Corporate Insolvency and Governance Bill — House of Lords, 2020-06-16
Topic: Domestic Commerce
Robert Stevenson (Labour, Centre-left): We now come to a group of amendments that contain a large number of different issues and I will go through them relatively quickly. I hope that that is in order. Amendment 46 in my name goes back to the biggest concern raised with us by people submitting evidence and ideas for the Bill and how we might discuss it as we go through the various stages. In moving to make sure that directors of companies who might be approaching insolvency were not caught by fiduciary duties and attract a personal liability for any act or actions they might take, it was suggested that the Bill should contain a full list of all the existing powers to make sure that directors are not affected by these issues. They are to be found in Sections 171 to 177 of the Companies Act 2006, which specify penalties for not fulfilling the fiduciary duty. My question for the Minister when he comes to respond is: would it not make sense to include within the Bill the powers that will be relied on to ensure that directors are somehow not gaming the system by allowing companies that would otherwise have gone insolvent to carry on little longer for any purpose, whether good or bad? That is all I wish to say on Amendment 46 Amendment 75 takes us back to the wider context and in particular to the question of how we can help small businesses. The Bill does not specifically pick out any strands for SMEs, although it will be of use to them when it comes into force. But we felt that other things should perhaps be considered at the same time as part of the package. The main idea we came up with was about the prompt payment code, which is a voluntary arrangement under which payments from and to companies are organised, and the Small Business Commissioner, who has particular responsibilities in relation to making sure that the prompt payment code works properly. They could be brought up to a more important role, particularly by making the prompt payment code statutory and by giving real powers to the Small Business Commissioner—we would see a huge difference. Many people out there, including the Federation of Small Businesses, would support this and I know that in previous years the Small Business Commissioner has also supported it, so I would be interested to hear the Government’s response Amendments 78 and 79 deal with the wider issue of what to do should the Government have the capacity and interest—I hope they do—to think harder and wider about the whole question of insolvency. It is obvious from the discussions that we have had today and earlier at Second Reading—and no doubt we will return to them on Report—that a lot of work still needs to be done in relation to insolvency. The issues that we have discussed today will help, there is no doubt about that, but, as we discussed in earlier amendments, they have also raised the lid on some of the issues that need further attention Within the various things that we know the Government are thinking about, there is work to change the way in which the Financial Reporting Council works. The Secretary of State previously indicated there would be legislation on that, so the amendment suggests that a report should be considered within a reasonable timescale to bring forward issues such as minimum standards for the oversight of auditors and the question about what happens to the big four—although they are named in the amendment, I should make it clear that this is not an attempt to hybridise the Bill—to make sure that standards are properly monitored and that the information reports of audit committees within companies are made more widely available, and various other points listed in the amendment. These are all good and sensible proposals. If they do not fit within this Bill, I am looking to the Government to respond by explaining how they can be brought forward in the future In a further look, building on comments made by the noble Baroness, Lady Bowles, when she introduced an earlier amendment about the need to reform Companies House, there are other corporate governance issues that the Secretary of State has previously mentioned. Again, it would be interesting for the Minister to see whether they will look at relevant powers that would bear on insolvency but also have a wider bearing on corporate governance. I look forward to the Minister’s response and I beg to move.