Company Law Reform Bill

moved Amendment No. 174:"Page 70, line 21, at end insert ““provided that the occurrence of such an authorisation shall be reported in the next annual report of the company””" The noble Lord said: I sense that there is agreement on both sides of the Committee that, using reasonable care, skill and diligence we might conclude Part 10 today. We will certainly do our best to ensure that we can leave the important but quite separate debate on derivative action to another day. Most of the amendments to which I will speak today are probing in nature. They have been raised by a number of organisations, including the CBI, the Law Society, the UK share association, a number of leading firms of city solicitors, investment management associations and many other professional bodies. There are probably at least two key issues on which we may get satisfaction today, but on which we may have to return later—that is, addresses of directors and future conflicts that it may not be possible to foresee. Under Clause 159, the directors can still authorise a conflict of interest situation, if the constitution allows, without telling the shareholders. We think that any such occurrence should be reported in the next annual report. The Explanatory Notes are extremely helpful and I congratulate those who put them together. They state that, as the CLR was concerned that this strict requirement might stifle entrepreneurial activity, it recommended that, in the case of a private company, it should be possible for conflicts to be authorised by independent directors unless the company’s constitution prevents that. However, there is no explanation of why the Government have deliberately gone further than the CLR in extending this exemption to public companies. Accordingly, we have tabled this probing amendment. I beg to move.