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Companies (Audit Committees)

Volume 931: debated on Monday 9 May 1977

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asked the Secretary of State for Trade if he will make a statement of his views as to the value to companies of appointing audit committees in accordance with North American practice; and if it is his intention to propose that the appointment of audit committees should now be made statutory in certain classes of company.

Proposals for the establishment of audit committees deserve attention and, as the hon. Member will recall from an answer I gave him on 14th February, they are being examined alongside the more fundamental reappaisal of the structure of companies following publication of the Bullock Report.

Will the Minister bear in mind the good sense of the New York Stock Exchange authorities, which have not only made absolutely clear their intention that all companies quoted in New York must have audit committees by the end of 1978 but left plenty of time for the companies to make the necessary preparations and for people suitably qualified for this work to prepare themselves for their responsibilities?

I am aware of the advantages which are claimed for this practice, not only in the United States but in Canada, and the hon. Gentleman does not allow me to forget that. This matter must fall within the general review of company law which relates to the publication of the Bullock proposals.