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Lord Phillips of Sudbury: My Lords, I add to my earlier comments one quick point on which I hope the Minister will reflect. The key statement that I cannot understand in the DTI statement—a formal statement under the deregulation legislation—is in paragraph 3. It states:
- "The Committee considered that, by removing the 20 member limit, the proposal would remove the legal burden from members of partnerships".
Lord McIntosh of Haringey: My Lords, I am grateful to all noble Lords who have taken part in the debate and have welcomed these regulations. I shall try to deal in turn with the points raised. First, the noble Lord, Lord Hodgson, asked whether the regulations applied to Northern Ireland. They do not. This is a devolved matter and Northern Ireland has separate companies legislation. He also asked me about parallel partnerships. As I understand it, parallel partnerships were a device to get round the limitation to 20 members and, therefore, there will no longer be a reason for them.
The noble Lord said that the originating legislation was dense and incomprehensible. Indeed, it was. That is why for a number of years we have undertaken a comprehensive review of companies legislation. As the noble Lord will be aware, in the summer we published a draft companies Bill. When it arrived on my desk, being of the order of 10 centimetres thick, I immediately sent it back again. I said that, when the consultation was complete, I would take delivery of a copy but that I had no intention of looking at it at that time.
The intention of the exercise, with the support of the Law Commission, is that we should revise all that.
That will not necessarily cover the noble Lord's point about the Trade Union and Labour Relations (Consolidation) Act, but it is a very minor point so far as concerns these regulations.The points raised by the noble Lord, Lord Phillips, are wide-ranging and concern the whole issue of registration and disclosure requirements. I do not complain about that. I can see that, if there is no limit on the numbers, then the argument for disclosure is different. However, this was a matter of very detailed consultation, and my understanding is that the substantial majority of respondents opposed setting up a register of partnerships. I also understand that the Law Commission report will not recommend such a register. Of course, once the Law Commission publishes its report, there will be further consultation and the Government will consider all the views, including those of the people who disagreed with the overwhelming majority.
The noble Lord talked about fluctuating partners and deed of settlement companies, but that was during the 18th and 19th centuries before the passage of the 1844 Act. The ability to sue the firm is the key element here. That applies now to partnerships. One does not have to identify all the partnerships in order to sue the firm. One can sue them at their place of business. As the noble Lord, Lord Phillips, rightly said, that does not help if they have gone out of business. But protection against those who have gone out of business is hardly affected by the number of partners.
Lord Phillips of Sudbury: My Lords, I am obliged to the Minister for giving way. The fact that one can sue a partnership as a firm does not help one to get at the personal assets that are needed to satisfy one's claim. That is the problem.
Lord McIntosh of Haringey: My Lords, it depends on the constitution of the partnership. However, surely in most cases the partners are jointly and severally liable. But, again, I suggest that this goes beyond the issue of 20 members and, therefore, beyond this set of regulations. The Law Commission is considering the issue of partnerships as legal entities as part of its reform of partnership law. The points raised by the noble Lord, Lord Phillips, can certainly be made in that respect.
He also asked me to comment on a statement by the committee. The Government are not responsible for what the committee says. I do not have the information in front of me, but I assume that he means the committee of the other place or of this House that was considering the regulations. We are not responsible for what such a committee says.
In terms of protection for investors, the interest in partnerships is regulated. Unlimited and limited partnerships are classed as unauthorised collective
investment schemes and are subject to the financial promotion rule in Section 238 of the Financial Services and Markets Act 2000. That means that they can be sold only to sophisticated investors who are well able to look after their own interests.The noble and learned Lord, Lord Fraser, reasonably said that if we get the matter wrong there will be problems in the future and the net effect will not
be deregulatory. That is why we are undertaking a review of company law and why we have published a draft companies Bill. There will also be an opportunity for representations to be made to ensure that that does not take place.On Question, Motion agreed to.
- House adjourned for the Christmas Recess at four minutes before five o'clock until 7th January next.
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