§ 5.10 p.m.
§ Baroness Denton of Wakefield rose to move, That the draft regulations laid before the House on 11th June be approved [3rd Report from the Joint Committee.]
§ The noble Baroness said: My Lords, the purpose of the regulations is to implement the 12-company law directive adopted on 21st December 1989. That directive provides that member states must allow the formation of a private limited company having one member or shareholder and must permit a company to be a single member company when all its shares come to be held by one person. At present the Companies Act 1985 requires that a company formed in Great Britain must have at least two members.
§ The regulations expressly authorise the formation and continuation of single member companies. The Government believe in removing unnecessary restrictions on companies. The requirement for a second shareholder is not a barrier to incorporation. Company founders have generally been able to find a second subscriber to play a nominal role in order to comply with the law. But it is a restriction that produces no benefit. It can be wasteful and troublesome both for the sole trader and the larger company. The regulations remedy that situation by removing the need for private limited companies to have a second shareholder. I hope that the House will feel able to approve the regulations. I beg to move.
§ Moved, That the draft regulations laid before the House on 11th June be approved [3rd Report from the Joint Committee].—(Baroness Denton of Wakefield.)
§ On Question, Motion agreed to.