Joint Committee On Human Rights Tenth Report


5 Companies (Audit, Investigations and Community Enterprise) Bill

Date introduced to the House of Lords

Current Bill Number

Previous Reports

3 December 2003

House of Lords 8

None

5.1 We have examined the Companies (Audit, Investigations and Community Enterprise Bill, a Government Bill in respect of which Lord Sainsbury of Turville has made a statement of compatibility with Convention rights under section 19(1)(a) of the Human Rights Act 1998.

5.2 Among its many effects, this Bill would confer increased powers on companies' auditors and on company investigators to obtain information about the activities of companies. Some of these may have an impact on human rights, including particularly the rights of companies to respect for their correspondence (ECHR Article 8.1) and to be free of coerced self-incrimination (ECHR Article 6.1). The provisions also engage the right of other people who have dealings with or are employed by a company to have information about their private lives respected (ECHR Article 8.1).

5.3 Clause 8 would add new sections 389A and 389B to the Companies Act 1985, allowing auditors access to a wide range of material and requiring many people to provide information to the auditors. However, new section 389A(7) would protect information which is subject to legal professional privilege in England and Wales or confidentiality of communications in Scotland, and seems to us to provide adequate protection to meet the requirements of ECHR Article 8.2.

5.4 Where it is alleged that a company's accounts are defective, clause 11 would insert a new section 245D in the Companies Act 1985 and a new Article 253D in the Companies (Northern Ireland) Order 1986. These would make it possible for the Inland Revenue to disclose tax information in its possession to certain persons who are applying to a court on the ground that a company's accounts are alleged to be defective. Tax information is often very sensitive and personal, and disclosure engages the right to respect for private life under ECHR Article 8.1. However, new section 245D(2) and new Article 253D(2) would prevent disclosures which would contravene the Data Protection Act 1998, and other restrictions on use and further disclosure of information are contained in new section 245E and Article 253E. This seems to us to be likely to offer adequate protection for the right to respect to private life to allow the interference with the right to be justified under ECHR Article 8.2.

5.5 Clause 12 would insert new sections 245F and 245G in the Companies Act 1985, allowing people to be compelled to answer questions or provide information or documents if they are reasonably required by an authorised person to establish whether a company's accounts comply with the statutory requirements. This has the potential to engage both the right to respect for correspondence under ECHR Article 8.1 and the right to be free of coerced self-incrimination under ECHR Article 6.1. However, the Bill seems to us to contain adequate protection for those rights. First, new section 245F(6) would prevent a person's compelled statements from being used against him or her in criminal proceedings. Secondly, the right to legal professional privilege (or, in Scotland, confidentiality of communications) and rights under the Data Protection Act 1998 are protected by new sections 245F(7) and 245G(10) respectively. Thirdly, other restrictions on further disclosure of information are contained in new section 245G. We therefore consider that these provisions are unlikely to operate in a manner incompatible with human rights.

5.6 Chapter 3 of Part 1 of the Bill would allow the Secretary of State to authorise investigators or company inspectors to exercise additional powers in respect of companies, including power to require production of documents and provision of information (clause 18, substituting a new section for section 447 of the Companies Act 1985) and power to enter and remain on premises (clause 20, inserting new sections 453A and 453B in the Companies Act 1985). These provisions would be capable of engaging the right to be free of coerced self-incrimination under ECHR Article 6.1 and the right to respect for private life and correspondence under ECHR Article 8. However, the impact on those rights would be ameliorated by new section 448A(3) to (5) (inserted by clause 19) which has the effect that it would continue to be unlawful for a disclosure to be made if it is prohibited by an enactment, involves disclosure of information subject to legal professional privilege (or, in Scotland, confidentiality of communications) communicated in the course of obtaining legal advice, or consists of confidential information held by a lawyer or banker. We also note that new section 447A, inserted by Part 3 of Schedule 2 to the Bill, would prevent compelled statements being adduced as evidence in criminal proceedings against the person who made them unless evidence relating to it is adduced, or a question relating to it is asked, by or on behalf of that person in those proceedings. In relation to the power to enter and remain on premises, we note that the investigator would only be allowed to enter premises which are reasonably believed to be used wholly or partly for the purposes of the company's business, would be subject to procedural requirements imposed by new section 453B, and, as a public authority, would also have to comply with the requirement of the Human Rights Act 1998, section 6 to act in a manner compatible with Convention rights. That being so, we consider that the safeguards for the rights are likely to be sufficient to prevent them from operating in a manner incompatible with human rights.

5.7 We consider that the other provisions of the Bill are unlikely to give rise to any significant risk of incompatibility with human rights.

5.8 We therefore conclude that it is not necessary to draw the Bill to the attention of either House on human rights grounds.



 
previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2004
Prepared 6 April 2004