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

My Lords, I am grateful to noble Lords for taking part in this debate. I would like to recall to your Lordships’ House the words of my noble friend Lord Sainsbury on 23 May last year in concluding the Third Reading debate on the Bill, which became in this House the Companies Act 2006: "““I believe the constructive spirit in which we have engaged in what have sometimes been controversial and often extremely technical issues has contributed greatly to the quality of debate. That is one key reason why the Bill leaves this House in such good shape. Ultimately, it is a Bill that will greatly help the success of British industry. However, all good things must come to an end””.—[Official Report, 23/5/06; col. 796.]" It was no doubt with relief that your Lordships completed the work on that Bill; they have all my sympathy. Great work was carried out in this House on that Bill. The present draft instrument, the second commencement order, is a further step towards that end. Before responding to the points that noble Lords have made, I would like to pick up on a few of the themes from my noble friend Lord Sainsbury’s remarks that remain pertinent this evening. The first is the constructive spirit of the debate. I am grateful to noble Lords this evening for their contribution to the provisions now contained in the Act which the second commencement order would bring into force. I am convinced that the provisions are all the more robust for the detailed scrutiny that they received in this House. Secondly, I turn to the technical nature of the provisions. I fear, alas, that companies legislation will always be beset by more than its fair share of complexity, as we heard again from the noble Lord, Lord Razzall. We are taking steps to make the legislation as accessible as possible. There are, for instance, briefing notes and explanatory guidance on the DTI website concerning the commencement orders laid to date and the takeover provisions introduced by the current order. Information about CICs is available on the website of the CICs regulator. I am sure that that will make the clause to which the noble Lord, Lord Razzall, referred, as clear as day. Finally, I shall deal with the benefits to business. I shall not try to pretend that the content of this draft order is exciting in itself. It is a technical and complex instrument, but it brings into force important key provisions of the Companies Act 2006. I shall deal with the points raised by noble Lords in the debate. The noble Lord, Lord Hodgson of Astley Abbotts, pointed out two minor blemishes in the Written Statement on the commencement timetable. I agree that it is important that business can plan properly for implementation of the Act. The Written Statement will greatly facilitate that. I can confirm that the extension of the CIC provisions of the CAICE Act will not lead to a parallel regulatory regime in Northern Ireland. Northern Irish CICs will use the same system as that in Great Britain. We expect roughly the same level of take-up as for Scotland and Wales, and the CIC regulator is absorbing the extra costs therefore the regulatory costs should not be excessive. On paragraph 4(2) of Schedule 1, there will be at least one more commencement order after this, and it will ensure that any transitional adaptations included in the draft order now before the House will cease to have effect at the appropriate time. The noble Lord, Lord Hodgson, also mentioned the takeover bid documentation offence. During the passage of the Bill we listened carefully to the arguments on new takeover bid documentation offence. I wish to reassure the noble Lord about the impact of the new offence provision. Liability under the offence is incurred only where a person actively knew that the bid documentation did not meet the required standards or was reckless as to whether it did so and failed to take all reasonable steps to rectify the shortcoming. That seems to us a reasonable and proportionate test. We also introduced amendments designed to narrow and clarify the scope of the offence, but nevertheless continue to view the offence as an important part of our package to implement the EU takeovers directive. We are not aware of a comparable situation in other EU member states, but I will look into it further. If it is of interest to the noble Lord, I shall write to him on the matter. The noble Lord, Lord Razzall, mentioned the implementation timetable. All of the Act will be in place by October 2008, with many elements implemented earlier. Major parts of the Act will be commenced in October 2007 and April 2008. The Government have been guided by a desire to see the benefits for business introduced as quickly as possible and to observe common commencement dates. We are aware, however, that business needs time to prepare properly for the implementation of such a large and important Act, as I said earlier when referring to the point raised by the noble Lord, Lord Hodgson. We have had extensive discussions with a wide range of interested parties to make sure that we have a timetable that gives business certainty, time to prepare and, wherever possible, early savings and administrative benefits. The Government’s consultative document was published on 28 February. It sets out our proposed approach in areas where secondary legislation is necessary to implement the Companies Act 2006. It also considers the extent to which transitional provisions are needed to ensure that the Act operates in a reasonable way for existing companies. It deliberately seeks to focus the attention of consultees on areas where we are considering substantive change. The noble Lord, Lord Razzall, expressed his views on the clarity of Article 11, on limited-liability partnerships.