Company Law Reform Bill [HL]

My Lords, we agreed in Grand Committee that it is extremely important to give companies certainty about the status of provisions which were originally contained in their memoranda but which will, by virtue of Clause 29(1), be deemed to form part of their articles after this part of the Bill comes into force. We also want to avoid, as far as possible, a situation in which the Bill forces existing companies to change their constitutional arrangements just to preserve the status quo. Since the current law is that provisions in the memorandum prevail over conflicting provisions in the articles, a provision along the lines of this amendment may well be part of the solution. But, as we said in Grand Committee, the Bill is not necessarily the most appropriate place to make such a provision. For a variety of reasons, it may be better to deal with this in a transitional order under Clause 881. Although Clause 29 makes specific provision on the application of the new law to old companies, our approach more generally has been to leave such matters to be dealt with at a later stage under transitional arrangements. We are currently looking at a range of issues where we need to consider how the new law should apply to existing companies. Some of these issues are interrelated and consequently I do not wish to pre-empt the results of that exercise by agreeing to consider an amendment to Clause 29 at this stage. That could undermine the best outcome as regards implementation of other parts of the Bill. What I can promise is that the issues raised by this amendment will be dealt with by clear legislative provisions in good time for existing companies to deal with them. I can also assure noble Lords that the Bill will not be imposed on existing companies at short notice or without warning: there will be full consultation with interested parties on all significant transitional measures. We will be consulting carefully over the coming months on the wider issue of applying the new law to existing companies and we think that this is the best way forward.