Company Law Reform Bill [HL]
3:43 pm

Lord Hodgson of Astley Abbotts (Shadow Minister, Home Affairs; Conservative)

My Lords, in moving the amendment, I shall speak also to Amendments Nos. 2 to 6 and 19 to 26. When this issue was raised on Report on 9 May, the Minister agreed to consider the execution of documents by company secretaries. Since then, the Minister has been kind enough to send a letter to us, stating that the Government are, in fact, inclined to go further than we asked and to allow execution of documents by a "named other person". Sadly, as the letter then says, it has not proved possible to produce the amendments in time for the proceedings of this House, which is indeed a pity, but we are pleased that the Government are in a receptive mode and grateful for that further assurance from the Minister. Indeed, Amendments Nos. 5 and 6 in this group, amending Clause 44 on the execution of documents, take that proposal a stage further.

However, we still harbour some concerns that the Government do not seem to have fully appreciated the thrusts of our amendments in Committee and on Report. The execution of documents point that they have agreed to consider was only part of our argument. The bigger picture was about the empowerment of company secretaries where they are not legally required; that is, secretaries who private companies choose to have even though the law does not oblige it. That is why we have tabled a further group this afternoon. The position of such secretaries under the Bill is unclear. There are no requirements for them to be registered, nor to be fit for their role; there are none of the requirements that secretaries of public companies must fulfil.

We do not argue with the deregulatory intent behind that approach, which is obviously aimed at easing the burden on smaller companies, but it has drawbacks. The lack of any requirement for the registration of secretaries will leave those that still exist in limbo, with no official recognition of their status. For example, how will an outsider to the company know, or be able to check, that such a person is a company secretary? The role is, currently, one that helps encourage the spread of good corporate governance; yet, by removing the need for any registration and denying them any legal status, the Government have cut the ground from under the feet of all secretaries of private companies, no matter how large.

Now, we agree that many companies welcome the removal of the need to have a secretary and the Bill will result in a decreased regulatory burden for them. Yet, there will remain some private companies, especially the larger ones, for whom a secretary adds value. Those companies who want to keep a person in that role should not then see the legal status of that secretary eroded or weakened. The Government seem, to us, to have missed that point and we now ask them to reconsider it. The amendment will impose no burdens on those companies that choose not to have a secretary, which will be unaffected. It will give strength to those companies which wish to preserve the status quo by keeping a secretary, probably because they believe that such a person adds value to their corporate governance processes. In that spirit, I beg to move.

See this speech in context