HL Deb 13 November 1989 vol 512 cc1147-9

411 Schedule 8, page 200, line 7, at end insert 'of this Act'.

412 Page 200, line 27, at end, insert 'of this Act'.

5 p.m.

Lord Strathclyde

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 411 and 412 and I shall speak also to Amendments Nos. 427 to 429, 432 and 448. These are merely drafting amendments. I beg to move.

Moved, That the House do agree with the Commons in the said amendments. —(Lord Strathclyde.)

On Question, Motion agreed to.

COMMONS AMENDMENT

413 Page 201, line 46, leave out from beginning to end of line 6 on page 202 and insert — '4. —(1) The body must have rules to the effect that a person is not eligible for appointment as a company auditor unless —

  1. (a) in the case of an individual, he holds an appropriate qualification;
  2. (b) in the case of a firm —
    1. (i) the individuals responsible for company audit work on behalf of the firm hold an appropriate qualification, and
    2. (ii) the firm is controlled by qualified persons (see paragraph 5 below).
(2) This does not prevent the body from imposing more stringent requirements. (3) A firm which has ceased to comply with the conditions mentioned in sub-paragraph (1)(b) may be permitted to remain eligible for appointment as a company auditor for a period of not more than three months.'.

414 Page 202, leave out lines 7 to 13 and insert — '5. —(1) The following provisions explain what is meant in paragraph 4(1)(b)(ii) by a firm being "controlled by qualified persons". (2) For this purpose references to a person being qualified are, in relation to an individual, to his holding an appropriate qualification, and in relation to a firm, to its being eligible for appointment as a company auditor. (3) A firm shall be treated as controlled by qualified persons if, and only if —

  1. (a) a majority of the members of the firm are qualified persons, and
  2. (b) where the firm's affairs are managed by a board of directors, committee or other management body, a majority of the members of that body are qualified persons or, if the body consist of two persons only, that at least one of them is a qualified person.'.

415 Page 202, leave out lines 14 to 25 and insert — '(4) A majority of the members of a firm means —

  1. (a) where under the firm's constitution matters are decided upon by the exercise of voting rights, members 1148 holding a majority of the rights to vote on all, or substantially all, matters;
  2. (b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution.
(5) A majority of the members of the management body of a firm means —
  1. (a) where matters are decided at meetings of the management body by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters at such meetings.
  2. (b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its consititution.'.

416 Page 202, leave out lines 26 to 48 and insert — '(6) The provisions of paragraphs 5 to II of Schedule 10A to the Companies Act 1985 (rights to be taken into account and attribution of rights) apply for the purposes of this paragarph.'.

417 Page 203, line 2, leave out from first 'The' to 'that' and insert 'body must have adequate rules and practices designed to ensure'.

418 Page 203, line 19, leave out 'voting rights at any general meeting' and insert 'rights to vote on all, or substantially all, matters at general meetings'.

419 Page 203, line 23, leave out from 'have' to end of line and insert adequate rules and practices designed to ensure —'.

420 Page 203, line 28, leave out from 'have' to end of line and insert 'adequate rules and practices designed to ensure'.

Lord Trefgarne

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 413 to 420. In parenthesis, in answer to an earlier point, I am told that the bank accounts directive has recently been agreed and we have just finished consultation, which I hope meets the point put to me by the noble Lord.

The amendments have four main effects. First, a recognised supervisory body need only have rules to the effect that, in short, company auditors are controlled by qualified persons, rather than having to have rules and practices which secure that result. Similarly Amendments Nos. 417, 419 and 420 alter other relevant provisions in Schedule 8 so as to make it clear that a recognised supervisory body only has to have adequate rules and practices designed to ensure the desired objective, or has rules to a particular effect.

In making this change, the Members of another place had had regard to concerns expressed in this House by the noble Lord, Lord Benson, and the noble and learned Lord, Lord Roskill, who were concerned that, if taken too literally, the original requirement would prove an impossible hurdle, since no body could guarantee that its members will always obey the rules. Although it may be argued that, in context, the provisions did not demand this degree of perfection, the amendments will put the point beyond doubt.

Moved, That the House do agree with the Commons in the said amendments —(Lord Trefgarne.)

Lord Williams of Elvel

My Lords, I am grateful to the Government for attending to what the noble Lord, Lord Benson, and the noble and learned Lord, Lord Roskill, said, on this matter. I believe that they had a very fair point and I think it is right that the Government adjusted the text in another place.

Perhaps I may return to the comment made by the Minister on the previous amendment on the banking accounts directive. If that is now almost upon us, does that mean that we shall have a new Companies Bill as soon as the directive requires implementation, or would it not be better —and here I am arguing against myself—to have a clause allowing the Secretary of State to implement provisions of the directive by regulation?

On Question, Motion agreed to.