The
Committee consisted of the following
Members:
Atkins,
Charlotte
(Staffordshire, Moorlands)
(Lab)
Bacon,
Mr. Richard
(South Norfolk)
(Con)
Baldry,
Tony
(Banbury)
(Con)
Baron,
Mr. John
(Billericay)
(Con)
Burt,
Lorely
(Solihull)
(LD)
Djanogly,
Mr. Jonathan
(Huntingdon)
(Con)
Gilroy,
Linda
(Plymouth, Sutton)
(Lab/Co-op)
Keen,
Alan
(Feltham and Heston)
(Lab/Co-op)
McDonnell,
John
(Hayes and Harlington)
(Lab)
Mole,
Chris
(Ipswich)
(Lab)
Palmer,
Dr. Nick
(Broxtowe)
(Lab)
Seabeck,
Alison
(Plymouth, Devonport)
(Lab)
Stuart,
Ms Gisela
(Birmingham, Edgbaston)
(Lab)
Teather,
Sarah
(Brent, East)
(LD)
Thomas,
Mr. Gareth
(Parliamentary Under-Secretary of State for
International
Development)
Todd,
Mr. Mark
(South Derbyshire)
(Lab)
Young,
Sir George
(North-West Hampshire)
(Con)
David Weir, Committee
Clerk
attended the
Committee
Seventh
Delegated Legislation Committee
Thursday 27 March
2008
[John
Bercow
in the
Chair]
Draft Companies Act 2006 (Consequential Amendments Etc) Order 2008
8.55
am
The
Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform
I beg to
move,
That the
Committee has considered the draft Companies Act 2006
(Consequential Amendments Etc) Order
2008.
The
Chairman:
With this it will be convenient to consider the
draft Companies Act 2006 (Consequential Amendments) (Taxes and National
Insurance) Order
2008.
Mr.
Thomas:
It is a genuine pleasure to serve under your
chairmanship, Mr. Bercow. I do not believe that I have had
the privilege before. I have had the joyI shall put it like
thatof answering many of your questions in Select Committee
debates, and no doubt that will continue, but I think that this is the
first time that I have served under your chairmanship, and I look
forward to it being a positive
experience.
The
orders are being made under sections 1292, 1294 and 1296 of the
Companies Act 2006. They make consequential amendments to other
legislation that are required as a direct result of the coming into
force of provisions of the Act. As the Committee will be aware, the Act
is being implemented in phases. The draft orders relate to provisions
that will commence on 6 April and 1 October this year,
including important provisions on accounts, reports and audits. There
are also a few amendments relating to provisions commencing earlier. We
expect to lay a further consequential amendments order in draft towards
the end of this year, or perhaps early next year, which will deal with
the amendments required as a result of the commencement of certain
provisions of the Act on 1 October next year.
The draft Companies Act 2006
(Consequential Amendments Etc) Order 2008 will make consequential
changes to many different pieces of legislation; the size of the order
is a clue to how many. The changes can be broken down into four broad
areas. The first is consequential amendments to existing company law:
for example, the remaining parts of the Companies Act 1985 and the
Companies (Audit, Investigations and Community Enterprise) Act
2004.
The second
area is amendments to insolvency legislation. The changes are required
because the 2006 Act breaks the link between the Companies Act 1985 and
the Insolvency Act 1986. We have inserted provisions previously
contained in companies legislation into insolvency legislation, and
additional changes have been made to ensure that the two pieces of
legislation work effectively together.
The
third area is statutory audit. About 50 Acts provide for audits of
certain non-company accounts by auditors who must be eligible for
appointment under part 2 of the Companies Act 1989. The order will
amend those requirements to refer to part 42 of the 2006 Act.
Finally, the draft order will
make consequential amendments to other primary legislation that refers
to or includes concepts from the 1985 or 1989 Acts, includingto
pick two examples at randomthe Pig Production Development Act
(Northern Ireland) 1964 and the Hairdressers (Registration) Act 1964,
which may be of interest to some Committee
members.
The draft
Companies Act 2006 (Consequential Amendments) (Taxes and National
Insurance) Order 2008 will amend legislation for which Her
Majestys Revenue and Customs is responsible but which uses
Companies Act references, definitions and concepts. I hope that the
Committee will recognise that it is sensible to consider the two orders
together, given that they make consequential amendments arising from
the implementation of the 2006
Act.
The
orders make two types of consequential amendment. The first relates to
references and definitions in other Acts changed by the 2006 Act, and
makes purely mechanical amendments. For example, a reference to the
Companies Act 1985 is on occasion simply changed to a reference to the
Companies Act 2006. The second type relates to a change in the
substance of company law; for example, a change has been made to the
rules relating to how a company can execute documents. Nevertheless,
the changes are not
dramatic.
On the basis
of that information, I hope that the Committee can approve the orders.
I am happy to answer Members
questions.
9
am
Mr.
Jonathan Djanogly (Huntingdon) (Con): Good morning,
Mr. Bercow. The Companies Act 2006 has many facets and
indeed many complications, not least as a result of its long and
staggered implementation. We always recognised that that would involve
a large number of creases to be ironed out and consequential amendments
to other Acts. Whoever got the job of looking through all the other
Acts to see where consequential amendments should be made deserves a
medal, in my opinion.
Nothing in
the orders presents a problem to us. I congratulate the Joint Committee
on Statutory Instruments on doing its usual fastidious job of spotting
the unintended consequence of the new directors loans
disclosure requirements in section 413 of the 2006
Act.
9.1
am
Lorely
Burt (Solihull) (LD): I, too, am a veteran of the
Companies Act 2006, so I can sympathise with the hon. Member for
Huntingdon about the number of consequential amendments that were bound
to be incurred by the longest Bill in history. As the amendments are
all consequential and contained in previous legislation, we have no
objections to the
orders.
9.2
am
Linda
Gilroy (Plymouth, Sutton) (Lab/Co-op): Co-operatives are
governed in law through the Industrial and Provident Societies Acts.
Until recently, that body of law was even more out of date than company
law,
having been left largely untouched since the Victorian era. As the
Minister will know, Co-operative MPs have been pressing for reform of
industrial and provident society law, and some changes have been
introduced to allow its modernisation by statutory instrument in line
with changes to company law. I have not had time to study the orders in
as much detail as I would like, but will they help in any way to bring
industrial and provident society law up to date with company
law?
9.3
am
Mr.
Thomas:
I am grateful to Committee members for how they
have received and considered the orders. I say to the hon. Member for
Huntingdon that my officials fought for the privilege of looking
through all the other Acts of Parliament that might contain relevant
references. Frankly, it was the task of Solomon to decide which
official should have that privilege, but I hope that Members will
recognise that I did a good job in
choosing.
On
my hon. Friends question about industrial and provident society
legislation, there are no dramatic changes in the orders. The one
important change that I should flag involves eligibility for
appointment as an auditor, as it is now determined under part 42 of the
Companies Act 2006 rather than the equivalent provisions of the
Companies Act 1989. The change will have an impact on industrial and
provident societies. As she rightly
says, both the co-operative sector in general and Co-operative MPs have
been pressing for reform of industrial and provident society law, and a
series of Acts have been passed, including a provision allowing
industrial and provident society law to be updated when consequential
changes are made to company law. We have used that provision in a
variety of ways. As she may know, the Treasury is consulting on
possible reforms to industrial and provident society law. Again, that
will take advantage of some provisions in some Acts of Parliament to
allow future modernisation of industrial and provident society law in
line with the beneficial changes made to company
law.
Question put
and agreed
to.
Resolved,
That the Committee has
considered the draft Companies Act 2006 (Consequential
Amendments Etc) Order
2008.
Resolved,
That the Committee has
considered the draft Companies Act 2006 (Consequential
Amendments) (Taxes and National Insurance) Order
2008.[Mr.
Thomas.]
Committee
rose at five minutes past Nine
oclock.