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Lord Filkin: My Lords, I beg to move that the House do not insist on its Amendment No. 46 to which the Commons have disagreed and do agree with the Commons in their Amendment No. 46A to the words so restored to the Bill.
Lord Filkin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 62A to Lords Amendment No. 62. I spoke to the amendment with Amendment No. 28A.
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Lord Grocott: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Companies (Audit, Investigations and Community Enterprise) Bill, have consented to place their Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
"( ) Before the appointment of a director under this section, the Regulator must take all reasonable steps to ensure that the chairman and board of the community interest company agree that his actions are necessary and appropriate."
The noble Lord said: My Lords, it is quite clear what I am after in Amendments Nos. 1 and 2. We have debated the topic. I did not move the equivalent amendment on Report for various reasons, which those of us who attended the debate will understand. However, I would like some reassurance on the matter from the Minister. I have written to him; he knows what I am looking for. I beg to move.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I had an interesting discussion with the noble Lord a few weeks ago about the issues underlying the amendments, and he has since written to me about them. He made the point that, where the regulator uses his powers to appoint a director or a manager to a CIC, it would be helpful if the regulator could obtain the consent of the CIC's existing directors to his action. That would reduce the risk of the regulator acting in a heavy-handed way, and of the appointment leading to tensions within the management team.
We would all agree that it would be desirable to get the consent of the CIC's directors to an appointment, and that the regulator should aim to do it where possible. However, it will not always be realistic to expect to obtain the board's agreement. As the noble Lord and I have discussed, an appointment under either of the powers will be made only where the CIC in question is in breach of at least one of the default conditions set out in Clause 39, and the regulator thinks that the power must be exercised to maintain confidence in CICs. The situation will therefore be quite serious.
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In such a position, we would of course expect the regulator to be in dialogue with the CIC concerned. He will surely need to talk to the directors of the CIC to find out what is going on, and what needs to be done to fix it. If he has not done so, he will not be able to provide good reasons for taking action, and will, quite rightly, be challenged. But there can be no certainty that the board of the CIC will co-operate with him, let alone that it will agree with the regulator's decision. For instance, the regulator may decide to appoint a director or a manager to a CIC because he considers that the existing directors are not capable without assistance of remedying the problem. In some cases, one can easily imagine that the existing directors might not agree. In other cases, the board might be so split that no agreement was possible.
the consent of the board, rather than to require their consent in all cases. However, I do not think that this additional measure is necessary. That is because the regulator is already required by the general principles of administrative law not to behave unreasonably. He is also subject to the specific constraints in the Bill, to act in accordance with good regulatory practice and to use his supervisory powers only where necessary. This means that where the regulator acted improperly or unreasonably in making an appointment, he would be subject to challenge.
If the appointment of a manager or director by the regulator is unnecessary, or inappropriate, the regulator would be in breach of his duty in Clause 39 to use his powers only to the extent necessary; and the CIC would be able to appeal to the appeal officer. The Government brought forward amendments at Report stage to require the regulator to give reasons for his decisions and to allow the appeal officer to consider appeals on matters of law as well as fact.
Overall, the Bill together with existing administrative law already place significant constraints on the way in which the regulator may use his power. As I have said in previous debates, our aim is that the regulator should have a light but proportionate touch and we think that the current provisions of the Bill achieve that. I hope that in the light of that explanation the noble Lord, Lord Glentoran, will be reassured and will feel able to withdraw the amendment.
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