Company Law Reform Bill [HL]

moved Amendment No. 350:"Page 244, line 1, leave out ““the auditor of the application”” and insert—" ““(a) the auditor, and (b)   every person who under section 404 is entitled to be sent copies of the accounts. of the application.”” The noble Baroness said: My Lords, this small amendment, which seeks to enhance the information that members receive about a departing auditor, was suggested by the UK Shareholders Association. In Grand Committee, the Government were keen to emphasise the relationship between members and the auditors; but that is something of a myth, because, in practice, the relationship is between the directors and the auditors. If the auditor leaves office for any reason, it is right that shareholders are informed. We support in principle Clause 511, which requires the company to circulate an auditor’s statements of circumstances and will be an invariable requirement for quoted companies. But the company can apply to the court not to circulate the notice. If it does so, the shareholder is left completely in the dark until the court has made its decision. That could put weeks, or even months, into the process. My amendment merely asks that the shareholders and others entitled to receive the accounts are informed of the application to the court so that they are on notice that there is an issue. The very fact that there is a dispute between the outgoing auditors and the directors is an indication that shareholders should have concerns, especially if there should be—as the Government appear to believe—a relationship of trust and confidence between the shareholder and the auditor. It is nonsense to suggest, as the Minister did in Grand Committee that, an"““astute shareholder will be aware of the resignation””.—[Official Report, 14/3/06; col. GC 425.]" That is simply not true and it is far from the truth for the vast majority of shareholders. If the Government believe that shareholders have a genuine role in the auditor/company relationship, they should welcome my amendment. I beg to move.