Company Law Reform Bill [HL]

My Lords, I apologise for the fact that the noble Baroness has not received a letter from me. I cannot even promise that it is in the post; I would need to check whether it has been drafted. I hope that what I say on this amendment will help. Clause 497 puts a duty on a company to include the name of the auditor and, if there is one, the senior statutory auditor in the copy of the audit report that it circulates to its shareholders or otherwise publishes. It also provides an important exception from this duty to deal with the case where there is a risk of violence or intimidation if the names are revealed in this way. There is an important balance of interests here. It is essential that members know whom they are appointing as auditor of the company. The auditor is acting on behalf of the members, helping them to assess the stewardship of the directors. Faced with the real problem of intimidation and violence, it is appropriate to allow companies to keep the information from the wider public, but we cannot prevent the members knowing the identity of the auditor—they must appoint the auditor. It is true that that inevitably limits the value of the exception. It will be of little use to listed companies or other companies whose shares are widely held or traded. Any activist could buy a single share in a listed company and so discover the name of the auditor, even if the auditor’s name was to be kept out of the published audit report. The provision does nothing special for auditors to prevent anyone, for example a disaffected employee, from disclosing the name of the auditors. There are still risks, and that is unfortunate, but by building an exception into the statutory requirement to disclose the auditor’s name we put the auditor on the same footing as every other supplier to the company. The exception would be of value to closely held companies. In such a company, it is right that the members should be able to pass a resolution to take advantage of the exception and that the resolution should state the name of the auditor. There is no reason why this resolution, any more than that the resolution appointing the auditors, should become public knowledge. The protection for companies and their auditors is inevitably not perfect, but I do not believe that the amendment will do anything to improve it. I hope that that has explained what we understand to be the position in respect of this conundrum.