Company Law Reform Bill

I think that I can reassure the noble Lord, but I do not think we need to change this clause. The preliminary stages of action by a regulatory body for non-compliance with a requirement of a regulatory nature might not constitute formal ““proceedings””. But in that case a loan to a director would be permitted under subsection (1)(b). One of the purposes of defending regulatory proceedings and investigations is to prevent the imposition of a penalty and thus to avoid incurring expenditure in defending any civil proceedings brought to enforce payment of the penalty. Therefore, this amendment is not necessary. Furthermore, Clause 212 permits a company to indemnify a director against any liability incurred when defending regulatory proceedings and investigations, even if the decision goes against him. Regulatory proceedings or investigations will be neither ““criminal proceedings”” nor,"““civil proceedings brought by the company, or an associated company””." It is only the regulatory penalty which may not be covered by an indemnity, by virtue of Clause 212(3)(a).