Dormant Bank and Building Society Accounts Bill [HL]

moved Amendment No. 25: 25: Schedule 1, page 15, line 7, leave out paragraph (b) The noble Baroness said: Amendment No. 25 seeks to delete paragraph 1(1)(b) of Schedule 1, which deals with some detailed provisions relating to the articles of association of a reclaim fund. Paragraph 1(1)(b) states that the articles must make provision, "““preventing the defraying of expenses that are unreasonable, or to the extent that they are unreasonable””." This is a probing amendment because I have absolutely no idea what that means. I do not think I have ever encountered such a provision in any of the articles of association of companies that I have come across. I am aware that the reclaim fund is an invented body for the purposes of the Bill, but the Government have decided to use a Companies Act company as the vehicle and I assume that they have some precedent in mind on which they have based this extraordinary provision. Can the Minister explain how ““reasonable”” is to be determined? Is it reasonable as to the type or the quantum of expenditure, or is it both? Is this an objective or subjective test based on what the directors actually think or what an objective set of directors might think? Is the reasonableness to be judged by the board of directors of the reclaim fund? If so, they are the people incurring the expenditure so they would be judge and jury. We also have to come back to what is the Treasury’s role. Will it get involved in judgments? The Minister said in an earlier amendment that the Treasury would be getting involved in judgments about reasonableness of expenditure because that was one of the reasons that the Minster gave for the Clause 5 direction power. One might think that reasonableness ought to be judged only by the shareholders; that is what companies are really about. But that depends on an active shareholder group. I am still very unclear. The noble Lord, Lord Newby, asked some questions about this company earlier in relation to the Government’s arrangements. In the context of this amendment, can the Minister explain a little more about the company? Is it a limited or non-limited company? If it is limited, is that by shares or guarantee? Can he say who precisely the shareholders will be? Will they also be directors, which is often the case for companies limited by guarantee? That is important information if we are trying to establish what paragraph 1(1)(b) is about and whether it is workable in reaching judgments on reasonableness. Will the Minister also say what happens if the reclaim fund incurs or defrays—I should use the rather Victorian language parliamentary draftsmen have chosen for the Bill—expenses that with the benefit of hindsight are shown to be unreasonable? Presumably that would be some other person’s judgment at a later stage. Does that make the expenditure ultra vires? If so, what are the consequences? Does the reclaim fund have to sue the directors? I hope that the Minister gets a flavour of my concerns about this paragraph, and that he can explain a little more what is meant by it. I beg to move.