COMMONS AMENDMENT (Hansard, 27 October 1981)

§ The Lord Advocate (Lord Mackay of Clashfern)

My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 1. It may be for your Lordships' convenience if we take, so far as possible, groups of amendments together which have the same subject matter and I would propose, along 932 with Amendment No. 1, to speak to Amendments Nos. 160, 161, 173, 210 and 239.

As a result of discussions in another place the Government have examined very carefully both the effectiveness of the powers to disqualify persons from the management of companies and the availability of information about a director's business career. Your Lordships will recall that Clause 63 already contains measures which will strengthen the existing provisions on disqualification. For example, the clause will enable an application for a disqualification order on grounds of a conviction for an indictable offence committed in connection with the management of a company or because of a history of default in making returns to the Registrar of Companies, to be made to a court of summary jurisdiction. This new procedure should avoid the present time-consuming and costly processes. While we are preparing to make a number of improvements to Clause 63 which we shall consider in due course, we also propose to make parallel improvements to Section 9 of the Insolvency Act 1976 as well as to require details of a director's past directorships to be available for public inspection.

Amendment No. 1 is a paving amendment for Amendments Nos. 161 and 210, the former of which will require companies to keep details of past directorships held by their directors in addition to the details of other current directorships which they are at present required to keep by virtue of Section 200 of the Companies Act 1948. The purpose of the clause is to enable interested parties—whether conducting business with a company or considering investment in it—to be able to ascertain details of the past record of any of its directors. Such details may be inspected either in the register of directors which the company is required to keep at its registered office or on the company's file which is help in Companies House. It will thus be possible in future to obtain a list of all companies of which a person had been a director in the past five years (other than its holding company or any wholly-owned subsidiary in the same group, and dormant companies) and then to inquire as to the success—or otherwise—of those companies.

We believe that this new facility to help creditors and potential creditors will assist them better to assess the trustworthiness of directors, but without involving the obvious disadvantage of calling for extra returns to the registrar as opposed to some expansion of existing returns. The beauty of the scheme is that the new requirement has been tailored to fit into the existing returns of directors which companies are already required to make to the registrar. Amendments Nos. 173, 210 and 239 are consequential upon this amendment.

I turn to Amendment No. 160, which was in fact brought forward by the Opposition in the other place and which the Government were happy to accept. This amendment will most usefully strengthen the provisions of Section 9 of the Insolvency Act 1976. That section enables a disqualification order to be made where, in circumstances where a director has been involved in at least two insolvencies within five years, the court considers that his conduct makes him unfit to be concerned in the management of a company. The improvements which will be made consist principally of an extension of the maximum period of dis- 933 qualification for such conduct to 15 years, and of a widening of the coverage of a disqualification order to include all the stages in the life of a company; namely, its promotion, formation, receivership and liquidation, as well as its management. These improvements, therefore, will bring the section into line with the improvements already being made, by means of Clause 63 of the Bill, to Section 188 of the Companies Act 1948. Therefore, I recommend them to the House. I beg to move.