Failure to give notice to registrar of application to court or to deliver copy of court order

– in the House of Lords at 7:15 pm on 16 May 2006.

Alert me about debates like this

13B For section 176(4) of the Companies Act 1985 (c. 6) (failure to give notice to registrar of application to court or to deliver copy of court order) substitute—

"(4) If a company fails to comply with subsection (3), an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale."."

On Question, amendment agreed to.

Clause 757 [Service of documents on directors, secretaries and others]:

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

moved Amendment No. 489:

Page 365, line 25, leave out paragraphs (a) and (b) and insert "any address for the time being shown as a current address in relation to that person in the part of the register available for public inspection"

On Question, amendment agreed to.

Schedule 6 [Communications by a company other than a traded company]:

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

moved Amendment No. 490:

Page 468, line 16, at end insert—

"(2) Such agreement may be valid for a maximum of twelve months."

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, I rise to rise to speak to Amendment No. 490 which concerns paragraph 9 of Part 4 of Schedule 6.

Part 4 of Schedule 6 enables companies to communicate electronically with their shareholders where shareholders have given their consent. But there appears to be no time limit to the consent once given.

The noble Lord, Lord Sharman, made clear during our debates that the electronic communication provisions enable companies to save a considerable sum of money. However, there is also the potential for problems caused by the failure of an individual member to understand properly what he or she is being asked to accept, and then being deemed to have agreed under paragraph 10.

There was some confusion when this amendment was tabled in Grand Committee. It was originally tabled with an amendment that made it read "minimum" instead of "maximum". This was corrected before the Committee sat, but I fear too late for the changes to reach the Minister as his speaking note addressed the minimum rather than the maximum that we intended. The noble Lord, Lord Sainsbury, said,

"I do not see the value of requiring a minimum period of commitment to receiving company documents by means of a website. Why should a member who agrees to use the web not be able to change his mind?".—[Official Report, 30/3/06; col. GC 378.]

Absolutely: that is precisely the point. I am sorry that we caused confusion with our wrong tabling in the first place.

We have therefore re-tabled this amendment for the same reasons that we did in Committee. The amendment seeks to cap any agreement between a company and a member to a maximum of 12 months. When this period expires the company would have to negotiate another agreement for the next year. We do not think that it is unreasonable to require companies to do this, given the savings they will make by using communication via a website in the event of member agreement. The main benefit from this will be to protect members who unwittingly agree to use the website for communication. They will then be given an opportunity to rescind their decision, while those who wish to continue with such an agreement can easily continue to do so. I beg to move.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, I am grateful to the noble Lord for tabling this amendment again so that I may now give him the right answer to address his concerns. When the noble Lord first laid his amendment at Grand Committee seeking to provide that agreements under paragraph 9 should be valid for a minimum of twelve months, we had thought the objective might be about providing a degree of certainty to businesses investing in web technology upgrades. However, the amendment clearly does the opposite in limiting the period of the agreement to a maximum of 12 months.

I do not see the value in imposing a maximum period for agreements to receiving company documents by means of a website. This seems unduly burdensome—a case of minor silver-plating rather than gold-plating, but nevertheless burdensome—and an unnecessary hurdle when we are seeking to facilitate the use of electronic communications. The other point is that people are not locked into these agreements. If someone changes his or her mind, it is clear that he or she can withdraw at any time. In any event, members and debenture holders always have the right under Clause 762 to request that a document or information received otherwise than in hard copy form be sent to them in hard copy.

Furthermore, a company must, under paragraph 13 of Schedule 6, notify an intended recipient of new documents posted on the website. If he has provided no e-mail address, then the company will, in effect, be obliged to send such notification in hard copy form by post, thus reminding the recipient of the website arrangement in place.

We think that the communications clauses and schedules together provide adequate protection for members and other intended recipients who may not have easy access to the internet or to e-mail. I hope, therefore, that the noble Lord will not press his amendment.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, I am grateful to the Minister for that response. I take at least half the blame, having got the wrong amendment down in the first place. I understand the wish we share to facilitate electronic communications as a means of saving money. That is a perfectly clear and sensible way to proceed. The noble Lord made a number of points—for example, that a member can withdraw at any time and that powers exist under Clause 762. I understand that. Is it likely that those facts will be shown on the website? Ordinary shareholders coming to the website will not be aware of the privileges and powers that exist for them under Clause 762. It would be helpful if the website stated, "If you want this in hard copy, you may apply for it". Is it part of the Government's thinking that if people wish to take advantage of such things, they will be encouraged to think of alternative ways?

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, I would like to think that the Government had thought in that detail on this particular issue. I doubt if we have. I would have thought that companies would very much want to do that as a customer service and put that on the website.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, it would be helpful as a means of maintaining good and proper communication between the company and its shareholders. I am grateful to the Minister. We can take this no further and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 763 [Requirement of authentication]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 490A:

Leave out Clause 763 and insert the following new Clause—

"REQUIREMENT OF AUTHENTICATION

(1) This section applies in relation to the authentication of a document or information sent or supplied by a person to a company.

(2) A document or information sent or supplied in hard copy form is sufficiently authenticated if it is signed by the person sending or supplying it.

(3) A document or information sent or supplied in electronic form is sufficiently authenticated—

(a) if the identity of the sender is confirmed in a manner specified by the company, or

(b) where no such manner has been specified by the company, if the communication contains or is accompanied by a statement of the identity of the sender and the company has no reason to doubt the truth of that statement.

(4) Where a document or information is sent or supplied by one person on behalf of another, nothing in this section affects any provision of the company's articles under which the company may require reasonable evidence of the authority of the former to act on behalf of the latter."

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, in moving Amendment No. 490A I shall speak also to Amendments Nos. 490B and 490C. These amendments seek to address the concerns raised by the noble Lords, Lord Hodgson and Lord Sharman, in Grand Committee, relating to two important aspects of the company communications provisions of the Bill.

Amendment No. 490A deals with the authentication of documents by one person on another's behalf. It makes clear that companies can require proof of authority to act and, in doing so, puts beyond doubt that authentication of documents by one person on another's behalf is permitted. Amendment No. 490B deals with deemed delivery of website communications and makes additional provision for opting out of default rules about deemed delivery. Amendment No. 490C is a consequential amendment. Clause 765 is what currently deals with deemed delivery. We are bringing the rules on deemed delivery clearly within the company communications provisions of the Bill. I beg to move.

On Question, amendment agreed to.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 490B:

After Clause 763, insert the following new clause—

"DEEMED DELIVERY OF DOCUMENTS AND INFORMATION

(1) This section applies in relation to documents and information sent or supplied by a company.

(2) Where—

(a) the document or information is sent by post (whether in hard copy or electronic form) to an address in the United Kingdom, and

(b) the company is able to show that it was properly addressed, prepaid and posted, it is deemed to have been received by the intended recipient 48 hours after it was posted.

(3) Where—

(a) the document or information is sent or supplied by electronic means, and

(b) the company is able to show that it was properly addressed, it is deemed to have been received by the intended recipient 48 hours after it was sent.

(4) Where the document or information is sent or supplied by means of a website, it is deemed to have been received by the intended recipient—

(a) when the material was first made available on the website, or

(b) if later, when the recipient received (or is deemed to have received) notice of the fact that the material was available on the website.

(5) In calculating a period of hours for the purposes of this section, no account shall be taken of any part of a day that is not a working day.

(6) This section has effect subject to—

(a) any contrary provision of the Companies Acts;

(b) in its application to documents or information sent or supplied by a company to its members, any contrary provision of the company's articles;

(c) in its application to documents or information sent or supplied by a company to its debentures holders, any contrary provision in the instrument constituting the debentures;

(d) in its application to documents or information sent or supplied by a company to a person otherwise than in his capacity as a member or debenture holder, any contrary provision in an agreement between the company and that person."

On Question, amendment agreed to.

Clause 765 [Deemed delivery of documents and information sent by post or electronic means]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 490C:

Leave out Clause 765.

On Question, amendment agreed to.

Clause 766 [Duty to notify registrar of certain appointments etc]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 491:

Page 368, line 40, leave out "Commissioners" and insert "Commission"

On Question, amendment agreed to.

Clause 767 [Offence of failure to give notice]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, this amendment introduces a specific deadline for complying with the requirement to notify the appointment of a judicial factor. It is needed so that the requirement is clear and can be enforced. I beg to move.

On Question, amendment agreed to.

Clause 769 [Power of court to grant relief in certain cases]:

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

moved Amendment No. 492:

Page 370, line 14, leave out "reporting accountant" and insert "independent examiner"

On Question, amendment agreed to.

Clause 770 [Meaning of "undertaking" and related expressions]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 493:

Page 370, line 33, leave out paragraph (a).

On Question, amendment agreed to.

Clause 771 [Parent and subsidiary undertakings]:

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

moved Amendment No. 494:

Page 371, line 43, at end insert—

"( ) In this section and that Schedule references to shares, in relation to an undertaking, are to allotted shares."

On Question, amendment agreed to.

Clause 774 [Dormant companies]:

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

moved Amendment No. 495:

Page 373, leave out line 17.

On Question, amendment agreed to.

Clause 778 [Minor definitions: general]:

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

moved Amendment No. 495A:

Page 374, line 42, at end insert—

"( ) Until such date as may be appointed by order under section 884(2) for the definition in subsection (1) of "regulated market" to come into force, the following definition has effect for the purposes of the Companies Acts

""regulated market" has the same meaning as it has in Council Directive 93/22/EEC on investment services in the securities field;"."

On Question, amendment agreed to.

Schedule 9 [Index of defined expressions]:

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

moved Amendments Nos. 496 to 506:

Page 482, line 13, at end insert—

"allotted shares and allotted share capital section (Companies having a share capital) (2) and (3)"

Page 482, line 17, column 2, leave out "section 363 of the 1985 Act" and insert "section (Duty to deliver annual returns)"

Page 482, line 17, at end insert—

"appropriate audit authority (in sections (Duty of auditor to notify appropriate audit authority), (Duty of company to notify appropriate audit authority) and 514) section (Meaning of "appropriate audit authority" and "major audit")(1)"

Page 487, line 5, at end insert—

"issued shares and issued share capital section (Companies having a share capital) (2) and (3)"

Page 487, line 13, at end insert—

"major audit (in sections (Duty of auditor to notify appropriate audit authority), and (Meaning of "appropriate audit authority" and "major audit")) section (Meaning of "appropriate audit authority" and "major audit")(2)"

Page 487, line 32, at end insert—

"offer to the public (in Chapter 1 of Part 17) section 530

Page 488, line 21, column 2, leave out "477" and insert "(Appointment of auditors of private company: general)(2)"

Page 489, leave out line 3.

Page 489, leave out line 9 and insert—

"protected information (in Chapter 8 of Part 10) section (Protected information)"

Page 489, line 23, at end insert—

"—in Chapter 5 of Part 16 section (Meaning of "quoted company") (and section 363)"

Page 489, line 31, at end insert—

"register of directors section 146
register of directors' residential addresses section (Register of directors' residential addresses)
register of secretaries (in case of public company) section 254"

On Question, amendments agreed to.

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

moved Amendment No. 507:

Page 490, line 14, column 1, leave out "reporting accountant" and insert "independent examiner"

On Question, amendment agreed to.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

moved Amendments Nos. 508 to 511:

Page 490, leave out line 15.

Page 490, line 24, at end insert—

"service address section 758"

Page 490, line 30, at end insert—

"—in section 771 and Schedule 8 section 771(7)"

Page 490, line 30, at end insert—

"share capital (company having a) section (Companies having a share capital) (1)"

On Question, amendments agreed to.

Schedule 11 [Recognised professional qualifications]:

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

moved Amendment No. 511A:

Page 506, line 4, after "organisation)," insert "have provided or"

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, Amendment No. 511A proposes a small amendment to paragraph 9 in Schedule 11.

In Grand Committee we debated the issue covered by this amendment; namely, the practical issues that arise in order that overseas audit experience may qualify as part of the requisite practical training for an auditor under Schedule 11. Paragraph 9 applies to all practical training, but I would like to tease out the significance of the paragraph by reference to overseas audit training. Put simply, paragraph 9 allows one of the UK recognised supervisory bodies to count overseas training by members of an overseas body if the UK body has approved them to carry out the training. In approving them, the UK body has to be satisfied, in the light of undertakings and the local supervision arrangements, that they will provide adequate training—that is, the paragraph is predicated on approval before the provision of the training.

With my amendment the UK body has to be satisfied that the overseas persons,

"have provided or will provide", adequate training, so approval may be granted in arrear.

The practical issue that this amendment addresses is that it is not always possible to recognise the training on an ex ante basis. The Institute of Chartered Accountants in England and Wales has said that it receives a small number of applications each year for the approval for individuals who find that they need to rely on the overseas component of their qualification period to satisfy the rules. At present, the institute cannot do so because it cannot approve such training ex post.

The amendment would not diminish the quality of training that an individual received before he was entitled to practise as an auditor, but it would make it easier for all relevant training to be validated. The alternative to this is a costly network of approved overseas training organisations set up by each RSB. I beg to move.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, the eighth company law directive on auditing sets out clear requirements for practical training in Article 10. It requires that member states ensure that all training is carried out by persons,

"providing adequate guarantees regarding their ability to provide practical training".

This requirement is not new and reflects the practical training provisions of the 1984 eighth directive, which the 1989 Act implemented.

Paragraph 9 of Schedule 11 reflects these requirements and, indeed, is a restatement of the provisions in the 1989 Act. It requires persons who wish to qualify as a statutory auditor to carry out at least three years' practical training under supervision of persons approved by the body offering the qualification.

In practice, these requirements are met through the recognised qualifying bodies—those professional bodies that offer audit qualifications—operating a system of approved training offices. This means that those firms which are hosting practical training experience for audit students have provided guarantees to the qualifying body on the standard of training and supervision being provided. That is important. The practical training requirement for auditors is a vital part of their professional development, providing them with a range and depth of technical experience as well as developing their technical, commercial and ethical awareness skills. It is vital to the quality of the future stock of UK auditors that the practical training that auditors receive is structured, supervised and up to date.

In considering whether a firm is suitable to provide adequate training, a number of criteria are considered, including the firm-wide procedures, the number of audit clients, the number of statutory auditors in the firm, the provision of training records, the setting of competencies and the number of assessments carried out on individuals. Although this amendment may be aimed at alleviating a practical difficulty for a handful of individuals it is not, in practice, the small matter that the noble Baroness, Lady Noakes, indicated. It runs a coach and horses through the UK qualifying system and would allow the retrospective approval of both overseas and UK practical training. That would fundamentally undermine the framework I have just described, which exists to ensure the quality of UK audit qualifications.

I find it difficult to see how retrospective approval would operate in assessing the adequacy of firms' training and supervision arrangements, or their suitability for training individuals, since—after a period of time has elapsed—records may not have been kept, changes in audit clients will have taken place, firm-wide systems may have changed and staff will have left. That is likely to mean that adequate guarantees could not be assured, in the spirit of the directive. I understand the practical issue for those relatively few people operating overseas, but on balance this is not the right way to go. I urge the noble Baroness to withdraw the amendment.

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions 7:30, 16 May 2006

My Lords, I thank the Minister for his reply, for he will be aware that I know the amendment goes wide in order to deal with a particular issue. I shall consult the Institute of Chartered Accountants in England and Wales on the basis of his reply to see if it wishes to pursue a more narrowly drawn exception.

I think that the Minister said it was difficult to do an ex ante approval; I suspect that it is not, in particular instances, for the recognised qualifying body to satisfy itself that a particular level of training has been provided. However, I shall ask the Institute of Chartered Accountants whether it wishes to pursue that issue. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 815 [Approval of overseas qualifications]:

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

moved Amendment No. 511AA:

Page 391, line 20, leave out leave out "(1)" and insert "(1)(a)"

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, in moving Amendment No. 511AA I shall also speak to the three other amendments in this group. With these amendments we return to an area we discussed in Committee, namely the exciting area of the reciprocal authorisation of auditors. I thank the Minister for his letter of 25 April following our Committee debate.

The amendments address whether the Secretary of State's powers of recognition of overseas qualifications under Clause 815—which, we understand, would in practice be exercised by the Professional Oversight Board for Accountancy—would have to be restricted either to reciprocal treatment for the professional qualification as a whole or to the ability to audit. I understand that Article 44 of the eighth directive requires the Secretary of State to have regard to reciprocity only in respect of registered foreign auditors, not foreign qualifications. Why then does Clause 815(4)(b) indicate that the Secretary of State has to be satisfied in respect of professional qualification reciprocity?

Our amendments would ensure that the oversight board concerned itself with the reciprocal treatment of auditors, not the much bigger territory of professional qualifications. Behind this lies a desire by the Institute of Chartered Accountants—and, doubtless, other relevant bodies—to see more recognition of overseas qualifications, because that is the route to greater overseas recognition of UK auditors. The larger professional accountancy firms, not just the big four, send some of their partners to overseas territories and will receive overseas-trained partners into the UK. That is what global businesses do; audit firms are no exception. If we do not recognise overseas qualifications because we make the test too hard, our own auditors will be unable to practise overseas and we will have to deny practising rights to overseas auditors.

Alongside that is the issue of transparency and the speed with which the approval process works. Amendment No. 511D—to which the noble Lord, Lord Sharman, will speak in the next group—could provide greater transparency through the use of the Freedom of Information Act 2000. Yet speed will remain an issue, as I am advised that in the 17 years since the 1989 legislation was introduced those reciprocal recognition powers have been used only twice. Only two overseas bodies have been approved. Will the Minister say something about the need to improve the recognition process?

If Clause 815 is passed unamended, the fear is that the reciprocity formulation will delay matters even further. There is a universe of non-EU overseas auditor qualifications extending considerably beyond Canada and Australia, which have the two that have already been approved. I beg to move.

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry

My Lords, I rise to support the noble Baroness's amendment. It may interest the House to know that 11 years of my life have been spent practising overseas. That is difficult and almost impossible where there is no reciprocity. Some of my friends wonder how I ever managed to learn Dutch; you have to take tests in Dutch and Dutch law to get a licence in the Netherlands, because there is no reciprocity. That gives serious difficulty, as that language is almost impossible to learn—yet it was unnecessary for me to have a knowledge of the Dutch language to do my work. I was dealing exclusively there with international businesses that worked the whole time in English; indeed, all their Dutch staff demanded that they did so. This issue of reciprocity is critical, yet it is not moving. There is stalemate.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, it may be helpful if I begin by explaining how Clause 815 works in practice. In doing so, I hope to address the concerns that the noble Baroness, Lady Noakes, and the noble Lord, Lord Sharman, have raised.

The eighth company directive, on auditing, allows UK authorities to approve an auditor from a third country only if there is reciprocal approval in relation to auditors operating in that country. Clause 815 is drafted to meet that obligation and requires the Secretary of State to be satisfied as to the matters it sets out on the basis of whether there is comparable treatment.

Clause 815 does not allow the Secretary of State to approve the qualifications of individual auditors from third countries on a case-by-case basis. It allows only the collective approval of qualifications. Under subsection (1)(a) he may collectively approve the qualifications of all auditors practising in a specified country, while under subsection (1)(b) he may collectively approve only specified qualifications held in the specified country. In either case, it is important to emphasise that subsection (3) requires the Secretary of State to be satisfied that the level of professional competence assured by foreign qualifications will be equivalent to that assured by UK audit qualifications.

Subsection (1)(b) is essential to the recognition of auditors who hold a specific professional qualification from a foreign country that meets our standards, but where—this is particularly relevant for countries with a federal structure—other qualifications recognised under law there do not meet our standards. I hope this explanation clarifies that subsection (1)(a) and (b) represents two limbs of the same power. Indeed, having the two limbs should help the process of reciprocity. The exercise of the power under either limb needs to be compatible with the directive's requirements; the test of comparable treatment must thus apply to both limbs.

The amendments proposed by the noble Baroness, Lady Noakes, would impose a different test for the limb in subsection (1)(b) that would not meet the directive's requirements. Furthermore, that would produce the odd result that the Secretary of State must apply different tests when exercising the same power—one if recognising all the qualifications in a country, but another if recognising only one particular qualification. I cannot see the logic in such a distinction.

I have no data to hand on the specific issue of the speed at which reciprocity and recognition are going ahead, but in the light of the comments made it is certainly a matter that we will look into discussing urgently with officials, to try to understand what roadblocks there may be. I share the view that has been expressed from all Benches about their importance in a global marketplace, for I have spent time abroad in an accountancy firm myself—although not as an auditor—and understand the importance of having quality on a wide front.

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, I thank the Minister for that reply. He said that my amendment would mean that subsection (1)(b) would not meet the directive's requirements. Either I have not understood what the Institute of Chartered Accountants has said to me, or it has not understood the requirements. Clearly I will need to clarify that, so I will do so and return to this at Third Reading if necessary. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 511AB to 511AD not moved.]

Clause 822 [Appointment of the Independent Supervisor]:

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry

moved Amendment No. 511B:

Page 394, line 6, at end insert—

"( ) The order shall have the effect of making the body appointed under subsection (1) designated under section 5 of the Freedom of Information Act 2000 (c. 36) (further powers to designate public authorities)."

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry

My Lords, I shall speak also to Amendment No. 511D. The purpose behind these amendments is to instil a deal of transparency into how the major accounting firms do their work. The public oversight body and its subsidiary organs, which consider audit quality in firms, do not publish individual reports. A composite report is published annually, which deals with the industry overall. It is averaged, because it takes the larger firms, the smaller firms and the medium-sized firms. Although there is some segregation, it is not a particularly useful document.

In the combined code, recent amendments have introduced requirements for audit committees to take a view on the effectiveness of the external audit process. They have always taken a view on the effectiveness of the internal audit process. In so doing, it has been relatively easy for them to perform a review themselves or to go outside the body and commission a review from a third party. However, they have no means to access detailed information about the performance of their external auditors in the work of auditing. It is extremely important, from the point of view of the public interest, that such information be available. That is the purpose of Amendment No. 511D. The purpose of Amendment No. 511B is to create a level playing field for the work of the independent supervisor over the Comptroller and Auditor-General. I beg to move.

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, I support the amendments, to which our names are attached. The noble Lord, Lord Sharman, has explained the specific reasons why it would be right for the Freedom of Information Act to apply to the public oversight board and, by extension, to the independent supervisor. There is also a wider reason, which is that when bodies are set up to carry out public functions, it is right and proper that the equivalent freedom of information requirements apply to them and are not avoided by public functions being transferred to bodies in the way set out in the Bill.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, the Professional Oversight Board is an operating body of the Financial Reporting Council and is currently responsible for exercising the Secretary of State's functions in relation to auditors delegated to it under the 1989 Act. The Government expect that the role of independent supervisor of the Comptroller and Auditor-General will also be carried out by the Professional Oversight Board. The oversight board is accountable—and will report annually—to the Secretary of State and, through him, to Parliament for the exercise of all functions that may be delegated to it under powers in this part and corresponding powers in existing legislation.

As I said in Committee, the Government recognise that this is an important issue, to which I am willing to give careful consideration. However, the Bill should not determine the Professional Oversight Board's status under the Freedom of Information Act.

The inclusion of the oversight board in the provisions of the Freedom of Information Act is an issue that requires careful consideration and public consultation, for a number of important reasons. As noble Lords have pointed out, the activities of the oversight board go beyond the scope of this part of the Bill and any delegation order under it. Specifically, the oversight board oversees the activity and publishes the annual report of the Audit Inspection Unit—a new independent inspection unit that reports to the oversight board and which was set up following the Government's review of the regulatory regime of the accountancy profession in 2003.

In Committee, the noble Baroness argued that those reports should be made public in the interests of transparency and decision-usefulness for audit committees. That is a subject worthy of debate and I have listened carefully to the noble Baroness and to the noble Lord, Lord Sharman. However, there are also very good reasons why the steering group that oversaw the implementation of recommendations from the review of the regulatory regime of the accountancy profession felt that publication of the AIU's reports on individual audits or auditors would be detrimental to the inspection programme—which is, after all, designed to improve firms' practices and internal processes through constructive dialogue, rather than an adversarial approach—and therefore not in the public interest. There are potentially significant drawbacks to extending the level of public reporting by the AIU to include reporting on individual firms and audits, and those drawbacks must be balanced against the calls for more transparency.

We run the risk of reports becoming more legalistic, as the burden of proof required before matters can be made public would arguably increase. The inspection process would become more adversarial: focused on arguments about the finer points of what amounts to compliance, rather than a constructive dialogue focused on best practice. Ultimately there is a real risk that such an approach would drive the inspection regime towards a tick-box approach to compliance. That would be undesirable and could have a detrimental effect on both transparency and audit quality.

Furthermore, as a result, there is a risk that public reports might become anodyne and thus of little or no real value to audit committees. I guess that that is a bit like engagement letters, which we discussed the other night.

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry 7:45, 16 May 2006

My Lords, I remind the Minister that I offered to give him an engagement letter. I can tell him that I have it with me.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, I look forward to receiving that and I thank the noble Lord in advance. I shall repair to the bar immediately to peruse it.

There is also the risk that audit firms will focus more on challenging points rather than focusing their efforts where we want them to, addressing underlying quality issues.

As I said, there is an important debate to be had on this, and the oversight board is currently reviewing its approach to publication, having regard to practices in other countries with a view to consulting more widely later this year. In any case, the amendments before us would not necessarily result in publication of individual reports. There are a number of exceptions under the Freedom of Information Act that would probably apply with respect to much of the information contained in AIU reports.

As I said in Committee, the Government are currently building up evidence on how freedom of information has impacted on the bodies that meet the existing criteria, with a view to extending designation to further bodies. We believe that that is the appropriate context in which to consider the position of the Professional Oversight Board with respect to inclusion within the provisions of the Freedom of Information Act. That should, however, remain completely separate to the passage of the Bill. As I said, the oversight board is reviewing its approach to publication of AIU reports with a view to consulting more widely later this year.

I hope that, on the basis of what I have said, the noble Lord will feel able not to press the amendment. This is an important issue; there is a way to address it; but it is not the manner suggested by the amendments.

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry

My Lords, I am quite willing to accept that the solution may not be as the amendments are framed. I was more than a little astonished by the Minister arguing that transparency, when it affects the detail of how an auditor is performing, is a bad thing. I believe that transparency is the only way in which any semblance of confidence can be restored, where it has been lost. We must face up to the fact that there have been significant questions about the quality of auditing in this country. The way to put it right is to be transparent about how good or bad it is. I will, in a moment, withdraw the amendment, but I ask that we look in some detail and with some urgency at how the purpose behind the amendments can be achieved.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, before the noble Lord withdraws the amendment, yes, we should look with some urgency at this. A process is under way already, but I am happy to engage in discussions outside the Chamber to see what more might be done. On the issue of transparency, I entirely agree with transparency for the profession as a whole and about thematic issues that face the profession. That is absolutely right. The question is the balance of transparency versus reports on individual firms and what that may entail. That issue needs particular consideration.

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry

My Lords, I thank the Minister for that and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

moved Amendment No. 511C:

Page 394, line 21, at end insert—

"( ) An order under this section must include requirements relating to—

(a) the preparation and publication of financial statements of the appointed body, and

(b) the audit of those statements (save that an order may not require or permit a person mentioned in section 820(1) to be appointed auditor for that purpose)."

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, with a little luck, this will be my last appearance at this Report stage, but I shall be back. This small amendment builds on a slightly different amendment discussed in Grand Committee. It concerns the accounts of the independent supervisor and the audit of those accounts. Amendment No. 511C states merely that the order appointing the independent supervisor must include requirements on accounts and audit. In Grand Committee, the Minister said that the order under Clause 822 was the right place for the accounts requirements rather than a special clause. We are inclined to agree with that, but we find it a little strange that, on this fundamental area of financial accountability, the Bill is completely silent. It is unusual to find a body being created without any explicit financial accountability arrangements. Paragraph (a) of my amendment states that an order under Clause 822 must include a requirement relating to the preparation and publication of financial statements.

Paragraph (b) of my amendment states that the financial statements have to be audited—I do not think that there will be any policy disagreement on this—but, importantly, it rules out audit by any of the auditors general. I hope that there will be no policy disagreement on that either. This was included in the amendment that I tabled for Grand Committee, but we somehow failed, probably due to fatigue, to debate the point, so I have included it again in this amendment. I beg to move.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

My Lords, I think we have agreement on what we want the outcome of this to be, but perhaps not on the process for achieving it. I listened very carefully to the noble Baroness's arguments in favour of including a requirement to prepare, audit and publish financial statements of the independent supervisor, but I reiterate my view that such a provision is unnecessary. I have already made a commitment, in the debate in Committee, to the effect that such requirements will be included in any order made under this clause. Clause 822(5) makes it clear that these requirements can be included in the order. I am happy to confirm that the Secretary of State will do so. It would be inconceivable for an auditor general to be appointed the auditor of its independent supervisor. I hope that I have given in as clear a way as I can the assurances that the noble Baroness seeks and that she will not press the amendment.

Photo of Baroness Noakes Baroness Noakes Shadow Minister, Treasury, Shadow Minister, Work & Pensions

My Lords, the noble Lord tempts me. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 846 [Delegation of the Secretary of State's functions]:

[Amendment No. 511D not moved.]

Clause 865 [Institutional investors: information about exercise of voting rights]:

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, this amendment is extremely simple. It returns us to an issue which we spent some time debating in Grand Committee. We began then by tabling a series of probing amendments to see whether there was any logic or any economic or commercial justification for the Government's policy. There appeared to be none. So we also tabled a clause stand part debate and received no clearer answer then. Accordingly, we seek now, as we sought then, the removal of this reserve power for the Treasury to make provision by regulation to require institutions to provide specified information about the exercise or non-exercise of voting rights attached to their shares.

We agree that there should be full disclosure of how voting rights are exercised by financial institutions for those on whose behalf they invest, but we do not see any reason why it should be compulsory for disclosure to be made to the public at large. Nor do we agree that the heavy-handed approach proposed in the Bill is the best way to achieve this.

I shall not repeat this evening the facts and figures that I gave in Grand Committee, but it is clear that there is a growing move to voluntary disclosure in any case, which the passing of this clause may slow down. Included in our concerns are a number of technical problems relating to the practical implications of the Government's proposal. The Government have failed so far to provide any explanation of how these would be overcome. Instead, the noble Lord hid behind these conventional words:

"I can reassure him that before a statutory disclosure regime was introduced there would be full consultation and a cost/benefit analysis to ensure that any final regime was proportionate and properly targeted".—[Official Report, 25/4/2006; col. GC80.]

From the number of representations on this clause that we have received, and from the diversity of backgrounds from which they have come, I suggest that we already have a clear idea of what the result of that consultation would be; that is, to scrap this proposal. I hope that the Minister has thought seriously about the matter since Committee and will now take the opportunity to do so. I beg to move.

Photo of Lord Sharman Lord Sharman Spokesperson in the Lords, Trade & Industry

My Lords, I support the amendment, principally for the reason that the voluntary scheme which is operating is beginning to work quite well. If we can give the voluntary scheme time to work, it will be unnecessary to have this reserve power.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, I am rather conscious of the fact that on the previous occasion when we debated shareholders' engagement, we were all saying exactly the reverse. Members opposite were saying, "We can't just wait for a voluntary scheme. We've got to actually go in there and have a scheme". We were arguing the reverse.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, the Minister really cannot get away with that. We are talking here not about disclosure to participators, but about disclosure to the public at large. As I said when I spoke, we have no problem with the institutions having to disclose how they are voting for people on whose behalf they are investing—that is the golden thread. We are talking about disclosure to the public at large, which is quite a different issue. The Minister really must try not to confuse them.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

No, my Lords, the point that I was making was about people's enthusiasm for a voluntary scheme as opposed to the taking of powers. On the previous occasion, the noble Lord was immensely unenthusiastic about the voluntary scheme, even though it seemed to be working, and went very hard on the need for regulations. It is nothing to do with the issue involved; it is just the general approach.

Clause 865 confers a power on the Secretary of State and the Treasury to make regulations requiring certain categories of institutional investor to provide information about the exercise, or non-exercise, of their voting rights. I am pleased that the noble Lord, Lord Hodgson, accepted in Committee that,

"shareholders whose shares are held through nominees or are managed on their behalf are entitled to know what is being done with the shares that they own".

Therefore, I am concerned that, in spite of this shared agreement about the rights of shareholders to this information, noble Lords have proposed the removal of this clause. However, I understand that they have concerns about the taking of a broad power, and I would like to allay their specific concerns.

Noble Lords were concerned, first, about the taking of a power without showing,

"that the financial costs and administrative complexities of the clause have been fully considered and that it has a commercially logical foundation".—[Official Report, 25/4/06; col. GC69.]

Noble Lords are quite right that the clause does not specify exactly how the power would be exercised, and therefore, if it is exercised, what the costs would be. It is precisely to address these complexities that we are proposing a broad and flexible enabling power.

Taking a power of this scope and flexibility of course requires an assurance that it will be exercised proportionately and appropriately. We have given this assurance. We have been very clear that the exercise of the power will be subject to further consultation as well as a cost/benefit analysis. If the Government were to exercise the power, they would shape the provisions to make sure that the regime is underpinned by the commercially logical foundation identified and fully justified on the balance of costs and benefits.

Noble Lords also commented on the importance of allowing time to see whether the voluntary approach will continue to yield more disclosure. I absolutely agree with this. This is why we are introducing an enabling power. The approach we adopt will take the evolution of market practice into account. We would like to see best practice continue to drive this improvement on its own. As noble Lords correctly noted in Committee, there is a growing trend domestically and internationally towards disclosure of voting. The mere existence of the enabling power may encourage institutional investors to adopt best practice, but if some institutional investors are reticent, it is right to consider the use of this power to bring the laggards up to the level of the better performers.

Noble Lords also expressed concern that mandatory disclosure of voting information could result in the production of mechanistic disclosures, including,

"pages of statistics and tables, which could be meaningless without further analysis".

The Government have said they would introduce a mandatory disclosure regime only where the benefits exceeded the costs. I can assure noble Lords that this analysis would consider the value of the information to be disclosed. The increasing trend towards voluntary disclosures suggests that more institutional investors recognise their clients' right to this information and that its disclosure is of benefit to clients.

More fundamentally, noble Lords asserted that they were by no means convinced that the clause,

"in any way meets the Government's strategic objectives set out in the Bill".—[Official Report, 25/4/06; col. GC79.]

A key objective is enhancing shareholder engagement. A power to compel institutional investors to disclose to their end beneficiaries how they vote on their behalf is surely crucial to enhancing shareholder engagement, particularly if the institutional investors fail to provide appropriate levels of transparency on their own. I am sure noble Lords want institutional investors to be accountable both for governance decisions they make on behalf of end beneficiaries and for managing transparently the conflicts of interest to which these decisions might give rise.

If noble Lords believe that individual investors are entitled to know what is being done with the shares that they beneficially own, and that this disclosure is beneficial, then they should support this clause. Moreover, this clause should also be supported by those who argue for a voluntary disclosure regime. The Government are committed to examining this and, if it is the better solution, it will be preferred to a mandatory regime. The choice with this clause is not between voluntary and mandatory approaches, but whether the Government should have effective backup. In the event that the voluntary approach does not deliver, we would have no lever to address the problem. The commitment to consultation, rigorous cost/benefit analysis and affirmative approval of any regulations provides the assurance that any use of this power would be proportionate. I therefore hope that the noble Lord will agree to withdraw the amendment.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry 8:00, 16 May 2006

My Lords, I am grateful for that very considered response. I am also grateful to the noble Lord, Lord Sharman, for his support. Obviously I have listened carefully to the Minister. The noble Lord, Lord Sharman, made it clear that we are dealing with the evolution of voluntary disclosure. I do not flatter the Minister when I say he has had a distinguished business commercial career outside the House. He therefore understands the push and the pull underlying this clause. The concern is that once you hand this power to his successors, it will not always necessarily be used as sensibly as I am sure the Minister would use it. It is very widely drawn and extensive in the powers it gives to his successors; that is one of our concerns. We have no problem with enhancing shareholder engagement. Indeed, our discussions on Part 9 were exactly about that. I think we need to talk to people outside and read carefully what the Minister has said. We need to see whether his remarks carry any weight outside and to consult further. But for tonight, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 866 [Disclosure of information under the Enterprise Act 2002]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 512A:

Page 426, line 17, leave out paragraphs (a) and (b) and insert—

"( ) for the purposes of, or in connection with, prescribed civil proceedings (including prospective proceedings) in the United Kingdom, or

( ) for the purposes of obtaining legal advice in relation to such proceedings, or

( ) otherwise for the purposes of establishing, enforcing or defending legal rights that are or may be the subject of such proceedings."

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, in moving Amendment No. 512A, I shall speak also to Amendment No. 512B, both of which amend Clause 866. They respond to very useful proposals put forward by the noble Lords, Lord Hodgson and Lord De Mauley, in Committee. I agreed to consider these as I thought the principles behind the proposals served positively to strengthen the clause. My officials have discussed the thinking further with the CBI and I hope the noble Lords will agree that the way we have drafted the amendments meets their points.

Amendment No. 512A makes it clear that information can be disclosed for the purpose of preliminary steps to enforcing rights and for alternative ways of resolving the dispute other than through commencing civil proceedings. For example, it can be used to enable use of information for investigation, the issuing of "cease and desist" letters to the person said to be committing a breach of intellectual property rights, or for an alternative dispute resolution procedure. There are benefits to both business and consumers in making it clear that information can be disclosed for such preliminary steps. For example, a holder of intellectual property rights might need information in relation to previous breaches by a trader to show a pattern of behaviour. A consumer might need information from a test report showing that a product is unsafe in pursuing a claim with a trader or through an ombudsman scheme.

Amendment No. 512B allows information disclosed under this clause to be used for all purposes covered by the clause. For example, this will make it unnecessary for an individual or business to go back to the public authority which disclosed the information to seek further permission if he intends to start proceedings. I beg to move.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, I am grateful to the Minister. This issue caused a lot of concern. It is a technical area but, as I understand it, the amendments brought forward here have put the issue to bed.

On Question, amendment agreed to.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 512B:

Page 426, line 43, leave out "that for which it is disclosed" and insert "those specified in subsection (1)"

On Question, amendment agreed to.

Schedule 15 [Repeals]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 512C:

Page 513, line 14, column 2, leave out from beginning to end of line 15 and insert "Sections 1 to 88."

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, in moving Amendment No. 512C, I shall speak also to the long series of amendments grouped with it: Amendments Nos. 512D to 527, 529 and 530, which amend Schedule 15—the repeals schedule—and Amendment No. 532, which amends Clause 884. The changes to Schedule 15 provided for by the first two groups of amendments are consequential to amendments made during consideration on Report. The final amendment in this group, Amendment No. 532, ensures that the repeals of enactments specified in Schedule 15 will occur at the time when commencement orders bring the various provisions of the Bill into force, rather than on Royal Assent. I beg to move.

On Question, amendment agreed to.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendments Nos. 512D to 530:

Page 513, line 19, at end insert—

"In section 122(1)—(a) paragraphs (a) to (d);(b) the words "consolidated, divided, converted, sub-divided," and ", or the stock reconverted"."

Page 513, leave out line 45 and insert—

"Sections 198 to 262A"

Page 513, leave out lines 47 and 48 and insert—

"Sections 282 to 361."

Page 514, line 2, column 2, leave out from beginning to end of line 3 and insert—

"Sections 363 to 394A."

Page 514, line 7, at end insert- "Section 430A(4)."

Page 514, leave out lines 42 to 45 and insert—

"Sections 680 to 720."

Page 514, leave out line 49.

Page 514, line 49, at end insert—

"Section 735B."

Page 515, line 8, at end insert ", "prospectus issued generally""

Page 515, leave out lines 12 and 13 and insert—

"In Schedule 2, Part 2."

Page 515, line 14, leave out "4" and insert "3"

Page 515, leave out lines 34 and 35 and insert—

"Sections 92 to 107."

Page 515, line 43, after "(4)" insert ", (6)"

Page 515, leave out lines 47 and 48 and insert—

"Sections 133 and 134."

Page 516, line 2, column 2, leave out "and 11 to 15 and 17 to 24" insert ", 11, 12 to 15, 18(7), 19 to 21, 23 and 24."

Page 516, line 24, column 2, leave out "Part 9" and insert—

"Sections 139 and 140."

Page 516, column 2, leave out lines 29 and 30 and insert—

"Sections 7 to 10."

Page 516, line 35, leave out "6" and insert "5"

Page 518, line 6, at end insert—

"In Schedule 2, paragraphs 11 to 15."

Page 518, line 20, at end insert—

"Limited PartnershipsAct 1907 (c. 24) In section 16(1)(a) the words ", and there shall be paid for such inspection such fees as may be appointed by the Board of Trade, not exceeding 5p for each inspection";(b) the words from "and there shall be paid for such certificate" to the end.In section 17(a) the words "(but as to fees with the concurrence of the Treasury)";(b) paragraph (a)."

Page 518, line 22, leave out "Part 2" and insert—

"Sections 24 to 54. Schedules 11 to 13."

Page 518, line 22, at end insert—

"Companies (Audit, Investigations and Community Enterprise) Act 2004 (c. 27) Sections 1 to 6.In Schedule 2, Part 1."

On Question, amendments agreed to.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 531:

After Clause 881, insert the following new clause—

"CONTINUITY OF THE LAW

(1) This section applies where any provision of this Act re-enacts (with or without modification) an enactment repealed by this Act.

(2) The repeal and re-enactment does not affect the continuity of the law.

(3) Anything done (including subordinate legislation made), or having effect as if done, under or for the purposes of the repealed provision that could have been done under or for the purposes of the corresponding provision of this Act, if in force or effective immediately before the commencement of that corresponding provision, has effect thereafter as if done under or for the purposes of that corresponding provision.

(4) Any reference (express or implied) in this Act or any other enactment, instrument or document to a provision of this Act shall be construed (so far as the context permits) as including, as respects times, circumstances or purposes in relation to which the corresponding repealed provision had effect, a reference to that corresponding provision.

(5) Any reference (express or implied) in any enactment, instrument or document to a repealed provision shall be construed (so far as the context permits), as respects times, circumstances and purposes in relation to which the corresponding provision of this Act has effect, as being or (according to the context) including a reference to the corresponding provision of this Act.

(6) This section has effect subject to any specific transitional provision or saving contained in this Act.

(7) References in this section to this Act include subordinate legislation made under this Act.

(8) In this section "subordinate legislation" has the same meaning as in the Interpretation Act 1978 (c. 30)."

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, this amendment introduces a new clause to follow Clause 881. It seeks to include a provision to ensure that things done in reliance on these provisions in the Companies Act 1985, which are repealed and replaced by the Bill, will continue to be legally effective.

Articles of association, company resolutions and contracts are all likely to refer to provisions of the Companies Act or to rely for their effect on the way in which those provisions work. Except where we intend a change, those articles, resolutions and contracts should continue to have effect, not only with old references converted into new but also with their legal effect capable of continuing, despite verbal differences between the old and the new.

This new clause applies automatically in all cases in which it is capable of applying. It is in addition to any more specific transitional provisions which may be included in the commencement orders by use of the power in the preceding Clause 881. It does not purport to be wholly comprehensive, but where it does apply it will avoid the need for equivalent provision to be made by possibly more than one order.

The same amendment was brought forward in Grand Committee, but our debate was coloured there by what I suspect may have been slightly crossed purposes. I hope, with the explanation I have provided today, we can agree the provision. I beg to move.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, I am not quite as happy as the Minister thought I might be. What we are concerned about is the question of the meshing of this piece of legislation with what went before. The Law Society still has some concerns about it. I wonder if it would be possible for the Minister, the Bill team and the Government to consider whether we could have a schedule to the Bill which would consist of a table identifying which provisions in the Bill correspond to provisions being repealed for the purposes of this clause.

There is certainly a concern which I explained on our last day in Committee about how these all mesh together. I said then that the new clause appears to apply only when existing provisions are re-enacted with or without modification. It does not appear to cover the situation where an existing provision is simply repealed without being re-enacted. I also think some of these concerns continue to persist in the world at large. We share the Government's view that we are trying to make company law comprehensible and accessible. Some practitioners and the Law Society feel that a schedule with a table would help bring the whole thing together. I wonder if the Minister could comment further on the possibility of some such arrangement being made available.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

My Lords, there are two parts to this: the general bit and then the transitional arrangements to cover any cases where one needs to give specific instructions as to what the transition should be. I would be delighted to write to the noble Lord with a more specific answer to his suggestion and, if necessary, hold further technical discussions.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Shadow Minister, Home Affairs, Shadow Minister, Trade & Industry

My Lords, I am grateful to the Minister for that. This is a practitioner issue and it would be wrong for me to pretend, even after three days on Report and 13 days in Committee, that I have this Bill completely focused in my mind. If the Law Society is having difficulty in seeing how all this fits together, I think there is an issue here that we could all usefully address in the interests of UK plc. I hope the Minister will be able to ask the Bill team to consider this and maybe talk to the Law Society and practitioners. It would help the Bill, which is what we are trying to achieve in this elaborate process.

On Question, amendment agreed to.

Clause 884 [Commencement]:

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

moved Amendment No. 532:

Page 432, line 14, after "provisions)," insert "except section 880 and Schedule 15 (repeals),"

On Question, amendment agreed to.