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.
|
