Clause 62
Company Law Reform Bill [Lords]
9:45 am
David Howarth (Shadow Minister (Energy), Trade & Industry; Cambridge, Liberal Democrat)
I just want to comment briefly on this amendment. I have had a great deal of sympathy with the Conservative amendments so far, but I have a problem with this one, and I ask the hon. Gentleman to reply to the following point in his closing remarks.
The clause is in line with a basic principle of company law: the protection of creditors. If a company has the word “limited” after its name, that puts potential creditors on notice that they might not get their money and they cannot pursue shareholders for it. It is at least arguable that a company that can return capital is one that puts at risk the creditor’s position. Therefore, it is reasonable for the clause to stand as it does, because it is protecting potential creditors from that particular possible abuse, although to a small extent only, because there are not many of these companies. I recognise that it will not be a very important matter in practice, but in theory this is the right thing to do.