Company Law Reform Bill [HL]

My Lords, both Amendments Nos. 275 and 276 would require the Financial Reporting Review Panel to have a greater oversight of the way the information it passes on to an overseas body through one of its gateways would be used and safeguarded. The first amendment would require the panel to consider whether the use that the body is likely to make of the information is ““necessary and proportionate””. Currently the panel needs to consider whether the use to which the body is likely to put the information is ““sufficiently important”” to justify disclosure. The proposed change to ““necessary and proportionate”” would require the panel to have a deeper understanding of the matters being considered by the overseas regulator to know whether disclosure would be critical to the exercising of its functions. The test of necessity would require a level of knowledge that the panel might not have about the relevance of the information in any particular case. Similar considerations apply to the proportionate test. The panel could meet particular difficulties in that regard if the overseas regulator was unwilling or unable to disclose to the panel the detailed information it would need in order to make an assessment about proportionality. The second amendment would require the panel to apply a double test. It would have to consider, as now, whether the overseas body had adequate arrangements to prevent the misuse or inappropriate further disclosure of the information. It would further have to determine whether those arrangements were effective. That second test would impose a significantly heavier burden on the panel than at present. It would be required to check the effectiveness of arrangements in practice as well as whether there were suitable processes there in the first place. The panel would need to expend considerably more resources to make this judgment, and I am not persuaded that it would deliver sufficient benefits justifying diverting the panel’s resources in that way. The effect of these two amendments would be to restrict and delay the free flow of regulatory information between the panel and the overseas regulatory bodies, and to divert the panel’s resources into lengthy consideration of the value of such exchange of information. I believe it would be unhelpful in a global marketplace, where regulators may need to exchange information quickly in the public interest. Amendments Nos. 460 and 461 replicate the intentions and consequences I have just described in relation to the Takeover Panel. They are undesirable for the same reasons. I hope I have made it clear I cannot support any of these proposed amendments.