Companies Bill [H.L.] (Hansard, 20 November 1984)

§ The Lord Chancellor
My Lords, I rise to move that the Companies Bill be now read a second time, but if I may I will speak to all four of the connected measures for which I bear responsibility and move the other 494 three formally, and the Motion relating to them thereafter.
The company law of Great Britain rests essentially on the Companies Act 1948. That Act was itself a consolidation. It remained largely unamended for almost 20 years and is still the principal Act. But since 1948 there have been five major company law statutes—in 1967, in 1976, in 1980 and 1981—together with a Scottish Act of 1972. Other primary legislation has affected company law, notably the European Communities Act 1972. There has also been a considerable volume of subordinate legislation.
In the result the relevant law has become more and more complicated. There is need for another consolidation to pull things together and restate the law in a more convenient form. That is what the four Bills before the House are designed to achieve.
There are three features of this consolidation to which I would briefly draw the attention of the House. The first is the sheer scale of the exercise. I have not weighed the main Companies Bill. But those who have looked through it will know that it runs to some 600 pages and to 747 clauses and 24 schedules. The three satellite Bills taken together represent another 68 pages and 62 clauses. This is a massive piece of work, and therefore I must give high praise to the work of the distinguished and retired parliamentary draftsman who has laboured long and hard in the preparation of these Bills.
The second feature is the structure of the consolidation. The Business Names Bill and the Company Securities (Insider Dealing) Bill deal with matters essentially outside the mainstream of company law and stand firmly, as it were, on their own feet. The Consequential Provisions Bill deals with a number of transitional and technical matters—for instance, old public companies, continuity of law and consequential amendment to other legislation. These are essentially of secondary importance and are more conveniently contained in a separate Bill. Everything else is contained in the main Bill. In 1981 and 1983 views were invited on the possibility of splitting the whole consolidation into 10 separate Bills, each dealing with a separate topic, and limiting the central Bill to matters affecting the formation, capital, administration and investigation of companies. Consultation, however, showed opinion to be overwhelmingly in favour of a single statute based on the classical model of the 1948 Act. The structure of the consolidation thus directly reflects the wishes of potential users.
The third feature, which is unique to this consolidation, is that the Bill incorporates the amendments to existing Acts made earlier this year in two separate Orders in Council. These were recommended by the two Law Commissions. Their object is to remove inconsistencies and anachronisms so as, and now I quote: to enable a satisfactory consolidation of the whole or the greater part of the Companies Acts to be produced", to use the phrase also used in Section 116 of the 1981 Act under which they were made. In all there are some 69 amendments. The main Bill is undeniably better as a result.
I fear that this consolidation will nowhere near emulate the record of the 1948 Act in remaining 495 unamended for 19 years. The pace of change is now too fast for that and the House is aware that there are already major reforms in contemplation, notably in insolvency and in financial services. But this consolidation is justified on its own merits and independently. It will make a major contribution to the clarification and accessibility of company law and will be of immediate benefit to the business community. It is on that basis that I commend the Bills to the House.
Finally, the House will note that unusually there is a special Motion on the Order Paper relating to this consolidation. This is because the Companies Consolidation (Consequential Provisions) Bill is not in the strict sense a Consolidation Bill, although it forms an essential part of the overall plan. Thus it can best be dealt with, along with the other Bills, by the Joint Committee, but to reach the Joint Committee the rules of the House require that the House must refer it to that committee specifically. The other Bills will, of course, go through to the Joint Committee in the ordinary course.
I beg to move that the first of the four Bills be now read a second time.

Lord Bruce of Donington
My Lords, we on this side of the House welcome in principle the decision to proceed to consolidation on the lines that the noble and learned Lord has indicated and we entirely approve of the separation of the Business Names Bill and the Company Securities (Insider Dealing) Bill, which, as the noble and learned Lord has said, stand on their own merits outside the main body of more generally applicable company law. I have only one question to ask the noble and learned Lord on this, and in part he has already answered it. This consolidation, of course, has been the product of what must be realised to be a monumental amount of work by those who have been involved in its detailed drafting, and we would wish to share the noble and learned Lord's sentiments of appreciation in regard to this very substantial operation that has taken place.
I pass therefore to the question of timing. I realise that this must be a matter on which some view has to be taken after consultation. It is quite clear that Part XX of the Bill will have to be amended very substantially due to the other legislation which will come before your Lordships' House on the whole question of insolvency; and there may indeed also be some European legislation that requires further amendment of the Companies Act. It therefore is for consideration, on the face of it, whether it might have been wiser to wait a little longer to have incorporated the insolvency provisions. I am well aware that professional views tend to regard the immediacy of consolidation as being of absolute importance, but if the noble and learned Lord could give in more detail his reasons for taking this course. I feel it might be of advantage to all concerned. We on this side of the House entirely support the Motion moved by the noble and learned Lord.

§ The Lord Chancellor
My Lords, I am very grateful indeed to the noble Lord, Lord Bruce of Donington, 496 for his general support and for joining with me in paying tribute to the extremely talented individual who made this extraordinary operation his own for year after year. The noble Lord was kind enough to give me a broad indication of what he was going to ask and I shall, therefore, elaborate a little on what I have already said.
The plain fact is that there is no ideal time for this consolidation. Company law is not static, and as I have said new legislation is already in the pipeline. The noble Lord has already referred to the Cork Committee legislation which is scheduled in the Queen's Speech and there will be a good deal more to follow. Over the next few years implementation of Community legislation will certainly require further changes in national law. But that said, I am quite sure that it is right to go ahead with this consolidation now; that is what I am told the business community wish, and I suggest that they are right. To pile new developments on top of the present proliferation of legislation would only make the present confusion over the true state of the law even worse. This is really an area where we must travel, hopefully, through stations rather than imagine that we are going to arrive at a final terminus. I could give the noble Lord some type of prospectus of the large number of legislative Acts which are likely to be in the pipeline, but perhaps that would take rather a long time. However, perhaps the House will take it from me that they are there and that it was a considered judgment, in the light of our knowledge of what was coming forward, to use this moment for this consolidation.

§ Lord Mishcon
My Lords, I rise for only a moment in order to say a few words so far as the professions are concerned. So far as the lawyers are concerned, they have greatly welcomed this consolidation measure and there is a feeling that, after all the work that has gone into it and after the length of time that has been taken, this is indeed the moment for consolidation in spite of the fact that there are other legislative matters pending.
I also rise because I believe that this is one of those occasions when the House would want to appreciate not only the worthy work of the draftsman, which all of us admire, but also the very hard work that is put in by the Joint Committee on Consolidation Bills which now has an item before it that will take many hours of very serious consideration. In that context, I wonder whether I might be allowed to say, as a humble member of that committee, how fortunate the House is and how fortunate, indeed, the country is, to have as worthy a chairman as we have in the noble and learned Lord, Lord Brightman.

§ The Lord Chancellor
My Lords, by leave of the House. I should like to thank the noble Lord, Lord Mishcon, and to associate myself with what he said, both about the committee in general and about the noble and learned Lord in particular.

Lord Morris
My Lords, in thanking the noble and learned Lord for moving his Motion, which I welcome most heartily, may I ask that we never ever have to wait another 35 years for further company law consolidation?

§ The Lord Chancellor
My Lords, again by leave of the House, I am afraid that I cannot answer for the next 35 years.