Company Law Reform Bill [HL]

My Lords, under Clause 444(5) disclosures may be made to overseas regulatory authorities by the FRRP provided that certain conditions are met. Clause 445 permits the Secretary of State to amend that subsection, subject to certain conditions. Amendments Nos. 277 and 278 would, as has been described, prevent the Secretary of State amending that subsection in any way. I appreciate that these amendments are more restrictive in scope than those tabled by the noble Baroness in Grand Committee, but they could still cause difficulties. Disclosure may currently be made only to an overseas body to enable or assist it to exercise functions of a public nature similar to those of the Financial Reporting Review Panel. These amendments would prevent the Secretary of State adding, for example, any specified categories of body with functions that were different from the panel’s other than through primary legislation. I suggest that that would be an undesirable restriction given the global nature of business today where regulators will increasingly need to be able to share information across national boundaries. I should emphasise that the Secretary of State’s power to make changes to subsection (5) is already limited. As was recommended by the Delegated Powers and Regulatory Reform Committee when the provisions were introduced in the Companies (Audit, Investigations and Community Enterprise) Act 2004, there is a restriction in Clause 445(2)(c) such that disclosure can be made only to a body that exercises functions of a public nature. In Grand Committee, the noble Baroness expressed concerns that this restriction was not tight enough—indeed, that has been reiterated tonight—because it would not prevent the Secretary of State deciding at some future date to allow for disclosures to a body exercising functions of a public nature in country X that would not be considered public functions in this country. However, any proposal to extend disclosures to an overseas body not exercising public functions that we would recognise would clearly be circumventing the spirit of this restriction. I have to say that it is highly improbable that any Government would want to do so. Amendment No. 279 would require an affirmative resolution for the exercise of the power under Clause 445 to amend the types of overseas bodies to which disclosure of information about accounts obtained by the FRRP under compulsory powers is permitted under Clause 444(5). This is an alternative to the other two amendments in this group. The argument is essentially the same as that which I made in Grand Committee. The Delegated Powers and Regulatory Reform Committee has considered this power both during the passage of the Companies (Audit, Investigations and Community Enterprise) Act 2004 and in respect of this Bill and has considered the negative resolution procedure to be appropriate. Mirroring amendments are proposed to the disclosure provisions in relation to the Takeover Panel. In that case, we have again followed the blueprint laid down by the Delegated Powers and Regulatory Reform Committee. The gateways list in relation to the Takeover Panel can be amended only by secondary legislation to include non-UK bodies exercising functions of a public nature. I know that the noble Baroness is pressing for some detail, but it is impossible to predict precisely what circumstances may arise. That is why it is important that the power is retained, subject to the negative resolution procedure, as provided for in the Bill.