New Clause 1 - Application of Company Accounts and Audit Provisions to Societies

Part of Industrial and Provident Societies Bill – in a Public Bill Committee at 12:00 pm on 13th February 2002.

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Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party 12:00 pm, 13th February 2002

I commend the way in which my hon. Friend the Member for Edmonton (Mr. Love) has introduced his new clauses. I agree with his view that there is a sensible case for aligning the law governing companies with that governing industrial and provident societies in the three matters. He is right to say that, in each case, societies operating as businesses suffer a significant disadvantage compared with companies, because of a failure to keep I and P law abreast of the changes and developments that have taken place in company law.

In each case, my hon. Friend's new clause points to the basic solution to the problems that exist by applying the appropriate company law provisions to societies. However, as my hon. Friend said, some further drafting work would be required to ensure that the new clauses could be appropriately applied to societies. It was that consideration that led me to propose the Bill in its original form and new clause 5 so as to omit the use of delegated legislation by Government, if they were so minded, to refine the application of company law to societies as we have already discussed.

The application of part VII of the Companies Act 1985 on accounts to societies, which my hon. Friend suggested in new clause 1, is a complex and technical point. Further work would be necessary before an appropriate and effective amendment to achieve that aim could be developed. If the Committee is convinced by the thrust of my hon. Friend's case, it may be that further down the line a new clause with more modest aims, such as the provision for societies of the exemptions and deregulatory advantages enjoyed by small and medium-sized companies, and an exemption from the need for a full audit on the same terms as companies, could be achieved without the need for delegated legislation and appropriately added to the Bill.

On the other two new clauses—and the one that was not accepted for debate—I believe that the application of company law rules to societies could be achieved more easily, but a clause to achieve that would clearly need some more refinement than is outlined in my hon. Friend's new clauses. If the Committee is so minded, I will consider whether incorporation of suitable provisions would be a useful and sensible addition to the Bill and consult on that. I may bring forward amendments on Report.