After five months of the Company Law Reform Bill being debated in Parliament, the Government have finally accepted Conservative Party demands to amend clause 22. The Clause originally allowed company members to entrench provisions in company's articles for the life of the company. In effect, company directors with enough shares would have been able to entrench any rights they desired, for example, a company car for life or large salaries. In a stand for shareholder democracy, the Shadow Minister for Company Law Reform, Jonathan Djanogly MP, criticised the clause during the Second Reading of the Bill in the House of Commons:
"It is interesting and somewhat bizarre to note that the Labour Party in opposition liked to attack what it called 'corporate fat cats'. In government, it seems to want to introduce laws that will allow those people to entrench their right to get fatter."
Following Conservative pressure, the Government have decided to move an amendment to clause 22 in committee today which means that entrenched company articles could be changed, but still only with the consent of all the member of a company. In response to the amendment moved by the Government today, Jonathan Djanogly said:
"The Company Law Reform Bill will be the longest Bill in history and the Government have only timetabled it nine days in Committte; we need more concessions from the Government like this one for there to be enough time to debate the whole Bill in nine days. We will always support the Govenrment when they do the right thing."
"We welcome the Government u-turn in clause 22, as it is important for shareholder democracy, but it does not go far enough. We have moved amendments to withdraw the principle of entrenchment from the Bill, as the principle runs contrary to the concept of shareholder democracy."
"I find it worring that this Government thinks so lightly of taking away rights from individual shareholders - the owners of the company. I don't know what Cedric the pig is up to these days - but this Government is looking more like Animal Farm everyday." "