Company Law Reform Bill [HL]

The noble Lord’s amendments would delete references to the memorandum in Clause 761(2) and in Schedule 8 so that the Bill referred only to the articles of the undertaking. We are happy to accept these amendments, which reflect changes in the Bill that mean that for companies formed under the Bill the memorandum will become essentially an historic document containing information evidencing the intention to form a company, with the key constitutional information being set out in the articles. We will, if necessary, make appropriate transitional provisions on implementation to preserve the effect of existing provisions in companies’ memorandums. I turn now to Amendment No. A212A. Clause 761(4) re-enacts Section 258(4) of the 1985 Act, which was amended in 2004 in order to implement the EC accounts modernisation directive. The purpose of that amendment was to align EC accounting requirements with those of International Accounting Standard 27. Under IAS27, an undertaking is a subsidiary undertaking if it is controlled by a parent, irrespective of the existence of an interest in the capital of the undertaking. The requirement in Section 258(4) for a participating interest to exist was therefore removed and, in order further to align with IAS27, the test was changed from actual exercise of a dominant influence to having the power to exercise, or actually exercising, dominant influence or control. Paragraph 4 of Schedule 8 provides further explanation of what is meant by the right to exercise dominant influence for the purposes of Clause 761(2)(c). Paragraph 4(3) specifically provides that the paragraph is not to be read as affecting the construction of the expression,"““actually exercises a dominant influence””" in Clause 761(4)(a). However, this reference is no longer correct—and, indeed, should have been changed in 2004 on the implementation of the accounts modernisation directive. Amendment No. A212A is therefore a technical amendment to remove the incorrect reference in paragraph 4(3) of Schedule 8, so the paragraph will provide that nothing in it is to be construed as affecting the construction of Clause 761(4)(a). On Question, amendment agreed to. Clause 761, as amended, agreed to. Schedule 8 [Parent and subsidiary undertakings: supplementary provisions]: