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Session 2005 - 06 Publications on the internet Standing Committee Debates Company Law Reform Bill [Lords] |
Company Law Reform Bill [Lords] |
The Committee consisted of the following Members:Mark Egan, Mark Oxborough,
Committee Clerks † attended
the Committee Standing Committee DTuesday 20 June 2006(Afternoon)[John Bercow in the Chair]Company Law Reform Bill [Lords]Clause 22Entrenched
provisions of the
articles Amendment
proposed [this day]: No. 81, in clause 22, page 9, line 3, leave
out paragraph (a).—[Margaret
Hodge.] 4.30
pm Question
again proposed, That the amendment be
made.
The
Chairman: I remind the Committee that with this we are
discussing 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3, leave out from ‘repealed' to end of line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). Amendment No. 23,
in clause 112, page 50, line 17, after ‘addresses',
insert ‘(which, for the avoidance
of doubt, need not be a home
address)'. 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. Mr.
Jonathan Djanogly (Huntingdon) (Con):Mr. Bercow,
I welcome you to the Chair. I understand that it is your first Bill
Committee, and what a Committee to be put on. I was trying to think of
some relevant Chinese proverb, but it is highly interesting, and all
good stuff. We welcome you, and I am sure that you will make an
excellent Chairman. We
were discussing clauses 22, 23 and 24 at some length. I tend to agree
with the Minister. During some of her last remarks, we started to turn
the wheel around again, so I do not intend to go on at length. We have
made clear our objections not only to the
mechanics, but to the principle of clause 22. For that reason, I will
recommend to my hon. Friends that we vote against clause stand
part. Question put,
That the amendment be
made:— The
Committee divided: Ayes 11, Noes
2.
Division
No.
3] AYESNOESQuestion
accordingly agreed to.
Amendments
made: Government Amendment No. 82, in clause 22, page 9, line 4,
leave out ‘altered' and insert
‘amended'. Government
amendment No. 83, in clause 22, page 9, line 11, at end
insert— ‘( ) Provision for
entrenchment does not prevent amendment of the company's articles by
agreement of all the members of the company.'.—[Margaret
Hodge.] Motion
made, and Question put, That the clause, as amended, stand part of
the Bill.
The
Committee divided: Ayes 13, Noes
6.
Division
No.
4] AYESNOESQuestion
accordingly agreed to.
Clause 22, as amended,
ordered to stand part of the Bill.
Clause 23Notice
to registrar in case of entrenched provisions
Amendment made: No. 84,
in clause 23, page 9, line 16, leave out ‘altered' and insert
‘amended'.—[Margaret
Hodge.] Clause
23, as amended, ordered to stand part of the
Bill.
Clause 24Notice
to registrar of removal of entrnched
provisions Amendments
made: No. 85, in clause 24, page 9, line 27, leave out
‘alters' and insert
‘amends'. No.
86, in clause 24, page 9, line 32, leave out ‘alteration' and
insert ‘amendment'.—[Margaret
Hodge.] Clause
24, as amended, ordered to stand part of the Bill.
Clauses 25 and 26 ordered to
stand part of the Bill.
Clause 27Registrar’s
notice to comply in case of failure with respect to amended
articles
Mr.
Djanogly: I beg to move amendment No. 49, in clause 27,
page 10, line 31, leave out ‘200' and insert
‘1,000'.
The
Chairman: With this it will be convenient
todiscuss amendment No. 50, in clause 27, page 10, line 31, at
end insert ‘and, for continued
contravention, a daily default fine of
£100'.
Mr.
Djanogly: The Minister may have noticed that I tend to
speak to those amendments first raised in the other place only when I
feel that I have something to offer that could move the argument
forward. It is quite hard to do that on this clause. We are talking
about whether a figure should be this amount or that amount.
The amendments are probing. I
thought it was worth questioning what was said in the Lords. Lord
McKenzie of Luton
said: “We
consider that £200 is the right amount for the one-off civil
penalty. It is not our intention to overpenalise companies through that
route but rather to encourage compliance with the
law.”—[Official Report, House of Lords, 30 January
2006;Vol. 678, c.
GC23.] I do not think
that either side of the debate had a heavyweight legal argument. It
comes down to the question of what is an appropriate amount to act as
an incentive to companies to use the amended articles. For the average
company, £200 is not much of a deterrent, especially given that
preferably it would mostly be dealt with by way of civil rather than
criminal proceedings. I know that the general mood is that such things
should be dealt with as civil matters, and this is one such instance.
We feel that if the amount was slightly higher, the civil route would
be more attractive than the criminal route.
The
Minister for Industry and the Regions (Margaret Hodge): I
welcome you to the Chair, Mr. Bercow, and I wish you well in your job.
Given your record, I am delighted that you are in the Chair rather than
anywhere else. I have looked up your details and I see that you went to
Essex university to look for trouble; and you then became a member of
Lambeth council to pick a fight. There is no better place to do that
than
this Committee, so I am thankful that you are Chairman. I am even more
thankful about it because of your record for asking lots and lots of
questions—2,619 parliamentary questions in less than a year. I
fear that had you been on the Opposition Benches in Committee, we might
not have completed our business even by the end of October. I look
forward to serving under your wise
chairmanship. The hon.
Member for Huntingdon (Mr. Djanogly) was right that it is an issue of
judgment as to where the fine should lie. It is our view that a civil
penalty of £200 is about right if a company is given notice
underclause 27 to remedy the breach within 28 days and fails
to do so. All members of the Committee should note that the civil
penalty does not take away from the ability to pursue a criminal case
if required. The criminal penalty would be a level 3 fine, which is
about £1,000. We are leaving it there; our judgment is that
£200 is about right. Companies may be in arrears with their
filing obligations through inadvertence. Clause 27 is a deregulatory
measure that provides companies with the opportunity to bring their
filing up to date without risking criminal sanctions. It is not
intended as a substitute for the criminal sanctions that would have a
higher penalty rate.
I accept that there is no
particular magic in the figure that we have chosen. It is simply there
to give some teeth and to encourage the companies to provide the
registrar with up-to-date copies of their articles within the period of
the prescribed notice. Equally, we cannot see any particular benefit in
raising the penalty to the level suggested in the amendment. Given that
the matter was also debated in another place, as the hon. Gentleman
said, I hope that he will withdraw the amendment to enable us to
continue with consideration of the Bill.
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