Company Law Reform Bill [HL]

My Lords, I wish to add a couple of points to the contribution of the noble Lord, Lord Razzall, because I begin from a not totally dissimilar position. I remind the House that the noble and learned Lord the Attorney-General made a very important point in the Moses Room when he said that,"““the main purpose in codifying the general duties of directors is to make what is expected of directors clearer and to make the law more accessible to them and to others. The problem is that the traditional formulation of that duty does not achieve that””.—[Official Report, 6/2/06; col. GC254.]" I have not heard the noble Lords, Lord Freeman and Lord Hodgson, and other noble Lords on the Conservative Benches address that point. There is another point made by elision, which ought to be brought out into the open—I think that it has been touched on by the noble Lord, Lord Razzall—which is that somehow we are interfering here with the common law, which has been with us since the 12th or 13th century or whenever. But surely company law has had a major part to play in what the modern capitalist system is constrained by. Limited liability is a tremendous protection for the system. It is not a case of the common law being involved here; what is involved here is an intervention by Parliament in 1862, as the noble Lord, Lord Razzall, said. That is the second reason why it is the property of Parliament to present a framework for companies. Again, I do not think that that point has been addressed by the Conservative Benches. It may well be true that some people in the great world out there do not understand the subtlety of the distinction between the interests of the company and the interests of the shareholders. But there must be many millions of people out there who would query the formulation that the noble Lord, Lord Freeman, has used. He did so in good faith; he believes very passionately that it is the only way in which the system can work. The noble Lord says that the interests of the company equate with the interests of the shareholders. He then says that he is not against matters concerning long-termism, the interests of employees and so on and so forth being in codes of practice. So we are back to the angels on the head of a pin regarding whether Clause 156 changes anything substantive at all. As my noble friend Lord Sainsbury has said on so many occasions—we are all repeating ourselves—the fact is that the clause does change something. The ““something”” which it changes is that directors should have explicit regard to the points that are set out and that those points do not comprise just a box-ticking exercise. I believe that that is a reasonably accurate summation of what has been said during the past couple of months. Ministers have lent over backwards to make many concessions. I give the example of safe harbours. Many important points made by Members on the Conservative Benches in Grand Committee in the Moses Room have been listened to and acted on—a few more have been acted on than suggestions made by noble Lords on this side of the House. However, I do not complain about that today; I shall complain about it tomorrow.