Company Law Reform Bill [HL]

My Lords, when we debated this amendment in Grand Committee, the noble Baroness raised concerns about how Clause 413(5) might operate. She asked whether the effect of the clause will be that companies will be expected to have elaborate business continuity arrangements to cover website availability in the event of major events such as fire or terrorist attack. Specifically, she asked what would be reasonable as regards prevention or avoidance. I shall try to address those concerns in my reply. She has reiterated some of those points in moving the amendment today. A company wishing to take advantage of paragraph (5)(b) must show that its failure to make information available on its website is wholly attributable to circumstances that it would not be reasonable to expect the company to expect or avoid. The examples given in Committee and again today are of major events such as fire or terrorist attack. They are clear examples of such circumstances. It was feared that the clause might require companies to operate on a risk-averse basis, employing elaborate business continuity arrangements that cover website availability. I must say that it would be a very risk-averse company that feared prosecution under Clauses 411 and 412 in circumstances such as the noble Baroness described. I should have thought that in those circumstances the failure would be wholly attributable to circumstances that it would not be reasonable for the company to have addressed and avoided. Of course, there could be cases where there were questions whether the failure was completely beyond the company’s reasonable control, which might be less clear-cut. However, even here, a company is unlikely to be at risk of prosecution provided that it takes action in the event of a website failure. The effect of subsection (5) is not onerous as it requires the company only to take reasonable means to ensure that the information is available on the website. I emphasise that it is not obliged to place its reports, accounts or preliminary results on its own website in the event of a website failure. It can make the information available on another website that is maintained on its behalf. I do not think that that can be described as an elaborate business continuity arrangement. As the noble Baroness, Lady Noakes, rightly said in Committee, we can expect rapid growing use of websites and electronic communication. Such forms of communication are increasingly important. It is quite reasonable to expect companies to arrange a form of backup facility for their websites to avoid problems when websites go down. I reiterate the point that the Institute of Chartered Secretaries and Administrators’ best practice guide on electronic communication with shareholders recommends that as a matter of best practice. For all the above reasons, I regret to say that I am not persuaded of the need for the amendment. However, I will, as ever, reflect on what the noble Baroness said and read Hansard with interest.