I thank all noble Lords who contributed to this short debate. I know that many also contributed to the legislation when we originally introduced it. There is a great deal of expertise in the House on this subject, and I am grateful to those who have thought to opine further on the extensions that we have introduced.
I thought that the debate started off well with an excellent contribution from the noble Lord, Lord Blunkett, who, rightly, highlighted the difficulties of businesses in areas such as his own dear Sheffield which are subject to tier 3 restrictions. The Government very much recognise the ever-changing context in which we operate, but I hope he is assured that the Government are keeping all these measures under review in light of the ongoing development with the pandemic, in order to act in a proportionate way should it prove necessary to do so. I can further offer assurances to the noble Lords, Lord Blunkett and Lord Vaux, and to my noble friend Lady McIntosh that the measures included in the order are being kept under review as part of this. We would not hesitate to move swiftly to extend them further if that is necessary to support business in a proportionate and viable manner.
My noble friend Lord Bourne raised questions on the differing dates of the extensions within the regulations. The reason for that is that they were assumed to be the best and most viable dates at the time, following consultations with various organisations and other government departments. However, as I said earlier, we will keep those measures under review. The temporary measures all have significant impacts on the normal working of various parts of insolvency legislation and the business community. The term of extension for one measure may not be desirable or needed for another.
We think it right, therefore, that any consideration of an extension and for how long should be done on an individual basis, rather than in the round, taking into account all the circumstances and potential impacts.
My noble friend Lord Bourne and the noble Lord, Lord Stevenson, asked further about why restrictions on wrongful trading were not being extended. Careful consideration was given to whether to prolong each of the separate temporary measures introduced by the Corporate Insolvency and Governance Act; a package of targeted measures remains in place to assist companies in financial difficulties. We reached the view that a further extension of the prohibition restrictions on wrongful trading was not required at this time.
The end of the suspension represents the return of an important protection for creditors. As always, it is a question of getting the right balance. At the beginning of the pandemic, company directors faced a very uncertain future with regard to trading conditions. Now that the suspension has been in place for seven months, they will have had time to make a better assessment of the impact of the pandemic on their companies’ viability. We therefore considered it right to restore that provision.
The points made in the debate have highlighted the importance of the measures being extended by these regulations and the necessity of extending them so that businesses continue to benefit from them. The Government have considered the ongoing impact of Covid-19 and the potential impact of each measure to determine how for long each measure should be extended, if at all. Government officials have been in close dialogue with business and professional groups about these measures and the impact that they are having. Given that the Covid-19 crisis is still with us and businesses are still dealing with its impact, the consensus is that the measures being extended are still necessary.
The number of corporate bodies benefiting from the company law measures—my noble friend Lord Bourne referred to 100 companies—are public companies with obligations to hold AGMs with a variety that is testament to our varied business sectors. Countless other companies will benefit from having flexible general meetings in the coming months. The flexibilities are intended to be temporary and only for the purposes of assisting bodies in coping with Covid-19 restrictions. Once the measures and powers expire, meetings will continue to be held as normal and in line with the body’s normal constitution.
The Companies Act 2006 already gives companies the ability to hold general meetings in a virtual form but, generally, they would need to secure shareholder consent to appropriate changes in their articles of association. Ultimately, it is for companies and shareholders to agree what flexibilities they want over the longer term. We do not think it appropriate to mandate that meetings be held in a particular way. These measures give bodies the flexibility to hold meetings in a safe way, including through the use of electronic means. This will allow companies to respond appropriately to changing circumstances where required. I am happy to confirm for the noble Lord, Lord Stevenson, and my noble friend Lord Bourne that the Financial Reporting Council has published guidance on AGMs on its website.
The noble Lord, Lord Vaux, asked how to protect businesses in recovery after the end of the measures for which it is clear that the restrictions have changed. Government support has evolved; its goal remains to protect people’s jobs and livelihoods. As the path of the virus and the threat to the economy become clearer, government action needs to support jobs and businesses while at the same time allowing the economy to adapt to the new normal.
The noble Baroness, Lady McIntosh, asked me about the uptake of the measures, and I can confirm to her that two companies have obtained a moratorium under the Insolvency Act 1986, as amended by the Corporate Insolvency and Governance Act 2020. One company had a restructuring plan under the Companies Act 2006 amended by this Corporate Insolvency and Governance Act 2020 sanctioned by the court. The restructuring plan, which was backed by creditors and sanctioned by the court in September, has allowed the airline Virgin Atlantic to restructure its debts, and to attract in excess of £1 billion of investment and international press attention. I think we can see that the legislation has worked in this respect: it has saved a company that was in difficulties because of the pandemic. We all know what has happened to airlines and the aerospace industry so, in this particular regard, the legislation that we slaved over has proved to be valuable.
Other noble Lords raised questions on the regional uptake of the measures and the impact of different-sized businesses; we are constantly keeping all these measures under review, and they will be reviewed on an individual basis. The low number of cases of each of these new legislative tools since the Act came into force is very likely to be as a result of the range of Government support which is still available and still being provided to companies—as noble Lords will be aware, and as I mentioned above—including the range of temporary measures that have recently been extended for a further period.
These temporary rules on the moratorium need to remain in place to allow time for the permanent moratorium rules, which require further secondary legislation, to be drafted. The law requires that the England and Wales rules require consultation with the Insolvency Rules Committee, which of course will take some time. It would also be undesirable to require businesses to adjust to new procedural rules at a time of great economic uncertainty, such as having to adapt to changes in government fiscal support and other regulatory support as a result of coronavirus.
The noble Lord, Lord Stevenson, asked on the point of viability for insolvency. I accept his point that this is not a term normally used by accountants of his persuasion, but it is being generally used as a term to indicate which companies would be profitable otherwise than for the impact of Covid-19. Over the past few months, businesses have continued to face an exceptionally challenging time, with many unable to trade or their ability to trade at full capacity restricted due to social distancing measures.
These regulations will provide the much-needed continued support for businesses to concentrate their best efforts on continuing to trade and to build upon the foundations for economic recovery in the United Kingdom. Careful consideration, as I said earlier, has
been given to extending these temporary measures, and the Government will monitor the situation very closely before making any decisions about any further extensions, including, of course, consulting further with businesses, their representatives and shareholder bodies. With that, I commend these regulations to the House.