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Public Bill Committee Debates

Draft Companies Act 2006 (Commencement No. 2, Consequential Amendments, Transitional Provisions and Savings) Order 2007



The Committee consisted of the following Members:

Chairman: David Taylor
Bacon, Mr. Richard (South Norfolk) (Con)
Coffey, Ann (Stockport) (Lab)
Djanogly, Mr. Jonathan (Huntingdon) (Con)
Ellman, Mrs. Louise (Liverpool, Riverside) (Lab/Co-op)
Ellwood, Mr. Tobias (Bournemouth, East) (Con)
Farrelly, Paul (Newcastle-under-Lyme) (Lab)
Fisher, Mark (Stoke-on-Trent, Central) (Lab)
Gilroy, Linda (Plymouth, Sutton) (Lab/Co-op)
Greening, Justine (Putney) (Con)
Hodge, Margaret (Minister for Industry and the Regions)
Howarth, David (Cambridge) (LD)
Kilfoyle, Mr. Peter (Liverpool, Walton) (Lab)
Kramer, Susan (Richmond Park) (LD)
McCabe, Steve (Birmingham, Hall Green) (Lab)
Moffat, Anne (East Lothian) (Lab)
Prentice, Mr. Gordon (Pendle) (Lab)
Tapsell, Sir Peter (Louth and Horncastle) (Con)
Chris Shaw, Committee Clerk
† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 20 March 2007

[David Taylor in the Chair]

Draft Companies Act 2006 (Commencement No. 2, Consequential Amendments, Transitional Provisions and Savings) Order 2007

10.30 am
The Minister for Industry and the Regions (Margaret Hodge): I beg to move,
That the Committee has considered the draft CompaniesAct 2006 (Commencement No. 2, Consequential Amendments, Transitional Provisions and Savings) Order 2007.
I am delighted to debate the order under your very wise chairmanship, Mr. Taylor.
The Companies Act 2006, with which many hon. Members are very familiar, will bring major benefits to business, by modernising and simplifying company law. It is significant legislation, and we want now to ensure that its provisions are brought into force in an orderly fashion.
We announced last year that we intended to commence all parts of the Act by October 2008. I made a written statement to Parliament on 28 February this year, setting out the detailed commencement timetable. On the same day, we published a consultation document, setting out our detailed plans on implementation and inviting discussion. We want all stakeholders to work with us to develop a robust implementation package, and I am encouraged by the positive reactions that we have already received.
The Government have already had extensive discussions with business and other stakeholders about the commencement timetable. The first commencement order was made in December 2006, to commence provisions that facilitate electronic communications by companies and implement EU obligations.
Mr. Peter Kilfoyle (Liverpool, Walton) (Lab): I was musing on what my right hon. Friend said about inviting stakeholders to contribute. Did that include the trade unions?
Margaret Hodge: Yes, indeed, and a wide group of non-statutory organisations in the Corporate Responsibility Coalition were involved in certain provisions. There have been extensive consultations right across the board.
This instrument—the second commencement order—will come into force on 6 April this year, which is the common commencement date. The draft order will bring into force part 28, on takeovers, of the 2006 Act. Throughout the passage of the Companies Bill, the Government said that we intended to bring part 28 on takeovers into force at an early stage. The provisions that we are debating will replace regulations that took effect in May last year and implemented the European takeovers directive on an interim basis, while the Bill was debated.
The Takeover Panel has made an important contribution to the competitiveness of UK financial markets over the past 40 years. We want it to continue to do so within the new legal regime, which underpins its activities. Previously, the rules on takeovers were set out in the takeover code, which historically had no statutory basis. In replacing the interim regulations that implemented the takeovers directive, all the panel’s regulatory activities will be placed within a statutory framework for the first time.
Section 943 of the 2006 Act gives the Takeover Panel a new rule-making power, thus allowing it to make rules that have direct statutory effect. Earlier this month, the code committee of the Takeover Panel adopted the necessary changes to the takeover code to reflect the commencement of part 28 of the 2006 Act. Those changes will also come into force on 6 April.
The draft order will also extend to Northern Ireland the availability of community interest companies. As hon. Members will know, they are limited companies, with special additional features, intended for those who want to conduct a business or other activity for community benefit, not simply for private benefit.
Community interest companies were introduced in Great Britain by the Companies (Audit, Investigations and Community Enterprise) Act 2004—known as CAICE, which is pronounced either cake or case—and more than 700 such companies are already in existence. It was always intended that community interest companies would be extended to Northern Ireland. The Companies Act 2006 will introduce a single legislative regime for companies that applies throughout the United Kingdom. In the order, we seek to apply to Northern Ireland both the relevant provisions of the CAICE Act that relate to community interest companies and the supporting secondary legislation.
In making this instrument, we are relying on powers in the 2006 Act to make consequential amendments, transitional provisions and savings, and to commence the provisions of the Act. The consequential amendments provision—section 1294—is subject to the affirmative procedure. We are making common-sense use of that power. The draft order will repeal or revoke redundant legislation, such as the interim regulations that give effect to implementation of the takeovers directive, and it will also update references in other legislation to provisions replaced by the 2006 Act.
The provisions of the 2006 Act that the order will bring into force have been extensively debated already in both Houses of Parliament. The provisions are self-contained and offer immediate benefits, as they will secure regulatory independence for the Takeover Panel and extend the choice of corporate vehicles in Northern Ireland.
10.35 am
10.37 am
Susan Kramer (Richmond Park) (LD): I welcome the draft statutory instrument. As the Minister will be aware, my colleagues who were engaged in the debates on the Companies Act 2006 extensively considered much of the substance, and I join the hon. Gentleman in suggesting that this is not the time to go through those issues once again. I shall be exceedingly brief and simply say that we are supportive of the order and that we are particularly delighted that an early move has been made to extend the provisions on community interest companies to Northern Ireland.
10.38 am
Margaret Hodge: Thank you very much, Mr. Taylor, and I thank the Committee for its forbearance. This is a pretty technical bit of implementation, and I am glad that it has full support. I can give the hon. Gentleman the assurance that he seeks: if an offer is held up during a bid, the current regime will apply, so the answer is yes. With that, I suggest that we adopt the draft order.
Question put and agreed to.
Committee rose at twenty-one minutes to Eleven o’clock.
 
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