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Companies Act 1985 (Electronic Communications) Order 2000

Volume 620: debated on Thursday 21 December 2000

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4.17 p.m.

rose to move, That the draft order laid before the House on 23rd October be approved [29th Report from the Joint Committee, Session 1999–2000].

The noble Lord said: My Lords, I had thought that those noble Lords who were so keen on the constitutional principles might be interested in staying to hear something about how it works in practice. However, the draft order removes obstacles in the Companies Act 1985 to electronic communications made by a company and its members. This is the first order brought forward under Section 8 of the Electronic Communications Act 2000. After describing the order's main provisions, I shall set out the Government's current plans under Section 8 of the Act.

A number of provisions in the 1985 Companies Act either require communications to be made in writing or are unclear as to whether electronic means can be used. The draft order amends those provisions. The order will permit three types of electronic communications: from companies to the Registrar of Companies when they are incorporating or reregistering; from companies to their shareholders—for example, sending out the annual report and accounts; from shareholders to their company—for example, when the shareholder is appointing a proxy. As required by the Electronic Communications Act. the draft order is permissive. It enables but does not require companies and shareholders to use electronic communications. Companies must ask their members to opt into electronic communications rather than to opt out. The order sets out how a company may satisfy its obligations under the 1985 Act by sending electronic rather than hard copies of documents. For example, when sending the annual report and accounts the company must have been notified by the shareholder of an address for electronic communications. By sending the report and accounts electronically the requirement in the Act to send the copy is satisfied, and no further paper copy is required.

The order leaves considerable flexibility for companies and their members to decide on the best means of electronic communication and the method for agreeing to it. Companies need that flexibility to accommodate their varying circumstances and adapt to developments in technology, so guidance rather than legislation is appropriate. I welcome the initiative of the Institute of Chartered Secretaries and Administrators in preparing best practice guidance for companies that choose to take advantage of the order. That guidance was published in December this year.

In accordance with the undertaking given by the Attorney-General last year, I confirm that in my view the proposed amendments to the Companies Act are compatible with the European Convention on Human Rights. This order is a good example of the way in which Section 8 of the Electronic Communications Act 2000 can be used to reduce burdens on companies and individuals while improving the service that they provide or receive. Section 8 contains a power to remove obstacles in other legislation to the use of electronic communication and storage in place of paper. That is a major element in delivering the Government's policy to promote electronic commerce and meet their target for making government services available electronically. That includes connection to the Internet of all schools and libraries by 2002, with 100 per cent of all government services to be deliverable on line by 2005.

Our current plans for the use of Section 8 include orders for the following purposes: to facilitate electronic conveyancing; the electronic submission of trade statistics to the Office for National Statistics; to permit the electronic submission of a statutory off-road declaration in respect of a vehicle; to allow electronic authentication of public records for court proceedings; to give legal recognition to the official legislation website version of statutes; and to allow the electronic submission of information by oil companies under the Petroleum Act 1998. The Electronic Communications Act will at last bring the statute book into the information age of the 21st century. The draft order before us was widely welcomed by companies when it was issued for consultation earlier this year. I beg to move.

Moved, That the draft order laid before the House on 23rd October be approved [ 29th Report from the Joint Committee, Session 1999–2000].—( Lord McIntosh of Haringey.)

My Lords, I am grateful to the Deputy Chief Whip for his explanation of the order. I have discussed this matter with my noble friends. We find nothing controversial in this order and, therefore, on behalf of Her Majesty's Opposition I happily accept it. Perhaps I may say to the Government Chief Whip that when we deal with the next four orders my response will be fairly similar. On this occasion short speeches are probably desirable.

My Lords, I too am happy to accept the order which is plainly desirable in the interests of modernisation and keeping up with the development of e-commerce. We believe that we can approve this order without reservation.

On Question, Motion agreed to.