Margaret
Hodge: If the hon. Gentleman will give me a chance, I am
responding to his previous point. The idea that we are doing anything
by stealth is ludicrous. All the parties with which we have engaged
since 1998 in taking forward the review of that intricate area of
company law have been clear that it was an inclusive and open
process. If the hon.
Member for North-West Cambridgeshire failed to see that or to have it
drawn to his attention as he prepared for the Committee, I am sorry. I
shall ensure that the articles that have been placed in the Library are
circulated. On any other matters, it would be sensible probably to draw
the Committee’s attention to the location of the relevant
papers, rather than to distribute them. That way people will know where
on the website or in the Library they can get them. I hope that that
will be sufficient for hon. Members—in order to save a few
trees.
Mr.
Blunt: The Minister and her Department have proceeded with
good intentions over a long consultation process, but she needs to
differentiate between Members. My hon. Friends behind me, like her hon.
Friends behind her, will not have known that they were going to be
selected for the Committee until the Selection Committee met. My hon.
Friend the Member for Huntingdon will have had some idea that the Bill
was coming down the tracks and an opportunity to follow it in detail.
However, I ask her to give as much assistance as she can to Back
Benchers by identifying and producing documents to make their job as
easy as possible. They have not been involved in the process since 1998
like officials in her Department.
Margaret
Hodge: This might help the Committee; I have just been
informed that there is a list of the relevant websites at the back of
the House of Commons Library note on the Bill. That might be of further
assistance to the
Committee.
Mr.
Davies: Briefly, the Minister now seems to be going back
on the promise that she gave me a moment ago, for which I was grateful.
The Government should give us the documents, not say, “Go and
look at websites”, so that we spend our time looking at
websites. We need to have the documents. The Government have them, or
claimed to have them, and she was gracious enough to say that she would
make them available. I take it that that undertaking is still valid. I
am still grateful for it and look forward to seeing the
documents.
Margaret
Hodge: I was simply reflecting the fact that I would like
to save a little bit of paper. But if Members feel strongly about
having all the bits of papers, rather than references to them, I am
happy to help out. I know how much paper we get through, and how much
we bin before even looking at it, so it seemed sensible just to provide
the relevant references. However, if the Committee so wishes, I shall
provide the documents. It is no great
problem.
Mr.
Vara: The Minister should speak for herself on the amount
of material that is binned. The Opposition take the Bill seriously and
certainly will read through all the material that comes our
way. The Minister has
repeatedly made the point that there has been a lengthy consultation
process, that many organisations have been consulted and that the Bill
has been debated in the House of Lords. I point out to her that many of
those organisations have put forward conflicting views, and it would
not be right for the Committee simply to accept all those views; it is
not possible to do so because of the conflicts. It is the purpose of
the Committee therefore to try
and—
Mr.
Vara: Certainly, Sir. The Committee must ensure that we
arrive at a proper decision, so constant reference to previous
organisations is perhaps not appropriate.
Margaret
Hodge: After that debate, I cannot remember all the points
that have been raised. Opposition Members are not the only people in
the Committee taking the Bill seriously. This Government instituted the
review of company law; we did it thoroughly, and it is insulting, yet
again, for him to suggest that he and his colleagues are the only ones
who take the matter seriously.
Of course there are conflicts.
We have just spent considerable time discussing one such conflict, to
which we shall return—whether there should be regulation and we
should insist that every company, be it public or private, have a
company secretary. That is a contentious issue, on which the Government
have taken a view. No doubt the hon. Gentleman will also
reflect on what is right, rather than what has been requested by a
certain group of people lobbying him at a certain
time. I wrote, I hope,
to all members of the Committee when welcoming them to the Committee
and in that letter I highlighted other information available on the
various DTI websites. It might help hon. Members if they return to that
information. I asked them to contact me for further information if they
so wished and it would be helpful if they did
that. I was asked about
the status of the model articles, as I recall. I hope that hon. Members
will come back to me if I forget something. I was asked whether the
model articles were advisory, I think by the hon. Member for
Huntingdon—[Hon. Members:
“No.”] Sorry, I should have said the hon. Member for
Grantham and Stamford. The model articles are advisory. They are not in
any way required; no company is required to adopt them. However, they
operate in default, so if a company has not adopted articles, these can
be used if the need so arises. It is because of the default provision
that they are prescribed; that is why the term
“prescribed” is used in the
clause. In discussions
that I have had with companies recently, there has been quite a lot of
support for the development of the advisory articles. That means that
people do not have to reinvent wheels and think through themselves what
they have to put into articles. They can look at these articles and see
whether they need to adopt
them. I was also
asked—I think it was indeed by the hon. Member for Huntingdon
this time—whether there was an intention to adjust existing
articles. No, it has never been the case that successive Governments
have replaced the articles of existing companies. I hope that what I
have said deals with the issues that Opposition Members have raised
about the clause, that I have convinced them that the Bill makes sense
and that we can approve the
clause.
Mr.
Djanogly: I am grateful to my hon. Friend the Member for
Grantham and Stamford for initiating the debate, to which several of my
hon. Friends have contributed. It has highlighted the importance of the
model articles for companies—that is an essential part of what
we are doing with the Bill—and the need to consult fully on the
matter. There has been
some confusion about when the model articles were put forward in the
White Paper and when they were consulted on. I have just seen in a pile
of paper that the consultation started on 8 June, so it has not being
going on for long. My first point is that the consultation is ongoing.
The fact that a White Paper was published, however long ago that was,
is unrelated to the fact that the consultation has been going on for
only a couple of weeks. On that basis, my hon. Friend the Member for
Grantham and Stamford made an important
point.
Margaret
Hodge: There is a misunderstanding. There was a
consultation on draft articles, which was initiated when we published
the White Paper in 2005. We then commenced a further consultation on
articles for public companies; the one in 2005 related to private
companies. We commenced a consultation relating to public companies on
the articles that we published before the Committee sat. It is those
that I have agreed to distribute around the
Committee.
Mr.
Djanogly: That clarification is
helpful. The second
point that I wanted to make is that what was in a White Paper is not
necessarily what was consulted on. There may have been changes between
the two dates. For that reason as well, it is fair to make the point
that we need to have a fresh look at this matter. However, I thank the
Minister for her offer to send out the documents and related
documents—I think that is what she said—so that what has
happened will not happen again and the Committee will be advised in
advance. Finally, I would be grateful if she could say when the
consultation is likely to end and when the results are likely to be
published. I hope that these important model articles will come into
play at the same time as the overall provisions of the
Bill.
Margaret
Hodge: I am informed that the consultation will continue
until the end of
August. Question put
and agreed to.
Clause 19 ordered to stand
part of the Bill.
Clause 20 ordered to stand
part of the
Bill.
Clause
21Alteration
of
articles
Margaret
Hodge: I beg to move amendment No. 80, in clause 21, page
8, line 28, leave out ‘alter' and insert
‘amend'.
The
Chairman: With this it will be convenient to discuss Govt
amendments Nos. 82, 84 to 89, 101, 102, 105 to 107, 104, 108 to
111.
Margaret
Hodge: 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. Mr.
Djanogly: 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.
David
Howarth: And so do
I. Amendment agreed
to. Clause 21,
as amended, ordered to stand part ofthe
Bill.
The
Chairman: 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. 12
noon
Clause
22Entrenched
provision of the
articles
Margaret
Hodge: I beg to move amendment No. 81, in clause 22, page
9, line 3, leave out paragraph
(a).
The
Chairman: With this it will be convenient to discuss the
following: Amendment No. 8, in clause 22, page 9, line 3, leave out
from ‘repealed' to end of line
6. Government amendment
No. 83. Clause stand
part. Amendment No. 9,
in clause 23, page 9, line 18, leave out subsection
(2). Amendment No. 48,
in clause 23, page 9, line 22, leave out subsections (3) and
(4). Clause 23 stand
part.
Amendment No. 10, in clause 24,
page 9, line 28, after ‘articles', insert ‘by unanimous
resolution'. Amendment
No. 11, in clause 24, page 9, line 28, after ‘articles',
insert ‘by unanimous resolution
less one
vote'. Amendment
No. 12, in clause 24, page 9, line 28, after ‘articles',
insert ‘by a resolution of at least
90% of its
members'. Clause
24 stand part.
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