Company Law Reform Bill [HL]

moved Amendment No. 312:"Page 229, line 40, leave out ““negative”” and insert ““affirmative””" The noble Baroness said: My Lords, in moving Amendment No. 312, I shall speak also to Amendment No. 313. Amendment No. 312 seeks to make the power contained in Clause 484 subject to the affirmative rather than the negative procedure. Amendment No. 313 seeks to remove Clause 484 and its power completely. Clause 484 is part of the Government’s restless desire to take control over every minute aspect of corporate life. It seems innocuous enough—let us disclose the terms on which the auditors are appointed, remunerated and carry out their duties—but this proposal has no firm policy foundation, is not sought by shareholders and a perfectly good mechanism already exists which could achieve its aims if it was ever thought desirable. I think the auditors themselves may have initially floated this idea of publishing their terms of appointment—probably in the confused post-Enron environment—but I cannot recall ever hearing shareholders saying, ““I need to see the auditors’ terms of reference””. But the idea somehow got into the public domain and it has been considered seriously by the Financial Reporting Council, which has been given the responsibility by the Government to develop and oversee corporate governance in the UK. As the Minister is aware, the FRC duly consulted on this late last year and found very little appetite for it. Accordingly, it proposes not to amend the combined code at present. But the important point is that the FRC can do so in future if ever demand arose to see the auditors’ terms of appointment, or if the FRC thought it would be beneficial. The Minister in Grand Committee reported that there was widespread support for this power when consultation was carried out. But that was some time ago and the FRC’s consultation is much more recent and relevant. As the chairman and a member of a number of audit committees, I am obliged to look at these documents. They are turgid. They are drafted by the auditors’ lawyers, vetted by the companies’ lawyers, and I can honestly say that I have never found anything useful in them. As the noble Lord, Lord Sharman, pointed out in Grand Committee, since audits are prescribed by statute, they tend to be concerned with liability rather than their content of the audit. I do not believe that the Government have made a case for having this power. The FRC exists and could do this job perfectly well if ever there was a necessity or reason for so doing. But if the Government manage to persuade us that they should have yet another power to interfere, we agree with the CBI that at the very minimum, this should be subject to the affirmative procedure. I beg to move.