Company Law Reform Bill [HL]

moved Amendment No. 343ZA:"Page 249, line 5, leave out paragraph (b)." The noble Baroness said: This is a probing amendment which is designed to find out how the ability to terminate liability limitation agreements will work. Clause 523(3)(a) states that a termination of a limitation of liability agreement by the members does not affect the operation of the agreement in relation to acts or omissions occurring before the date on which the resolution is passed. That is common sense. However, subsection (3)(b) states that the termination does not affect acts or omissions occurring,"““after the beginning of the financial year to which the agreement relates””." Since agreements can cover only a single financial year by virtue of Clause 522, the paragraph seems to override the effect of a termination under Clause 523(1). I shall give an example. An agreement is entered into in October 2006 to cover the financial year starting 1 January 2007. In December 2006, the company changes its mind and passes a resolution to end the contract. I think that the effect of subsection (3)(b) would be that the termination would not affect any acts or omissions after 1 January 2007, which is what the company would be trying to achieve. Can the Minister explain what the Government believe is the effect of paragraph (b), because I cannot make any sense of it? I beg to move.