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Clause 21

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

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Photo of Margaret Hodge Margaret Hodge Minister of State (Industry and the Regions) 11:45 am, 20th June 2006

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.