Considered in Grand Committee
My Lords, perhaps I may explain by way of background to the order that the Companies Act 2006 provided for a single consolidated company law regime to apply across the whole of the United Kingdom. It repealed most of the Companies Act 1985, the Companies (Northern Ireland) Order 1986 and the Open-Ended Investment Companies Act (Northern Ireland) 2002.
Before I go into the details of this order, which makes various amendments that, as its name implies, are consequential on the commencement of the 2006 Act, I shall touch briefly on some of the background to that Act. It was commenced in stages between Royal Assent in November of that year and the final commencement order which came into force in October 2009. Indeed, there have already been eight orders commencing various provisions of the Act, and five orders making amendments required as a consequence of its passing. This order is designed to complete and consolidate that lengthy process. The legislation that is amended by this order comprises the Companies Act 2006 and various instruments that contain references to the Companies Act 1985 as well as other legislation that has been superseded, repealed or revoked by the 2006 Act.
I turn to the specifics of today’s order. Most of the articles make amendments to regulations in the area of financial services by updating them so as to refer to the relevant provisions of the 2006 Act rather than the old, superseded provisions of, for instance, the Companies Act 1985.
Among the pieces of legislation to which such amendments are made is the Open-Ended Investment Companies Regulations 2001, which are amended so that they apply to any open-ended investment companies incorporated in Northern Ireland. The order also contains transitional provisions to ensure a smooth changeover for such companies to the requirements of the 2001 regulations. The order also formally revokes two pieces of secondary legislation which were effectively superseded by the Companies Act 2006; namely, the Companies (Single Member Private Limited Companies) Regulations 1992 and the equivalent Northern Ireland regulations of that year.
The order also makes a small number of correcting measures to address some minor errors in certain companies-related legislation. The amendments will ensure that that legislation is clear and easily applied. With your Lordships’ permission, I do not propose to go through them in detail, although I should like to draw attention to two changes.
The first arises because the Companies Act 2006 allows a public limited company to have a single member whereas the Insolvency Act 1986 stipulates that having only one member is a ground for winding up a plc. For this reason, Article 6 of today’s order repeals this provision of the Insolvency Act to ensure consistency and avoid any confusion.
Secondly, the order amends the power in Section 766 of the 2006 Act which, among other things, enables regulations to be made for determining whether a public company which reduces its share capital and has shares denominated in more than one currency continues to satisfy the statutory requirement to have share capital at or above a minimum aggregate value in sterling or euros. The current drafting of Section 766 means that regulations cannot be made dealing with the situation where a public company reduces its share capital and is left with all its capital denominated in one currency other than sterling or euros, such as Swiss francs or US dollars. Article 28 of the order corrects Section 766 so that regulations can be made dealing with this situation. There will now be a mechanism for establishing clearly whether such a company continues to meet the minimum capital requirement.
The rationale behind all the amendments made by the order is to ensure that companies legislation is clear, consistent and coherent. I think that the order is uncontroversial. It is simple; it ensures greater consistency; and it removes contradiction. As such, it is good for business and I commend it to the Committee.
My Lords, before we approve the order, as we clearly should, we should look at what has happened since 2006. Noble Lords who lived through the various stages of the Companies Bill of that year, which was probably the longest Bill in the history of this House, will remember that we on these Benches argued from an early stage that it should be a consolidation Bill. Its first draft did not constitute a consolidation Bill but was a huge Bill with different clauses. The noble Lord, Lord Sainsbury of Turville, who was the relevant Labour Minister at the time, eventually came to us and said that he had won his argument internally and now thought that it should be a consolidation Bill. However, he asked whether, if he was prepared to concede that point to those of us who were arguing for it, we would agree that we would not go back for another 25 days in Committee going through, clause by clause, the consolidation procedures. I responded that I was certainly happy to give that undertaking provided there was not some obvious omission or howler in the process of consolidation. Looking at this order, I have to congratulate the drafters of that Bill because we require only these few, very minor, changes of things that were missed at the time of the Bill. I am glad that we had a consolidation Bill of that nature, although whether the Butterworths the publishers are so happy remains to be seen. I certainly support the order.
My Lords, I am grateful that I waited for the contribution of the noble Lord, Lord Razzall, because as a veteran of the discussions on that very long Bill—while I was idly occupied, or underoccupied, elsewhere—he is to be congratulated on the work that he did on it. Of course, that Bill was such a massive measure that it led to anxieties about whether it was sufficiently comprehensive in ironing out aspects that affected previous legislation. That was a cause of concern, which he expressed at the time and which I recall my noble friend Lord Sainsbury of Turville being concerned to respond to. I agree with him that it hurts a little bit for the Official Opposition to congratulate the Government even in minor ways, but we are relieved to see that there are only minor emendations in the draft order. We also note that the Merits of Statutory Instruments Committee found no reason to express anxiety about it.
I am extremely grateful to the Minister for clearly and accurately expressing the salient aspects of this really rather complex issue while sparing us the considerable detail with which he could have belaboured the Committee if he had cared to do so. However, one aspect on which I had a little anxiety, although this is probably more concerned with language than with substance, is that the Explanatory Memorandum from the Treasury—I am sure that the noble Lord, Lord Razzall, was half-reflecting this—uses that wonderful word “impliedly”. As I have never used that word nor heard it used on any occasion, although I could not doubt that the Treasury had used the term accurately, I looked it up. Indeed, the Treasury has used the term accurately, as there is such an adverb, used somewhat infrequently in this context, which means,
“hinted at or suggested; not directly expressed”.
Well, I understand the point that is being made, as we are clarifying the issue and making explicit what is in the legislation. However, I would just say that the word has a slightly weasel quality, as if it is covering certain anxieties about the past. Therefore, I will say that I am grateful that it is now being made clear that what was impliedly in the legislation is now there explicitly and properly as a result of this instrument. For that reason, we welcome the order.
My Lords, I am grateful to both noble Lords for their comments and to the Committee for considering this draft order. As I said earlier, the draft order is uncontroversial. Most of its articles make amendments to regulations by updating them so as to refer to the relevant provisions of the Companies Act 2006 rather than, for instance, to the superseded provisions of the 1985 Act.
My noble friend Lord Razzall referred to the lengthy process of the 2006 Act. I congratulate him and those other stalwart noble Lords who had the stamina to sustain them through that process. I thank him for his support today. I also thank the noble Lord, Lord Davies, for his helpful comments. I commend the order to the Committee.