The Mental Health (Discrimination) Act 2013 (the “Act”) which came into force on 28 April 2013 has been widely welcomed by numerous mental health charities and mental healthcare professionals. Paul Farmer, the Chief Executive of Mind, the mental health charity, described the Act as a “watershed moment for attitudes to mental health”. And Sue Bailey, the President of the Royal College of Psychiatrists, said the Act “goes some way to eradicating one of the last bastions of legalised discrimination”.
Gavin Barwell MP, the Conservative Member of Parliament for Croydon Central, who introduced the bill which led to the Act has claimed that it will “drag the law of this land into the 21st century” and have the effect of putting “an end to archaic laws which interfere with the rights of people with mental health problems from . . . becoming or remaining a company director”.
So how does the Act seek to achieve those objectives?
Every company in England and Wales is required to adopt a set of provisions called articles of association which operate as a constitution. Some companies write their own bespoke articles of association, and others adopt pre-written model articles of association which can be found in various regulations passed by parliament. The Act seeks to achieve the above objectives by removing a provision from the pre-written model articles of association which provided for the automatic termination of a director’s appointment in circumstances where, due to that director’s mental health, a court had made an order which wholly or partly prevented that director from personally exercising any powers or rights which he or she would otherwise have had. Therefore, that provision will not automatically be contained in the articles of association of any company that adopts the model articles of association after 28 April 2013.
It may of course be questioned whether it is at all desirable for a company to maintain the appointment of a company director on account of whose mental health issues a court has sought to remove certain powers or rights. The issue being whether a director considered incapable of exercising such powers or rights in a personal capacity on his or her own behalf should still be in a position to exercise such powers and rights in a professional capacity on behalf of a company and its shareholders. The provision removed by the Act dealt with that issue by automatically terminating the director’s appointment. It was precisely the indiscriminate nature of the provision (which did not account for the possibility of the director’s mental health issues being of either a temporary nature, or indeed the court order being overturned on appeal) which was understandably considered by those championing the Act to be not only draconian but also representative of an intolerant attitude to company directors who may experience mental health issues. In removing the provision from the model articles, parliament has attempted to disassociate itself from the intolerant attitude it represented.
However, despite the worthy objectives of the Act, it does not in any way fetter the freedom of companies to decide the provisions of their own articles of association. The following observations are worth noting:
- Conforming to the purpose of the Act is entirely voluntary. Companies are not legally bound to adopt models articles of association. All companies are free to adopt bespoke articles of association which contain the provision the Act removed from the model articles of association even if they do so after 28 April 2013;
- the Act is not prescriptive. Even if a company adopts the model articles of association after 28 April 2013, there is nothing to prevent that company from redrafting those articles and re-inserting the provision; and
- the Act is passive. It neither removes, nor renders ineffective, the same provision contained in articles of association adopted by a company prior to 28 April 2013. By January 2013, there were over 2.7 million active companies in England and Wales. A great number of those companies may have the provision in their articles of association either because (i) they adopted the model articles of association which contained it, or (ii) it was contained in bespoke articles of association they adopted instead of the model articles of association. Unless each of the 2.7 million companies which have the provision in their articles of association passes a resolution to remove it, that provision shall remain a part of each of their constitutions.
Given the above observations, it may be concluded that insofar as the Act relates to companies, its importance does not lie in putting “an end to archaic laws which interfere with the rights of people with mental health problems” – as it clearly does not do that at all – but rather, as David Nuttall MP, the Conservative Member of Parliament for Bury North more astutely observed, “its greater importance is in the wider message it sends to society about how we should see those who, sadly, suffer from mental health problems”.