Instruments reported
At its meeting on 21 May 2025 the Committee scrutinised a number of instruments in accordance with Standing Orders. It was agreed that the special attention of both Houses should be drawn to two of those considered. The instruments and the grounds for reporting are given below. The relevant departmental memoranda are published as appendices to this report.
1 S.I. 2025/439: Reported for requiring elucidation and doubt as to vires
The Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2005
Procedure: Made negative
1.1 The Committee draws the special attention of both Houses to these Regulations on the grounds that they require elucidation in one respect and that there is doubt as to whether they are intra vires.
1.2 These Regulations make amendments to provisions in the Companies Act 2006 and in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410). These amendments repeal most of the requirements relating to the reporting of directors’ remuneration by quoted companies that were introduced in 2019 to implement part of an EU Directive. The Regulations also make minor changes to the current audit regulatory framework through amendments to three other instruments.
1.3 The preamble to these Regulations cites provisions in both the Retained EU Law (Reform and Revocation) 2023 Act (the “2023 Act”) and the Companies Act 2006 (the “Companies Act”) as enabling powers for the instrument. The Explanatory Note states that all of the provisions being amended by Part 2 of the Regulations are secondary retained EU law and therefore capable of being amended by using the general power contained in section 14 of the 2023 Act. The Committee was therefore unclear as to why, in those circumstances, citation of certain of the enabling provisions in the Companies Act (sections 421(1) and 468(1) and (2)) was necessary. The Committee asked the Department to explain which provisions were enabled by those Companies Act provisions.
1.4 In its memorandum printed at Appendix 1, the Department explains that, while it may be the case that the general power in section 14 of the 2023 Act would have been sufficient to make all the changes in Part 2 of the instrument relating to directors’ remuneration reporting, it is nonetheless appropriate to recite the specific Companies Act powers that enable certain of those amendments as well (with the 2023 Act power being relied on only for those remaining amendments where the Companies Act powers are not sufficient). As a result, the 2023 Act power is only relied upon to make the amendments contained in regulations 4 and 10 of this instrument. The Committee is grateful for this clarity but notes that the Explanatory Note to this instrument had the effect of introducing a lack of clarity about the basis for the amendments in Part 2 of the instrument. However, the Committee accepts the Department’s implicit position in its memorandum that, where a specific power is available for any provision, it is generally preferable to rely on such a power rather than a general power that could in principle enable the same provision. The Committee therefore reports this instrument for requiring elucidation, provided by the Department’s memorandum.
1.5 These Regulations, being made under powers in the 2023 Act, are subject to the requirements set out in paragraph 6 of Schedule 5 to that Act (the “sifting requirements”). The sifting requirements impose certain conditions that must be satisfied in order for the relevant national authority (here, the Secretary of State) to have power to make the instrument subject to the negative procedure. One condition is that a draft of the instrument must be laid before each House of Parliament, and that the relevant committees of each House must then make a recommendation as to the appropriate parliamentary procedure for the instrument. In the case of these Regulations, a draft of the instrument was laid before both Houses on 4 March 2025 for the purposes of the sifting requirements, and the relevant committees then recommended that they be subject to the negative procedure. However, the Committee noticed that the version of the instrument subsequently made by the Secretary of State (on 31 March 2025) and then laid before Parliament in accordance with the negative procedure was different in one respect from the draft that had been laid before Parliament for the purposes of the sifting requirements, in that the coming into force date specified in regulation 1(2) had changed. The Committee asked the Department to explain.
1.6 In its memorandum, the Department explains that the coming into force date changed between the laying of the instrument for the purposes of the sifting requirements and its making because the Department wished to avoid the instrument coming into force during Parliamentary recess. The Committee is not aware that there is any requirement to avoid instruments coming into force during periods of Parliamentary recess. The 21 days referred to the in the “21-day rule” are calendar days, and days on which Parliament is not sitting are not excluded (see First Special Report of Session 2017–19, Transparency and Accountability in Subordinate Legislation at paragraph 2.15). Moreover, a desire to avoid such a result should not in any case override compliance with the statutory pre-conditions for the making of the instrument. In the Committee’s view, the wording of paragraph 6(2) of Schedule 5 to the 2023 Act does not merely prescribe a procedural requirement with respect to the making of certain instruments under the 2023 Act, but also expressly states that the instrument may not be made unless that requirement is fulfilled. Paragraph 6(2) does not require the laying of a draft of a similar instrument, it requires the laying of a draft of the instrument. If an instrument is changed after it has been laid for sifting, the made instrument is not the same as the draft laid before each House and that requirement has not been met. The instrument has therefore purported to be made without compliance with a statutory pre-condition, and the Committee accordingly reports this instrument for doubt as to whether it is intra vires.
2 S.I. 2025/444: Reported for doubt as to vires
The Companies Act 2006 (Recognition of Third Country Qualifications and Practical Training) (Amendment) Regulations 2005
Procedure: Made negative
2.1 The Committee draws the special attention of both Houses to these Regulations on the ground that there is doubt as to whether they are intra vires.
2.2 These Regulations revoke and replace provisions in the Companies Act 2006 relating to the approval of overseas audit qualifications. They are made using powers in the Retained EU Law (Revocation and Reform) Act 2023 (the “2023 Act”) and are therefore subject to the sifting requirements in paragraph 6 of Schedule 5 to that Act as set out earlier in this Report in relation to S.I. 2025/439. The Committee noticed that the same point that it queried in relation to that instrument also arose in this case (the coming into force date specified in regulation 1(2) having changed between the instrument being laid for sifting purposes on 12 March 2025 and subsequently being made on 3 April 2025) and asked the Department for Business and Trade to explain.
2.3 In a memorandum printed at Appendix 2, the Department gives the same explanation for the change as for S.I. 2025/439. Therefore, for the reasons given above in relation to S.I. 2025/439, the Committee reports this instrument for doubt as to whether it is intra vires.
Instruments not reported
At its meeting on 21 May 2025 the Committee considered the instruments set out in the Annex to this Report, none of which were required to be reported to both Houses.
Annex
Draft instruments requiring affirmative approval
|
S.I. Numbers |
S.I. Title |
|
Draft |
|
|
Draft |
The Casinos (Gaming Machines and Mandatory Conditions) Regulations 2025 |
Instruments subject to annulment
|
S.I. Numbers |
S.I. Title |
|
S.I. 2025/503 |
The Gambling Act 2005 (Gaming Tables in Casinos) (Definitions) (Amendment) Regulations 2025 |
|
S.I. 2025/505 |
The Motor Vehicles (Driving Licences) (Amendment) (No. 4) Regulations 2025 |
|
S.I. 2025/549 |
Instruments not subject to Parliamentary proceedings not laid before Parliament
|
S.I. Numbers |
S.I. Title |
|
S.I. 2024/389 |
|
|
S.I. 2025/430 |
The Levelling-up and Regeneration Act 2023 (Commencement No. 7) Regulations 2025 |
|
S.I. 2025/494 |
The Power to Award Degrees etc. (National Film and Television School (The)) (Amendment) Order 2025 |
|
S.I. 2025/501 |
The Investigatory Powers (Amendment) Act 2024 (Commencement No. 2) Regulations 2025 |
|
S.I. 2025/553 |
The Taxation of Chargeable Gains (Gilt-edged Securities) Order 2025 |
Appendix 1: Memorandum from the Department for Business and Trade
S.I. 2025/439
The Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2005
1. The Committee has asked the Department for Business and Trade for a memorandum on the following point(s):
Explain which provisions in this instrument are enabled by sections 421(1) and 468(1) and (2) of the Companies Act 2006, given that the provisions amended by Part 2 of this instrument are all secondary retained EU law and therefore capable of being revoked and replaced under the powers cited in section 14 of the Retained EU Law (Revocation and Reform) Act 2023.
Explain why regulation 1(2) provides that the Regulations come into force 40 days after the day on which they are made, but in the draft of this instrument laid for sifting purposes, regulation 1(2) provided that the Regulations come into force 21 days after the day on which they are made.
2. The Department is grateful for the Committee’s consideration of this instrument.
3. On the Committee’s first question, about the use in the Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2025 (‘the instrument’) of the enabling powers in sections 421(1) and 468(1) and (2) of the Companies Act 2006 (‘the 2006 Act’), the instrument cites these powers on the basis that these are the specific powers that were approved by Parliament to make changes to the content of directors’ remuneration reporting (section 421(1)), and to the category of companies subject to remuneration and other reporting requirements in Part 15 of the 2006 Act (section 468(1) and (2)). While it may be the case that the general power in section 14 of the Retained EU Law (Revocation and Reform) Act 2023 (‘the 2023 Act’) would have been sufficient to make all the changes in the instrument related to remuneration reporting, the Department believes it is appropriate to cite the relevant specific pre-existing powers that also enable these changes in line with the requirement to recite every enabling provision that the SI derives its validity from or through, while only relying on the new general powers in the 2023 Act where the pre-existing specific powers are insufficient.
4. The citation of those powers is considered appropriate given that the original amendments to the 2006 Act that are now largely reversed by this instrument were made by the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) (Amendment) Regulations 2019 (SI 2019 No. 970) (’the 2019 Regulations’), which cited sections 421 and 468 of the 2006 Act alongside section 2(2) of the European Communities Act 1972.
5. The power included in section 14 of the 2023 Act is cited in the instrument specifically in order to repeal elements of the 2019 Regulations that could not be amended using the specific powers in sections 421 or 468 of the 2006 Act. These are the elements that cover neither the content of the directors’ remuneration report (which are amended by regulations made using the section 421 power) nor amendments to Part 15 of the 2006 Act (which are amended by regulations made using the section 468 power). Accordingly, section 14 of the 2023 Act is needed specifically to make the changes to Part 10 of the 2006 Act, in regulation 4 of the instrument; and those to Part 16 of the 2006 Act, in regulation 10 of the instrument, which largely remove unquoted traded companies from certain procedural and audit measures relating to directors’ remuneration reporting. Meanwhile, section 468 of the 2006 Act is needed to make changes to Part 15 of that Act, and to Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (‘the 2008 Regulations’), to remove unquoted traded companies from the scope of the directors’ remuneration reporting framework. These changes are in regulations 5, 6, 7, 8, 9, 11 and 12 of the instrument. Finally, Section 421 of the 2006 Act is used to make the changes to the content of directors’ remuneration reporting in Schedule 8 to the 2008 Regulations, in regulations 11 and 12 of the instrument.
6. In respect of the second point the Committee has raised, the instrument was originally drafted and intended to come into force 21 calendar days after the day on which it was made. The version of the instrument that was laid for consideration by the sifting committees reflects this approach.
7. However, as plans were developed to make the instrument under the negative resolution procedure, and to lay it before Parliament on 3rd April, those 21 days would have meant that the coming into force date, and part of the 21-day period preceding it, would fall during the period over Easter when Parliament was in recess. This is usually something which, if possible, the Government seeks to avoid, unless there is a specific valid reason for the 21-day period, or parts of it, to fall or end during a recess period. Accordingly, an alteration was made so that the coming into force date fell 40 days after the instrument was made. This was made to allow for the Regulations to come into force on a day when Parliament was sitting, with a sufficient total number of sitting days falling within the 40-day period.
Department for Business and Trade
12 May 2025
Appendix 2: Memorandum from the Department for Business and Trade
S.I. 2025/444
The Companies Act 2006 (Recognition of Third Country Qualifications and Practical Training) (Amendment) Regulations 2005
1. The Committee has asked the Department for Business and Trade for a memorandum on the following point(s):
Explain why regulation 1(2) provides that the Regulations come into force 40 days after the day on which they are made, but in the draft of this instrument laid for sifting purposes, regulation 1(2) provided that the Regulations come into force 21 days after the day on which they are made.
2. The Department is grateful for the Committee’s consideration of this instrument
3. The Companies Act 2006 (Recognition of Third Country Qualifications and Practical Training) (Amendment) Regulations 2025 were originally drafted and intended to come into force 21 calendar days after the day on which they were made. The version of the instrument that was laid for consideration by the sifting committees reflects this approach.
4. However, as plans were developed to make the instrument under the negative resolution procedure, and to lay it before Parliament on 3rd April, those 21 days would have meant that the coming into force date, and part of the 21-day period preceding it, would fall during the period over Easter when Parliament was in recess. This is usually something which, if possible, the Government seeks to avoid, unless there is a specific valid reason for the 21-day period, or parts of it, to fall or end during a recess period. Accordingly, an alteration was made so that the coming into force date fell 40 days after the instrument was made. This was made to allow for the Regulations to come into force on a day when Parliament was sitting, with a sufficient total number of sitting days falling within the 40-day period.
Department for Business and Trade
12 May 2025
Formal Minutes
Wednesday 21 May 2025
Members present
Sir Bernard Jenkin, in the Chair
Lewis Atkinson
Lord Brady of Altrincham
Lord Meston
Andrew Pakes
Lord Sahota
Baroness Sater
Gareth Snell
Report consideration
Draft Report (Twenty-fifth Report), proposed by the Chair, brought up and read.
Ordered, That the draft Report be read a second time, paragraph by paragraph.
Paragraphs 1.1 to 2.3 read and agreed to.
Annex agreed to.
Papers were appended to the Report as Appendices 1 to 2.
Resolved, That the Report be the Twenty-fifth Report of the Committee to both Houses.
Ordered, That the Chair make the Report to the House of Commons and that the Report be made to the House of Lords.
Adjournment
Adjourned till Wednesday 4 June at 3.40 p.m.
List of Reports from the Committee during the current Parliament
All publications from the Committee are available on the publications page of the Committee’s website.
Session 2024–25
|
Number |
Title |
Reference |
|
24th |
2 Statutory Instruments Reported |
HC 291-xxiv |
|
23rd |
2 Statutory Instruments Reported |
HC 291-xxiii |
|
22nd |
3 Statutory Instruments Reported |
HC 291-xxii |
|
21st |
2 Statutory Instruments Reported |
HC 291-xxi |
|
20th |
5 Statutory Instruments Reported |
HC 291-xx |
|
19th |
No Statutory Instruments Reported |
HC 291-xix |
|
18th |
2 Statutory Instruments Reported |
HC 291-xviii |
|
17th |
No Statutory Instruments Reported |
HC 291-xvii |
|
16th |
1 Statutory Instrument Reported |
HC 291-xvi |
|
15th |
1 Statutory Instrument Reported |
HC 291-xv |
|
14th |
No Statutory Instruments Reported |
HC 291-xiv |
|
13th |
8 Statutory Instruments Reported |
HC 291-xiii |
|
12th |
2 Statutory Instruments Reported |
HC 291-xii |
|
11th |
2 Statutory Instruments Reported |
HC 291-xi |
|
10th |
2 Statutory Instruments Reported |
HC 291-x |
|
9th |
2 Statutory Instruments Reported |
HC 291-ix |
|
8th |
4 Statutory Instruments Reported |
HC 291-viii |
|
7th |
1 Statutory Instrument Reported |
HC 291-vii |
|
6th |
4 Statutory Instruments Reported |
HC 291-vi |
|
5th |
5 Statutory Instruments Reported |
HC 291-v |
|
4th |
2 Statutory Instruments Reported |
HC 291-iv |
|
3rd |
10 Statutory Instruments Reported |
HC 291-iii |
|
2nd |
No Statutory Instruments Reported |
HC 291-ii |
|
1st |
2 Statutory Instruments Reported |
HC 291-i |