Company Law Reform Bill [HL]

moved Amendment No. 328:"Page 243, line 8, leave out ““in the case of a major audit,””" The noble Baroness said: I shall try to speak to all of the amendments in the group but it is slightly complicated because it is quite a long clause. I have suggested deleting,"““in the case of a major audit””," and subsection (3)(b). It is a requirement of Article 36 of the Statutory Audit Directive that both the company and the auditor inform the authority or authorities responsible for public oversight about the dismissal or resignation during the term of appointment and that they give an adequate explanation of the reasons thereof. However, subsection (3) allows for some of these statements to be sent to a recognised supervisory body and it is not clear whether the directive has been correctly implemented in this regard. If subsection (3)(b) was deleted, the statements would go to the Secretary of State or to a body to which the Secretary of State has delegated functions, not to a recognised supervisory body, and there would be no need for a definition of a ““major audit””. Clause 509(4) requires the auditor to send a statement of reasons where he has concluded that there are no circumstances to be brought to the attention of shareholders and creditors. Under Clause 506(2), the auditor would have deposited a statement that there are no circumstances. As to Clause 509(5) and the amendment which seeks to delete ““the company””; I understand that that subsection requires that the company must send the same statement as the auditor. However, the statutory audit directive does not seem to preclude different statements being sent by the auditor and the audited entity. If, for example, there is a disagreement over the circumstances or the reasons for resignation or removal, the amendment would also reduce the administrative burden on companies. It is not clear what the position would be for auditors on disclosure of information as to an appropriate audit authority when a court action is being taken by a company to prevent circulation of the statement to shareholders. It is possible that the auditors must send the statement to the audit authority before the courts have reached a view under Clause 507. I therefore suggest that the statement be sent at the same time and be deposited at Companies House. In Clause 509(5), I seek to replace ““he”” with ““the auditor””. This is a small drafting matter. As currently drafted, there may be some ambiguity about the identity of ““he””. The amendment would rectify this. In subsection (6), I seek to replace ““person”” with ““company””. The Bill deals with companies, not individuals, and the amendment would clarify any potential ambiguity. I beg to move.