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Lord Bassam of Brighton: My Lords, I do not entirely follow the noble Lord's logic though I can see where he is coming from. Shareholders are entitled to be told about all except the very smallest of donations; and there is no reason to amend the current disclosure threshold of £200. If a company donates £1,000 to a constituency association it would still be able to be disclosed under Part IV of the Bill. So there is already provision in place for that eventuality.

Lord Wedderburn of Charlton: My Lords, I, and many others, will read very carefully my noble friend's remarks in Hansard. The noble Lord is right to say that a report must appear in the director's report of all political donations over £200. The argument of the noble Lord, Lord Goodhart, that there are grounds for choosing £1,000 seems to have some strength.

The figure of £5,000 apparently comes from some anonymous representations from political parties. As I was unable to attend the House, I read the Official Report in bed. I do not remember this precise point being made in Committee. If the Minister writes to me with a reference--he has kindly done so previously--I shall be interested to read it.

Of course I shall beg leave to withdraw the amendment. However, if what I think was said appears in Hansard there will be a considerable amount of dislike within his own party. It is true that if one is a subscriber one can gain these figures from the research undertaken by the Labour Party research department. I suspect that few people here read such publications. I congratulate the noble Lord, Lord Goodhart, on being an avid reader of the Labour Research Department's publications. My noble friend must understand that the provision removes any shareholder control in relation to the figure of £5,000 a year, every year. The figure will appear in the report of the directors, but no more. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Amendments Nos. 237B to 237D, as amendments to Amendment No. 237, not moved.]

On Question, Amendment No. 237 agreed to.

[Amendments Nos. 237E to 241 not moved.]

Lord Wedderburn of Charlton moved Amendment No. 242:

    Page 209, line 25, leave out from ("means") to end of line 29 and insert ("a special resolution").

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 243, 244, 247 and 250. The amendments can be dealt with quickly. They relate to two points of company law.

The first is the procedure when a matter comes before a shareholders' meeting. As the Bill stands, approval can be given by an ordinary resolution, a special resolution, any other means allowed by the articles of association or--this is what I object to--a mechanism determined by the directors. The issue is whether the shareholders will approve of the donations proposed by the directors. It is therefore improper for the directors to be in charge of the way in which the shareholders' meeting must give that approval. I would have thought that that was elementary.

Since the turn of the century, important decisions relating to a company, such as a change of the articles, have had to be made by a special resolution that must be passed by a three-quarters majority with 21 days' notice. That is set down in the Companies Act 1985. Under Amendment No. 242, that would be the only way of approving of a donation.

The other amendments cover a technical point. I congratulate the Government that the Bill prevents the method of ratification by shareholders from curing a breach of their duties if the directors are in breach. There is also a line of authority, particularly in the court's decision in Re Duomatic, whereby many decisions have accepted informal unanimous acquiescence of shareholders as equivalent, although not identical, to ratification. That is why Amendment No. 244 would include:

    "any formal or informal unanimous acquiescence or agreement".

I beg to move.

Lord Bassam of Brighton: My Lords, the Government do not accept the amendments. In the first place, they would require companies wishing to make political donations to table a special resolution. We do not believe that that would be appropriate, given that a special resolution is required under the Companies Act 1985 only when fundamental changes, such as the alteration of the articles of association, are proposed. The Bill allows companies to require a higher voting majority for such resolutions by modifying their articles or by directors' determination.

Another aim of the amendments is to ensure that retrospective unanimous consent by shareholders to a donation made without their approval, however expressed, would not relieve the directors of the consequences of contravention. We believe that the

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amendment is unnecessary, as the wording that the noble Lord seeks to amend is sufficiently wide to include all forms of approval, formal or informal, given by shareholders to prior director action. Indeed, specifying a particular means of approval may cast doubt on the width of the words,

    "no ratification or other approval made or given by the company or its members".

Having heard that explanation and the assurances on the construction of the relevant provision, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Wedderburn of Charlton: My Lords, I am sorry about my noble friend's first point, but I shall leave it. As to the second point--that approval or ratification must include unanimous acquiescence--I do not know what to do. I can only refer him to the judgment in Multinational Gas v. Multinational Gas Services in 1983 in the first volume of Chancery 258 in the Court of Appeal. He will see that, unless one deliberately inserts the words "informal acquiescence" as well as "formal ratification or approval", one is very much at risk of a court accepting the argument that informal acquiescence is sufficient. I can say no more than that and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 243 to 250 not moved.]

Lord Bach moved Amendment No. 251:

    Page 213, line 19, leave out ("otherwise than as mentioned in section 347F(1)") and insert ("without having been authorised as mentioned in section 347D(2)").

On Question, amendment agreed to.

[Amendment No. 252 not moved.]

Clause 137 [Disclosure of political donations and expenditure in directors' report]:

Lord Wedderburn of Charlton moved Amendment No. 253:

    Page 101, line 27, leave out ("registered party") and insert ("political party, wherever situated,").

The noble Lord said: My Lords, there will probably be some mysterious reason why this amendment is not acceptable, but I shall set out what it seeks to achieve. As the law stands at present, there is one system of entering into the directors' report donations made by the company for political or charitable purposes. I expected that the Government would leave, but amend and bring up to date, that method, which is set out in Schedule 7 to the Companies Act 1985. However, the Government have not done so. Indeed, it was pointed out in a research paper for another place that Clause 129 proposes,

    "two new disclosure regimes for political donations and expenditure within the UK/EU area and for political contributions in the rest of the world".

I appreciate that some noble Lords may become confused and believe that I am repeating a point made in relation to permissible donors. I am not. This has nothing whatever to do with the previous debates about the European Union. The question raised by my amendment is: what ground is there for changing the

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system of reporting political donations into a dual system, which is brought about by Clause 137? They are similar systems. It is simply that one is drafted for the UK and EU and is slightly more regulatory but scarcely more so than the one which is drafted for new paragraph (4) of the Companies Act schedule for political contributions in the rest of the world.

Would it not be better to have less red tape and to leave one system for disclosure in the directors' report? We have chosen to amend the first system that the Government propose so that everything is covered. It seems to us rather better drafted than the second one because the second one refers to "contributions" rather than "payments" and has problems in that respect. I simply ask the Minister whether we could have rather less of the Bill in this case and have one system for reporting in directors' reports that covers every donation, whomever they are to and in whatever manner the directors propose to make them.

Lord Bassam of Brighton: My Lords, the Government have adopted the same pragmatic response to disclosure as they have to shareholder authorisation. In the light of the responses to their consultation, the Government have decided to apply the full disclosure regime only in respect of donations to EU political organisations or EU political expenditure. However, the Bill would require companies which made political donations outside the European Union to disclose a single aggregate figure in respect of monetary donations to overseas political parties. We feel that that would best provide for the situation which I believe is envisaged by my noble friend and provide a warning flag to investors if companies were making substantial overseas donations.

The other points which my noble friend made were covered in some of our earlier debates. Therefore, I do not need to respond to those. But if there is something that I have missed, I shall certainly pick that up at a later stage, having noted carefully what my noble friend said.

9.30 p.m.

Lord Wedderburn of Charlton: My Lords, I am grateful to my noble friend for saying that he will look again at some of the matters concerned. It has nothing whatever to do with any of the previous debates. It is a question of what the Bill says about what directors should put into their reports about donations.

The Government have invented an extremely regulatory system for donations relating to the United Kingdom or Europe and a rather less clear and less regulatory system for donations made anywhere else. Donations to Sweden will go in one director's report; for donations to Norway, something rather different is in place. I cannot understand why that is so.

My noble friend seemed to say that the Government have had consultations but we are not told with whom and in regard to what propositions. He concluded by saying, "We think this is the best way of doing things". I asked why and my noble friend, with great respect to

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him--and I value his friendship very greatly--did not give me any reason at all for the division of paragraphs 3 and 4 of Schedule 7 into two different methods. I hope that he will think again. It would be easier for directors to operate if they knew which system they had to follow if, for example, they are giving one donation in respect of Australia and another in respect of Austria or France. But, obviously, I must beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 254 to 256 not moved.]

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