Company Law Reform Bill [HL]

My Lords, I state at the outset that we on the Conservative Benches support the government amendments in this group. Indeed, we even tabled some of them ahead of the Government. I am sure that the Minister will agree that the Government have not handled the whole OFR debacle well. It is a pity that so much time has been spent veering from one policy position to another, and satisfying none of the interest groups. I know that some of those interest groups will not be wholly satisfied with what the Government have done with these amendments. Indeed, other amendments have been tabled for discussion today which demonstrate that. However, we think that the Government have achieved the right balance. From the perspective of corporate reporting, the most important thing is to have certainty. Alongside certainty I particularly welcome the fact that the Government have not included the more onerous audit requirements that went with the OFR and have not introduced the reporting standard provisions. Those two provisions were drivers of the cost, which was significantly in excess of the £30 million that was initially estimated. The Minister kindly dealt with the two amendments that I tabled, which were probing amendments, as he correctly deduced. My first amendment probed the meaning of subsection (2) of the new clause replacing Clause 395. The Minister explained that the provision ought to demonstrate enhanced shareholder value. I was trying to tease out whether the report had to show how the directors had had regard to the various items listed in Clause 156—which we debated at some length yesterday—or whether those items had any special relevance. Ambiguity may arise in the minds of the preparers of OFRs on what precisely they have to report on. As we can see, enlightened shareholder value is already set out in subsection (5), and to some extent in subsection (6), so what is it within subsection (2) that adds to reporting on enhanced shareholder value? I stress that I seek clarity on these matters from the Government because preparers of business reviews will want to know what they have to comply with. I was also grateful for the Minister’s response on my second amendment about whether everything had to be stuck into the directors’ report, which as I am sure the noble Lord will be aware is about the most boring bit of the annual report and accounts, unless companies choose to put other material in there. Is it sufficient for the matters to be dealt with in separate reports? As I am sure the noble Lord is aware, some companies issue separate corporate social responsibility reports and separate environmental reports, which give a much fuller account than what may sometimes be a couple of paragraphs in the main body of the annual report. Will it be sufficient to refer to documents that are not physically a part of the main annual report and accounts? Subject to the Minister’s comments on those points, I reiterate our support for these amendments.