Company Law Reform Bill [HL]

moved Amendment No. 326A:"Page 242, line 1, leave out ““the auditor of the application”” and insert—" ““(a)   the auditor, and (b)   every person who under section 399 is entitled to be sent copies of the accounts of the application.”” The noble Baroness said: In moving the amendment, I should point out that its layout is wrong. The last three words of the amendment—““of the application””—should be on a new line, so that subsection (3), as amended, would read,"““If it applies to the court, the company must notify" (a)   the auditor, and (b)   every person who under section 399 is entitled to be sent copies of the accounts of the application””. So for those who were mystified by the nature of the amendment, that is the explanation. I apologise to the Committee for not spotting it earlier. The UK Shareholders Association has concerns about members being kept in the dark about relationships between a company and its auditors. The association believes that the rights of shareholders to know of auditor problems, which often conceal much more significant issues about accounting treatments or internal controls should be given greater weight. The association would prefer there to be no ability of the company to withhold material, and so if defamation is involved the company has access to the normal legal routes for redress. Amendment No. 326A does not go that far—it is a compromise—and simply states that if the company applies to the court in order to suppress material prepared by the auditor, the members of the company should at least be made aware of that fact. I beg to move.