COMPANIES (NORTHERN IRELAND) ORDER 1978

HL Deb 06 July 1978 vol 394 cc1285-9

8.53 p.m.

Lord MELCHETT rose to move, That the draft Companies (Northern Ireland) Order 1978, laid before the House on 6th June, be approved. The noble Lord said: My Lords, this order follows the recommendations of a Northern Ireland Committee on Company Law which recommended that company law in Northern Ireland should be kept in line with the law in Great Britain, subject only to certain limited reservations.

This order, therefore, extends to Northern Ireland the company law provisions included in the Companies Acts of 1967 and 1976 and those parts of the Companies Act 1948 for which there were no corresponding provisions in the main Northern Ireland Companies Act of 1960. The order also re-enacts certain existing Northern Ireland company provisions, so that Northern Ireland company law can be consolidated in the Act of 1960 and in this order.

The order will provide the power to introduce the disclosure of the accounts of private companies by making these available for public inspection at the Companies Registry. This will of course, be in line with the provisions that have applied in England and Wales since 1967. The Government are aware of the concern felt by some involved in commerce and industry in Northern Ireland over disclosure of financial information. The Government have no wish to add to that concern, but we do believe that it is right to retain the provisions relating to publication in the order. However, we will defer a decision on implementation for private companies until disclosure of information about company accounts becomes a formal EEC requirement, or until it is felt that circumstances in Northern Ireland are right, which ever is the sooner. I believe that leaving the final decision on the timing of disclosure to be taken in the light of future circumstances is the most sensible approach.

My Lords, this new order will allow Northern Ireland to take on board the changes being brought about by our membership of the European Economic Community and the further developments in company law likely to take place in Great Britain. This revised body of company law will help lawyers, accountants and all those involved in business in both Northern Ireland and Great Britain, because in future they will be dealing with what will virtually be a common code of company law. My Lords, I beg to move.

Moved, That the draft Companies (Northern Ireland) Order 1978, laid before the House on 6th June, be approved.—(Lord Melchett.)

8.57 p.m.

Viscount LONG

My Lords, I am sure the whole House is very grateful to the noble Lord, Lord Melchett, for the information he has given us on this particular order. This order sets out to remove some of the differences which have existed between company law in Northern Ireland and in England and Wales. We have recently been changing some of the company laws in England and Wales, and it appeared to us all that some of the company laws in Northern Ireland would probably have to be brought up to England and Wales company standards, for simplicity's sake and for standardisation reasons. I believe this goes back to the Murray Report; I believe that is where it all stems from. I think, also, we must look at what is likely to happen; the new EEC requirements which we are still to receive will eventually have to be brought into force with this new companies order.

This order is, of course, of constitutional and of economic importance. The constitutional importance is because it brings the company law of Northern Ireland into virtual parity with that of Great Britain, and, economically, the provisions of this order should lead to a more efficient company structure in Northern Ireland. The argument that separate company laws should apply to Northern Ireland seems to me not to hold water; it seems to me that now is the time to bring them up to date with some of our own company laws, making it much easier for commerce and trade as a whole.

The noble Lord has very gallantly taken most of my notes in the latter part of his speech. I thought that one of the delicate areas with which we were dealing was the filing of accounts. It appeared to me that the accountants in Northern Ireland were very anxious that the Government should look again at this particular area. I am sure that we are all very grateful to the Government for refraining from going forward with this until they have looked into it further. There are in Northern Ireland some 10,000 companies on the register; of those companies at least 60 per cent. have capital of less than £20,000, and of those 93 per cent. have fewer than 50 employees. If the illegal organisations, as we call them, were to start looking into these accounts and starting trouble, then not only would it affect the companies but it would bring further unemployment to the province. I am glad to see that the noble Lord's Department are again looking at this. On behalf of my noble friends 1 welcome this order. I may say there are 137 pages of it and I have not read it all, and am not likely to. I am not likely to discuss it any further at this late hour, but from this side of the House we welcome it.

Lord HAMPTON

My Lords, I, too, should like to thank the noble Lord, Lord Melchett. We accept the good sense of this order which largely brings Northern Ireland company law into line with that in England and Wales. As has been said, the Murray Committee on Company Law, appointed by the Stormont Government in 1969, recommended in 1974 a general policy of parity with the English law. Therefore, there is no question of parity just for English satisfaction. On the other hand, and following the noble Viscount, Lord Long, I think that a case can be made out for the continuation of exempt private company status in the Province. I am very interested to hear the qualifying comments of the noble Lord, Lord Melchett. We support the order.

Viscount BROOKEBOROUGH

My Lords, I do not want to detain the House. However, this is a massive, very detailed order and in my view it should have been before the whole House because it is the type of order which the whole House would have dealt with most efficiently. We cannot begin to deal with it here, but there are some very important principles to be dealt with. I gave the noble Lord some previous warning of the type of matters that I wished to raise. It was unfortunate that in another place his colleague said that it had been suggested that the business community was 100 per cent. behind the order. My information is that that is not true and that the business community supports the Government very strongly in their determination not to enforce disclosure regulations at some date, but basically does not agree that the removal of that privilege of disclosure for private companies is right. It considers that the situation in Northern Ireland is such that the exempt private company should be maintained. I think that it would be unfortunate if that view should get about. I checked with the business community verbally this evening—that is, the CBI and the Chamber of Commerce—and it has not changed its view.

The situation in Northern Ireland is different for private companies, and small one-product private companies, from what it is in England. We trade in an area which is geographically limited by the sea. It is a small area and we cannot define the area of a private company—even a one-product private company—operating in Great Britain, as clearly as we can define it in Northern Ireland. We have companies operating from the South of Ireland which have virtually no disclosure requirements, or at least they can consolidate. We have companies operating from England which consolidate to such an extent that their accounts mean nothing as regards trading within Northern Ireland. From personal experience, I know of the case of a wholesaling firm which, if the company in Northern Ireland could have been forced to disclose, would have been taken over with the resultant loss of jobs.

There are certain businesses, for instance, insurance broking, which are privately-owned and which would be eminently easy for people to take over if their accounts had to be disclosed. Therefore, I should like to ask the Government whether they could go a little further and say that they will not force disclosure until after the EEC consolidation, and that they will not enforce it even with EEC consolidation if the security situation will not allow after that date. It is just possible that we might reach a stage six or 12 months before the EEC Regulations when the Government will say, "Right, we shall force disclosure". We would then have the EEC Regulations, and all the fashions appear to be running in favour of private companies. There would then be too many changes. Therefore, I ask the Government whether they would go that much further, or whether they would examine the matter to see if they could do so, and tell me how they will implement this. Will they bring it before the House as a further order or will it just be implemented?

Lord MELCHETT

My Lords, on that last point I shall have to take advice and maybe I could write to the noble Viscount and let him know.

Viscount BROOKEBOROUGH

My Lords, it is only that provision.

Lord MELCHETT

My Lords, I shall certainly write to the noble Viscount on the implementation of the disclosure provisions as they affect private companies. I do not think that I can go as far as the noble Viscount would like me to go. The Government's view is that many of the fears and worries which he has expressed are very much the same as those which were expressed before similar provisions were brought into effect in England and Wales, and the subsequent experience has proved them to be quite groundless. Nevertheless, as I made clear when introducing the order, we recognise the special circumstances in Northern Ireland, and we have therefore said that, while we shall take the power under this order, we shall not implement it until either the EEC requires us to do so—and in that case it will be an EEC requirement applying to the United Kingdom and the Republic of Ireland as well—or until it is accepted that the conditions in Northern Ireland are such that it will not cause any problems if that should happen sooner. As an optimist, I very much hope that it will. I hope that that goes far enough, if not entirely, to satisfy the noble Viscount that, at least, the Government have thought very carefully about this matter and have taken fully into account the concern that has been expressed. I am grateful for the welcome that the massive number of other Articles in the order has received from noble Lords opposite.

On Question, Motion agreed to.