Company Law Reform Bill

That intervention indicates exactly what I propose to start by saying, which is that the noble Lord, Lord Freeman, is right to point out that we are steering a course between placing undue burdens and restrictions on enterprise and corporate activity and looking after the interests of shareholders and others interested in the affairs of the company. We believe that that is the right course to take. The Company Law Review drew a distinction between conflicts of interest relating to transactions with the company and conflicts of interest relating to the exploitation of property, information and opportunities. The ability to disclose by way of general notice, which we will come on to in Clause 168, is appropriate in relation to transactions with the company, but we think it goes too far to allow authorisation to be given by way of general notice in respect of any other conflicts of interest that may arise. Perhaps I may put it this way. The purpose of a general notice in relation to company transactions would be to put the company on notice that the director has an interest in that transaction. The company can then decide whether or not to go ahead with the transaction and may decide what, if any, steps it should take to safeguard its interests. As the company is a party to the transaction, it will be aware of the terms of the transaction even if it is not aware of all the details of the directors’ interest. However, when it comes to other conflicts of interest, which is where we are in Clause 159, the company will not have all that additional information to hand. It may not know anything about the property, information or opportunity to which the conflict relates. A general notice made in the way proposed in the amendment might well give the company insufficient information to give an informed authorisation. To provide, as the amendment intends, that a general notice will always be sufficient is to risk leaving the company too much in the dark. So, having responded to my noble friend’s amendment which sought to go in one direction by saying we think we are in the right place, I shall respond to the noble Lord now moving his amendment by saying that that amendment appears to go too far in the other. I invite him to consider those observations.