LORDS AMENDMENT TO COMMONS AMENDMENT No. 211 (Hansard, 27 March 1980)

§ Lord WEDDERBURN of CHARLTON
My Lords, I beg to move Amendment No. 211A to the Commons amendment. The object of the new section is to define the persons connected with directors, to stop up loopholes and prevent them from escaping from their obligations in what would be Part IV of the Bill. We have already come across the "connected person" in a large number of clauses that we have adopted this evening, among them Amendments Nos. 196 and 201: the director must or must not do certain things, and a connected person must not be the loophole, or way out.
The first obvious loophole is the family. Company law is now well adapted to using phrases to stop the family from being used as the method of evasion of a 1110 director's duties. It was done quite well in the 1967 Act for certain purposes, but the 1967 Act was rather different from this statute and does not have the equivalent of the Part IV obligations, as I have called them; that is, the clauses with which this has just dealt. Into the stopping up of loopholes, the obstacles to evasion, naturally come the spouse, child or stepchild in this clause. But then we find in subsection (2) that the evasion is stopped only if the child or stepchild is not over 18 years of age. This was criticised in another place on 4th December, especially in cols. 537 to 538 of the Official Report. The answer of the right honourable friend of the noble Lords, the Under-Secretary of State for Trade, was first of all that it was in the same form as in the 1978 Bill. That, as I explained to noble Ministers, does not deter me at all—nor indeed any of my noble friends—because we are always willing to improve on our own work. The Government should take a lesson from that. That is no deterrent.
Secondly, the Under-Secretary of State for Trade, Mr. Eyre, said this: I am advised that the connection is only a matter of the nuclear family. Once the children are over 18 in law they are no longer dependent". Later he said: The child over 18 has reached maturity". But it was put to him that this part of the Bill was not to protect the child. It was to protect the company, the shareholders, the employees, the creditors and the public. The last person it is there to protect is the child. It may be even to protect the director against his sinful wishes to evade his obligations, but certainly not to protect the child, except I suppose, from exploitation by the father when it is under the age of 18. If the object is to stop up a loophole, why should the protection be afforded only when the child is under 18? Why should it not be afforded merely because the director has found in his family a child of 19 who might be able to make rather more sympathetic suggestions about loopholes and evasions to his father than a child of six? Why should an evasion by a child of 21 be all right when an evasion by someone between the age of nought and 18 is all wrong?
It seems that it is impossible for the Government to accept anything tonight, but the Minister in another place made 1111 noises of the kind that indicated he might be prepared to consider this matter. I hope that noble Ministers tonight will answer the question. Are they refusing this amendment because it is wrong and there is a good reason why a loophole through someone of nought to 18 is not all right, but after 18 it is all right, or are they refusing it simply because they cannot amend the Bill because it will hold up the Government's timetable?

§ Viscount TRENCHARD
My Lords, the straight answer to the noble Lord is that all the reasons given in the other place have a bearing, but particularly that a child over 18, certainly in the experience of Members on this Front Bench, is fully independent, has no more dependency or connection or likely connection or likelihood to do wrong with his father than almost any other acquaintance. As we know, in the whole of this area of the Bill we have a problem against the determined criminal acting in a collusive way. But I believe it is quite unfair to single out an adult child who in many cases will have left his family home, and I cannot see there is any more likelihood of problems from a grown-up child than from any other person.

§ Lord WEDDERBURN of CHARLTON
My Lords, the answer to my question is really that the Government will not accept any amendments, and I say that with respect to the noble Viscount. He says it is unfair to single out the grownup child who has left home. The Bill says nothing about him leaving home. Children over 18 are fully independent and the likelihood to do wrong is less. Is that so? I know some people over 18 who are crooks and would do wrong at the drop of a hat, much sooner than children under 18. Children over 18 are fully independent, the noble Viscount says, but the spouse is in the clause. The loophole via the wife or husband is blocked up, whatever the age. Why do the Government not restrict the loophole relating to wives under 18? Or have they not heard of women's lib? Wives over 18 can be very independent, more independent than a son or daughter of 19 living at home, who has perhaps never left home or who may not be well. The line taken by the Minister is quite astonishing. Given that the object of the Bill— 1112 and the noble Viscount did not challenge this—in this case is to protect the company, shareholders, employees, the public and creditors, and not to protect the director or the child, it is quite astonishing that the Government cannot accept an amendment which seems to have logic with it all the way. I beg leave to withdraw the amendment.

§ Lord WEDDERBURN of CHARLTON
My Lords, I beg to move these amendments formally, simply to get them on the record.

§ The DEPUTY SPEAKER (Viscount Simon)
I understand that Amendments Nos. 212 to 214 can be taken en bloc.

§ Viscount TRENCHARD
My Lords, I an not sure whether I can move those amendments en bloc because of an amendment to No. 213 down in the name of the noble Lord, Lord Lloyd of Kilgerran.

§ Lord LLOYD of KILGERRAN
There is a misprint in the list of amendments, my Lords, and it is not my fault.

§ Viscount TRENCHARD
I stand corrected, my Lords. I understood that the noble Lord had an amendment down to Amendment No. 213. That must have been withdrawn.