rose to move, That the draft order laid before the House on 8 February be approved. 10th Report from the Statutory Instruments Committee.

The noble Lord said: My Lords, your Lordships will be aware that the Companies Act 2006 had a long history, both in its policy development and its passage through this House. The Act is a large one and its implications are far-reaching, and it is important that we ensure its provisions are brought into force in an orderly fashion if we are to maximise the benefits to businesses.

In the context of the present debate, it might be useful to say something about our overall approach to the commencement of the Act. The Minister for Industry and the Regions, my right honourable friend Margaret Hodge, made a Written Statement in the other place on 28 February setting out, in comprehensive terms, the commencement timetable.

On the same day, the Department of Trade and Industry published a consultation document providing further information concerning implementation, the issues involved and the proposed way forward. We hope that all stakeholders will wish to engage with us to help us make the implementation package as good as possible.

A first commencement order was made in December 2006, commencing important provisions, facilitating electronic communications by companies and implementing EU obligations.

The present instrument, the second commencement order, would come into force from 6 April this year, the common commencement date. It would commence further provisions that we felt it right to implement ahead of the main body of the Act.

The draft order would bring into force Part 28 of the Act concerning takeovers. Throughout the passage of the Companies Bill, the Government made clear their intention to bring the provisions of Part 28 on takeovers into force at an early stage following Royal Assent. These provisions place the regulatory activities of the Takeover Panel within a wholly statutory framework. They will replace regulations which took effect in May last year and implemented the European takeovers directive on an interim basis while the Bill completed its parliamentary passage.

Section 943 of the Act confers a rule-making power on the Takeover Panel. The rules on takeovers have long been laid down in the takeover code, which historically had no statutory basis. Yesterday, the code committee of the Takeover Panel adopted the necessary changes to the takeover code to reflect commencement of Part 28 of the Act. These will come into force on 6 April.

The Takeover Panel has made a significant contribution to the competitiveness of UK financial markets over the past four decades. We are convinced that it will continue to do so within the new legal regime that underpins its activities.

The draft order would also extend to Northern Ireland the availability of community interest companies—CICs. These are limited companies, with special additional features, created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. CICs were introduced in Great Britain by the Companies (Audit, Investigations and Community Enterprise) Act 2004—the CAICE Act. There are now more than 700 incorporated CICs. It was always intended that CICs would be extended to Northern Ireland. The necessary secondary legislation was, however, never finalised. The Companies Act 2006 will introduce a single legislative regime for companies applying throughout the United Kingdom. The order seeks to apply to Northern Ireland both the relevant provisions of the CAICE Act relating to CICs and the supporting secondary legislation.

In making this instrument, we rely on powers in the Companies Act to make consequential amendments, transitional provisions and savings and to commence the provisions of the Act. The consequential amendments provision—Section 1294—is subject to affirmative procedure. We believe that we are making common-sense use of this power. The draft order repeals or revokes redundant legislation, such as the interim regulations giving effect to implementation of the takeovers directive. It also updates references in other legislation to provisions replaced by the Companies Act 2006.

The provisions of the Companies Act 2006 that this order would bring into force have been extensively debated during the passage of that Act. These provisions are self-contained and offer immediate benefits in terms of securing regulatory independence for the Takeover Panel and extending choice of corporate vehicles. We think that there is a good case to give early practical effect to the takeovers and Northern Ireland CICs’ provisions which the draft order is designed to do. I beg to move.

Moved, That the draft order laid before the House on 8 February be approved. 10th Report from the Statutory Instruments Committee.—(Lord Truscott.)

My Lords, I know that the whole House will be grateful to the Minister for his careful explanation of this technical but, nevertheless, important set of regulations. For those of us, including the noble Lord, Lord Razzall, and I, who slogged our way through 1,920 amendments on the Bill’s initial passage before later considering 1,020 Commons amendments, the mere mention of the Companies Act 2006 brings a certain tension to the atmosphere. To paraphrase Shakespeare, we shall certainly stand on tiptoe when this Bill is named.

I welcome the noble Lord, Lord Truscott, to his first outing on this subject. He will be aware that the Bill did for his predecessor, the noble Lord, Lord Sainsbury, but I trust that a similar fate does not await him.

As I said, this is a technical set of regulations, but there are underlying issues on which I believe the House would welcome clarification. First, there are some practical issues relating to the 2004 Companies Act and the application of the CIC regime to Northern Ireland. Secondly, there is some unfinished business from the 2006 Act relating to the implementation of the takeover directive. Thirdly, there is the future implementation of the 2006 Act.

As I was preparing for this debate, I was hoping to persuade the Minister to lift the curtain a fraction on the Government's overall plans for implementation, because there have been a number of different smoke signals. At that very moment, through my letterbox came the Written Statement by Margaret Hodge in another place and the associated consultation document. That did not so much lift the curtain as tear it down. We are grateful to the Government for that—as, I know, are a whole range of practitioners. The 2006 Act is complex stuff with far-reaching consequences, so it is important for those affected to have the maximum time to absorb its implications.

I hope that I will not be seen to be ungrateful if I raise a mini-whinge about the Statement. It consists of a helpful list of the dates on which the various parts of the Bill come into effect. Two parts appear to be missing from the list: Part 39, “Companies: minor amendments”—by the way, I am not sure that minor amendments is quite the right title because quite substantial powers are taken and given up by the Minister in that regard—and Part 40, “Company directors: foreign disqualification”. It is only when one goes to the consultation document and the table of commencement date that one can discover that Part 39 is due to come into effect in April 2007 and Part 40 in October 2008. So my minor whinge—and it is a mini-whinge—is that it would have been preferable if the Written Statement had in and of itself contained a comprehensive list of all parts of the Bill.

I now turn to Northern Ireland and the CIC regime. We are sympathetic to the attempts to encourage voluntary and charitable work. We accept that a conventional company structure does not always fit requirements. It was in that spirit that we welcomed in principle the new CIC regime when they debated the 2004 Bill, as it then was, but they raised concerns in Committee. Chief among those was the fact that yet another regulatory framework was to be created, with all its associated costs and expenses, for which there might be little demand. The CIC regime is not quite as simple as it might at first seem. Part 2 of the rather clumsily titled, Companies (Audit, Investigations and Community Enterprise) Act, does not just set up a CIC. There is to be a regulator under Clause 27 with a whole schedule, Schedule 3, with his duties. There is a CIC appeal officer in Clause 28 and he, too, has a schedule of duties associated with him. Finally, there is to be a CIC official property holder in Clause 29, also with a schedule of duties.

So we are giving this expensive party. How many people want to attend it? The Minister has just given us an up-to-date figure of about 700. In terms of the per capita or per company cost, that must be an extraordinarily expensive exercise. Do we really have to extend all that structure to Northern Ireland now? Would it not be better to wait to see the level of demand in England and Wales before going ahead? If we are to go ahead, will the Minister confirm that Northern Ireland will not have to have its own regulator, its own appeal officer and its own official property holder? If not, and Northern Ireland must have its own officials, surely it would be even more unwise to proceed now, because on a pro rata basis, given what has happened in England and Wales, it would seem unlikely that Northern Ireland will have more than about 20 CICs.

I fear that the Minister will not be moved by those arguments. I suspect that if I were to be able to sit on the Bench behind him and glance over his shoulder at the speaking notes prepared by his officials, they would say words to the effect of, “It is very important to do this now. Northern Ireland is part of the United Kingdom. The encouragement of voluntary effort in the Province is particularly important”, and so on. If that is the argument that he will be deploying to the House, I draw his attention to the Charities Acts 2006, in which Clause 34 and its associated Schedule 7 establish a regime for charitable incorporated organisations—CIOs. The truth is that CIOs are CICs by another name. The only significant difference is that one comes under the DTI—CICs—and the other under the Cabinet Office—CIOs.

I yield to no one in my desire to encourage and increase charitable and voluntary work, but we need at all times to have regard to the regulatory cost and burden that we are creating and whether they are proportionate to any return to be achieved. If the Minister is determined to press on with this part of the regulations, he owes the House an explanation of why we need these two parallel, overlapping structures; what he thinks the difference is between CICs and CIOs; and for which separate problems they provide a remedy.

My Lords, like the noble Lord, Lord Hodgson, but unlike the Minister, who took office afterwards, I have “Company Law Bill 2006” written on my heart, rather like Mary did with Calais, but the Minister was either fortunate or unfortunate—he would say unfortunate—not to have the opportunity. Nevertheless, in the view of the noble Lord, Lord Hodgson, and myself, we ended up with a very good Bill as a result of the conduct of proceedings in both this House and the amendments that the Government took on board to what was, I think, the largest Bill ever presented to either House of Parliament.

As the noble Lord, Lord Hodgson, indicated, the Statement from Margaret Hodge, the relevant Minister in another place, indicated when the various pieces of legislation come into effect. My instinctive reaction has been to ask why some of them need to take so long. Industry and the professions have taken on board the Bill’s implications, but I am not entirely sure why it needs to take until 1 October 2008 to bring into effect many of the provisions. However, that is obviously what the Government have decided and that is what will happen.

I want to draw attention to a point about the regulations. I am more worried that the Minister in another place has indicated in her Statement that there will be a consultative document on the policy issues related to the secondary legislation that will need to be made under the Act and on transitional and savings provisions. I am concerned that we should not become bogged down in the detail; in particular, the corporate law files that seem to have applied particularly to Article 11(2) of the order. If that is the extent to which practitioners are expected to understand what the Government are saying, I draw attention to the Explanatory Memorandum on Article 11(2). The Minister is probably too young to remember the Hoffnung story about the bricks and the rope but the noble Lord, Lord Davies, sitting next to him, will remember it because he is older than I am. The Explanatory Memorandum states that:

“Article 11(2) relies on Section 1296(1) of the Companies Act 2006 to save the application to limited liability partnerships (“LLPs”) of a provision of the Companies Act 1985 which it had been intended should continue to apply to LLPs despite the repeal of that provision in its application to companies. Because of an error in the Companies … Order, this was not achieved. The Department considers that this saving is effective notwithstanding that the repeal has already come into force, because its effect is not to reverse the repeal but to save the application of the repealed provision to LLPs and thus to cause it to apply again from the coming into force of the Companies Act 2006 … Order 2007. The Department does not consider that savings under section 1296(1) have to be made at the same time as the commencement to which they relate.

“It has been suggested that the vires ought to be found within sections 15 to 17 of the Limited Partnerships Act 2000. They could not, however, have been relied upon in this commencement order, because the power there is to make regulations. There seems to be, in any event, no difference between what could have been achieved had separate regulations been made under section 15(b) of that Act and what has been provided in the Order under section 1296(1) of the Companies Act 2006”.

I know that the noble Lord, Lord Davies, is a man of distinguished ability, perspicacity and brilliance. If even he is prepared to stand up and explain what that gobbledegook means, I bow to him with the estimation that I always show him, but if this is the quality of consultation that will apply to future orders, I worry for the future of consultation.

My Lords, I am grateful to noble Lords for taking part in this debate. I would like to recall to your Lordships’ House the words of my noble friend Lord Sainsbury on 23 May last year in concluding the Third Reading debate on the Bill, which became in this House the Companies Act 2006:

“I believe the constructive spirit in which we have engaged in what have sometimes been controversial and often extremely technical issues has contributed greatly to the quality of debate. That is one key reason why the Bill leaves this House in such good shape. Ultimately, it is a Bill that will greatly help the success of British industry. However, all good things must come to an end”.—[Official Report, 23/5/06; col. 796.]

It was no doubt with relief that your Lordships completed the work on that Bill; they have all my sympathy. Great work was carried out in this House on that Bill. The present draft instrument, the second commencement order, is a further step towards that end.

Before responding to the points that noble Lords have made, I would like to pick up on a few of the themes from my noble friend Lord Sainsbury’s remarks that remain pertinent this evening. The first is the constructive spirit of the debate. I am grateful to noble Lords this evening for their contribution to the provisions now contained in the Act which the second commencement order would bring into force. I am convinced that the provisions are all the more robust for the detailed scrutiny that they received in this House.

Secondly, I turn to the technical nature of the provisions. I fear, alas, that companies legislation will always be beset by more than its fair share of complexity, as we heard again from the noble Lord, Lord Razzall. We are taking steps to make the legislation as accessible as possible. There are, for instance, briefing notes and explanatory guidance on the DTI website concerning the commencement orders laid to date and the takeover provisions introduced by the current order. Information about CICs is available on the website of the CICs regulator. I am sure that that will make the clause to which the noble Lord, Lord Razzall, referred, as clear as day.

Finally, I shall deal with the benefits to business. I shall not try to pretend that the content of this draft order is exciting in itself. It is a technical and complex instrument, but it brings into force important key provisions of the Companies Act 2006.

I shall deal with the points raised by noble Lords in the debate. The noble Lord, Lord Hodgson of Astley Abbotts, pointed out two minor blemishes in the Written Statement on the commencement timetable. I agree that it is important that business can plan properly for implementation of the Act. The Written Statement will greatly facilitate that. I can confirm that the extension of the CIC provisions of the CAICE Act will not lead to a parallel regulatory regime in Northern Ireland. Northern Irish CICs will use the same system as that in Great Britain. We expect roughly the same level of take-up as for Scotland and Wales, and the CIC regulator is absorbing the extra costs and therefore the regulatory costs should not be excessive.

My Lords, the noble Lord, Lord Davies, will explain it.

My Lords, I am always grateful for the knowledgeable advice of my noble friend Lord Davies. Article 11(2) arises from the repeal of a provision in the 1985 Act, which repeal was brought into force by the first commencement order. The article provides that the repeal does not apply to limited-liability partnerships. This is not the reinstatement of a repeal but a saving. The repeal provision was applied to LLPs by the Limited Liability Partnerships (No. 2) Regulations 2002, which remain fully in force. Our intention is to include a saving provision in all the commencement orders so that the provisions of the Companies Act 1985 which have been applied to LLPs by regulations such as these remain in force for LLPs until such time as we are ready to replace them. In this case, the saving provision was omitted in error. The Joint Committee on Statutory Instruments has raised no objection to this provision. I hope that I have made the position on this absolutely clear and that there is now a full understanding of the clause.

That concludes my remarks—

My Lords, the point I sought to make was not on the substance of the article, which is summarised but that the language and explanatory documents on these commencement orders should not be presented in a Hoffnung manner. The noble Lords, Lord Davies and Lord Hodgson, and I are all old enough to remember Hoffnung. We need to use plain English in explaining these provisions. We may understand the points, but a lot of people out there will not.

My Lords, the noble Lord makes a fair point. The clearer and simpler the language can be in these documents, the better. I think that we would all appreciate the use of clear English that people outside this House may have an opportunity of understanding. I commend the order to the House.

On Question, Motion agreed to.

My Lords, I beg to move that the House do now adjourn during pleasure until 8.34 pm.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.04 to 8.34 pm.]