Clause 32
Company Law Reform Bill [Lords]
5:00 pm
David Howarth (Shadow Minister (Energy), Trade & Industry; Cambridge, Liberal Democrat)
My view of the amendment is similar to my view on entrenchment, which we have already discussed. Although I am sympathetic with the direction of change throughout normal commercial events in the world outside, I am still concerned about removing from companies the option of restricting their objects, if they find that commercially convenient. That situation might arise in joint ventures. Two business partners might find it useful to restrict the purposes to which a vehicle that they are using is put.
An argument could be made for saying that changes in company law over a long period have been towards general purpose companies—companies whose objects are not restricted—but that is no reason to remove the option. There are no effects on third parties. Because of the abolition of the ultra vires rules in almost all circumstances, there is no need to worry about the effects of restricting the objects on the outside world.