The same remarks apply to this section. It is one of the sections in the British law which our committee recommended be adopted.
I think we are being a little more liberal than the British law in paragraph (b) (ii) of subsection (2) where a discretionary power is given to directors not to present group accounts, if they deem fit. That seems to me to be a very considerable power to give to directors and I think in Britain Board of Trade consent to the directors' action is required in such circumstances.
No, that is not so. This is drawn up on much the same lines as the British provision, but the British have an additional escape clause, apart from all the items listed there in our paragraph (b) : there is an additional clause in the British law allowing the Board of Trade to exempt companies from the obligation to prepare group accounts. Our view was that it was not necessary to have a similar clause here because the provision as it stands gives directors pretty wide discretion.
Have we any idea how many holding companies there are in this country to which these provisions would apply?
I think the Company Law Reform Committee made an estimate when they were preparing their report that the number of subsidiares did not exceed 750. That, of course, is no indication of the number of holding companies, though it is some indication there would not be many companies involved.
I think, in general, it it is undesirable to give directors of the holding company the right to decide that the accounts of any of their subsidiaries be excluded from consolidation.
Of course, the case has to come within subparagraphs (i) or (ii). The British law is, in fact, much more liberal to directors. Apart from the general power of exemption given to the Board of Trade, there are certain clauses, additional to our subparagraphs (i) and (ii), on which directors can rely in order to exclude subsidiaries from group accounts. We whittled it down considerably for the reasons the Deputy mentioned. I do not think subparagraphs (i) and (ii) are objectionable because they are drawn pretty tightly.
It is still leaving the right of decision to the directors; but, outside of that, it is either impracticable or misleading and there is the right of appeal on the part of any aggrieved shareholder to the Minister.
There is, of course, the provision in subsection (3).
They have not got a provision similar to our subsection (3) in British law either, and our hope is that this will act as a big inducement to directors to prepare group accounts wherever it is feasible to do so; otherwise, they will be annoyed by people looking for the accounts of the subsidiary.
Is there any reason why the amendment " or to both " should not be included in subsection (4)?
We intend to ask the draftsman about that. It should go in in the ordinary way, I think, and we will probably provide for it in the next Stage.