UK Parliament / Open data

Company Law Reform Bill [HL]

It is a fact not known to many people that, as the noble Lord, Lord Freeman, said, companies’ legislation does not specify a minimum age at which an individual may be a director. It is quite an interesting fact that last week there were 432 directors under the age of 16, some of whom hold several appointments. Of course, their directorships were all in companies registered in England and Wales as those under 16 do not have legal capacity under Scots law and the register in Edinburgh does not accept their appointment as directors. A significant number were under 10. In January 2005, 205 out of 443—nearly half—were such young children. We believe that that is not a totally satisfactory situation and the clause introduces a minimum age of 16. Amendment No. 137 would make the minimum age 18. In general, I agree with the Law Society that those who appoint directors are best placed to judge whether a particular individual is able to undertake the duties of a director. However, there are those who appoint children and young persons as directors in order to exploit their immunity from prosecution or the reluctance of enforcement authorities to pursue young persons. A safeguard is clearly needed. That is why the Bill includes this clause. I consider that the minimum should not be set unnecessarily high. There have been some extremely successful teenage entrepreneurs. There are at present more than 1,000 directors aged 16 or 17 who do not give any cause for concern. So while I agree that the vast majority of teenagers are not ready for the responsibilities of a director, I consider that those who appoint directors should be able to decide whether a particular 16 or 17 year-old would be a suitable director of a particular company. Generally, those whom the law requires to be at school should not be able to be a director, but there may be circumstances in which the knowledge and experiences of a younger person would be useful. For example, charitable companies associated with youth work may want their directors to include a young person. Clause 142 provides power for the Secretary of State to prescribe circumstances and conditions for the appointment of someone under 16 as a director of a UK company. It might, for example, be used to permit young persons to be directors of such companies provided that, say, the majority of the directors were over 16. There are cases of companies set up by schools to give young people experience. In those circumstances, there might be cases—which we would develop through regulations—where young people could be directors of such companies provided that the majority of directors were over 16.
Type
Proceeding contribution
Reference
678 c167-8GC 
Session
2005-06
Chamber / Committee
House of Lords Grand Committee
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