AS AN AMENDMENT TO COMMONS AMENDMENT NO. 24 (Hansard, 7 November 1989)

§ Lord Williams of Elvel
My Lords, 1 beg to move Amendment No. 24A. I gave notice to the noble Lord, Lord Trefgarne, that I was worried about this situation. In general, Amendment No. 24 is acceptable, but whereas Section 245 of the Companies Act gives directors of a company the ability to revise accounts or reports, they have no ability under that section to revise the summary financial statement. If they find it to be out of order, apparently they can do nothing. It has occurred to my advisers —and it seems to me to be a strong point —that the insertion of summary financial statements as being something which the directors could revise, if for some reason they find them out of order, would be sensible. For that reason I have put down the amendment.
It may be for the convenience of the House if I also speak to Amendments Nos. 24C and 24D, all in my name, which are purely consequential on Amendment No. 24A. I do not wish at this stage to 603 speak to Amendment No. 24B in the name of the noble Lord, Lord Lloyd of Kilgerran, because I wish to hear what he himself has to say before responding. I beg to move.

§ Lord Trefgarne
My Lords, I shall reply, if I may, to Amendments Nos. 24A, 24C and 24D, but specifically at this point to Amendment No. 24A. These amendments would extend the provisions of the voluntary revision of accounts, as the noble Lord has explained, to summary financial statements. I shall explain why I believe that the change would lead to no improvement at all in the Bill.
As I explained in moving Amendment No. 24, the reason for providing for the voluntary revision of the full accounts and the directors' report in the statute is to enable such documents to be filed at Companies House as statutory accounts and to require such filing, to correct the public record. Without such a provision, the revised accounts would be left in limbo since it would not be possible for the registrar lawfully to substitute them for the accounts which have already been filed.
Summary financial statements are different in that they are not required by law to be sent to the registrar of companies. They are sent to those members who do not wish to receive the full accounts. The full accounts are still filed. There is nothing in the Bill which would prevent the directors of a company from revising and reissuing summary financial statements where, for example, they are concerned lest they are defective. They would of course have committed an offence by preparing defective summary statements in the first place.
These amendments are therefore not necessary to enable the provisions on summary financial statements to work properly. I hope that the noble Lord will, on reflection, agree with that. In essence that is the difficulty I see with the noble Lord's amendments, and I therefore hope that he will not press them.

§ Lord Williams of Elvel
My Lords, I am disappointed with the noble Lord's reply. Although summary financial statements do not have to be filed, and I understand that, nevertheless they will be sent out to many thousands of shareholders. Again, those shareholders may fail to opt for the full report and accounts. It should be brought to the attention of directors of the company that they may have the facility under the present legislation to change the summary financial accounts as they see fit.
However, if they see that the annual accounts of the company or the directors' report are defective in the Companies House filing sense of the term, they ought to change the summary financial accounts if they are inconsistent. I think that the amendment is needed to draw people's attention to the fact that shareholders will rely on information. It may not be wholly conclusive in making sure that the directors 604 do it, but it will certainly draw their attention to the matter if that happens.

§ Lord Trefgarne
My Lords, I was not proposing to intervene again but I hope that I have your Lordships' permission to do so, if I need it. The point is that if directors have to prepare new full accounts and to file them with the registrar, then it stands to reason that if a change is needed in the summary statement, they should make that change.

§ Lord Williams of Elvel
My Lords, with the leave of the House, is the noble Lord telling me that directors are obliged to change the summary financial statement, if they have to prepare new accounts for the registrar?

§ Lord Trefgarne
My Lords, again with the permission of the House, presumably in the circumstances which the noble Lord envisages, the summary financial statement would, by virtue of the new accounts, become inconsistent with the new accounts, and therefore the directors would wish to prepare a new one.

§ Lord Williams of Elvel
My Lords, again with the leave of the House—I apologise if there is a procedural problem but these are very important matters—the accounts may not be inconsistent. There may be defects in the annual report and accounts which are defects so far as the law is concerned, but they do not make the annual report and accounts inconsistent with the summary financial statement. That is the burden of my last amendment. They could be perfectly consistent but they may contain some mistakes which the directors might like to correct in the summary financial statement and which were not previously included, and therefore it was a defect in the report and accounts. I commend the amendment to your Lordships.

DIVISION NO. 2
CONTENTS
Airedale, L.	Hutchinson of Lullington, L.
Amherst, E.	Irving of Dartford, L.
Ardwick, L.	Jay, L.
Aylestone, L.	Jeger, B.
Broadbridge, L.	Jenkins of Hillhead, L.
Callaghan of Cardiff, L.	Jenkins of Putney, L.
Carmichael of Kelvingrove, L.	Kennet, L.
	Kilbracken, L.
Cledwyn of Penrhos, L.	Kirkhill, L.
Cocks of Hartcliffe, L.	Listowel, E.
Dean of Beswick, L.	Llewelyn-Davies of Hastoe, B.
Dormand of Easington, L.
Falkender, B.	Lloyd of Kilgerran, L.
Gallacher, L. [Teller.]	Lovell-Davis, L.
Galpern, L.	McIntosh of Haringey, L.
Glenamara, L.	Mackie of Benshie, L.
Grey, E.	Monson, L.
Hampton, L.	Nicol, B.
Hatch of Lusby, L.	Northfield, L.
Hirshfield, L.	Ogmore, L.
Houghton of Sowerby, L.	Oram, L.

Peston, L.	Taylor of Gryfe, L.
Ponsonby of Shulbrede, L. [Teller.]	Turner of Camden, B.
	Underhill, L.
Prys-Davies, L.	Wallace of Coslany, L.
Rea, L.	Walston, L.
Rochester, L.	Wedderburn of Charlton, L
Seear, B.	Whaddon, L.
Serota, B.	White, B.
Shackleton, L.	Williams of Elvel, L.
Shepherd, L.	Willis, L.
Stoddart of Swindon, L.	Winstanley, L.
Strabolgi, L.

NOT-CONTENTS
Allenby of Megiddo, V.	Johnston of Rockport, L.
Alport, L.	Joseph, L.
Arran, E.	Kenilworth, L.
Ashbourne, L.	Killearn, L.
Astor, V.	Kimball, L.
Barber, L.	Kimberley, E.
Belstead, L.	Knutsford, V.
Blake, L.	Lindsey and Abingdon, E.
Blyth, L.	Liverpool, E.
Borthwick, L.	Long, V. [Teller.]
Boyd-Carpenter, L.	Lonsdale, E.
Brabazon of Tara, L.	Lucas of Chilworth, L.
Brookeborough, V.	Lyell, L.
Brougham and Vaux, L.	McColl of Dulwich, L.
Bruce-Gardyne, L.	Mackay of Clashfern, L.
Butterworth, L.	Macleod of Borve, B.
Caithness, E.	Mancroft, L.
Campbell of Alloway, L.	Margadale, L.
Campbell of Croy, L.	Marley, L.
Carnegy of Lour, B.	Merrivale, L.
Carnock, L.	Mersey, V.
Chelmer, L.	Morris, L.
Coleraine, L.	Mottistone, L.
Colnbrook, L.	Munster, E.
Colville of Culross, V.	Murton of Lindisfarne, L.
Colwyn, L.	Nelson, E.
Constantine of Stanmore, L.	Oppenheim-Barnes, B.
Cork and Orrery, E.	Orkney, E.
Crathorne, L.	Oxfuird, V.
Crawshaw, L.	Pender, L.
Crickhowell, L.	Peyton of Yeovil, L.
Davidson, V. [Teller.]	Rankeillour, L.
Denham, L.	Reay, L.
Dilhorne, V.	Redesdale, L.
Dundee, E.	Rees, L.
Eden of Winton, L.	Renton, L.
Elibank, L.	Rippon of Hexham, L.
Elles, B.	Rochdale, V.
Elliot of Harwood, B.	Rodney, L.
Elliott of Morpeth, L.	Rootes, L.
Elton, L.	Saltoun of Abernethy, Ly.
Faithfull, B.	Sanderson of Bowden, L.
Fanshawe of Richmond, L.	Shannon, E.
Fortescue, E.	Sharples, B.
Fraser of Carmyllie, L.	Shrewsbury, E.
Gardner of Parkes, B.	Skelmersdale, L.
Gibson-Watt, L.	Southborough, L.
Gisborough, L.	Stanley of Alderley, L.
Glenarthur, L.	Stockton, E.
Gormanston, V.	Stodart of Leaston, L.
Gray of Contin, L.	Strange, B.
Greenway, L.	Strathclyde, L.
Gridley, L.	Strathcona and Mount Royal, L.
Grimston of Westbury, L.
Haig, E.	Strathmore and Kinghorne, E.
Hailsham of Saint Marylebone, L.
	Suffield, L.
Halsbury, E.	Swinfen, L.
Hardinge of Penshurst, L.	Thomas of Gwydir, L.
Harlech, L.	Thomas of Swynnerton, L.
Harmar-Nicholls, L.	Torphichen, L.
Harvington, L.	Tranmire, L.
Henley, L.	Trefgarne, L.
Hives, L.	Ullswater, V.
Hooper, B.	Vaux of Harrowden, L.
Hylton-Foster, B.	Wedgwood, L.
Ingrow, L.	Westbury, L.

Whitelaw, V.	Wynford, L.
Willoughby de Broke, L.	Young, B.
Wise, L.