Company Law Reform Bill [HL]

moved Amendment No. 282:"After Clause 450, insert the following new clause—" ““GENERAL POWER TO MAKE FURTHER PROVISION ABOUT ACCOUNTS AND REPORTS (1)   The Secretary of State may make provision by regulations about— (a)   the accounts and reports that companies are required to prepare; (b)   the categories of companies required to prepare accounts and reports of any description; (c)   the form and content of the accounts and reports that companies are required to prepare; (d)   the obligations of companies and others as regards— (i) the approval of accounts and reports, (ii) the sending of accounts and reports to members and others, (iii) the laying of accounts and reports before the company in general meeting, (iv) the delivery of copies of accounts and reports to the registrar, and (v) the publication of accounts and reports. (2)   The regulations may amend this Part by adding, altering or repealing provisions. (3)   But they must not amend (other than consequentially)— (a)   section 371 (accounts to give true and fair view), or (b)   the provisions of Chapter 12 (revision of defective accounts and reports). (4)   The regulations may create criminal offences in cases corresponding to those in which an offence is created by an existing provision of this Part. The maximum penalty for any such offence may not be greater than is provided in relation to an offence under the existing provision. (5)   The regulations may provide for civil penalties in circumstances corresponding to those within section 436(1) (civil penalty for failure to file accounts and reports). The provisions of section 436(2) to (5) apply in relation to any such penalty.”” The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 285 and 303. Those amendments are required as a consequence of the removal of the general company law reform power previously contained in Part 31 of the Bill. Among other things, the general power had been intended to replace Section 257 of the Companies Act 1985, which currently contains a wide power for the Secretary of State to modify any of the provisions on accounts, reports and audits by regulations. Section 257 has been in companies legislation in its present form since the Companies Act 1989. It has been used to implement EC accounting directives—for example, to insert Schedules 9 and 9A to the 1985 Act relating to the accounts of banks and insurance companies. It was the means whereby small companies gained exemptions from audit. There is no equivalent to Section 257 of the 1985 Act in the Bill; rather, a number of targeted powers are provided for in Part 15 to enable the form and content of accounts and reports to be prescribed by regulations made by the Secretary of State. This is in line with the recommendations of the Company Law Review, and recognises the fact that, given the technical content and evolving nature of the form and content of accounts and reports, it is more appropriate that they be specified in secondary legislation. In the absence of the general reform power and a provision equivalent to Section 257, the substantive provisions in Part 15 could be modified only by using Section 2(2) of the European Communities Act 1972, where required by EC law. Following the decision to remove the general reform power, we consider that we shall need delegated powers to modify the provisions of Part 15 in the following specific areas as reflected in Amendment No. 282: the accounts and reports that companies are required to prepare; the categories of companies required to prepare accounts and reports; the form and content of accounts and reports; and provisions on the approval, circulation, laying, delivery and publication of accounts and reports. All these matters are encompassed by the existing Section 257. Subsection (3) of the proposed new power expressly excludes two provisions from its ambit other than for the purpose of consequential amendment as a result of other amendments to the part. These provisions are Clause 371, headed, ““Accounts to give true and fair view”” because of its overarching nature, and the provisions on the revision of defective accounts and reports in Chapter 12 of Part 15. Amendment No. 285 is consequential on Amendment No. 282. On Amendment No. 303, without the general reform power and Section 257, we need a power to be able to modify the substantive provisions in Chapter 1 of Part 16. Again, these are provisions that could have been amended by Section 257. The requirements for audit in that chapter are a balance between the costs of audit and the benefit of audited accounts for members and the wider economy. This is an area where we will want to try to improve the balance from time to time, particularly where there may be opportunities for deregulation. It is therefore important to be able to make changes by regulation rather than needing to introduce new primary legislation whenever we want to change the rules or raise the thresholds. I beg to move. On Question, amendment agreed to. Clause 453 [Meaning of ””annual accounts”” and related expressions]: