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Lord Goldsmith: My Lords, as the noble Lord said, there are two parts to the amendment. The part that he has just referred to would dispense with the requirement that a majority in number of the creditors or members must vote in favour of a scheme for it to be binding. The noble Lord's amendment provides that it would be enough if three-quarters by value did so. The Company Law Review observed that that would mean that larger creditors and members could impose their will unfairly on smaller creditors and shareholders. Protection would be removed by this part of the amendment.
It could be said, "Well, we could rely upon the court's discretion to protect those members". That is not a satisfactory answer—why should the court have a better view of the interests of those persons than they have themselves? So, in principle, I could not accept the amendment. The noble Lord tempts us by painting a picture of abuse taking place, with people splitting their shareholdings up into a series of nominee companies. It may be that he has evidence that that takes place; if so, it is not evidence that has reached me and I note that the noble Lord shakes his head—so it seems that he does not have evidence of that, either. That theoretical possibility is not a good enough reason to do away with the protection which this provides.
I turn now to the second part of the amendment. We have some doubts as to whether this is really necessary. As the noble Lord has made clear, the point is to allow the courts to approve a scheme of arrangement even if relevant classes have not been correctly constituted, provided—and this is an important condition—that the fairness of the scheme is not affected.
Companies have been given quite a lot of guidance to make sure that the problem does not arise. The courts have issued a practice statement in 2002
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reminding companies for example that, in case of doubt, they should take all reasonable steps to notify any person who may be affected by the scheme, and requiring them to identify any issues as to composition of classes at an early stage of the court procedure. Those steps should already prevent most of the problems of wasted time and effort that the noble Lord's amendments are targeted at. Having said that, we are not convinced that the amendment is necessary in practice, or that it would serve a useful purpose. But if the noble Lord will not press his amendment now we will discuss the question of the court's discretion further with interested parties to see if there are practical difficulties that such an amendment could address. That is as far as I can go in relation to that part of the amendment today.
Lord Sharman: My Lords, I am grateful for the reply given to this part of the debate by the noble and learned Lord the Attorney-General. In the light of his reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 677 [Disclosure of individual's residential address:non-disclosure certificate]:
Lord Sainsbury of Turville moved Amendment No. 483:
On Question, amendment agreed to.
Clause 678 [Requirement to identify persons to accept service of documents]:
Lord McKenzie of Luton moved Amendment No. 483A:
"( ) particulars identifying every person resident in the United Kingdom authorised to accept service of documents on behalf of the company, or
( ) a statement that there is no such person."
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 483B, 483C, and 483D. Together the regulations to be made under this part of the Bill will determine the registration, reporting and disclosure requirements imposed by our company law on overseas companies, including the range of overseas companies to which the requirements apply and the offences for their breach. This part, together with the regulations to be made under it, replace the provisions made by Part 23 of the Companies Act 1985.
Clause 678 imposes a disclosure requirement based on paragraph 3(e) of Schedule 21A to the Companies Act 1985 to disclose those persons resident in the UK authorised to accept service on the company's behalf. Amendment No. 483A makes clear that the clause does not impose a requirement on the overseas company to have anyone resident in the UK able to accept service on its behalf. If there are no such persons, the company must simply make a statement to that effect. Amendment No. 483B deletes
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Clause 679. The provision made by that clause is replaced by the new clause to be inserted by Amendment No. 483C.
Where an overseas company has registered particulars with the registrar following the opening of a branch in the United Kingdom, the new clause will enable regulations to require the overseas company to give notice to the registrar if it subsequently closes that branch. These disclosures are a requirement of the 11th company law directive. In addition, an overseas company that has registered particulars in other circumstances specified by regulations under Clause 669 may be required by regulations made under the new clause to give notice to the registrar if those circumstances cease to obtain. The regulations will require the notice to be delivered to the registrar for the part of the United Kingdom in which the branch was registered and may set deadlines for sending the information to the registrar.
Finally, Amendment No. 483D makes clear that the relocation of a branch from one part of the United Kingdom to another is to be treated as the closing of the branch in one part and the opening in another. Such provision is currently made by Section 695A(4) of the Companies Act 1985, which is being repealed. I beg to move.
On Question, amendment agreed to.
Clause 679 [Duty to give notice of ceasing to have registrable presence in the UK]:
Lord McKenzie of Luton moved Amendment No. 483B:
On Question, amendment agreed to.
Lord McKenzie of Luton moved Amendments Nos. 483C and 483D:
"DUTY TO GIVE NOTICE OF CEASING TO HAVE REGISTRABLE PRESENCE
(1) The Secretary of State may make provision by regulations requiring an overseas company—
(a) if it has registered particulars following the opening of a branch, in accordance with regulations under section 669(2)(a) or (b), to give notice to the registrar if it closes that branch;
(b) if it has registered particulars in other circumstances, in accordance with regulations under section 669(2)(c), to give notice to the registrar if the circumstances that gave rise to the obligation to register particulars cease to obtain.
(2) The regulations must provide for the notice to be given to the registrar for the part of the United Kingdom to which the original return of particulars was delivered.
(3) The regulations may specify the period within which notice must be given.
(4) Regulations under this section are subject to negative resolution procedure."
After Clause 680, insert the following new clause—
"APPLICATION OF PROVISIONS IN CASE OF RELOCATION OF BRANCH
(1) For the purposes of this Part the relocation of a branch from one part of the United Kingdom to another counts as the closing of one branch and the opening of another.
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(2) The relocation of a branch within the same part of the United Kingdom does not."
On Question, amendments agreed to.
Clause 682 [The registrar's functions]:
Lord McKenzie of Luton moved Amendment No. 483E:
"(i) under the Companies Acts, and
(ii) under the enactments listed in subsection (2)"
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 483F, 483G, 487G and 528. These amendments relate to other enactments beyond the Companies Acts which confer functions on the registrar. Three of the amendments—Amendments Nos. 483E, 483F and 487G—make no real change of substance but are designed to introduce a little more clarity. At the moment the provision of the functions of the registrar in Clause 682, at the start of Part 26, refers generally to "other enactments" but does not list those enactments. In Clause 739, at the end of this part of the Bill, a list is provided, but it is arguably unclear what the effect is of the list in respect of some individual provisions. It is also not entirely clear whether the Bill or the existing enactments should apply to matters already covered by existing enactments. The amendments clarify the position.
Amendments Nos. 483G and 528 do, however, make a change of substance to one of those enactments—the Limited Partnerships Act 1907. At the moment, enshrined in that Act is the provision that Companies House, when performing its functions, may only charge amounts varying from 2p to £2. The effect is that it is uneconomic for the registrar to offer certain optional services in respect of Limited Partnerships to customers, even where they have a need and are more than willing to pay the legitimate costs of the service being provided; other, mandatory, services have to be provided at a loss. This is creating difficulties in practice. In removing the statutory caps, the amendments will allow Companies House to develop services to meet customer demand and to charge for them in the normal way under Clause 684 of the Bill. I beg to move.
On Question, amendment agreed to.
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