Clause 39
Company Law Reform Bill [Lords]
5:30 pm
Quentin Davies (Grantham and Stamford, Conservative)
I must apologise that, because of sheer negligence, I omitted to refer to my interests, which are declared in the Register of Members’ Interests, when I spoke on the Bill in Committee for the first time this morning. I spelled those interests out on Second Reading, so I hope that I will be spared doing so now, although I am happy to do so if required.
I do not rise to make a substantive point on the clause but because I think an explanation is required. I may be, and probably am, missing something obvious, but I do not believe that I am the only person likely to be confused when reading the Bill. Earlier, we passed clause 32, subsection (1) which says:
“Unless a company’s articles specifically restrict the objects of the company, its objects are unrestricted.”
The clear implication is that, if the company’s articles do restrict the objects of the company, the company will be so restricted by those articles.
Clause 39(1) states:
“The validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company’s constitution.”
In the clauses that we have discussed this afternoon, “constitution” has encompassed the articles, but subsection (1) states that nothing in the articles can restrict the company in any way. However, as I read it and as others will naturally read it, clause 32 states, at least by implication, that the company’s articles restrict the company’s activities if the articles are defined and drafted in such a fashion as to embody that restriction.
I am perplexed by the apparent contradiction between clauses 32 and 39. If the Bill becomes law, as I trust it will, it will be in the public interest that anyone reading the new Act should not suffer the same confusion. We do not want to waste the public’s timeor that of the legal profession. If there is no contradiction, I should be grateful if the Minister explained why. If there is a danger of there being one, perhaps she could do something about it on Report.