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Lord Goldsmith moved Amendment No. 381:
"AUTHORISATION OF AGREEMENT BY MEMBERS OF THE COMPANY
(1) A liability limitation agreement is authorised by the members of the company if it has been authorised under this section and that authorisation has not been withdrawn.
(2) A liability limitation agreement between a private company and its auditor may be authorised—
(a) by the company passing a resolution, before it enters into the agreement, waiving the need for approval,
(b) by the company passing a resolution, before it enters into the agreement, approving the agreement's principal terms, or
(c) by the company passing a resolution, after it enters into the agreement, approving the agreement.
(3) A liability limitation agreement between a public company and its auditor may be authorised—
(a) by the company passing a resolution in general meeting, before it enters into the agreement, approving the agreement's principal terms, or
(b) by the company passing a resolution in general meeting, after it enters into the agreement, approving the agreement.
(4) The resolution required is an ordinary resolution, subject to any provision of the company's articles requiring a higher majority (or unanimity).
(5) The "principal terms" of an agreement are terms specifying, or relevant to the determination of—
(a) the kind (or kinds) of acts or omissions covered,
(b) the financial year to which the agreement relates, or
(c) the limit to which the auditor's liability is subject.
(6) Authorisation under this section may be withdrawn by the company passing an ordinary resolution to that effect—
(a) at any time before the company enters into the agreement, or
(b) if the company has already entered into the agreement, before the beginning of the financial year to which the agreement relates.
Paragraph (b) has effect notwithstanding anything in the agreement."
On Question, amendment agreed to.
[Amendments Nos. 382 and 383 not moved.]
Clause 524 [Effect of liability limitation agreement]:
[Amendments Nos. 384 to 386 not moved.]
Lord Goldsmith moved Amendment No. 387:
On Question, amendment agreed to.
[Amendments Nos. 388 to 390 not moved.]
Lord Goldsmith moved Amendment No. 391:
"( ) In determining what is fair and reasonable in all the circumstances of the case no account is to be taken of—
(a) matters arising after the loss or damage in question has been incurred, or
(b) matters (whenever arising) affecting the possibility of recovering compensation from other persons liable in respect of the same loss or damage."
[Amendment No. 391A, as an amendment to Amendment No. 391, not moved.]
On Question, Amendment No. 391 agreed to.
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Clause 526 [Exclusion of agreements for more than one year]:
Lord Goldsmith moved Amendment No. 392:
On Question, amendment agreed to.
Clause 527 [Termination of agreement by members of company]:
[Amendment No. 393 not moved.]
Lord Goldsmith moved Amendment No. 394:
On Question, amendment agreed to.
Clause 528 [Minor definitions]:
Lord Goldsmith moved Amendment No. 395:
On Question, amendment agreed to.
Clause 529 [Prohibition of public offers by private company]:
Lord McKenzie of Luton moved Amendment No. 396:
The noble Lord said: My Lords, we have reached Part 17, which contains the prohibition on private companies offering their shares to the public. I am moving these amendments in response to the concerns raised in Grand Committee on the prescriptive nature of the remedies following breach of the prohibition. I will also explain why these amendments are preferable to the noble Lord's related amendment.
Under Clause 532, the court must make an order for the company to reregister as a public company unless it appears to the court that the company does not meet the requirements for reregistration and it is impracticable or undesirable to require it to take steps to do so. If the court does not make an order for reregistration, it must instead make an order for the compulsory winding-up of the company. The amendments provide the court with further alternatives if an order for reregistration is not made.
The starting position remains that if it appears to the court that the company has acted in contravention of the prohibition on public offers, the court must order the reregistration of the company as a public company unless the company does not meet the requirements for reregistration and it is impractical or undesirable to require it to take steps to do so. Members cannot frustrate the company from seeking to comply with a reregistration order.
The court will have all its usual powers available for the enforcement of its orders. Where the court does not order reregistration, the amendments give the court a choice. It might decide to make an order for the compulsory winding-up of the company, or the court may make a remedial order for the purpose of putting anyone affected by the breach of the public offer prohibition back in the position they would have been in if the breach had not occurred. In particular, under
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a remedial order, the court can order those persons knowingly concerned in the breach to offer to purchase the shares or debentures that were the subject of the offer on such terms as the court thinks fit, or the court has discretion to make no order at all. This might be appropriate, for example, where the company has breached the prohibition but has not allotted shares, has withdrawn the offer and has undertaken not to do it again. These amendments greatly widen the options available to the court following a breach of the public offer prohibition where reregistration is not appropriate. All the other government amendments in this group are consequential on the new options given to the court.
Amendment No. 408 would allow the court to make such order as it thought fit. It would give the court a wide discretion but without any assistance as to how it might use it. The amendment goes unnecessarily far, moving away from the consistency of approach we have been aiming to achieve. The government amendments provide a framework for the court—one wide enough for the orders that may be made when reregistration is not appropriate, including the option of making no order at all. The government amendments address the concerns raised in Grand Committee and I hope noble Lords will not press Amendment No. 408. I beg to move.
Lord Sharman: My Lords, I thank the Minister for the response that the Government have made to the concerns I raised in Committee. Amendment No. 408 was proposed to us by the Law Society. I accept that it is a wide enabling amendment. I would like to consider carefully the impact of the government amendment and, if appropriate, return to this on Third Reading, but in the circumstances I will not move the amendment at this stage.
On Question, amendment agreed to.
Clause 530 [Meaning of "offer to the public"]:
Lord Sainsbury of Turville moved Amendment No. 397:
On Question, amendment agreed to.
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