Draft Deregulation Bill The Law Society of Scotland s response September 2013

Transcription

1 Written Evidence Draft Deregulation Bill The Law Society of Scotland s response September 2013

2 Introduction 1. The Law Society of Scotland aims to lead and support a successful and respected Scottish legal profession. Not only do we act in the interests of our solicitor members but we also have a clear responsibility to work in the public interest. That is why we actively engage and seek to assist in the legislative and public policy decision making processes. 2. This response has been prepared on behalf of the Society by members of our Banking, Company and Insolvency Law sub-committee. This committee is comprised of senior and specialist lawyers (both in-house and private practice) and legal academics. General Comments 3. The Society commends the principles behind the draft Deregulation Bill, namely to reduce bureaucracy, and is in general supportive of the Bill. However, we have a number of concerns about how the Bill proposes to implement its policy objective. Our specific comments are outlined below. Specific Comments Legislation no longer of practical use (Clauses 51 57) 4. Clause 51 his allows a Minister of the Crown to make an order for legislation to cease to apply if the Minister considers it is of no practical use. The Order can repeal or revoke the legislation or amend it. 5. In terms of Clause 52, before making an Order under Section 51 which contains provisions which would be within the legislative competence of the Scottish Parliament, if it were contained in an Act of that Parliament, the Minister must obtain the consent of the Scottish Ministers. Clauses 52(2) and (3) apply a similar provision to Wales and Northern Ireland. Page 1

3 6. The Society questions whether it is appropriate for a Minister acting under clause 52, where the Order would contain a provision which would be within the legislative competence of the Scottish Parliament, that the Minister should only require the consent of Scottish Ministers and not the Scottish Parliament. The lack of Parliamentary engagement in connection with such Orders which affects Scottish legislation or indeed Welsh or Northern Irish devolved legislation lacks proper democratic engagement. These concerns also extend to Clause The provisions of Clauses 53, 54, 55 and 56 seem appropriate in terms of Parliamentary procedure. The Society particularly approves of Clause 54 which relates to the procedure for consultation. Auditors ceasing to hold office (Schedule 4) 8. The Society is concerned about proposals to remove the requirement on listed and non-listed companies to notify the Registrar of Companies within 14 days when auditors resign. 9. Many members of the Law Society s Banking, Company and Insolvency law subcommittee act for or have acted for individuals and large investing institutions registered in Scotland, whose investment decisions can frequently be significantly influenced by the financial and other information available publicly on underlying investee, or potential investee, companies. 10. Experience suggests that instability in auditors holding office is a significant negative factor influencing investors and potential investors (institutional and individual). Resignation of auditors mid-term can be the first clear indication of possible underlying financial difficulties or irregularities, or disconnects with management. 11. The Registry at Companies House is an early port of call for due diligence on all types of companies for making or withdrawing from investments. In an investment sector where significant amounts of investors money are moved by managers daily, Page 2

4 and decisions are otherwise time critical, the earliest possible indication of events such as auditors unexpected resignation can be helpful and ultimately beneficial. 12. The Society therefore wishes to express its concerns on this point, which is considered potentially unhelpful to investing business entities and individuals, whilst approbating the remainder of the simplified notification provisions. The authorisation of Insolvency Practitioners (Schedule 5, Part 6) 13. The Society is concerned about the concept of partial authorisation of Insolvency Practitioners. In England, bankruptcy and corporate insolvency legislation is separate, but in Scotland significant parts of corporate insolvency is linked to bankruptcy legislation. 14. The Insolvency (Scotland) Rules in their present form require reference to Scottish Bankruptcy law when an Insolvency Practitioner is appointed as receiver, liquidator, administrator or CVA supervisor. In contrast to the position in English law, the insolvency of a Scottish partnership is governed by Bankruptcy law, not corporate insolvency law and rules. 15. The Society would therefore question whether anyone could be an effective corporate Insolvency Practitioner in Scotland if they possessed little or no knowledge of bankruptcy legislation. Page 3

5 For further information and alternative formats, please contact: Julia Brown Law Reform DD: E: The Law Society of Scotland Atria One, 144 Morrison Street Edinburgh EH3 8EX Page 4