Company Law Reform Bill [HL]

My Lords, I am conscious that I disappointed the noble Lord, Lord Hodgson, in Grand Committee. I hope that I will not disappoint him so much on this occasion, although I am not sure that he will be happy with the totality of what I have to say. We have considered carefully the raft of amendments that the noble Lord brought forward in Grand Committee on the audit of charities. On some, we have brought forward amendments at this stage, but that should not be seen as our total response to the points that the noble Lord has raised. We have already debated the amendments that make the Bill refer to the Charity Commission, not the Charity Commissioners, consistent with the Charities Bill. In Part 16, we have amendments to bring the thresholds applying to charitable companies into line with those for charitable companies in the Charities Bill. The amendments to which the noble Lord has spoken go much further, together with the degrouped list which we will discuss subsequently, and would move in the direction of subjecting small charitable companies to the same rules on scrutiny of financial accounts as unincorporated charities are subject to under the Charities Acts. Overall, we have sympathy with that proposal and are willing to consider it. However, we need to consider it carefully, taking into account the interests and views of the charities and those who contribute to and work with charities. If we conclude that it is right that small charitable companies should be subject to a charity law audit regime rather than a company law one, it would probably be best to remove small charitable companies from the audit rules in company law altogether. That way charity law would determine the appropriate regime for audit of all charities, whether companies or not. I think that that is a point on which the noble Lord would agree. We agree that it would be clearer for charities if we were able to apply a single set of rules set out in charity law to all small charities for purposes of audit, but we are not in a position yet to amend the Bill in the way proposed. We have, however, following Grand Committee, discussed this with the Home Office and others. There will be a consultation with a view to our bringing forward appropriate amendments, probably in another place, if this is the outcome of the consultation. In summary, I agree to consider these amendments. We are minded to remove the special rules for scrutiny of the financial accounts of small charitable companies from company law and there will be a brief consultation on that. I hope that the noble Lord will see that as at least half a loaf and that our earnest intention is to move down the path which he would support and accept.