Company Law Reform Bill [HL]

My Lords, the drafting as currently before us is not as clear as it might be on that point. But the provisions before us do not only deal with the current delegations that have taken place. Who knows what might happen in the future? That is why it is important to provide the alternative. I would like to repeat that and put in on record. If anything else is needed, I am happy to write on that matter. As that delegation has taken place, the POB is the body to which those submissions should be made. If the company that the auditor has left is an unlisted company and not otherwise of major public interest, a statement need only be submitted in the case of an auditor’s resignation or dismissal by the company and the statement is sent to the auditor’s own supervisory body—for example, one of the institutes of chartered accountants—rather than to the POB. The second new clause sets out the company’s duties when its auditor resigns or when it dismisses its auditor. The company has to inform the appropriate audit authority and send it a statement. This can either be a copy of the auditor’s statement or a separate statement by the company explaining the reasons for the auditor’s departure. The reason the company and auditor are both required to send their statements is that when an auditor resigns or is dismissed, it is quite possible that the auditor and the company will have different accounts of the circumstances. This is a requirement of the newly adopted audit directive. Amendments Nos. 354 and 355 would remove reference to the supervisory bodies so in practice all the statements would go to the POB. Burdening the POB—a relatively small organisation—with details of the circumstance of every auditor who resigns or is dismissed would not be of value. The relevant part of the audit directive refers to authorities responsible for public oversight and I am advised that the supervisory bodies can be included as they are part of the public oversight system for auditors. The supervisory bodies may have a closer interest in any case as some of the circumstances around dismissal may suggest a problem with an auditor, particularly if there is a pattern. Our intention is that the company should have the choice of whether to send any statement made by an auditor or to send its own. That is what the two paragraphs of subsection (2) of the new clause to be inserted by Amendment No. 362—linked by the word ““or””—are meant to achieve. If the Secretary of State has delegated the functions of supervisory statutory auditors to a body, it is that body to which the auditor or the company should send their statement. That will be clear from the wording of Amendment No. 370, but we will reflect to see if anything further needs to be said. That is the clear intention and I am happy to put it on the record. I am grateful to the noble Baroness for probing this issue so we can be clear on it.