Company Law Reform Bill

I shall speak to Clauses 165 and 166, which I wish to probe. Section 317 of the Companies Act 1985 is based on the current common law rule which restricts a director’s freedom to act when his interests are in conflict with his company. This principle is now encapsulated in the form of a duty in Clause 161, which we have dealt with. It would be helpful if the Minister could explain why it was thought necessary to preserve two distinct requirements—one, in Clause 165, based on Section 317, relating to existing transactions with the company, and one, in Clause 161, applying to proposed transactions. It is also unclear why breach of Clause 165 attracts criminal penalties while breach of Clause 161 does not. I believe that the Attorney-General has already addressed the earlier point. I shall not burden him with providing a further explanation; the record will serve that purpose. However, we need to address why breach of Clause 165 attracts criminal penalties while Clause 161 does not.