§ 6.50 p.m.
§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(Lord Brown.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD STRANG in the Chair.]
§ Clause 1 agreed to.
§ Clause 2 [Abolition of status of "exempt private company"]:
§ On Question, Whether Clause 2 shall stand part of the Bill?
§ LORD DRUMALBYNI did not move Amendment No 1 and I should like to explain why. It is because, on consideration, it seemed clear to me that it would not fit in with the earlier part of Clause 2. If Section 129 of the Companies Act 1948 were to be repealed, reference in Section 190 to "exempt private companies" would be meaningless. Therefore there is no point in retaining Section 190. Moreover, it is the case that the Jenkins Committee, quoting the Cohen Committee, stated that there was very little support for the maintenance of the present exemptions in respect of auditors and directors. Those representations had been made to me, and in the circumstances I did not think it worth while to pursue my first Amendment. I have had the opportunity of discussing the point with the noble Lord opposite, and I am grateful to him for having given me that opportunity.
At the same time this is such an important clause that I think it would be impossible to let it go without some discussion. I am sorry not to see the noble Lord, Lord Goodman, in his place, because he made such a very stirring speech on it on Second Reading. Jenkins (I think it easier to refer to the Jenkins Committee throughout as "Jenkins") stated in their Report that disclosure for what are now exempt private companies was right in principle, and necessary to protect those who trade with or extend credit to limited companies. I would not quarrel with that; but, of course, Jenkins himself qualified it by saying 1525 that in respect of emoluments, in respect of turnover, there was good reason for exempting private companies—and, I think he added "rents" as well.
The question which I think we shall be considering at intervals throughout our discussions on this Bill is how far one ought to exempt private companies. The Bill places further liabilities for disclosure on companies as a whole, and it is doubtful whether we ought to extend the existing liabilities—which in any case would be extended to private companies under this particular clause—still further in the rest of the Bill. It is also open to doubt (the noble Lord, Lord Milne, made this point in the course of the Second Reading debate) how far one should press upon private companies the liability for the full disclosure that applies to public companies.
Perhaps it would he right at this stage for me to see whether I have correctly understood what is involved. Under Section 124 of the Companies Act, an annual return has to he filed by the companies having a share capital. Under Section 126 it has to be filed within 42 days of the annual general meeting. Under Section 127, a certified copy of the balance sheet, together with every document required by law to be attached to it, has to be annexed to the annual return, with a certified copy of the report of the auditors and a report of the directors. Section 129, which is to be repealed by Clause 2 of this Bill, exempts private companies complying with the conditions set out in that section from the requirements of Section 127.
Under Section 156 the documents required to be annexed to the balance sheet are the profit and loss account and the group accounts to which have to be attached the auditors' report; and, under Section 157, the directors' report, which must give the dividend recommended, and the amount proposed to be carried to reserves. The report must also deal with any change in the nature of the business of the company or its subsidiaries or in the classes of business in which the company has an interest.
so far as is material for the appreciation of the state of the company's affairs by its members and will not in the directors' opinion he harmful to the business of the company or of any of its subsidiaries".1526 These duties are to be considerably modified in the clauses as we come to them.In the case of a public company, in which any member of the public can take shares, it is clearly desirable not only that the accounts should be available to the public but that the directors' report also should be available. In the case of any private company whose articles prohibit the offer of any of its shares or debentures to the public, it is plain that if the principle enunciated by Jenkins is accepted the accounts should be available to the public as the price of limited liability. But it is by no means clear that the directors' report, designed as it is to enable the state of the company's affairs to be appreciated by the shareholders, should be so made available. This is a clear distinction between the accounts and the report.
I think it is right, when we are considering, as we are here, the principle of dispensing with the status of exempt private companies, that we should consider in principle whether the companies that have so far been exempt should have any alternative relief from the full necessity to disclosure. I thought that the point made by the noble Lord, Lord Milne, was a good one. I am sorry not to see him in his place; but, as he is not here, perhaps I might be allowed to say that he suggested to me—and the noble Lord is a chartered accountant—that one way out of it would be through the certificate of solvency procedure. If, for example, private companies were to be obliged to give a certificate of solvency within, say, six months of the end of their financial year, this would give exactly the satisfaction that creditors are required to have. And it is, of course, mainly in favour of creditors, that Jenkins made his recommendation. These are two separate forms of qualification which could be devised to the general principle that private companies should make disclosure in the same way as public companies. I feel that this is a very important step that is being taken—we are dealing with something like 300,000 private companies; I do not know how many of them are exempt—and we ought to discuss this matter before we dispose of this particular clause.
§ 6.59 p.m.
§ LORD CHORLEYThe noble Lord who has just resumed his seat has made a speech which he might have made appropriately at this point instead of in not moving his Amendment. He covered a good deal of ground and covered it very pertinently—I think there is a good deal in what he said. But if the Committee will allow me a few minutes I want to go even wider before we part with this clause. I should like to make some observations on the whole problem of exempt private companies and the problem of the private company itself. In fact, we are celebrating the obsequies of the exempt private company.
The death warrant was deplored by a number of speakers on Second Reading, notably by the noble Lord, Lord Goodman, in a powerful speech. I confess that I am rather surprised that no attempt has been made to stay this execution by the noble Lord or by some of the other noble Lords who took such a strong view in favour of the exempt private company. If I could have stayed, I should have liked to cross swords with the noble Lord, Lord Goodman, on Second Reading. Unforunately, as your Lordships will remember, there was a long list of speakers, and as I had an engagement which took me away it was not possible for me to discuss his valuable speech. I agree with a good deal of it, but not with the fundamental premise on which it was based. It is on this theme that I want to say a few words to your Lordships now.
I have always taken the view that the private company was a legislative mistake and a business mistake as well. It may well be thought that it is a waste of time for me to plunge a dagger into the expiring corpse of the exempt private company, but I hope that your Lordships will forgive me for making some observations of a general character because I have been a student of Company Law for a long time and it has always seemed to me that we made a mistake in 1907 when we brought the private company into existence by the Companies Act of that year. It was led up to by a most unfortunate decision in your Lordships' House—the famous case of Saloman, which I will not go into now, and which has always been a subject of controversy in the legal profession and more widely.
1528 It was suggested in the Second Reading debate that there is a basic difference between a great public company, such as I.C.I. with tens of thousands of shareholders, and the small family concern very often consisting of the manager and his wife. The public company provides an ingenious and exceedingly valuable method of obtaining the large amounts of capital which are needed in modern industry and commerce. But I can find no similar justification for the small private company which, having been granted the inestimable boon and privilege of limited liability, has become an umbrella under which the small capitalist can and does in many cases shelter himself from the obligation to pay his just debts to his creditors.
If a private trader continues his business when he knows perfectly well that he is insolvent he commits an offence under the Bankruptcy Act. But if he has thought of establishing a small private company, which he can perfectly well do, he escapes this sort of situation and may carry on what is little better than a fraudulent business. I have no doubt at all that the great majority of private companies are honourably carrying on their business and pay their debts, but a sizeable minority are really little more than vehicles of debt evasion. If your Lordships will bear with me a moment, it is interesting to see that of the compulsory winding-up petitions, which are now running at more than 10,000 per annum—in 1965 they numbered 12,062—the great majority are petitions by creditors, which means that the companies in question are not paying their debts. In 1965 some 36,000 companies were registered. Only a fraction of 1 per cent. are public companies, so the great mass of these are putting themselves into the position to use this method of evading the just payment of their debts.
This is only one aspect of it. As the noble and learned Lord on the Woolsack pointed out on Second Reading, the private company has been one of the main vehicles used by tax evaders over the years. There is no question about this. An enormous amount of Parliamentary time and draftsmen's skill has been put into attempts to prevent this, and no doubt to a substantial extent it has been prevented, but it is still the case that the private company can be, 1529 and is, used for the purpose of evading taxation.
Even worse, in my submission, is the fact that the private company can be, and very often is, used as an engine of oppression. It may seem strange to unknowledgeable people to be told that many widows have been caused great suffering, and even brought to something like penury, by the manipulation of these provisions in the law which restrict the transfer of shares of private companies. A shareholder dies with a large holding in a private company and leaves it to his widow. She may find it impossible to get a fair price for these shares because—and often they are members of her own family—thesurviving directors treat her in a disgraceful way and there is no satisfactory provision in the Companies Act for the protection of oppressed people in small private companies. The reports show case after case in which this provision has been used in this oppressive way.
The noble Lord, Lord Hawke, with whom I found myself much more in agreement than usual, in his excellent Second Reading speech two or three weeks ago, instanced another example of this, in which a wife who happened to have one more share than her husband was able to turn him out of the company—a thoroughly oppressive piece of work. If there were time, I could give more examples and expatiate on this point at great length.
I think that the old-fashioned partnership, under which after all the tremendous commercial and industrial prosperity of this country was built up in Victorian and earlier times, was an altogether fairer type of business organisation and much less unjust in its effects on business people. Unfortunately, this Bill does not abolish the private company, although the Jenkins Committee proposed in effect to do this and to have just one kind of company. This Bill leaves the 1907 Act extant and the restriction about transfer of shares can still be used. I do not think that the provisions about publication of accounts hits at the real mischief of the private company in any way. No doubt if you are going to have private companies there is a good deal in what Lord Goodman was saying, namely, that the proposals may make it more difficult to carry on a private company; 1530 for to treat a small private company as this Bill does—that is, to treat it from a number of points of view and from the point of view of accounting in particular, just as a large public company is treated—has obviously a great deal to be said against it.
What we really need as the noble Lord, Lord Hawke, indicated in his speech, is some new type of organisation for a small business. I agree with what the noble Lord said or what his friend the Chancery barrister said. He thought it was fundamentally wrong to treat private companies in exactly the same way as public companies, and he said that this has been recognised in some Continental countries which had separate codes according to the type of company that was being set up. He was absolutely right about this. One of the most serious omissions in the Jenkins Report is that it shies off this important problem altogether. This is really one of the most extraordinary things about the Jenkins Report.
Professor Gower who was a member of the Jenkins Committee and whose book on Modern Company Law is a work of outstanding importance was invited some years ago by the Ghanaian Government to draft company legislation for that country. In doing so he took this very point and drafted a separate code for what he called the Incorporated Private Partnership in which he made separate provision for this type of business organisation. Indeed this is a legislative point into which we in this country might go with great advantage. It is interesting to notice that while Professor Gower's work in this way has been pretty well ignored in this country, not only by the Jenkins Committee of which he was a member, on the other hand, a great deal of attention has been paid to it in some other countries, notably Israel. This, as I say, is most interesting, and also disappointing.
As many of your Lordships will know, Professor Gower is now a member of the Law Commission. I am sorry that the noble and learned Lord the Lord Chancellor is not with us, because I should respectfully like to suggest to him that in co-operation with his colleague at the Board of Trade he should remit this problem of the proper structure of a new type of organisation for the small 1531 business to the Law Commission, who obviously, while Professor Gower is a member, are particularly well placed for drawing up a useful report which could in due course be considered by Parliament, who, after all, must take the final responsibility for seeing to it that the type or organisational structure which our business requires is provided for the business world.
It really is quite ridiculous that we should go on trying to mould these rather outworn types of organisations—organisations devised for a very different situation from that which exists now in the late twentieth century, and devised for the purpose of dealing with the sort of business requirements which existed in the nineteenth century—to meet the requirements of the modern world. I hope your Lordships will agree that this is a matter of great importance and that it is perhaps legitimate for one to stray a little away from the exact terms of Clause 2 in order to bring this matter to the attention not only of your Lordships but, I hope, of a rather wider public.
§ 7.16 p.m.
LORD COHENI hope I shall be forgiven if I follow to some extent the probably improper course that was followed by the last speaker—namely, to make a Second Reading speech on this Committee stage. However, I think I can justify myself in view of what the noble Lord, Lord Drumalbyn, said. I feel I have some justification in intervening, as the exempt private company owes its origin to the Report of the Committee over which I presided in 1945. I am quite unrepentant for having signed that Report. We expressed our opinion then as to the validity of the principle of the fullest information practicable about the affairs of companies being available to the shareholders and the public, and we recommended considerable extension in the information previously given in accounts. But we recommended an exception in the case of the exempt private company, because we had a good deal of evidence as to the advantage the filing of full information might give to the large concerns vis-à-vis the small concerns. And similar evidence appears to have been given before the Jenkins Committee.
1532 If your Lordships look at Paragraph 61 of the Report, you will see that they state in the first two sentences:
We appreciate the argument that the filing of accounts may cause embarrassment or inconvenience to some exempt private companies, though the fears which have been expressed to us on this score are, we believe, exaggerated (like the fears expressed to previous Company Law Committees about the effect of the publication of full accounts by public and, later, by non-exempt private companies). We think that in general such disadvantage as there may he should he accepted, because disclosure is right in principle and necessary to protect those who trade with and extend credit to limited companies.With that, if I may say so, I respectfully agree. But they went on to suggest that certain concessions might be made to the exempt private companies, because they did not think that that kind of information—though very important that it should be known to the shareholders and prospective shareholders—was of great importance to the creditors, who were concerned with the net figure; and they suggested that directors' emoluments, company turnover and rents should not be required to be disclosed in the file accounts of companies whose securities had not been quoted or offered to the public, but that this information should be given in the accounts of such companies circularising members and debenture holders.What I should have said, if I had spoken on Second Reading, would have been that I regretted that this exception did not seem to be covered by the draft Bill. Amendments are proposed, such as Amendment No. 8 (I do not know whether the noble Lord, Lord Drumalbyn, will move it when the time comes), and I will not inflict myself upon your Lordships again if and when we come to those Amendments, which go a long way and even further than suggested by the Jenkins Report, because they suggest that private companies whose shares and debentures are not quoted on the Stock Exchange, to put it shortly, should be exempted from disclosing certain pieces of information as to emoluments and the like in the accounts which they file, though I think they should be bound to disclose that information to their shareholders. If I may say so with respect, I would approve the principle of the Bill—namely, that in the case of private companies the wide exemptions should be very much reduced. I hope that the 1533 noble Lord who presents this Bill will consider before the Report stage whether something cannot be done to give effect to the concluding sentence of paragraph 61 of the Jenkins Report which I have read to your Lordships. I will not inflict myself any longer on your Lordships, except to say, with respect, that I agree with the course the noble Lord, Lord Drumalbyn, adopted in not moving his first Amendment.
§ 7.21 p.m.
LORD HAWKEI thank the noble Lord, Lord Chorley, for his kind references to my remarks on Second Reading, which I am sure will be read with gratitude by the eminent Chancery lawyer who inspired them. As the noble Lord well knows, they were not strictly invented by me. In my 25 years in your Lordships' House I have noticed that Governments of all complexions are apt to quote Royal Commissions as Holy Writ, but I have come to the conclusion that if they do that, they should at the same time say why they have not carried out all the recommendations of Royal Commissions. One cannot have one's cake and eat it. Either Royal Commissions are not Holy Writ or else they are, and you must carry out all their recommendations.
As the noble Lord, Lord Chorley, said, the burden of my Second Reading speech was that a new animal should be invented, a sort of incorporated partnership. That, of course, would come forward at a time when the Government were producing fresh thoughts on Company Law in general. But if we are to amend this Bill in any way, this would be going part of the way towards that. So I should like to hear from the noble Lord in charge of the Bill whether the Government's predilection is towards new thought for the next legislation, or some amendment of this Bill.
I quite agree with the noble and learned Lord, Lord Cohen, with his vast experience, that to put all these burdens on the small private company will produce an intolerable degree of bureaucracy in the shape of filing accounts, and so on. Though the noble Lord, Lord Chorley, deployed a certain number of reasons why the exempt private company should be reformed, what they boiled down to was that there was a very small proportion 1534 of people who went bankrupt in running these companies. The noble Lord rather hinted that they went bankrupt on purpose. I prefer to think that in the vast majority of cases they went bankrupt because they found the pace a bit too hot for them and were not able to make a profit. Quite frankly, his complaints about tax evasion, oppression and bankruptcy—
§ LORD CHORLEYMay I interrupt the noble Lord? You cannot go bankrupt if you are running a company—that is the whole point of it. If you are a private trader, your goods and chattels are made available for your creditors, but not if you are running a business through a private company.
LORD HAWKEI think perhaps I expressed myself badly. The noble Lord was talking about windings-up and so on. He hinted that in general these seemed to be the result of deliberate evasion of creditors. In the majority of cases the people concerned are not clever enough to make a profit out of running their business. The fact that they will have to file accounts, et cetera, I do not think will be of the slightest assistance to the widows who would be oppressed, or the Inland Revenue who have their tax evaded, or the creditors who will find companies going bankrupt on them. Therefore, I think it is a great pity that the Government have partially accepted the recommendations of this Committee.
§ VISCOUNT ECCLESI wish to intervene only briefly. I find the exempt private companies a most difficult question. If one looks at it—and I hope perhaps I may declare my interest from the point of view of a large firm; in this particular case Courtaulds is my firm—one sees there are two conflicting considerations. First of all, of course, it is absolutely true that it is very difficult to find out whether certain exempt private companies are creditworthy or not. If they are asked for their accounts—it is generally said that the bank manager does that sort of thing—in many instances their accounts are not worth the paper they are written on; they are not even audited. For a business that has a vast number of small accounts it is sometimes very difficult. Therefore, from the point of view of collecting debts and 1535 having a proper means of discovering the credit-worthiness of customers, what the Bill does is a good thing. On the other hand, there is no doubt that if the small individual company were compelled to give away all the information which it is asked to give away under this Bill the large company would be in a much stronger position. I think I ought to say that, knowing exactly how this would work.
Suppose, for the sake of argument, a large company has a number of shops in different towns. Under this Bill the individual turnover of those shops will not have to be given. It will be aggregated in the turnover of the group as a whole. But the small man in a shop alongside, whose turnover one would very much like to know—and, of course, one does not know it now—will have to give that information, and it will be of advantage to the big man.
I wonder whether the Government cannot find some way in which quite rightly to make the exempt private company that is enjoying the benefits of limited liability really pay for those benefits in telling us whether it is creditworthy or not, but at the same time so that that small man is not put in a weaker position than he is already vis-à-vis the big industrial or commercial group. There ought to be some way in which we could find a compromise between the two. I do not want to win all along the line, nor do I want the private company to continue fraudulently getting credit.
§ THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN)I am grateful to the noble Lord, Lord Drumalbyn, for not moving his Amendment, because I think it has given us a little more time for a broad discussion on Clause 2. I am unfamiliar with this process, and it struck me that it was very like a Second Reading debate. But I think perhaps that is justified because, as the noble Lord, Lord Chorley, suggested, Clause 2 brings about the demise of the exempt private company; and in so far as it does that it sets a sort of climate for the rest of the Bill. As such it is a very important clause indeed.
Perhaps it would be as well to make quite clear precisely what withdrawal of the exemption privilege is going to mean. I will make the points quite quickly. It 1536 means that companies will lose the exemption to file accounts; or, to put it positively, which I think would be better, exempt private companies will find themselves in a position where they will be required to file accounts with the Registrar of Companies for public inspection. They will be required to have qualified auditors and independent auditors. They will be unable to lend money to their directors. There is one other matter, concerning Northern Ireland, which I do not think is particularly important.
When we look at these four points as requirements to which they will now have to submit I think it is possible to overestimate the burden of these points. If one were to say to people from many other countries, "We are going to take the tremendous step of making all our limited liability companies fall in line on these points", I think some of them would say, "We are surprised to know that they have not always fallen in line in this particular way". Nevertheless, it is an important step, and it is reasonable for the question to be put as to why it was not considered possible to produce another type of institution more suitable for the smaller companies.
The noble Lord, Lord Cohen, has himself asked this question, and with great respect I would quote back from the Cohen Report itself, which tried to devise a definition for the purpose of exempting
what can roughly be called the small family business incorporated as a company".That Committee, however, were reluctantly driven to conclude that it was impracticable to define the companies which they had in mind by reference to the capital, the number of employees, the turnover, or even by a combination of these tests. We all know what happened: we ended up with the exempt private company defined in such a way that 70 per cent. of all limited companies become exempt private companies, and we know this means that the four points I have just made do not have to be met by something over 300,000 companies. I do not believe that any of us want to go on in that way.The noble Lord, Lord Chorley, has suggested that it would be a good thing if we could put to the Law Commission for the future the idea that something more suitable should be built if possible. 1537 We are faced, however, with the fact that we have to make some change to better the existing situation. In facing this change the Government have been presented with the problem that, in their submission, to attempt to draw further lines of demarcation is not possible within the terms of reference of the 1948 Act. It is too difficult; there are so many possibilities of loopholes, and we propose, therefore, to take the extremely bold step of moving gradually towards big changes. We are taking a big jump now by having one sort of limited liability company in the country. No doubt this will mean further work and difficulty for many small companies, but we shall come to some ideas for minor amelioration of these as we go through the Amendments, and I shall try to be as helpful as I can in endeavouring to meet some of the points raised.
There is no doubt we are adding this burden. On the other hand, let us make the point that there are many very small companies in this country (and this is in answer to the noble Viscount, Lord Eccles) which have miserable sets of accounts. In one sense, people tend to be rather proud of the fact that they can run a small business on a few scraps of paper. But when one looks at some of the shops in the less well built parts of some of our towns, and sees filthy windows with sleazy-looking goods flung into the windows—and some of these places really smell—one realises that they would be very much better off as a result of a good spring cleaning and a reasonable set of well-drawn-up accounts to show them just how stupid they are in the way they run their business. These people employ many thousands of employees, and I do not think we ought to lean over too far in our sympathy for the additional trouble to which the small companies are to be put. I have some sympathy for them; on the other hand, we should not go too far in extending our sympathy in this particular way.
I should have asked the noble Lord, Lord Hawke, a question when he was speaking, but I understood him to suggest that if a Royal Commission were set up to produce a report such as the Jenkins Report, the Government ought to accept either all its recommendations or none of them. Am I wrong in that interpretation?
LORD HAWKEThe noble Lord has slightly misheard me. My experience suggests that when a Government wish to take one recommendation and regard it as Holy Writ they ought to take the whole lot. Otherwise they can take a recommendation but they must not regard it as Holy Writ.
§ LORD BROWNI note the distinction, but I must be a little cautious as long as the noble Lord is in the House, from standing too firmly on a particular point made by the Jenkins Committee. We are faced with a practical difficulty of expediency; and I am not ashamed of expediency. The difficulty is that if in fact we had set to work to produce a Bill which covered practically all the Jenkins Report it would not be in this House this evening. It would be doubtful whether it would be in this House a year hence, because there are the considerations of finding Parliamentary time, and of drafting.
Already this Bill, which is deliberately a limited Bill in order that it may find its place in the Parliamentary timetable, has given rise to an enormous amount of work. There are 87 Clauses, and as a newcomer I am dismayed at the amount of comment which has to be made in order to get the position clear in the minds of myself and others on this side of the Committee. I have the greatest sympathy with those who have not had the advantage of these excellent notes. If we had taken all the Jenkins recommendations into account we should have had an enormously indigestible Bill.
I was asked whether I could give some idea of the sort of shape that the next Bill would take. I think that is asking a little too much. Many wide issues are being discussed concerned with the structure of relationships between shareholders, customers and employees inside companies, but I could not commit the Government in any way.
LORD HAWKEI think I was the one who asked the noble Lord that question and I do not think he has it quite right. He has since said that he is going to provide for some amelioration of the private company in this Bill, and I was wanting him to say whether that was his line or whether the Board of Trade would be thinking of the next legislation 1539 on the lines of producing legislation to provide a separate type of animal for the incorporated partnership.
§ LORD BROWNI note the point and I confess I simply do not know whether or not the next legislation will be able to produce the animal. It requires a great deal of thought.
I have tried to deal with as many points as possible raised in this debate on Clause 2 stand part. I think the salient features are the fact that we are taking this big step and are producing the one type of limited liability company. It is acknowledged to be a bold step and we know it will entail quite a bit of trouble for many companies, but we believe that the need for further information and greater protection of creditors, the need for efficiency and the difficulty of drawing lines, are such that in toto this big step is justified. As I say, we will attempt to introduce one or two ameliorations in response to Amendments put forward to various clauses. With that, I think I can close my remarks, and I hope I have answered some of the questions put.
§ LORD DRUMALBYNMay I make one or two observations? First of all, I would say thatI am very grateful, and I am sure all my noble friends are, for what the noble Lord has said. But I do not think, for my part, I can quite leave the matter there. The noble Lord has said that the Government have decided to take a bold step and equate the private and the public company, but he went on to say—and I think we were all glad to hear it; I am sure my noble friend Lord Eccles will be and I certainly agree with every word he said—that he would attempt to introduce one or two ameliorations, which, I take it, is one or two examples of relief for private companies, where he feels that is possible. As he knows, there are a good many Amendments down seeking to do that. My point in raising the matter at this time was simply to suggest that if we do that, we are dealing with the matter in a rather piecemeal way.
I revert to what I said before. I fully agree that all companies should have to 1540 provide accounts and that those accounts should be duly audited by independent auditors. I agree with the Jenkins recommendation about accounts. But the directors' report is not part of the accounts; it has merely to be attached to the accounts. There is a complete distinction. The suggestion I was throwing out to the Committee, and I was hoping the noble Lord would take up rather differently, was that it would be possible to deal with the whole of this question in one, if the unquoted companies were exempted from the necessity to attach the directors' report to the accounts filed with the Registrar. Of course, the directors' report would continue to be circulated to the shareholders. It seemed to me that this was one way in which this could be done. Then we should not have to go into the detail that we shall have to go into on each of these Amendments to particular clauses dealing with the directors' report, because it would not be filed with the Registrar. That would be one way of doing it. I hope that the noble Lord will at least consider it. It will not be difficult to put down an Amendment. We shall not arrive at it to-morrow, in any case, and it could be considered. It seemed to me, in considering this matter as a whole, the demise of the exempt private companies, that this was the opportunity to air the whole question.
I think this has been an extraordinarily useful debate. We had the intervention of the noble and learned Lord, Lord Cohen, and my noble friends Lord Eccles and Lord Hawke. I think we can now leave this clause, in the knowledge that the Committee, every single person who has spoken, has agreed with the broad principle that Jenkins enunciated: that the principle of disclosure as a whole should be accepted. But Jenkins suggested that certain exemptions should be retained, and in the rest of the Bill we shall be sticking closely to Jenkins and trying to work out means of ensuring that his recommendations are carried out.
§ Clause 2 agreed to.
§ THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION)I understand that the next Amendment is a very considerable one. In the circumstances I beg to move that the House do now resume.
§ Moved, That the House do now resume.—(Lord Champion.)
§ On Question, Motion agreed to, and House resumed accordingly.