Clause 278

Company Law Reform Bill [Lords] – in a Public Bill Committee at 1:00 pm on 29th June 2006.

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Application not to circulate members’ statement

Question proposed, That the clause stand part of the Bill.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I have just one small point on the clause. We touched this morning on a company’s right to apply for relief in the event that clause 275, on members requiring the circulation of a written resolution, is abused. Such an application can be made by a company or

“another person who claims to be aggrieved”.

How wide is that intended to extend? Will anyone who feels aggrieved have locus standi? What is the ambit of that provision?

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

That reference in clause 278 mirrors the general meetings provisions in clause 300, which is entitled “Application not to circulate members’ statement”. So those words are just a restatement of the provisions in clause 300. But the answer to the hon. Gentleman’s specific question is yes.

May I take a slight liberty? This morning, I made an error, which I would like to correct, if I can. During the exchange on clause 271, there was a slight confusion. The hon. Gentleman asked whether the Bill would allow a company to use its articles to override the written resolution procedures for statutory resolutions. I think that I answered yes, but apparently the answeris no.

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

There were two possible answers, so I had a 50 per cent. chance of getting it right, but I got it wrong.

It is important for the decision-making procedures of a company that the articles cannot create alternative written resolution procedures or require meetings. That is the effect of clause 283. That is quite different from the ability of companies to entrench provisions in their articles, as we discussed earlier. For example, if a company wishes, on the agreement of all its members, to entrench higher than the 75 per cent. majority, it may do so. However, it is important for the protection of minority shareholders that the articles cannot require statutory resolutions to be taken in a meeting. Otherwise, it would limit the rights of members to require the circulation of written resolutions and accompanying statements on a number of key matters, and remove a particularly important new right for a member of the scheme.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I am grateful for the clarification on clause 271. Outsiders watching these proceedings can be sure that we are clear about the ambit and operation of that clause in the context of clause 283—the clause to which I was referring in our earlier debate.

I heard what the Minister said about the ambit of clause 278. In essence, it covers anybody who might be interested, and therefore is fairly wide-ranging. I do not know whether further clarification is on offer, but it does not sound like it. On that basis, I am content with what she said, and shall not press the matter.

Question put and agreed to.

Clause 278 ordered to stand part of the Bill.