Clause 142
Company Law Reform Bill [Lords]
10:15 am
Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)
I beg to move amendment No. 148, in clause 142, page 63, line 38, leave out subsection (5).
John Bercow (Buckingham, Conservative)
With this it will be convenient to discuss the following amendments: No. 149, in clause 143, page 64, leave out lines 12 and 13.
No. 150, in clause 144, page 64, line 28, at end insert
‘unless, before section 142 comes into force, the company has appointed a natural person over the age of 16 to be a further director.’.
Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)
Clause 142 is one of the more innovative clauses in the Bill. It provides that people must be 16 to become directors. For the most part, notwithstanding the fact that parents are required to sign until the child is 18 and that children are immune from prosecution, it is a good idea. However, the answer to my written question of 31 January revealed that on 31 December last year there were 431 directors under the age of 16, all in England and Wales—apparently Scotland is not very entrepreneurial at that age—and that some 200 were under 10.
I can envisage circumstances where controlling family companies or trust arrangements from wills drafted many years ago requires that a child be appointed a director, and that not to do so would involve losing assets or causing problems in respect of inheritance. Would the Secretary of State make an exception under clause 143 in such circumstances, which involve an individual rather than some class basis of individuals?
My reading of subsection (5) is that a child who owned all the shares of a company—for example, a 14-year-old who had some bright idea and incorporated— and had his parents as directors and told them what to do presumably could be treated as a shadow director if he could not be a director. I am not sure that that follows logically. If the child is considered not old enough to take decisions as a director before he or she is 16, how can we then say that they have the nous to act as a shadow director? Surely in such circumstances it is incumbent on the real directors not to allow the minor to act as a shadow director. Amendment No. 148, which is a probing amendment, seeks clarification on that issue.
Amendment No. 149 would delete the words
“The regulations may make different provision for different parts of the United Kingdom.”
I am not sure why they should be included in the Bill. I thought that we were considering UK corporate law, so why should it be acceptable to allow directors under 16 in some parts of the country? That seems inconsistent and illogical.