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Company Law Reform Bill [HL]

moved Amendment No. 16:"Page 97, line 17, at end insert—" ““(   )   This section does not apply to a provision made by a company (““Company A””) in respect of a director of an associated company of Company A— (a)   if the associated company is a wholly owned subsidiary of Company A, or (b)   to the extent that the associated company is acting or, otherwise than in bad faith, purporting to act as a trustee of an occupational pension scheme.”” The noble Lord said: My Lords, this amendment brings back an issue which we discussed, on which the Government indicated that further consultation would be required. It stems from concerns of the Confederation of British Industry and others. The amendment was previously tabled in Grand Committee, and seeks to meet concerns that the Bill goes too far in preventing parent companies indemnifying directors of their subsidiary companies and, in particular, employing companies indemnifying the directors of corporate trustees of their occupational pension schemes. The problem is particularly acute given the limited protection afforded to such employee directors by directors and officers’ liability insurance policies currently available. The amendment will aid recruitment of and provide appropriate protection for employee directors of subsidiary companies, including company secretaries, who frequently act as directors of subsidiary companies to aid company administration and compliance requirements, and for employees who agree to act as directors of pension trustee subsidiary or associated companies. In Grand Committee, at Hansard cols. GC 366 and GC 367 on 9 February, the noble and learned Lord the Attorney-General seemed sympathetic to my amendment, and sought further consultations on the problems highlighted. While my amendment may require some further development in due course, we are keen to see the Government accept the principle that parent companies and subsidiary parent undertakings are able to indemnify the directors of subsidiary companies. We do not see any issue as to the possible scope for abuse in providing such an indemnity, which has apparently been one of the Government’s concerns. We look forward to the Government addressing companies’ concerns in this area. I am therefore sure that your Lordships would appreciate a progress report from Government on where consultation has got to. I beg to move.