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Lord Freeman moved Amendment No. 183:
Page 73, line 31, at end insert "and, where the company has a company secretary, to the company secretary"
The noble Lord said: This amendment is intended to ensure that the secretary is aware of declarations treated as made at meetings of the directors, and that a central record of declarations can be kept. I am grateful to the various professional bodies that represent company secretaries for drawing this to my attention. I beg to move.
Lord Goldsmith: The short answer is that particular companies may find it helpful for a copy of the notice to be sent to the company secretary, if there is one, but we do not see a need to require that in the Bill. Neither
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the Bill nor existing law prescribes the functions or duties of a company secretary. Although it is common that company secretaries keep records of directors' meetings—that is one responsibility that companies may well place on them—it is not a requirement imposed by law. Indeed, the company secretary is not even required by law to be present at the meeting.
3.15 pm
Lord Clinton-Davis: Although there may not be a requirement of that kind, would it not be desirable to include the words "company secretary" in this connection?
Lord Goldsmith: As I said, a particular company may want to have that as its practice. A change is intended under these provisions. At the moment, Section 317 of the Companies Act requires a declaration of interest to be made by a director at a meeting of the directors. There is now to be a new option, which is the ability to make that declaration by notice in writing. Under the Bill, when the notice is made in writing the director must send the notice to the other directors. Those notices are deemed to form part of the proceedings at the next meeting of the directors after the notice is given. Clause 227, to which we shall come, applies, so that the making of a declaration must be included in the minutes of the directors' meeting.
Against that background, it seems unnecessary to add to that a statutory requirement that the notice be sent to the company secretary—forgive me, I recognise that the amendment recognises that the company may not have a company secretary. However, I repeat that the Companies Acts do not place responsibilities on the company secretary as such. This requirement seems unnecessary and may not fit within the operation of the particular company, although, in many cases, I have little doubt that the company will want to ensure that the company secretary receives the notice.
Lord Hodgson of Astley Abbotts: I am grateful to the noble and learned Lord for his response. I do not want to run before our horse to market by anticipating our debates on Part 12, when we shall discuss the company secretary, but one issue that we are trying to distil in the Bill is transparency and a still, small voice of calm in the midst of the hurly-burly that is corporate life. That is one problem that we have with Part 10 generally. The company secretary, where there is one, is that still, small voice of calm because he has a much more administrative role. I hope that the Government will think further about this, because it could be very helpful in achieving the aims that are shared on all sides of the Committee: to get transparency and a proper process. Not accepting the amendment misses an opportunity to improve the possibilities for corporate governance. We shall come back to this when we discuss Part 12, but it is a pity not to have dealt with it here.
Lord Goldsmith: As the noble Lord put that question to me, I understand his point, but it is equally
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important to recognise the force of the point that I made before. Notice has to be provided to the other directors; then the making of the declaration must be included in the minutes of the next directors' meeting. So there is the transparency for which the noble Lord is pressing. But perhaps we both need to reflect on both propositions.
Lord Freeman: There is a fine line to be drawn between encouraging best practice by, for example, a combined code, and trying to ensure that there is a proper underpinning of the statutory duties that directors and boards collectively have. I agree with the comments of my noble friend Lord Hodgson and we will return to the matter either later in our discussion or at a later stage. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Freeman moved Amendment No. 184:
Page 73, line 36, leave out "it" and insert "that notice, or notices given under this section in general,"
The noble Lord said: This is to do with the modern age of electronic communication. My amendment would make Clause 167(4)(b) read: "if the recipient has agreed to receive that notice, or notices given under this section in general, by electronic means, by agreed electronic means". We are trying to avoid being caught seriatim forcing on the director communicating the information to ensure that he has specific agreement by those receiving it each time that a communication is sent. If there was a general agreement—it is common practice in many companies for the directors to agree to communicate with one another, with the chief executive or with the company secretary by electronic means—that would ease matters considerably. I beg to move.
Lord Goldsmith: The amendment is unnecessary because the Bill requires that the notice may be sent by agreed electronic means,
The question of fact is: has he agreed to receive it? He might have agreed to receive it by saying, "On this occasion only, send it by electronic means"; he may have agreed to receive it by electronic means because he has given a standing instruction that he can do so. Either would satisfy the requirements of the clause, so there is no need to spell out that it could be a specific or a general notice, because it plainly could.
There is a disadvantage to the amendment, because it appears—we would have to see what the courts made of it—to restrict the sort of notice that a director could give to either a specific or a general one. Actually, directors might say, "Send me electronic notices whenever I am overseas", or, "Send me electronic notices, but only during the month of March". It might be said that a limited general notice is not included in the words that the noble Lord would write into the Bill; the notice would have to be either specific or general.
So there are difficulties of that sort, but my principal point, to reassure the noble Lord and those who have raised this point, is that it seems to me incontrovertible
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that the only question that will arise is: has the recipient agreed to receive it by electronic means? He may have done specifically and alone to that individual notice or by way of a general agreement. Either would constitute agreement.
Lord Freeman: Following the wisdom that the noble Lord, Lord Grabiner, imparted to us, and the importance for those interpreting the law by reference to what the Minister, not others, said, I am convinced. I accept what the Minister said and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Goldsmith moved Amendment No. 185:
The noble and learned Lord said: Grouped with Amendment No. 185 is Clause 722 stand part and government Amendments Nos. 353 and 355 to 357.
The electronic communication provisions will not only produce some of the most significant cost savings of the Bill, but enable companies and their shareholders to reap the great benefits of improved delivery of and access to information, as well as easier decision-making processes. The objective of the government amendments is to simplify the existing drafting by inserting a single, general provision covering the meaning of the terms "hard copy", "electronic communications" and related expressions wherever they appear in the Companies Acts. So Amendments Nos. 185, 353 and the removal of Clause 722 will remove separate provisions about the terms "hard copy" and "electronic form" and related expressions in Clauses 167, 722 and 751. The new general provision is inserted by Amendment No. 355. Amendments Nos. 356 and 357 are consequential changes to the index of defined expressions in Schedule 9. I beg to move.
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