Company Law Reform Bill [HL]

moved Amendment No. 144:"Page 114, line 14, after ““company”” insert ““which is entitled to the exemption conferred by subsection (1) or (2) of section 249A (exemptions from audit) of the 1985 Act in respect of its current financial year””" The noble Lord said: My Lords, it is with some relief that we leave the area of derivative claims and move to Part 12 of the Bill, which relates to company secretaries. In moving the amendment, I shall speak also to Amendments Nos. 145 to 147. They are all concerned with the second half of the discussion which we had earlier today about the role of the company secretary. We debated the merits of empowering company secretaries, where companies choose to have one despite not being required by law so to do. On this occasion, we come to the issue of which company should be required to have a secretary. As the House will know, the Bill radically alters the law so that only public companies will in future have to have a secretary and private companies will be free to choose. As we have said previously, we appreciate that this desirable for many companies. The role of a company secretary does not add much of value to many small businesses and it is often filled by family members in a box-ticking exercise to satisfy the legislative requirements. The removal of the requirement will ease the regulatory burden on companies and we entirely support it. However, on closer inspection of the Bill, we wonder whether where the line is proposed to be drawn is entirely suitable. There are number of extremely large private companies—some may dwarf many public companies—and a secretary would add value in those situations. The safeguards that a company secretary traditionally adds for creditors and corporate governance are surely as applicable in a large private company as in a public company. We wonder also whether the provision is sending the wrong message to business in the UK and overseas. With corporate governance issues making the headlines in recent years and many jurisdictions tightening up their compliance requirements, is it not counter-intuitive to remove a function which historically has played a valuable role in ensuring that companies fulfil their obligations? Our amendments would relocate the point at which a secretary is required from the public-private cross-over to the audit threshold. As we have argued previously, if a company has reached a sufficient size to require the added checks and balances in audit, why should it not require a company secretary? The amendment would have the effect of excluding small and medium-sized companies and therefore achieve the deregulatory aim which lies at the heart of this change in the law, while keeping high standards of corporate governance, which should be required in companies which receive significant levels of outside investment. I hope the Minister can be slightly more sympathetic to our concerns. At 10 minutes to 10 o’clock, he is looking fairly stern-faced. Nevertheless, I shall have a crack with Amendment No. 144, which I beg to move.