Clause 19
Company Law Reform Bill [Lords]
11:30 am
Quentin Davies (Grantham and Stamford, Conservative)
I want to probe a little the idea of model articles. Presumably, it is the state not in legislative mode but in advisory or nanny mode. I want to make it clear that I had properly understood that that is the case because, under subsection (3),
“A company may adopt all or any of the provisions of model articles”,
which makes the idea look very voluntary.
The word “prescribe” is used under subsections (1) and (2), and I want to be clear whether it is intended that pressure is to be put on companies to adopt the model articles or whether the Government envisage sanctions for companies that do not adopt them. Above all, I protest slightly that we have reached the clause that provides for the model articles without having any notion of what the Government have in mind. That very bad habit is becoming more and more common and, as each year goes by, we come across Bills that provide for the Government subsequently to make regulations, produce guidance documents or, in this case, produce model articles without our having any idea what they have in mind.
After seven years of consultation on the subject, it is reasonable to expect that, by the time the Bill is brought before Parliament, the Government have shown us the colour of their money and explained what the model articles would be. That would enable us in the House of Commons to do our job and see whether there were any difficulties or perversities about the proposals. Even though they are voluntary, presumably they will have a quasi legal force so that, if a company were challenged about the adequacy of its articles and it can point to having adopted the model articles provided by the Secretary of State, that will be a full defence. We do not know whether the model articles will be adequate for the purpose.
Will the Minister explain the status of the model articles? Are they purely advisory? Is there any intention to put pressure on companies to adopt them? Will the Minister explain why we do not have the model articles in front of us? The position is highly unsatisfactory. Can we have an opportunity before we discuss the Bill on Third Reading—at least before it is debated on Report, so that we can consider the matter on the Floor of the House—to know what the Government have in mind for the model articles? After all, surely seven years is long enough for someone to draft them. If the Government had the concept that model articles are required, the onus is on them to show us what they have in mind.