HL Deb 02 December 1991 vol 533 cc77-8

7.25 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley) rose to move, That the draft order laid before the House on 22nd October be approved [1st Report from the Joint Committee].

The noble Lord said: My Lords, I beg to move that the Building Societies Act 1986 (Modifications) (No. 2) Order 1991 be approved. The purpose of the order is to amend the Building Societies Act 1986 in one respect to bring it into line with present company law.

Section 110 of the Building Societies Act makes void any provision in the rules of a building society or in any contract which exempts any director, other officer or auditor of a building society from liability to the society in respect of negligence and other defaults. It is very similar to Section 310 of the Companies Act 1985 but in present circumstances this can bear very heavily upon directors of building societies, as in the case of companies, and could well inhibit suitably qualified people from accepting appointment as building society directors.

The corresponding provision in the Companies Act 1985 was changed by the Companies Act 1989, Section 137, which permits companies to purchase and maintain insurance against the relevant liabilities for directors and auditors of companies and it was desired to make a similar change for building societies.

Section 104 of the Building Societies Act enables the Treasury by order to make modifications of certain provisions of the Act, called the relevant provisions, for the purpose of assimilating those provisions to corresponding provisions of the Companies Acts where those are modified by subsequent legislation. The relevant provisions, however, did not include Section 110 of the Building Societies Act, but that section has now been added to the relevant provisions in Section 104 by Section 211(1) of the Companies Act 1989, which has now been brought into force by the Companies Act 1989 (Commencement No. 12 and Transitional Provision) Order 1991. Accordingly the way is now clear, subject to approval of this Motion, for an order in the terms of the draft before the House to enable building societies to effect insurance to cover their directors against the heavy liabilities which they may incur by negligence or other forms of inadvertence in the same way as has been done for company directors. I commend the order to the House.

Moved, That the draft order laid before the House on 22nd October be approved. [1st Report from the Joint Committee] —(Lord Henley.)

Lord Graham of Edmonton

My Lords, my noble friend Lord Peston has spoken to me on the matter. Having studied the order with care, we on this side of the Chamber have no objection to it.

Lord Henley

My Lords, I am most grateful for the care which the noble Lords, Lord Graham and Lord Peston, have given to the order. I am glad that they welcome it. I commend it to the House.

On Question, Motion agreed to.

The Earl of Strathmore and Kinghorne

My Lords, I beg to move that the House do now adjourn during pleasure until eight o'clock.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.27 until 8 p.m.]