Fragmented Law: Whitehall aims to incorporate 1985 and 1989 Acts into new Bill

The Department of Trade and Industry (DTI) is planning to use the Company Law Reform Bill as an opportunity to consolidate existing company legislation, the Gazette learned this week.


The department is currently looking at how it can incorporate the 1985 and 1989 Companies Acts into the Bill, in a bid to create a more complete code of legislation.


However, the consolidation would not include provisions relating to the investigation of companies - which may be consolidated at a later date - or the community interest companies created by the Companies (Audit, Investigations and Community Enterprise) Act 2004.


The DTI plans to insert the consolidation clauses in the Bill when it reaches the report stage in the House of Commons. Draft clauses should be available for comment over the summer.


The move is partly a response to concerns raised by practitioners, including the Law Society's company law committee, that the original Bill would leave company law too fragmented, with the law spread across several different Acts. The Society supports the consolidation initiative, but has warned that it could cause unintended changes to the law. A DTI minister will make a clear statement in Parliament that the consolidation exercise is not intended to effect changes.


Oliver Barnes, a member of the Law Society's company law committee and partner at City firm Travers Smith, said: 'The more that can be in one Act, the better. A number of provisions in the new Bill still leave related provisions in the old Act. The DTI is trying to put that right so that practitioners should have most of the law all in one place.'


Mr Barnes added that the consolidation will not be an opportunity to change the law: 'There are certainly some areas where the existing law could be improved, but the DTI has made it clear that if there were to be consolidation, they would want to do it on the basis that people do not try to unpick the existing law. There will not be time in the parliamentary process to make changes. If the DTI could not have political agreement, it would not bring forward consolidation - though it has said that if there are gross errors, it will consider [correcting them].'


He added: 'From the outset, the DTI was talking about reuniting the whole act in modern language, but they realised that would be a task too far... the Bill has given rise to a certain amount of comment that it was not helpful for practitioners and all users of company law [to have the law in separate places], and the DTI has responded to that.'