Economic Crime and Corporate Transparency Bill

Lord Leigh of Hurley Excerpts

Committee stage
Thursday 20th April 2023 Grand Committee

Moved by

[Lord Leigh of Hurley]

73AA: After Clause 106, insert the following new Clause—
“Requirement to notify registrar of change of auditor
(1) The Companies Act 2006 is amended as follows.(2) In section 485 (appointment of auditors of private company), at the end insert— “(6) Following the appointment of a new auditor or auditors of the company, the company must give notice to the registrar within 10 working days of the date of change, along with the name and address of the auditor or auditors.”(3) In section 489 (appointment of auditors of public company), at the end insert—“(6) Following the appointment of a new auditor or auditors of the company, the company must give notice to the registrar within 10 working days of the date of change, along with the name and address of the auditor or auditors.””Member’s explanatory statement
This new Clause introduces a requirement for private and public companies to notify Companies House within 10 working days of the appointment of a new auditor or auditors, and provide the registrar with associated details.

[Lord Leigh of Hurley (Con)]

My Lords, for this amendment, I will add to my previous disclosures that I am a member of the Institute of Chartered Accountants in England and Wales. By qualification, 40 years ago, I rummaged around companies Acts hoping never again to see them. Sadly, here I am again, but hey ho. In fact, I rummaged around Sections 516 and 517 of the Companies Act 2006, as amended by the Deregulation Act 2015. This imposes an obligation on a company to tell Companies House if there has been a change of auditor, but not an obligation about the details of that change.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank my noble friend and guru Lord Leigh for his Amendment 73AA, and the noble Lords, Lord Fox and Lord Ponsonby, for their contributions. I assure my noble friend that this amendment is not necessary. The Government hear his comments loud and clear but, as with all outings at this Dispatch Box as a Minister, I am unable to give the purity of the answer that we might all prefer to hear.

However, I will say that the Government are taking forward reforms to audit and corporate governance regulation separately following the publication last year of our response to the White Paper consultation on restoring trust in audit and corporate governance. The White Paper considered the information that must be provided to Companies House when an auditor leaves office, so this covers the point about the auditor leaving office rather than necessarily the appointment of a new one; that is a core point that has been raised and heard. The Institute of Chartered Accountants in England and Wales—many noble Lords in this Room have declared an interest as being a member of that august body so they will know this already, although I am not—has raised with my officials the lack of up-to-date information on the Companies House register about the appointment of new auditors.

The Government are therefore already considering how the public record might be improved in respect of appointments of auditors, including possibly via a combination of notifying the appointment when it is made, as well as updating the register if needed as part of the annual confirmation statement. We covered the point about the auditor stepping down or leaving office. This could work in much the same way that it does for the identities of company directors, which I believe will satisfy this Committee. There are already secondary legislative powers in the Companies Act 2006 on the content of the confirmation statement, and amendments to this framework are already being considered as part of the implementation of the Government’s White Paper proposals on restoring trust in audit and corporate governance.

I hope that satisfies the Committee and I therefore ask my noble friend kindly to withdraw his amendment.

[Lord Leigh of Hurley (Con)]

I thank my noble friend. I am not surprised by his response, although one would have thought that a Bill on corporate transparency might stretch itself this far. In answer to what we might call the Vaux-Fox syndicate, when an auditor resigns, the company has to notify the Registrar of Companies of that within 14 days. I think it is a criminal offence not to do so, for both the company and the officer. That is pretty tight; it is just what is in the notice and making sure we are aware of what is going on thereafter. However, given the reassurances from my noble friend that the Government are beavering away day and night on the audit reform, I beg leave to withdraw my amendment.

Amendment 73AA withdrawn.