Clause 575
Company Law Reform Bill [Lords]
12:30 pm

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. 325, in clause575,page281,line23,at end insert—

‘(3A) In subsection (3), after paragraph (g) insert—

“(h) the payment of a commission which is permitted by the Companies Acts,

(i) indemnities given in connection with any issue of shares (whether in respect of defaults by the company itself or in respect of defaults by third parties and including indemnities in respect of losses arising in connection with activities carried out as a broker, underwriter, placing agent, adviser or sponsor to an issue),

(j) representations or warranties given by a company in connection with any issue of shares in its capital,

(k) the payment of any fees or other costs, charges or expenses by a company in connection with an issue of shares in its capital.”.’.

Briefly, the purpose of the amendment is to make it clear that certain arrangements cannot amount to unlawful financial assistance. I draw attention to the categories suggested.

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

This again is a Law Society issue. In order to address its concerns, which relate to the impact that the financial assistance provisions have on business transactions, it would be necessary to start from scratch, perhaps by adopting a different approach to the requirements of article 23 of the second directive from which section 151 of the 1985 Act derives. Article 23 makes no reference to the items described in the amendment, and we consider that it would not be helpful to add further to a list which arguably already gold-plates the directive. Moreover, the difficulty with extending the list in that way is that it raises a question about the status of arrangements that do not fall within the exact terms of the exceptions.

There was an extensive discussion in the other place, and the various concerns that the Law Society and others have about the way in which the current exemptions are framed may point to a reworking of the provision so that it is to have the intended effect. Such a provision could refer to concepts along the current lines or be framed on an entirely different basis. That would not matter as long as we keep our obligations under the directive. Such a reworking would be much more suitably addressed by the use of the power that we are seeking as part of the restatement exercise than by piecemeal amendments. Therefore, I invite the hon. Gentleman to withdraw his amendment. This provision, like the others in this part, is subject entirely to the restatement procedure, so there is a summer—as it were—yet to come.

Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

I thank the Minister for her clarification; her points make sense. On that basis, I beg to ask leave to withdraw the amendment.