Clause 271
Company Law Reform Bill [Lords]
9:45 am

Written resolutions of private companies

Question proposed, That the clause stand part ofthe Bill.

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James Brokenshire (Hornchurch, Conservative)

Clause 271(5) refers to the effectiveness of written resolutions, and states that

“references in enactments passed or made before this section comes into force...at which a resolution is passed or to members voting in favour of a resolution shall be construed accordingly.”

Although I recognise the use of the clause to allow shareholders in companies with articles of association predating the new Bill to have the benefit of its written resolution provisions, if a company had deliberately opted for meetings to approve resolutions, for whatever reason, what impact would the provision have in that context?

Clause 283 suggests that that cannot be done, but I would be grateful for the Minister’s confirmation, as it seems to me that a company, for whatever reason,  might wish to entrench something in its articles to ensure that a general meeting is held, rather than relying on a written resolution provision. I would appreciate clarification and perhaps some thoughts about why that particular approach has been taken.

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Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)

I do not quite understand which point the hon. Gentleman is not clear about.

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James Brokenshire (Hornchurch, Conservative)

Clause 283 states:

“A provision of the articles of a private company is void in so far as it would have the effect that a resolution that is required by or otherwise provided for in an enactment could not be proposed and passed as a written resolution.”

I therefore take it that if the article said that something had to be passed at a general meeting, clause 283 would override it. I raise the matter in the context of clause 271 because it makes provision in respect of written resolutions of private companies. I want to be sure that my reading of the proposal is correct in terms of how clause 271(5) will apply to the moving of written resolutions and what protection might be afforded to companies in that respect. I hope the Minister can clarify the point.

Photo of Margaret Hodge

Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)

I hope that I can help the hon. Gentleman. We will look at clause 283 when we consider transition arrangements and we may wish to return to the matter then. Clause 271(5) applies only to enactments, so in relation to Acts, regulations and so on, existing articles are offered the transitional consideration. I am not sure that that deals with the point, but I hope it does.

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James Brokenshire (Hornchurch, Conservative)

I do not think it does. The Minister has already mentioned statutory provisions in relation to the removal of directors and auditors. My point is about what will happen if a company wants to entrench within its articles a particular issue—for example, the right to deal with something in a general meeting rather than a written resolution. Will it be entitled to do so in those circumstances?

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Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)

I shall stop listening to my officials and just try to understand what the hon. Gentleman is saying. I think the answer is yes.

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James Brokenshire (Hornchurch, Conservative)

In the light of the Minister’s confirmation, for which I am very grateful, I shall sit down.

Question put and agreed to.

Clause 271 ordered to stand part of the Bill.