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'(c) he is a party to an arrangement (including any undertaking, expectation or understanding), whether or not legally binding, whereby parties to the arrangement, whether or not including himself, who hold or are beneficially entitled to 50 per cent. or more of the equity share capital of the body in aggregate or 50 per cent. or more of the voting power in it in aggregate make provision as to the manner or circumstances in which any voting power in the body possessed by any of them is to be exercised or not exercised either generally or in relation to any specified matters.'.
No. 233, in page 114, line 19, at end insert--
Mr. Sproat:
Given the marvellous brevity of the hon. Member for Caithness and Sutherland (Mr. Maclennan), I shall begin with some good news for the Opposition, which is good news for us on the Bill. Our legal advisers are of the opinion that there is little to choose between the current formulation, using the word "secure", and one that uses the words able to "achieve", as proposed by amendment No. 230. In legal and policy terms they produce the same result. In the light of the legal opinion that we have received, and given the continuing concern expressed by the regulators, the Government will not oppose amendment No. 230.
Amendment No. 231 would bolster the provisions inserted in the Bill in Committee that deal with "joint control" and "deadlocking". As it stands, the Bill will, without doubt, catch cases where two companies each have a 50 per cent. stake in the deadlocked company. However, concern has been expressed about a case where, for example, company A and company B each hold a 49 per cent. interest, while 1 per cent. is held by another company that can be relied on to follow the wishes of company A and 1 per cent. by a company that can be relied on to follow the wishes of company B. Such a case could be caught by the substituted paragraph 1(3)(c) on page 114 of the Bill, as amended in Committee, if the 1 per cent. shareholders could each be regarded as nominees within the meaning of part I to schedule 2 to the 1990 Act. Such a situation could also be caught by paragraph 1(3)(b) if it was thought likely--in the sense of "reasonable expectation"--that A and B would be acting in accordance with each other's wishes. This is because if A and B were acting together, it would be reasonable to expect that they would be able to secure that the company's affairs would be conducted in accordance with their joint wishes. The 2 per cent. part shareholding would be completely irrelevant in company law terms unless allied with A or B.
As it stands, amendment No. 231 would treat each of the parties to the arrangement as controlling the company. That could produce some unwelcome, and possibly even absurd, results. It would clearly be wrong to catch the many legitimate and commonplace arrangements that may be entered into among shareholders in private or family companies to secure their position within the company.
For example, if a 5 per cent. shareholder had entered into an agreement with other shareholders speaking for 51 per cent. of the voting power purely to safeguard his representation on the board of directors--which would be "any specified matter" within the meaning of the ITC's amendment--it would be contrary to principle and common sense to treat him as controlling the company. For those reasons, the Government will not accept amendment No. 231.
Amendments Nos. 232 and 233 would prevent those who simply hold shares on behalf of others from being caught by the ownership provisions in schedule 2. They would ensure that such shareholders are not caught by the definition of the participant that now appears in the Bill. However, in so far as that is the intention of amendment Nos. 232 and 233, I understand that they are technically defective. They carve out an exemption for the purpose of limiting stakes in licences, but they do not do so in other respects. If the amendments were passed, such nominee or custodian trustees could still be deemed to control licences for other purposes and to be connected persons or "associates" of licence holders. In lay terms, they would be excluded from some of the ownership restrictions, but would still be included in others. To accept the amendments as they are could be to subvert, albeit unintentionally, the scheme of schedule 2. For that reason, and as I have agreed to amendment No. 230, I hope that the hon. Gentleman will withdraw his other amendment.
Mr. Maclennan:
I am grateful to the Minister for explaining in some detail, as I think is appropriate, the Government's reasons for not wishing to accede entirely to the views of the ITC on the matter. I have no doubt that his legal advice will be studied with great care. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 230, in page 114, line 1, leave out 'secure' and insert 'achieve the result'.--[Mr. Sproat.]
Mr. Sproat:
I beg to move amendment No. 22, in page 114, line 30, at end insert--
The amendment puts beyond any doubt the fact that any reference in schedule 2 to a person who is over a particular age means that a person has attained that age. If that formulation still mystifies hon. Members, perhaps they will give me another 10 seconds to say that the intention of that form of words is to remove an ambiguity in the current wording of paragraph 9 of part III to schedule 2, dealing with the calculation of radio points for the purposes of the 15 per cent. limit applying to the ownership of radio licences. The current wording could be interpreted as relating to persons who are not yet 16 years old, rather than to those who have reached their 15th birthday.
Amendment agreed to.
Mr. Sproat:
I beg to move amendment No. 8, in page 116, line 13, leave out from "Act)" to end of line 15 and insert--
Mr. Deputy Speaker:
With this, it will be convenient to discuss Government amendments Nos. 9 and 7.
Mr. Sproat:
Amendment No. 8 honours the commitment given to my hon. Friend the Member for Hexham (Mr. Atkinson) in Committee to disapply the nationality restrictions in part II of schedule 2 to the 1990 Act in respect of the ownership of digital programme service licences.
Amendment agreed to.
Mr. Sproat:
I beg to move amendment No. 92, in page 116, line 24, after 'BBC company' insert
Mr. Deputy Speaker:
With this, it will be convenient to discuss Government amendments Nos. 93 to 101.
Mr. Sproat:
The amendments fulfil our commitment to allow Channel 4 to create or participate in companies involved in broadcasting activities. This will allow Channel 4, like S4C and the BBC, to take full advantage of the opportunities of digital broadcasting.
We are allowing Channel 4 to establish or participate in companies anywhere in the world, provided that they are involved in activities that would be licensable by the ITC or the Radio Authority if they were taking place in the United Kingdom. We are also allowing it to be involved in holding companies. These extra powers have been added to those already granted to S4C.
Amendment No. 94 makes it clear that Channel 4 is able to broadcast its digital simulcast service throughout the United Kingdom, including Wales. On analogue, the Welsh fourth channel is, of course, the responsibility of S4C.
Amendment agreed to.
Amendment made: No. 9, in page 116, line 29, at end insert--
Mr. Sproat:
I beg to move amendment No. 23, in page 116, line 41, leave out 'paragraphs 9 and 17' and insert 'paragraph 9'.
Mr. Deputy Speaker:
With this, it will be convenient to discuss Government amendments Nos. 35, 38, 41 and 42.
Mr. Sproat:
The amendments arise as a result of the new regime for limiting participation, short of control, in broadcasting licences. As a result of these changes, paragraphs 16 to 21 of part III to schedule 2 are largely redundant, and are therefore deleted by amendment No. 42.
The holder of a licence to provide a national channel 3 or Channel 5 service is currently limited to a maximum interest of 20 per cent. in a national radio service and vice
versa. The holder of a licence to provide local digital sound programme services or a local radio service is currently limited to a maximum interest of 20 per cent. in a regional channel 3 licence holder where each of the services covers an area that is to a significant extent the same, and vice versa.
Amendment No. 35 replaces these restrictions with restrictions on common control, but does not impose restrictions on the extent of participation below the level of control. It therefore harmonises these restrictions with the restrictions on participation that were agreed in Committee.
Amendments Nos. 23, 38 and 41 make consequential adjustments to part III of schedule 2.
'(5A) After sub-paragraph (5) there is inserted
"(5A) For the purposes of this Schedule a person shall not be regarded as a participant in relation to a body corporate by reason only that his interest in shares in that body is--
(a) that of a bare trustee;
(b) that of a simple trustee (where such shares are held on trust according to the law of Scotland); or
(c) an exempt custodian interest within the meaning of section 209(4) of the Companies Act 1985." '.
'(8) Any reference in this Schedule to a person who is over a particular age is a reference to a person who has attained that age.'.
'(i) a licence to provide digital programme services, or
(j) a licence to provide national or local digital sound programme services.'
', a Channel 4 company'.
'( ) A BBC company is also a disqualified person in relation to any licence granted by the Authority to provide a national, local or restricted service within the meaning of Part III of this Act.'--[Mr. Sproat.]
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