HL Deb 19 July 1993 vol 548 cc581-3

6.41 p.m.

Viscount St. Davids rose to move, That the draft regulations laid before the House on 21st June be approved [35th Report from the Joint Committee].

The noble Viscount said: My Lords, the purpose of these regulations is to implement EC Directive No. 90/605/EEC which was adopted in 1990. The directive is described as one that amends the fourth company law directive on annual accounts and the seventh company law directive on consolidated accounts, as regards the scope of those directives.

Accounting requirements for companies in the European Community have been harmonised, principally through the fourth and seventh company law directives; but there was concern that companies in some member states were avoiding the disclosure requirements of those directives by conducting business through the equivalent of partnerships. The Council therefore adopted the partnerships directive to bring partnerships between limited companies, and unlimited companies owned by limited ones, within the scope of the accounting directives—that is to say, to require them to produce and publish accounts.

In Great Britain the directive, and thus these regulations, apply to partnerships, limited partnerships and unlimited companies where all the members having unlimited liability are limited companies. That means partnerships or unlimited companies whose membership is entirely made up by limited companies, and limited partnerships where all the general partners are limited companies. The regulations will not apply to most 'partnerships in Great Britain, such as those between accountants, solicitors and small traders, where one or more of the partners is an individual, not a company.

Partnerships between limited companies, or where the general partners are limited companies, are not thought to be particularly common in Great Britain. The department consulted business and others on the line to be taken in the negotiation of the directive. The conclusion of that consultation was that such partnerships were not being used as a vehicle to avoid disclosure. As that is the problem which the directive is seeking to address, the department negotiated sufficient options in the directive to ensure that existing practice in Great Britain could continue to be followed, as far as possible.

The Department of Trade and Industry also consulted on the method of implementation, and the approach taken in these regulations was welcomed by the organisations that responded. The department has estimated that the compliance costs will be low. To give companies and partnerships the maximum time to adapt to the requirements, the directive permits member states not to apply its provisions to financial years commencing before 1st January 1995. The regulations would take advantage of this. The regulations implement the directive in a most light-handed way. I beg to move.

Moved, That the draft regulations laid before the House on 21st June be approved [35th Report. from the Joint Committee].—(Viscount St. Davids.)

Lord Graham of Edmonton

My Lords, once again, in his absence, my noble friend Lord Peston has asked me to say that he has no objection to the passage of the regulations.

Lord Mackie of Benshie

My Lords, I should like the noble Viscount to repeat that persons who enter a partnership in which they have full liability (there is no limitation of liability) do not need to disclose their accounts.

Viscount St. Davids

My Lords, the regime which is pertinent to the normal running of partnership practice with doctors and accountants continues. The new regime is implemented only where the partners themselves are incorporated and have limited liability.

On Question, Motion agreed to.