogly: That clarification is helpful.
The second point that I wanted to make is that what was in a White Paper is not necessarily what was consulted on. There may have been changes between the two dates. For that reason as well, it is fair to make the point that we need to have a fresh look at this matter. However, I thank the Minister for her offer to send out the documents and related documents—I think that is what she said—so that what has happened will not happen again and the Committee will be advised in advance. Finally, I would be grateful if she could say when the consultation is likely to end and when the results are likely to be published. I hope that these important model articles will come into play at the same time as the overall provisions of the Bill.
Margaret Hodge: I am informed that the consultation will continue until the end of August.
Question put and agreed to.
Clause 19 ordered to stand part of the Bill.
Clause 20 ordered to stand part of the Bill.

Clause 21

Alteration of articles
Margaret Hodge: I beg to move amendment No. 80, in clause 21, page 8, line 28, leave out ‘alter' and insert ‘amend'.
The Chairman: With this it will be convenient to discuss Govt amendments Nos. 82, 84 to 89, 101, 102, 105 to 107, 104, 108 to 111.
Margaret Hodge: The amendments look extremely complicated. In fact, they are tidying-up amendments arising out of debates in another place. The Bill makes provision in clause 21 for changes to company articles that may be made by a company’s members, and for changes that may be made by other means such as legislation, which is dealt with in clause 35, or by the courts or other authorities such as the Charities Commission, which is dealt with in clause 36. The amendments are intended simply to introduce a greater consistency in the way that the Bill talks about different kinds of changes.
The amendments ensure that when the Bill refers to changes made to a company’s articles by its members, the company’s articles are generally referred to as being amended, and the changes are referred to as amendments. When the Bill refers to changes made by legislative, judicial or other external intervention, the company’s articles are generally referred to as being altered, and the changes are referred to as alterations.
Mr. Djanogly: I do not intend to take too much of the Committee’s time debating the merits of the words “alteration” and “amendment”. I agree with what the Minister said.
David Howarth: And so do I.
Amendment agreed to.
Clause 21, as amended, ordered to stand part ofthe Bill.
The Chairman: We now come to clause 22. Members will note that clauses 22, 23 and 24 are grouped for debate with the amendments under clause 22 on the selection list. That means that the questions on those clauses—that is, the stand part questions—will be put to the Committee for decision without further debate when we reach them. The point is, obviously, that as we debate clause 22 and the amendments that go with it, we will debate clauses 22, 23 and 24 stand part as well, because the amendments to the group of clauses are so substantial to them that it would be easier to debate them in that way. So, if any Member wishes to raise a point on any of clauses 22, 23 and 24 that would have come under the debate on clause stand part, they should raise it in the next debate.
12 noon

Clause 22

Entrenched provision of the articles
Margaret Hodge: I beg to move amendment No. 81, in clause 22, page 9, line 3, leave out paragraph (a).
The Chairman: With this it will be convenient to discuss the following: Amendment No. 8, in clause 22, page 9, line 3, leave out from ‘repealed' to end of line 6.
Government amendment No. 83.
Clause stand part.
Amendment No. 9, in clause 23, page 9, line 18, leave out subsection (2).
Amendment No. 48, in clause 23, page 9, line 22, leave out subsections (3) and (4).
Clause 23 stand part.
Amendment No. 10, in clause 24, page 9, line 28, after ‘articles', insert ‘by unanimous resolution'.
Amendment No. 11, in clause 24, page 9, line 28, after ‘articles', insert
‘by unanimous resolution less one vote'.
Amendment No. 12, in clause 24, page 9, line 28, after ‘articles', insert
‘by a resolution of at least 90% of its members'.
Clause 24 stand part.
 
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Prepared 21 June 2006