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Companies Act 2006 (Consequential Amendments) (Uncertificated Securities) Order 2009

Volume 712: debated on Monday 6 July 2009

Considered in Grand Committee

Moved by

That the Grand Committee do report to the House that it has considered the Companies Act 2006 (Consequential Amendments) (Uncertificated Securities) Order 2009.

Relevant document: 18th Report from the Joint Committee on Statutory Instruments.

The final debate concerns three draft consequential amendments orders: the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009; the Companies Act 2006 (Consequential Amendments) (Taxes and National Insurance) Order 2009; and the Companies Act 2006 (Consequential Amendments) (Uncertificated Securities) Order 2009.

The Companies Act 2006 updates company law to ensure that it reflects modern needs. The Act, which received Royal Assent in November 2006, has been implemented in phases over the past three years and these draft orders relate to the provisions which are being commenced as part of our final implementation of the Act on 1 October 2009. An earlier consequential amendments order was made in 2008 relating to those provisions, commencing on 6 April 2008 and 1 October 2008. A number of consequential amendments have also been made in two commencement orders made under the Companies Act 2006.

The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009 makes consequential changes to many different pieces of legislation, going as far back as the Newspaper Libel and Registration Act 1881. The amendments can be broken down into three broad areas. First, there are the consequential amendments to existing company law—for example, the remaining parts of the Companies Act 1985 relating to company investigations. Secondly, there are the amendments to insolvency legislation, which are required because the 2006 Act removes the link between the Companies Act 1985 and the Insolvency Act 1986. Finally, this order makes consequential amendments to other primary legislation that refers to, or includes concepts from, the Companies Act 1985 or the Companies Act 1989. In many cases, we have simply updated references to provisions in the 1985 Act.

The taxes and national insurance order similarly amends legislation for which Her Majesty’s Revenue and Customs is responsible which uses Companies Act references, definitions and concepts.

The uncertificated securities order makes consequential amendments to the uncertificated securities regulations 2001. These set out the legislative structure for CREST, the computerised system that transfers shares, gilts, corporate bonds and money market instruments electronically without using paper certificates. In all but two areas— refusal to register a transfer of shares and information about the state of the register of members—the order simply replaces old references to various definitions and provisions of the Companies Act 1985 with new ones relating to the Companies Act 2006.

All three orders make two types of consequential amendment. The first type relates to references to company law in other Acts which are changed to refer to the equivalent provisions and definitions in the 2006 Act. These are purely mechanical amendments. For example, a reference to “the Companies Act 1985” is simply changed to “the Companies Act 2006”.

The second type of amendment relates to a change in the substance of company law. For example, some of the information contained in the old-style memorandum is now contained in the articles of association. That change must be reflected in other legislation. The overall intention of all these consequential amendments is to ensure that the legislation which is amended continues to operate in an effective way and is easy for the reader to use. I commend these orders to the Committee.

Yet again, I thank the Minister for his continuing dedicated work this afternoon in explaining these orders. They do not sound earth-shattering or controversial, but perhaps I have allowed myself to be worn down by the seemingly unending stream of statutory instruments that we have debated this afternoon. At least these are the last. I restrict myself to asking two questions. First, according to the Treasury, the uncertificated securities regulations are likely to undergo further significant change in the course of 2009-10. Will the Minister give any indication as to what those changes will be? Finally, will 1 October 2009 see all remaining Companies Act 2006 provisions entering into force? If not, when will the remaining provisions become law?

I also welcome these orders. The only point that I would make is more for the publishers of legal textbooks than for the Government. I appreciate that this is an attempt to have a user-friendly document, but one of the problems of not consolidating legislation is that practitioners have to trail through the books to trace how the regulation fits in. As the Minister will be aware—certainly, his department will be—I argued strongly when the original legislation came in that it should be consolidated, and eventually the Government agreed.

It is quite difficult to see how this could have been done in a consolidated way because we are talking about other pieces of legislation that are not necessarily only about company law. However, as legislation and regulations become more and more complicated for the practitioner to follow, I often say that it is really only for the benefit of Butterworths.

To answer the noble Lord, Lord De Mauley, one further change will incorporate the settlements of shares and the open-ended investment of companies into the CREST system. He asked whether these were to be the last instruments to be made as part of the implementation of the Companies Act 2006. I am sure that he will be pleased to know that we expect to lay two further draft affirmative instruments relating to sensitive company names. We also expect to make further instruments, subject to negative resolution, by early September, including the registrar company fees regulations.

On consolidation, the noble Lord, Lord Razzall, is correct that we will make further amendments. I take his point about complexity. We have to make consequential amendments because the law that they amend would no longer work properly without them. In other cases where legislation refers to provisions of the Companies Act 1985, which has been repealed, the consequential amendments will help those using the legislation—that is what it says here. Without the amendments, the reader may not be aware of relevant changes to company law. We are also ensuring that policy changes within the Companies Act 2006 are applied to other relevant legislation.

Motion agreed.