Company Law Reform Bill [HL]

My Lords, I am impressed with what the noble Baroness had to say about subsection (3). It is essential that there should not be a duty to update the entire time, otherwise at what stage does one do so? Should one do that when one sees a change of 1 per cent, or perhaps of 5 per cent? One would be issuing something the entire time and, as the noble Baroness pointed out, spending most of the time in board meetings looking back at what had been said rather than looking at the future. However, I am somewhat surprised by the second half of subsection (2), although not to the same extent as the noble Lord, Lord Clinton-Davis. It seems surprising to say that someone is not in any way liable for a statement which is ““untrue or misleading”” unless they actually knew that it was. Is there to be no duty on directors looking at these reports to say to themselves, ““Cor, that looks pretty surprising. Are we really right to say that we are going to make twice as much money next year? The sales prospects do not accord with what I thought was the atmosphere three months ago at the last board meeting””? I fully see that the duty should be limited because otherwise, as the noble Lord said, the review could become 400 pages long, 346 of which would be drafted by lawyers merely to provide one with a defence if one was sued on it. However, I think there should be, perhaps, some liability if a director fails to notice that what is being said seems wholly inconsistent with what had been said at all previous board meetings. He should take some care to ensure that the statements are not untrue or misleading, but I do not quite see how this ties in with a general duty of care. I agree that the general duty of care must be limited, particularly in the case of a non-executive director or a director who is not the production director in relation to finance and so on. He should not have to go in and second guess the man who drafted the statement and whose expertise it is.