Company Law Reform Bill [HL]

moved Amendment No. 194A:"Page 180, line 6, leave out ““where appropriate,””" The noble Baroness said: My Lords, in speaking to Amendment No. 194A, I shall speak also to Amendments Nos. 194B and 314A, which are tabled in my name and the names of my noble friend Lord Razzall and the noble Lord, Lord Dubs, and to Amendment No. 194C, which is tabled in my name and the names of my noble friend Lady Miller of Chilthorne Domer and the noble Lord, Lord Dubs. These amendments fill in some of the gaps left by the proposed removal of the OFR, even if we shortly agree to add the business review. Amendment No. 194A would delete the words ““where appropriate””. The information required to be supplied under this subsection is already qualified by the use of the phrase,"““to the extent necessary for an understanding of the development, performance or position of the business of the company””." The words ““where appropriate”” are superfluous and may weaken that requirement. Amendment No. 194B would delete the words,"““environmental matters and employee matters””," and would insert a more detailed specification of what should be included. The requirement for companies to provide information on social and community issues, which has been referred to, was included in the OFR regulations, but is absent from the business review provisions as currently drafted. That means that there is no requirement for companies to report on the impact of their activities on any communities in which they operate, including on any related human rights issues. In addition, the requirements, as currently drafted, to report in the business review on environmental matters are weaker than those under the OFR regulations. The business review requires the provision of information on environmental matters,"““to the extent necessary for an understanding of””," a company’s,"““development, performance or position””." However, the OFR also required the provision of information on the impact of the business of the company on the environment to the extent necessary for such an understanding. This amendment refers to the social aspects, to which we believe explicit reference should be made, the impact of the company’s activities on the environment and, as my noble friend Lord Phillips said, the persons with whom the company has contractual or other arrangements that are essential for the business of the company. The proposed new Clause 395(4)(b)(iv) requires the inclusion of information on,"““the areas described in sub-paragraphs (i) to (iii) and the extent to which those policies have been successfully implemented””," because companies could easily introduce policies to address those issues simply for PR purposes. This provision, which is also in the OFR, is vital to ensure that companies cannot pay lip-service to such policies without serious intentions of implementing them. Amendment No. 194C would delete Clause 395(7), which would mean that the provisions applied to medium-sized as well as large companies. This issue has been mentioned by the noble Lord, Lord Dubs. Where medium-sized companies impact these factors, we believe that they should be required to report on them. Amendment No. 314A concerns the auditing of what I have just described. The auditing requirements for the business review are less stringent than those for the OFR. The OFR regulations require, first, a consistency check—that is, a check by the auditor that the information provided in the OFR corresponds with the available evidence—and, secondly, consideration by the auditor about whether any other matters that have come to his attention during the audit were inconsistent with the information provided in the OFR. The Government asserted that that second check was necessary to provide adequate assurance for investors and other users. However, the second check is not part of the audit requirements for the business review included in the current draft. That is why I also put forward this amendment. So, in the interests of transparency—a matter I have mentioned before—and corporate responsibility, for the reasons we all know, and in the interests of putting back in some of the protection that was provided in the OFR in the first place, I commend these amendments to the House. I beg to move.