Company Law Reform Bill [HL]

I think we can all recognise, as the Company Law Review did, that there may be a category of company officer, beyond directors themselves, who should not escape potential liability for breaches of statutory requirements in certain circumstances. I think we can recognise these persons—those with an appropriate degree of influence and seniority within the company, and who have responsibility for the particular area in question—but it is not necessarily easy to define them precisely. The Company Law Review suggested that providing a definition of the term ““manager”” might provide greater legal certainty, and to this end proposed a definition based, as is the amendment of the noble Lord, Lord Hodgson, on the equivalent provision in the Building Societies Act 1986. Those suggestions were taken forward in the Government’s White Paper of 2002, but reactions to that document suggested that the definition did not achieve the desired legal certainty for the wide range of different circumstances in which companies are run. In particular, some respondents felt that defining a ““manager”” as someone who ““exercises managerial functions”” was unhelpfully circular. I think it would be fair to say that the alternative approach adopted in the more recent White Paper of 2005—unpicking the notion of manager and attempting to provide specific definitions for the newly-introduced terms ““senior executive”” and ““delegate””—met with no greater approval from consultees. There was particular concern that the new definitions might inadvertently have cast the net of liability wider than is the case in the current Act, which relies on the undefined term ““manager””. We have listened to the concerns that have been raised. In an ideal world, it would no doubt be possible to define the term ““manager”” in a way that provided greater clarity to users of the law. But we have needed to weigh the potential advantages of that approach against the risk that in doing so we introduce new uncertainties, or make unintended changes of substance. On balance, we think that it is preferable for the Bill not to contain a definition of ““manager””, just as the 1985 Act does not. We are not aware of any difficulties that the current approach has caused in practice, and the courts have been able to interpret the term taking account of the widely differing circumstances presented by businesses which take the form of a company.