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Lord Sainsbury of Turville: Discussing these amendments may be the peak experience of our
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discussion of this Bill. They are entirely matters of drafting approach. I assure the noble Lord, Lord Hodgson, that no change of substance is intended by the change from, for example, "special resolutions" to "any special resolutions". While I do not have strong objections to the noble Lord's suggestions, I do not feel that there is any reason to depart from the drafting usage in the Bill.
The noble Lord said: Amendment No. 25 seeks to leave out Clause 30(1)(b). While it is certainly desirable for companies to file with the registrar any agreement that alters the constitution of the company, there is in practice great difficulty not only in companies understanding which agreements alter the constitution but also in enforcing any clause requiring the registration of these agreements.
One of these grey areas in which there is widespread lack of understanding and enforcement is in shareholder agreements as provided in Clause 30(1)(b). That is where shareholders may unanimously agree a resolution or agreement but either fail to notice that it is altering the company's constitution or fail to register it for other reasons. For example, some agreements are regarded as "personal"a situation where a founder of a company is appointed a director of a company for life and, that person, for all sorts of reasons, does not wish it be filed with the registrar.
As these are agreed by all shareholders, there is no need for a special resolution to pass them and so they are often not picked up by the company as requiring registration. There seems little point in legislating that these agreements must be filed if, in practice, the requirement is neither followed nor enforced. The amendment would remove these types of agreement from the requirements under Clause 31copies to be forward and recorded by the registrarand Clause 32agreements to be embodied in or attached to articlesand the corresponding criminal offences. The alternative would be to call for stricter enforcement of this requirement. However, as we are all so keen on deregulation, I am sure that this is a path that the Government would not wish to follow. I beg to move.
Lord Sainsbury of Turville: The amendment suggests removing subsection (1)(b) of the clause, which
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restates Section 380(4)(c) of the 1985 Act. Subsection (1)(b) is important, as members of companies can take decisions informally by unanimous consent that ordinarily they would need to take by special resolution. The public needs to know the substance of such informal decisions as much as it needs to know about special resolutions. So it is right that there should be an obligation to file records of such decisions with the registrar and this should remain an important part of our company law.
Lord Hodgson of Astley Abbotts: I understand and note what the Minister said. The evidence that we have had from practitioners is that this provision is more honoured in the breach than in the observance and that we may to ensure that it will be observedalthough not much harm seems to have followed from its non-observance. We will take further advice, and in the mean time I beg leave to withdraw the amendment.
which have been omitted from this clause. Our amendment seeks to put back those words; but perhaps the Minister could convince us that they do not need to be there and that there is no change as a result. I beg to move.
Lord Sainsbury of Turville: The Bill removes the distinction between extraordinary resolutions, requiring a majority of 75 per cent of the members and 14 days' notice, and special resolutions, because it reduces the length of notice needed for a special resolution, requiring a majority of 75 per cent and 21 days' notice. Accordingly, in restated clauses reference to extraordinary resolutions have become references to special resolutions. Therefore, there is no need for a reference to extraordinary resolutions in Clause 30, as the Bill provides that special resolutions require 14 days' notice. The distinct category of extraordinary resolutions is unnecessary and hence Clause 30 does not operate in relation to them.
The Bill team kindly produced a table of derivations which states that Clause 30 makes no substantive change to the Companies Act 1985 from which it is derived. However, as Clause 578 is a new provision, will the Minister explain what the effect of including such resolutions in Clause 30 will be and the rationale behind that? I beg to move.
Lord Sainsbury of Turville: Similarly, the suggestion to omit subsection (1)(f) relating to resolutions under Section 578 does not seem right. In this case, the Bill includes new provisions on redenomination of share capital in Part 19 which do not appear in the 1985 Act. While it is true that redenomination of share capital, for example, from sterling to euros or to dollars will not affect the amount of share capital, it will still be a material change to what one might call the company's basic constitution. Therefore, it is appropriate to include that in this section so it is filed on the public register. This is, indeed, a change.
Lord Hodgson of Astley Abbotts: I am grateful to the Minister for that response. We will reflect on his remarks and no doubt we shall return to the point when we consider the problems of redenomination in Part 19. In the mean time, I beg leave to withdraw the amendment.
The noble Lord said: We are still considering Clause 30. This amendment seeks to reinsert a paragraph that has not been brought into this Bill from the Companies Act 1985. The corresponding paragraph is (c) in Section 380(4). We have introduced a slight rewording: where the 1985 Act states "section 31(2)", this has been updated to the corresponding Clause 65 in the Bill, as described in the table of destinations kindly provided for us.
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