Company Law Reform Bill [HL]

moved Amendment No. 334C:"After Clause 510, insert the following new clause—" ““REVIEW OF AUDITOR RESIGNATION REQUIREMENTS (1)   It shall be the duty of the Secretary of State to review the effect of sections 497 to 510 on the audit arrangements for companies which are not public companies within three years of the day on which this Act is passed. (2)   If the Secretary of State concludes as a result of his review that amendments to the requirements of those sections are required in respect of the audits of companies which are not public companies, he may amend those sections by order. (3)   An order under subsection (2) shall be subject to the affirmative resolution procedure.”” The noble Baroness said: Amendment No. 334C inserts a new clause after Clause 510 requiring the Secretary of State to review Clauses 497 to 510 within three years of the passing of the Bill. It also gives him power to amend the clauses by order as a result of that review. The Institute of Chartered Accountants in England and Wales, which suggested the amendment, has commented that the clauses are very complicated for both companies and their auditors to understand. It is quite difficult to work out who does what, to whom and when. The institute believes that there may well be problems for the people who are trying to cope with this and that they may not understand precisely their responsibilities. The addition of the audit and accounting authorities has further complicated matters. In addition, the clauses are accompanied by the usual raft of penalties, so it is important for everyone involved to get things right. I imagine that the ““big four”” and their clients will not be much troubled by the clauses—they have lawyers to deal with this sort of thing—but further down the size scale of audit firms and audited companies, there may well be problems. The institute is particularly concerned about SMEs and the burdens on them. The amendment is intended to be a helpful way of addressing complexity in a measured way. I beg to move.