Company Law Reform Bill [HL]

moved Amendment No. 318:"Page 234, line 29, leave out ““knowingly or recklessly”” and insert ““dishonestly or fraudulently””" The noble Baroness said: In moving Amendment No. 318, I shall also speak to Amendments Nos. 318A, 319 and 320. The phase ““knowingly or recklessly”” could lead to criminal charges being brought when there has been an honest mistake or when behaviour was, at its worst, negligent. In fact, the effect of the Bill is to single out audit as the only profession in which gross negligence is criminalised. The word ““knowingly”” gives rise to difficulties of interpretation, as arose in the context of deliberate behaviour under the Limitation Act 1986, which ultimately had to be resolved by the House of Lords. Both the DTI and the Solicitor-General’s office have had various counsels’ opinions on these words relating to the Bill. As for the word ““recklessly””, the Law Society stated in its June 2005 response to the White Paper that the case law on recklessness shows that the meaning varies depending on the context. We do not think that it would be appropriate for there to be any uncertainty in that area as to what is required. The amendment addresses these issues by clarifying that the auditor’s offence is confined to the aspect of the auditor’s duty to form an opinion of the company’s accounting records that relates to the basis of annual accounts which are properly prepared in accordance with the Bill and give a true and fair view. I beg to move.