Company Law Bill [HL]

Clause 562 sets out the conditions that must be satisfied in order for a private company limited by shares to reduce its share capital using the new solvency statement procedure for capital reductions. It provides, among other things, that where the resolution is proposed as a written resolution, a copy of the solvency statement must be sent or submitted to every eligible member at or before the time at which the proposed resolution is served on the members. Where the resolution to reduce a company’s share capital is proposed as a written resolution, Amendment No. A68A would oblige the company to send the resolution and the solvency statement to the company’s auditors at the same time as it goes to the company’s members. That obligation would reflect the current requirement under the 1985 Act in respect of all written resolutions. However, the Committee will remember our earlier discussions on Part 13, which sets out a new and simpler framework for decision taking in a company, including greater opportunities for the use of written resolutions. As a result of those measures, the general obligation in Section 381B of the 1985 Act, ensuring that written resolutions are circulated to auditors, will no longer apply. It would be unhelpful to introduce such a requirement for this clause alone. Singling out the case of solvency statements in this way might risk creating confusion as to what, if anything, the auditors were expected to do on receiving such documentation, or indeed the consequences for a company of failing to comply with the requirement. In those circumstances, the Government do not think that the proposed amendment is necessary, and I hope that the noble Lord will not press it.