My Lords, as has already been said, Clause 7 substantially amends the provisions of Section 14 of the Defamation Act 1996 and, in particular, Schedule 1 to that Act. Subsection (7) of
Clause 7 deals with reports of proceedings at meetings of listed companies and stipulates that qualified privilege should attach to,
“A fair and accurate copy of, extract from or summary of any document circulated to members of a listed company”.
There are then listed three cases in which the privilege applies. The first is where the document is circulated with the authority of the board of directors, and the second case is where the document is circulated by the auditors of the company. So far, so good and so predictable. However, in relation to qualified privilege, Clause 7(7)(b) seeks to amend Schedule 1 to the 1996 Act by substituting sub-paragraph (3) of paragraph 13 as follows:
“A fair and accurate copy of, extract from or summary of any document circulated to members of a listed company which relates to the appointment, resignation, retirement or dismissal of directors of the company”.
My amendment seeks to add, “or its auditors”.
2.30 pm
The position of the auditors of listed companies in the present age could not be more important. A great deal of the disappointing events in the City and the financial world over the past few years has related to a want of probity, or at least of morality, as most would see it. The role of the auditors in policing the financial services legislation in the past, let alone in the future, could not be more vital. I do not think that is disputable in view of the fact that the documents circulated to members by the auditors of the company are expressly dealt with earlier in this proposed clause.
So, given the crucial importance of auditors and their high profile in the whole structure of a limited company in our law, it is vital that the qualified privilege attaches where the directors are dismissing the auditors of a listed company. That is a matter of the highest significance, not only to the members of the company but more generally to the proper regulation and probity of our largest companies. I feel, therefore, that the addition of auditors to this part of the clause is desirable from every point of view and is, indeed, essential. I beg to move.