Company Law Reform Bill [HL]

My Lords, I fear that I shall disappoint the noble Lord by singing a song he has heard before. We agree, of course, that directors should comply with their general duties to the company in everything that they do as a director. In a perfect world, that would be sufficient. However, it would be unrealistic to overlook the fact that when it comes to political donations, the possibility of a conflict of interests is particularly acute and a requirement for shareholder consent is appropriate. Amendments Nos. 174 and 181 would remove the requirement for prior shareholder authorisation and, in doing so, would neuter the provisions entirely. In this context, we do not believe that Amendment No. 180, which draws an explicit link between the ability of a board to authorise a political donation and its general duties, provides anything more than window dressing. I do not think that there is very much to be gained by setting out in detail our reasoning for opposing the amendments as it simply boils down to a matter of principle. But it is worth noting that the requirement for member authorisation is hardly unique to this part of the Bill. For example, Chapter 4 of Part 10 details a number of transactions that require the approval of members. We believe the approach that we have adopted in this part provides business with sufficient flexibility to manage legitimate activities with the minimum of process overhead. To relax the restrictions in the manner proposed by the noble Lord would be a radical change that would undermine the entire raison d’être of this part and reverse the existing law. I need hardly remind noble Lords that the current law is based on the recommendations of the Committee on Standards in Public Life. I hope that the noble Lord, Lord Hodgson will recognise that on this point of principle we have no flexibility and does not feel it necessary to press the amendment.