Company Law Reform Bill

The amendment moved and those spoken to by the noble Lord relate to immaterial omissions or accidental failures. They address two slightly different situations and I want to deal with them separately. Amendment No. 186 seeks to ensure that immaterial omissions or mistakes in stating the nature and extent of a director’s interest, as required in Clause 168(3), should not invalidate a general notice of a director’s interests. I understand the concern expressed by the noble Lord that omissions or mistakes might invalidate the general notice, giving rise to a technical breach of the disclosure obligation. However, we do not think the amendment is necessary for the following reason. Clause 168(3) provides that the notice must state the extent of the director’s interest in the body corporate or firm or, as the case may be, the nature of his connection with the material. So if there are only minor or immaterial—to use the word of the noble Lord—omissions, it would seem to us that the director would have succeeded in meeting the obligation to state the nature and extent of his interest in the body corporate. If it is a material mistake, he may well have failed to state the nature and extent of his interest, but the amendment is explicitly not designed to deal with that position, and I entirely understand why. The Government do not consider it necessary to accept the amendment. Indeed, we are concerned that it could be unhelpful to insert an explicit provision because, as often happens with the insertion of explicit provisions, it then throws into doubt other occasions when such an explicit provision is not included. But, looking at the obligation, the question will always be: has the director adequately declared the nature and extent of his interest so as to satisfy Clause 168(3)? That is my answer to Amendment No. 186, which I am not inclined to accept. Amendments Nos. 188 and 191 deal with a different point. They are concerned with the accidental failure to send to any member a copy of the memorandum required under Clauses 171(5) and 180(3) setting out the details of a proposed long-term service contract or proposed loan to a director, but that would not invalidate the resolution approving that long-term service contract or loan. It is probably right to make clear that Clauses 171 and 180 do not require the memorandum setting out details of the loan or contract to be sent to members if the resolution is to be approved at a general meeting of the company. In that case, all that is required is that the memorandum is made available for inspection. A copy of the memorandum needs to be sent to the members only if approval is to be given by written resolution. We do not intend that accidental failure to send the memorandum to every member of the company should necessarily invalidate the approval. However, having heard what the noble Lord has said, we probably need to consider it to ensure that the intention I have just identified is made sufficiently clear. I undertake that we will take that back and will consider those two amendments specifically.