Clause 84
Company Law Reform Bill [Lords]
2:00 pm

James Brokenshire (Hornchurch, Conservative)

I beg to move amendmentNo. 147, in clause 84, page 36, line 12, at end insert—

‘(3) For the purpose of this section a shadow director is treated as an officer of the company.'.

The clause deals with the situation that arises if a company is acting in accordance with the instructions of a person who is not a director—that is to say a shadow director—and those instructions include the non-provision of information under clause 82 on the requirement to disclose the company name and so on. I wish to question why a shadow director should not be liable in such circumstances.

In my review of the Bill, I noted that in other, similar circumstances a shadow director is liable. Why are they not covered by the clause? It is possible that I have missed something, but I wanted to flag up the point. The amendment would therefore make clear that a shadow director should be treated as an officer for the purposes of compliance and therefore of liability in the event of failure to comply. If a shadow director of a company, who is not stated as a director, effectively frustrates satisfaction of the clause 82 provisions, it would be a little strange for that shadow director not to be liable in accordance with the rest of the officers of the company given that, in other circumstances, they would normally be treated in the same way.

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

Shadow directors are not liable for failures to make the required disclosures, and we see no reason to widen the clause as proposed. However, I have received a note, which says, “If he has a good argument, we will consider it”. We will consider it, if he agrees to withdraw the amendment; we will go through his points and decide if there should be a change.

James Brokenshire (Hornchurch, Conservative)

I am grateful for the Minister’s assurance. It was a question of consistency. In similar circumstances, elsewhere in the Bill, shadow directors are liable, but not here. That struck me as odd, and that issue might apply in other parts of the Bill. I am grateful therefore for her assurance because we might have to examine that matter in other cases to ensure that there is not some gap and that shadow directors cannot in some way squeak out of those provisions. I do not think that that is the Government’s intention, however, and in the light of her assurances, I beg to ask leave to withdraw the amendment.