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Lord Williams of Elvel: I am grateful to the Minister. I am sure that it does not create problems

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under the Companies Act; it is just wholly unprecedented. It runs in parallel with the normal provisions of the Companies Act. The Minister mentioned groups of shareholders. Certainly 10 per cent. of shareholders can summon an EGM. That applies to any company under the terms of the Companies Act. I cannot think of any regulator--Ofgas, Oftel, Ofwat, off anything else--which has the power to summon an EGM of a Companies Act company. That is the power that the Government are giving to the corporation.

The noble Lord made the point that this would be to summon an EGM which would usually be used to sack the director. An EGM is also required for increasing capital. It may well be that the corporation will wish to increase the capital of a company. Presumably, the corporation will be allowed to make that suggestion and put propositions to an EGM. It is not stated anywhere that the corporation or the director can move a motion at an EGM; it simply says he can call an EGM. He cannot even necessarily speak at the meeting except as a director. It all seems very confused. The Government should examine this matter to see what would happen at an extraordinary general meeting, if convened by a director appointed by the corporation. Would that director then be allowed to move any resolutions at the EGM? It has to be assumed that he cannot unless he has the approval of the board under the Companies Act. I should be grateful if the Minister would look into the matter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dubs moved Amendment No. 33:


Page 123, line 25, after ("Corporation") insert ("together with the Accounting Standards Board").

The noble Lord said: In moving this amendment standing in the name of my noble friend Lord Williams of Elvel, I shall also speak to Amendments Nos. 34 and 35.

I was a little surprised when in an earlier debate, I believe on Clause 1 stand part, the Minister, in reference to paragraph 16(1) of this particular schedule, said that there would be two sets of accounts for those registered social landlords that came both under the Companies Act and under the Housing Corporation. I was rather puzzled by that, and I have tried to think my way through the significance of this particular provision. The Government risk causing some confusion.

As I understand it, some registered social landlords are also incorporated companies and therefore have to conform to Companies Act requirements. That means that the way in which they present their accounts would have to be in accordance with the Accounting Standards Board. Other registered social landlords may not be registered companies. Therefore, they would simply come under the requirements of the Housing Corporation. But, in addition, those which come under the Companies Act would also have to come under the Housing Corporation. It is difficult for me to take comfort from an outcome which means that the corporation may set different requirements for the whole

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range of social landlords, some of whom will also have to conform to the standards of the Accounting Standards Board.

In a nutshell, it seems to me that that is excessively complicated and will cause confusion. I trust that I am right in having quoted the Minister as saying that there would be two sets of accounts. If not, if the Minister will indicate, perhaps we can clarify that. But, as I heard him fairly clearly, no doubt he goes along with that. The Minister also used the expression "separate but overlapping".

The result is likely to be that for some registered social landlords there will be two sets of accounts; or certainly some social landlords will prepare accounts in one way and others will be obliged to prepare accounts in another way. I do not see how that will help clarify the financial position of those bodies. Moreover, I should have thought that the Accounting Standards Board would require the accounts to be prepared, as it says in the schedule:


    "in a proper form and ... give a true and fair view of ... the state of affairs of the landlord ... and ... the disposition of funds and assets".

I cannot understand why there should be those different conflicting and confusing requirements. It seems to me that Amendment No. 33 helps clarify matters. The amendment simply requires that the Corporation:


    "together with the Accounting Standards Board may from time to time determine accounting requirements".
That seems to me a very simple change which will add clarity and consistency to the way in which those bodies prepare their accounts.

Turning to the other two amendments which concern the requirements for audit, I have looked hard at that part of the schedule which refers to this matter. The expression "a qualified auditor" comes up more than once. My understanding is that when companies come under the Companies Act, they have to appoint auditors who are members of the Institute of Chartered Accountants (I think it is that), which means that they must conform to certain specific requirements. But some social landlords may not come under the Companies Act, as has already been made clear. Therefore, I assume that the reason for this provision is that they need to have qualified auditors because they are not obliged to provide auditors with particular qualifications under the Companies Act.

I ask who such a qualified auditor would be and to what would he have to conform if they were not the same requirements as those that come under the Companies Act. It seems to me that it would be much simpler if all social landlords had to have their accounts audited by people who conform to the same standards. That is the purpose of Amendments Nos. 34 and 35. I beg to move.

7 p.m.

Lord Lucas: These amendments raise two questions: first, whether there will be two sets of accounts, as I said earlier. It is quite clear that for a company incorporated under the Companies Act 1985 and for a

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registered social landlord under this Bill, which is also such a company, there are two sets of requirements to produce accounts. There is the requirement in the Companies Act and the requirement in this Bill. The two exist not in opposition but parallel. So, in principle, there is a requirement to produce two sets of accounts.

But the Housing Corporation confirms that there are no substantial differences between its requirements and those of the Companies Act. But the corporation requires more detailed information in some areas in order to fulfil its regulatory function. It says that in practice there may not be a need for completely separate sets of accounts; all that may be required is to supply the supplementary information alongside the Companies Act accounts. Ordinary commercial companies encounter that difference when producing accounts according to the English standard and the American standard. The accounts look different and are different but they apply to the same company and the same affairs. But one is looking at a different set of regulatory regimes and a different set of purposes.

We do not feel that Amendment No. 33 is appropriate. Page 123, line 25 of the Bill applies to the accounts required by the Housing Corporation. The Accounting Standards Board is interested in the Companies Act accounts. So we do not believe that the Accounting Standards Board has any function to fulfil in that set of accounts. The two are conceptually separate. But probably in practice one set of accounts, with an additional set of notes, will satisfy the housing corporation.

With regard to Amendments Nos. 34 and 35, I agree with the noble Lord, Lord Dubs. I find the phraseology on page 124 of the Bill--paragraph 18(4)--a little confusing. What it amounts to is that an auditor has to be a Companies Act auditor. In other words, any social landlord has to be audited by an auditor who is qualified to audit a company under the Companies Act. For the noble Lord's enlightenment, that consists of the Institute of Chartered Accountants in England and Wales, Scotland and Ireland, the Chartered Association of Certified Accountants and the Association of Authorised Public Accountants. They can all audit Companies Act companies and those people will be required to audit any social landlord.

Therefore, I do not believe that there is any case for a restriction to the Institute of Chartered Accountants in England and Wales because those people are already quite happily qualified to audit any company. We do not need to look for more than that. I understand that these amendments were put forward in the fear, which I agree could easily be gathered from the wording here, that there might be some possibility of a relaxation, allowing in people who would not be qualified to audit a company to audit a social landlord.

Lord Monkswell: The Minister has satisfied me to a certain extent with regard to the arrangements for the auditing of the accounts. But I must say that he has not satisfied me with regard to the preparation of the accounts and the accounting requirements.

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I am a comparative layman when it comes to accounts. I must admit that in the past I have had some difficulty in determining what the accounts of different organisations and companies mean. Quite often they are arranged in different ways and it is difficult to work out what they signify. When it comes to housing associations or arrangements under the Housing Corporation, we must recognise that there is a need for some transparency and visibility over what is going on. We are also dealing with a large body of volunteers who almost by definition will not be qualified in accountancy. It is useful to recognise that. We must ensure, as best we can, that the accounts that may be determined by the Housing Corporation are not significantly different from accounts that may be required for companies.

I was interested in the Minister's remarks that the requirements of the Housing Corporation were supplementary and additional to enable it to perform its regulatory functions. We can all recognise that and it is probably very useful to have extra information in accounts to make them more understandable and more transparent to the regulatory authorities, members of the Housing Corporation and others involved in this area of activity. It would be useful if, when the Housing Corporation is determining its requirements, it could be involved with the Accounting Standards Board to ensure that the accounts required by the Housing Corporation are supplementary and additional rather than in a different form, which could quite easily happen.

I hope that the Government will think about this problem. Although they may not accept this amendment, I hope that they will think of other ways of ensuring that two sets of accounts are not produced but that all the information that is needed can be enshrined in one set of accounts. The Minister's remarks about supplementary or additional information would be the way to do it. It is rather disturbing to hear that we are likely to see two sets of accounts. Unless this problem is resolved, we shall only add to the confusion of people trying to determine what is going on.


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