Companies Act 2006 (Commencement No. 2, Consequential Amendments, Transitional Provisions and Savings) Order 2007

My Lords, I know that the whole House will be grateful to the Minister for his careful explanation of this technical but, nevertheless, important set of regulations. For those of us, including the noble Lord, Lord Razzall, and I, who slogged our way through 1,920 amendments on the Bill’s initial passage before later considering 1,020 Commons amendments, the mere mention of the Companies Act 2006 brings a certain tension to the atmosphere. To paraphrase Shakespeare, we shall certainly stand on tiptoe when this Bill is named. I welcome the noble Lord, Lord Truscott, to his first outing on this subject. He will be aware that the Bill did for his predecessor, the noble Lord, Lord Sainsbury, but I trust that a similar fate does not await him. As I said, this is a technical set of regulations, but there are underlying issues on which I believe the House would welcome clarification. First, there are some practical issues relating to the 2004 Companies Act and the application of the CIC regime to Northern Ireland. Secondly, there is some unfinished business from the 2006 Act relating to the implementation of the takeover directive. Thirdly, there is the future implementation of the 2006 Act. As I was preparing for this debate, I was hoping to persuade the Minister to lift the curtain a fraction on the Government's overall plans for implementation, because there have been a number of different smoke signals. At that very moment, through my letterbox came the Written Statement by Margaret Hodge in another place and the associated consultation document. That did not so much lift the curtain as tear it down. We are grateful to the Government for that—as, I know, are a whole range of practitioners. The 2006 Act is complex stuff with far-reaching consequences, so it is important for those affected to have the maximum time to absorb its implications. I hope that I will not be seen to be ungrateful if I raise a mini-whinge about the Statement. It consists of a helpful list of the dates on which the various parts of the Bill come into effect. Two parts appear to be missing from the list: Part 39—““Companies: minor amendments””—by the way, I am not sure that minor amendments is quite the right title because quite substantial powers are taken and given up by the Minister in that regard; and Part 40—““Company directors: foreign disqualification””. It is only when one goes to the consultation document and the table of commencement date that one can discover that Part 39 is due to come into effect in April 2007 and Part 40 in October 2008. So my minor whinge—and it is a mini-whinge—is that it would have been preferable if the Written Statement had in and of itself contained a comprehensive list of all parts of the Bill. I now turn to Northern Ireland and the CIC regime. We are sympathetic to the attempts to encourage voluntary in charitable work. We accept that a conventional company structure does not always fit requirements. It was in that spirit that we welcomed in principle the new CIC regime when they debated the 2004 Bill, as it then was, but they raised concerns in Committee. Chief among those was the fact that yet another regulatory framework was to be created, with all its associated costs and expenses, for which there might be little demand. The CIC regime is not quite as simple as it might at first seem. If one turns to Part 2 of the rather clumsily titled, Companies (Audit, Investigations and Community Enterprise) Act, one does not just set up a CIC. There is to be a regulator under Clause 27 with a whole schedule, Schedule 3, with his duties. There is a CIC appeal officer in Clause 28 and he, too, has a schedule of duties associated with him. Finally, there is to be a CIC official property holder in Clause 29, also with a schedule of duties. So we are giving this expensive party. How many people want to attend it? The Minister has just given us an up-to-date figure of about 700. In terms of the per capita or per company cost, that must be an extraordinarily expensive exercise. Do we really have to extend all that structure to Northern Ireland now? Would it not be better to wait to see what is the level of demand in England and Wales before going ahead? If we are to go ahead, will the Minister confirm that Northern Ireland will not have to have its own regulator, its own appeal officer and its own official property holder? If not, and Northern Ireland must have its own officials, surely it would be even more unwise to proceed now, because on a pro rata basis, given what has happened in England and Wales, it would seem unlikely that Northern Ireland will have more than about 20 CICs. I fear that the Minister will not be moved by those arguments. I suspect that if I were to be able to sit on the Bench behind him and glance over his shoulder at the speaking notes prepared by his officials, they would say words that the effect of, ““It is very important to do this now. Northern Ireland is part of the United Kingdom. The encouragement of voluntary effort in the Province is particularly important””, and so on. If that is the argument that he will be deploying to the House, I draw his attention to the Charities Acts 2006, in which Clause 34 and its associated Schedule 7 establishing a regime for charitable incorporated organisations—CIOs. The truth is that CIOs are CICs by another name. The only significant difference is that one comes under the DTI—CICs—and the other under the Cabinet Office—CIOs. I yield to no one in my desire to encourage and increase charitable and voluntary work, but we need at all times to have regard to the regulatory cost and burden that we are creating and whether they are proportionate to any return to be achieved. If the Minister is determined to press on with this part of the regulations, he owes the House an explanation of why we need these two parallel, overlapping structures; what he thinks the difference is between CICs and CIOs; and for which separate problems they provide a remedy. I now turn to the implementation of the takeover directive and Part 28 of the Act. We had lengthy debates in Committee in March last year on the loss of self-regulatory flexibility hitherto enjoyed by the Takeover Panel which, as the Minister said in his opening remarks, has been such an important part of the success of the City of London. We accepted that if we were to create a level pan-European playing field in financial services, which would be much to the City's advantage, that was a price that we were going to have to pay. Where we were unpersuaded was that once again, there was evidence of goldplating—the UK doing more than was required by the directive. Specifically, what has become Clause 9(5)(3) makes failure to comply with rules about the takeover code and bid documentation a criminal offence. We were very concerned about what that might do for the City's competitive position. At that time, last March, we could find no other European country that had felt it necessary to criminalise such behaviour to comply with the directive. The noble and learned Lord the Attorney-General argued lengthily and fluently—but not, in my case, persuasively—that we had to have that sanction to comply with the directive. However, he could not name any other country in the EU that thought as he did. When pressed, his only argument was that it was early days to see how different countries interpreted the provisions. It is no longer early days. The directive has now been in force for eight months. It would be interesting if the Minister could tell us how many other countries have felt it necessary to introduce a criminal sanction. Were we right or was his colleague the Attorney-General right? Finally, I have a point concerning the drafting. Schedule 1 has three paragraphs concerned with takeovers—2, 3 and 4. Subparagraph 4.2 concerns written resolutions defined in terms of Section 381 of the Companies Act 1985. According to the Hodge Statement, in October this year, Part 13 of the 2006 Act—““Resolutions and meetings”” will come into force. Clause 288 in this part deals with written resolutions. It will be helpful if the Minister could confirm that that will require another set of regulations to amend the subparagraph 4.2 to update their definition. I conclude by saying that we are pleased to see the Government proceeding with the implementation of the Companies Act 2006—a vital updating of our corporate law. We are especially pleased in the light of the Hodge Statement on which the Government are to be congratulated. Notwithstanding that, given that general welcome, I will be grateful for some further detail on the points that I have raised.