Clause 21

Company Law Reform Bill [Lords] – in a Public Bill Committee at 11:45 am on 20th June 2006.

Alert me about debates like this

Alteration of articles

Photo of Margaret Hodge Margaret Hodge Minister of State (Industry and the Regions)

I beg to move amendment No. 80, in clause 21, page 8, line 28, leave out ‘alter' and insert ‘amend'.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

With this it will be convenient to discuss Govt amendments Nos. 82, 84 to 89, 101, 102, 105 to 107, 104, 108 to 111.

Photo of Margaret Hodge Margaret Hodge Minister of State (Industry and the Regions)

The amendments look extremely complicated. In fact, they are tidying-up amendments arising out of debates in another place. The Bill makes provision in clause 21 for changes to company articles that may be made by a company’s members, and for changes that may be made by other means such as legislation, which is dealt with in clause 35, or by the courts or other authorities such as the Charities Commission, which is dealt with in clause 36. The amendments are intended simply to introduce a greater consistency in the way that the Bill talks about different kinds of changes.

The amendments ensure that when the Bill refers to changes made to a company’s articles by its members, the company’s articles are generally referred to as being amended, and the changes are referred to as amendments. When the Bill refers to changes made by legislative, judicial or other external intervention, the company’s articles are generally referred to as being altered, and the changes are referred to as alterations.

The thinking behind this approach is that a company’s articles can be changed either by changing the text or by means of some free-standing overriding provision. We think that “amendment” is the normal way of describing textual changes, and that it is by  textual changes that companies normally change their articles, whereas legislation and courts are more likely to adopt free-standing overriding provisions. Since “alteration” naturally has a broader range of meaning, encompassing both textual changes and overriding provisions, the Bill should generally refer to amendments when it is dealing with changes made by the company’s members and to alterations when it is dealing with changes made by legislation or external agencies. I should make it clear, however, that we do not intend in this way to limit the ability of companies to change their articles by the adoption of free-standing overriding provisions, or the ability of courts, for example, to change a company’s articles by textual amendment.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice)

I do not intend to take too much of the Committee’s time debating the merits of the words “alteration” and “amendment”. I agree with what the Minister said.

Amendment agreed to.

Clause 21, as amended, ordered to stand part ofthe Bill.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

We now come to clause 22. Members will note that clauses 22, 23 and 24 are grouped for debate with the amendments under clause 22 on the selection list. That means that the questions on those clauses—that is, the stand part questions—will be put to the Committee for decision without further debate when we reach them. The point is, obviously, that as we debate clause 22 and the amendments that go with it, we will debate clauses 22, 23 and 24 stand part as well, because the amendments to the group of clauses are so substantial to them that it would be easier to debate them in that way. So, if any Member wishes to raise a point on any of clauses 22, 23 and 24 that would have come under the debate on clause stand part, they should raise it in the next debate.