Clause 8
Company Law Reform Bill [Lords]
10:15 am
Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)
I welcome the general remarks made by those who speak for the Opposition parties. I look forward to getting on with the meat of this complex Bill.
It might not surprise the Committee that I asked precisely the same question about clause 8. I do not know whether my question was the result of my naivety in trying to get to grips with the matter or whether it was sensible. All I can do is offer the response given by my officials.
I was told that after discussions across the board with interested parties, and after the Law Commission review of company law, everyone felt that it was important to preserve the fundamental principle of company law—it has been part of our law for ever—that a company is an association. As a result, we decided to keep the memorandum. It is almost a historical document. Once set, it can never be amended. It is a record of the fact that people have come together in an association and agreed to form a company.
That principle provides the flexibility that I am told is the key feature that underpins company law. However, information on how functions and powers are allocated between directors and members of companies will in future be in not the memorandum, but the articles of association. Other information contained in the 1985-style memorandum will be provided in the form of a statement. To underpin that principle, which informs all company law, we have kept the memorandum, although its purpose will be very different.