Company Law Reform Bill [HL]

My Lords, I should like to raise one point on Amendment No. 196, which appears to me—and I am sure that I am wrong—to contain one rather serious illogicality. It basically requires a business review, which is an objective review of how the company has done, how it is doing, and the extent to which it has had proper regard for employees, environmental matters, and so on. That is a report on how the company is doing. But subsection (2) of the amendment says that the purpose of the review is to inform members of the company how the directors have performed their duty. A report on how the company is doing may not in any way tell you how the directors are doing. A company may be doing very well because it has excellent managers, or because the economic trend has favoured it tremendously, or because its product has suddenly become very desirable for outside reasons. Although it is doing very well, the directors may have met three or four times a year for a quarter of an hour, nodded through the business in front of them without having read it, and then retired to a very good and perhaps rather over-refreshed lunch. The fact that you are told how the company is doing does not tell you at all how the directors are doing. Surely subsection (2) is an illogicality? While not asking the noble Lord to deal with the matter today, I ask him to take it away and consider whether subsection (2) really does logically fit, in the way that it is worded, with the rest of the amendment.