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Mr. Timms: In Committee, the hon. Member for Arundel and South Downs (Mr. Flight) said:
- "There is also a lot of old law on banks, including the frequent requirement that banks get a private Act of Parliament when merging businesses. Will amendments be tabled to tidy that up in relation to the Bill?--[Official Report, Standing Committee A, 7 December 1999; c. 1185.]
New clauses 15 to 24 and new schedule 1 provide a new mechanism for sanctioning and giving effect to schemes to transfer business by certain kinds of authorised persons, specifically insurance companies and banks. The matter with which we are dealing is not takeovers and mergers in the usual sense. From a regulatory perspective, the relevant powers for takeovers are already in place in part XI. No other special arrangements apply to takeovers.
Instead, what is at issue is the merger of two distinct businesses into a single legal entity. That normally follows a takeover. For example, Lloyds Bank plc bought TSB plc some years ago, but it was only last year that a single company, Lloyds TSB plc, was formed and the transfer of the business took place.
In addition to transfers following takeovers, other cases might involve a situation in which a business--for example, a composite insurer--wanted to sell off its life business and concentrate on general insurance. In such cases, it would seek another insurer to which it would transfer its life business. That might be an essential part of a rescue of a failing firm.
I hope that the provisions, foreshadowed as they were by the hon. Gentleman's question to me in Committee,
will meet with the approval of the House. I hope that the House will welcome the rationalisation of the existing arrangements and their extension to banks, so that all deposit taking and insurance undertakings will be able to take advantage of an effective and efficient mechanism to transfer their business.
This is a positive development, which we believe will be welcomed by the industry. It should also be welcomed by customers of relevant firms--as I am sure my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) will acknowledge--and others affected by qualifying transfers whose rights will be protected by the procedures in the new clauses and new schedule 1.
Question put and agreed to.
Clause read a Second time, and added to the Bill.
Brought up, read the First and Second time, and added to the Bill.
Brought up, read the First and Second time, and added to the Bill.
Brought up, read the First and Second time, and added to the Bill.
".--(1) A scheme is an insurance business transfer scheme if it--
(a) satisfies one of the conditions set out in subsection (2);
(b) results in the business transferred being carried on from an establishment of the transferee in an EEA State; and
(c) is not an excluded scheme.
(2) The conditions are that--
(a) the whole or part of the business carried on in one or more member States by a UK authorised person who has permission to deal in contracts of insurance ("the authorised person concerned") is to be transferred to another body ("the transferee");
(b) the whole or part of the business, so far as it consists of reinsurance, carried on in the United Kingdom through an establishment there by an EEA firm qualifying for authorisation under Schedule 3 which has permission to deal in contracts of insurance ("the authorised person concerned") is to be transferred to another body ("the transferee");
(c) the whole or part of the business carried on in the United Kingdom by an authorised person who is neither a UK authorised person nor an EEA firm but who has permission to deal in contracts of insurance ("the authorised person concerned") is to be transferred to another body ("the transferee").
(3) A scheme is an excluded scheme for the purposes of this section if it falls within any of the following cases:
Where the authorised person concerned is a friendly society.
Where--
(a) the authorised person concerned is a UK authorised person;
(b) the business to be transferred under the scheme is reinsurance business carried on in one or more EEA States other than the United Kingdom; and
(c) the scheme has been approved by a court in an EEA State other than the United Kingdom or by the host state regulator.
Where--
(a) the authorised person concerned is a UK authorised person;
(b) the business to be transferred under the scheme is carried on in one or more countries or territories (none of which is an EEA State) and does not include policies of insurance (other than reinsurance) against risks arising in an EEA State; and
(c) the scheme has been approved by a court in a country or territory other than an EEA State or by the authority responsible for the supervision of that business in a country or territory in which it is carried on.
Where the business to be transferred under the scheme is the whole of the business of the authorised person concerned and--
(a) consists solely of reinsurance business, or
(b) all the policyholders are controllers of the firm or of firms within the same group as the firm which is the transferee,
and, in either case, all of the policyholders who will be affected by the transfer have consented to it.
(4) The parties to a scheme which falls within Case 2, 3 or 4 may apply to the court for an order sanctioning the scheme as if it were an insurance business transfer scheme.
(5) Subsection (6) applies if the scheme involves a compromise or arrangement falling within section 427A of the Companies Act 1985 (or Article 420A of the Companies (Northern Ireland) Order 1986).
(6) Sections 425 to 427 of that Act (or Articles 418 to 420 of that Order) have effect as modified by section 427A of that Act (or Article 420A of that Order) in relation to that compromise or arrangement.
(7) But subsection (6) does not affect the operation of this Part in relation to the scheme.
(8) "UK authorised person" means a body which is an authorised person and which is incorporated in, or an unincorporated association formed under the law of, any part of the United Kingdom.
(9) "Establishment" means, in relation to a person, his head office or a branch of his.".--[Miss Melanie Johnson.]
".--(1) A scheme is a banking business transfer scheme if it--
(a) satisfies one of the conditions set out in subsection (2);
(b) is one under which the whole or part of the business to be transferred includes the accepting of deposits; and
(c) is not an excluded scheme.
(2) The conditions are that--
(a) the whole or part of the business carried on by a UK authorised person who has permission to accept deposits ("the authorised person concerned") is to be transferred to another body ("the transferee"),
(b) the whole or part of the business carried on in the United Kingdom by an authorised person who is not a UK authorised person but who has permission to accept deposits ("the authorised person concerned") is to be transferred to another body which will carry it on in the United Kingdom ("the transferee").
(3) A scheme is an excluded scheme for the purposes of this section if--
(a) the authorised person concerned is a building society or a credit union; or
(b) the scheme is a compromise or arrangement to which section 427A(1) of the Companies Act 1985 or Article 420A of the Companies (Northern Ireland) Order 1986 (mergers and divisions of public companies) applies.
(4) For the purposes of subsection (2)(a) it is immaterial whether or not the business to be transferred is carried on in the United Kingdom.
(5) "UK authorised person" has the same meaning as in section (Insurance business transfer schemes).
(6) "Building society" has the meaning given in the Building Societies Act 1986.
(7) "Credit union" means a credit union within the meaning of--
(a) the Credit Unions Act 1979;
(b) the Credit Unions (Northern Ireland) Order 1985.".--[Miss Melanie Johnson.]
".--(1) An application may be made to the court for an order sanctioning an insurance business transfer scheme or a banking business transfer scheme.
(2) An application may be made by--
(a) the authorised person concerned;
(b) the transferee; or
(c) both.
(3) The application must be made--
(a) if the authorised person concerned and the transferee are registered or have their head offices in the same jurisdiction, to the court in that jurisdiction;
(b) if the authorised person concerned and the transferee are registered or have their head offices in different jurisdictions, to the court in either jurisdiction;
(c) if the transferee is not registered in the United Kingdom and does not have his head office there, to the court which has jurisdiction in relation to the authorised person concerned.
(4) "Court" means--
(a) the High Court; or
(b) in Scotland, the Court of Session.".--[Miss Melanie Johnson.]
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