Clause 22
Company Law Reform Bill [Lords]
12:30 pm
Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)
We sit in the middle of the two arguments, and that is probably the right place to be. I shall deal with some of the detailed issues before discussing the point of principle.
I was asked why notice needs to be given to the registrar. I have already given the answer, but I shall repeat it, if that helps the hon. Member for Huntingdon. In clause 23, we are trying to create a straightforward mechanism for checking that that has happened. First, we require the company to notify the registrar when it concludes provision for entrenchment in its articles. Secondly, when such a company delivers a document making or evidencing an amendment in its articles, we require it to deliver with that document a statement of compliance, stating that the amendment has been made in accordance with the company’s articles—that is, in accordance with any relevant provision for entrenchment.
I was asked what clause 22(1)(b) is about. It enables companies to set a higher threshold than that required to pass a special resolution. That is, in fact, the essence of entrenchment. Companies are also currently permitted to entrench provision in their memorandums.