Company Law Reform Bill: Legislative Consent Memorandum
The minister will remain with us for the next three items. I remind members that it is now nearly 20 past 4 and we still have a fair amount to get through. I think that the evidence sessions merited the time that we awarded to them but hope that we can get through the rest of our business fairly quickly.
For this item of business, the minister has with him two new officials, Joyce Lugton, the property law team leader in the civil law division of the Justice Department and Laura Bailie, who is in the Development Department's charity law team.
Minister, do you want to say a word or two by way of introduction?
Yes. I will do so briefly because I am conscious of the pressure on the committee's time.
The Company Law Reform Bill was introduced into the House of Lords on 1 November 2005. The bill follows a full-scale review of company law by the Department of Trade and Industry. The bill seeks to ensure that British business operates within a legal and regulatory framework that promotes enterprise, growth, investment and employment.
The bill runs to almost 900 clauses and is predominantly concerned with matters that are outwith our legislative competence. However, there are five provisions in the bill that are subject to the consent of the Scottish Parliament, by virtue of the Sewel convention. That is because they apply to Scotland and are for devolved purposes or because they alter the executive competence of Scottish ministers.
These matters are minor and technical in nature and I do not think that they are about to cause controversy—but you never know. The five issues are, first, to confer a new power on the Lord Advocate that will enable him to issue guidance to regulatory enforcers in relation to the new offence of deliberately making a false audit report; secondly, to confer a new power on Scottish ministers to allow them to specify, by order in the Scottish Parliament, relevant companies that would be required to have their accounts audited by the Auditor General for Scotland. I asked for and have a list of those companies, if members want to see it.
The third issue is to extend to Scotland a new provision to regulate the trade names of sole traders, so that no rogue traders can interfere in that process up here and the Scottish public are as protected as their English counterparts. The fourth issue is to extend to Scotland the prohibition on charitable companies producing individual or group accounts in accordance with international accounting standards. The fifth issue is to ensure the application in Scotland of the simplified provisions exempting small charitable companies from having an audit and allowing them to have an accountant's report instead. From the perspective of the small charitable company, that is obviously an advantage. Laura Bailie can speak on that particular subject.
The point of the motion, therefore, is to deal with those five technical and relatively minor changes. I believe that they provide a good case for using a legislative consent motion in this instance.
Thank you, minister. It is fair to say that the Company Law Reform Bill is, in some ways, the sister bill to the Bankruptcy and Diligence etc (Scotland) Bill and that they are intended to complement each other. I draw members' attention to a couple of points in the briefing paper that was circulated. The first is that the Subordinate Legislation Committee considered the legislative consent memorandum on the Company Law Reform Bill on 7 February and reports that it is content with the proposed use of delegated powers.
We have five points to consider, which are highlighted in paragraph 7 of the briefing paper. We must consider the merits of the five relevant provisions in the bill that are identified by the Executive in the memorandum on the legislative consent motion, which is the new name for a Sewel motion. We must consider whether it is appropriate to use the Sewel convention for each of the five provisions and consider the points raised by the Subordinate Legislation Committee. We must also consider the wording of the draft legislative consent motion and agree whether to make a specific recommendation to the Scottish Parliament to give its consent to the United Kingdom Parliament, as set out in the draft legislative consent motion, to pass the bill.
I will take general comments from members, then go through the relevant parts if there is any dissent.
I do not dissent. I am content.
I do not dissent from the five points, but I want to raise an issue that pertains to the reserved nature of the bill, although I do not know whether it is relevant.
Tell us what it is and we will tell you whether it is relevant.
It is about the fact that the Westminster bill, which I obviously accept is a reserved issue, does not appear to place a duty on company directors to take account of the environmental and social implications of their businesses.
That is a reserved matter.
Well, can I put my question?
Sure.
Sustainable development is a core principle of the Executive's thinking, so I wonder what influence the Executive has on the bill. Do you have any influence at all in Westminster, minister?
I think that that should be the subject of a parliamentary question because this discussion is specifically about the five points that the minister listed. I must keep the discussion within the confines of those points.
I recognise that.
If no-one has any points, questions or comments to make on those five points, are members happy to accept the recommendation that the writing of the report—which will be circulated to the committee anyway—should be delegated to me and the clerk?
Members indicated agreement.