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Vera Baird: Is not that the same question put by the hon. Member for Cambridge, which I have already answered? [Interruption.] I think that it is, but let me say it again. There are rarely claims for third parties, but if a creditor of some sort—including a depositor— can get recourse outside the contract to limit liability, there is nothing in the provisions that will prevent them from doing so. They will be in no worse or better a position than they were before the change was introduced.
The current position is that the requirements for publicity surrounding the entry into an agreement are as I have set out, but new clause 86 would force the company to send the proposal to all those—including private companies that had already decided to waive the need for approval—who receive the company’s accounts. It would also include venture holders as well as members. If the company wants to send the publicity to the venture holders, that is absolutely fine, but they are not part of the decision-making process and we see no good reason for forcing companies to send the proposals to them.
Amendment No. 802 would constrain the regulations on disclosure that include filing the full agreement and all correspondence at Companies House within 21 days. As I have already explained to the hon. Member for Putney, the Department will consult on the best form of disclosure, seeking views on the balance between the need for transparency and the avoidance of unnecessary burdens. I would not like to pre-judge that consultation, but it strikes me that the proposals of my hon. Friend the Member for Newcastle upon Tyne, Central lie towards the extreme wing of the argument. In our view, it is best left to regulation and we should not place such definitive proposals in the Bill.
Jim Cousins: My hon. and learned Friend advises the House that some of these issues will be clarified in later regulation. We understand that and I drew attention to it, but can she give us a flavour of what propositions the Government will advance in the regulatory consultation?
Vera Baird: We will do our best to ensure that all the interests in such arrangements are consulted as thoroughly as possible about the right level at which to pitch the measure. It would be wrong for me to suggest that the Government were going in a particular direction. It is a matter of balance between the need for transparency and the avoidance of unnecessary burdens. I am sure that my hon. Friend will play a role in that consultation, representing the interests that he has rightly represented today.
The last of my hon. Friend’s amendments in this group is No. 803, which would make a small change to the list in clause 551 of items to which the court is to have regard in considering whether a limitation of liability is fair and reasonable. In practice, I do not think that it would make any difference whether the court has regard to the auditor’s responsibilities under part 17 or under the Bill as a whole, because those responsibilities are confined to part 17.
In conclusion, I support Government amendment No. 648, which is minor and technical. If anybody wants to know what it is I shall be pleased to tell them
more about it, but it is merely a drafting amendment. We shall resist the new clause and the other amendments.
Jim Cousins: This has been an interesting series of exchanges. I am left to puzzle about what my hon. and learned Friend the Minister has just told us—that a court can override a limited liability agreement. A number of people will ponder carefully what circumstances might give rise to that situation. She has indicated that there will be regulations to cover consultation on the introduction of a limited liability agreement. Although, to be frank, I do not find her initial remarks on that point entirely satisfactory, there will at any rate be a consultation in which we can all take part.
At an early age I was taught to believe that confession and repentance were more important than righteousness, so I considered carefully whether I should ask the House to divide on the new clause and on amendment No. 763. However, as I believe that in due course the Government will come to repent the approach of limiting liability, and I fear that to force a Division would only slow down that process, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
Madam Deputy Speaker: Order. Before we deal with the next group, the House must deal with the Government amendments and new clauses that have already been debated. With the leave of the House, I shall put all amendments and new clauses together.
Question, That amendments Nos. 241, 242, 447, 243 to 245, 544, 545, 246, 546, 714, 547, 247 to 252, 548, 488, 213, 225, 449, 648, 549, 826 and 550 to 552 be made, that new clauses 8 and 10 to 12 be brought up, read the First and Second time, and added to the Bill, put and agreed to.
(a) a compromise or arrangement is proposed between a public company and—
(i) its creditors or any class of them, or
(ii) its members or any class of them,
for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies,
(i) a merger (as defined in section (Mergers and merging companies)), or
(ii) a division (as defined in section (Divisions and companies involved in a division)), and
(c) the consideration for the transfer (or each of the transfers) envisaged is to be shares in the transferee company (or one or more of the transferee companies) receivable by members of the transferor company (or transferor companies), with or without any cash payment to members.
(a) a “new company” means a company formed for the purposes of, or in connection with, the scheme, and
(b) an “existing company” means a company other than one formed for the purposes of, or in connection with, the scheme.
(3) This Part does not apply where the company in respect of which the compromise or arrangement is proposed is being wound up.’.— [Margaret Hodge.]
Brought up, and read the First time.
Margaret Hodge: I beg to move, That the clause be read a Second time.
Madam Deputy Speaker: With this it will be convenient to discuss the following:
Government new clause 19— Relationship of this Part to Part 27.
Government new clause 20— Mergers and merging companies.
Government new clause 21— Draft terms of scheme (merger).
Government new clause 22— Publication of draft terms (merger).
Government new clause 23— Approval of members of merging companies.
Government new clause 24— Directors’ explanatory report (merger).
Government new clause 25— Expert’s report (merger).
Government new clause 26— Supplementary accounting statement (merger).
Government new clause 27— Inspection of documents (merger).
Government new clause 28— Approval of articles of new transferee company (merger).
Government new clause 29— Protection of holders of securities to which special rights attached (merger).
Government new clause 30— No allotment of shares to transferor company or its nominee (merger).
Government new clause 31— Circumstances in which certain particulars and reports not required (merger).
Government new clause 32— Circumstances in which meeting of members of transferee company not required (merger).
Government new clause 33— Circumstances in which no meetings required (merger).
Government new clause 34— Other circumstances in which meeting of members of transferee company not required (merger).
Government new clause 35— Divisions and companies involved in a division.
Government new clause 36— Draft terms of scheme (division).
Government new clause 37— Publication of draft terms (division).
Government new clause 38— Approval of members of companies involved in the division.
Government new clause 39— Directors’ explanatory report (division).
Government new clause 40— Expert’s report (division).
Government new clause 41— Supplementary accounting statement (division).
Government new clause 42— Inspection of documents (division).
Government new clause 43— Report on material changes of assets of transferor company (division).
Government new clause 44— Approval of articles of new transferee company (division).
Government new clause 45— Protection of holders of securities to which special rights attached (division).
Government new clause 46— No allotment of shares to transferor company or its nominee (division).
Government new clause 47— Circumstances in which meeting of members of transferor company not required (division).
Government new clause 48— Circumstances in which meeting of members of transferee company not required (division).
Government new clause 49— Agreement to dispense with reports etc (division).
Government new clause 50— Power of court to exclude certain requirements (division).
Government new clause 51— Expert’s report: valuation by another person.
Government new clause 52— Experts and valuers: independence requirement.
Government new clause 53— Experts and valuers: meaning of “associate”.
Government new clause 54— Power of court to summon meeting of members or creditors of existing transferee company.
Government new clause 55— Court to fix date for transfer of undertaking etc of transferor company.
Government new clause 56— Liability of transferee companies for each other’s defaults.
Government new clause 57— Meaning of “liabilities” and “property”.
Margaret Hodge: I know that there are a lot of new clauses in this group, but I hope that they are pretty uncontentious. The restatement clauses in part 27 of the Bill allow for the wide range of reorganisations, arrangements and reconstructions that can arise within a company and allow some types of merger or demerger to take place. Part 27, as introduced in Committee, contained a regulatory power under clause 908 to make detailed provision for mergers and divisions of public companies in certain cases. On reflection, we have concluded that it would be preferable to replace that power by setting out the provisions in full in primary legislation, as they are in the Companies Act 1985. We all feel that that is a better way of proceeding where we can.
Accordingly, this part restates section 427A and schedule 15B to the 1985 Act. We have made only one minor change: in new clause 52(1)(c), concerning the independent requirement of experts and valuers, we have taken a power to specify a disallowed connection for the purposes of determining whether a person meets the independence requirement. That is consistent with the approach that we have taken elsewhere in the Bill, in clauses 351, 1117 and 1178. We have consulted on the new clauses and are grateful to the Law Society, in particular, for its comments.
Mr. Djanogly: The Government’s approach in this group is acceptable to the Opposition, but I would like to put it on the record that, with just over half an hour to go, we have finished dealing with only four of the 31 groups to be discussed today. Many of the issues in these groups are being covered for the first time on this Bill. Surely that is yet another indictment of the Government’s guillotining of the Bill.
Margaret Hodge: I will respond to that point, because I am rather tired of it. [ Interruption. ] I am delighted to welcome the hon. Member for Rutland and Melton (Alan Duncan) to his place for the first time since we have been discussing the details of the Bill. I wonder whether he knows —
Madam Deputy Speaker: Order. May I remind Members that the Minister will just be responding to the debate on the new clause?
Margaret Hodge: I am sure that the hon. Member for Rutland and Melton knows full well what is involved in this group of new clauses. I will simply say what I said at the beginning: the amendments tabled in the names of Opposition Members are all amendments that we have discussed before and the amendments tabled by the Government relate to the consolidation that was requested by the Conservatives in the House of Lords. We have taken the advice of leading people in the field—particularly the Law Society—and have made sure that what we put into the Bill can stand the test of time. That is a perfectly proper way of proceeding, which was agreed by Opposition Members. To play silly politics just wastes time.
Mr. John Gummer (Suffolk, Coastal) (Con): I had not intended to speak, but I have sat through most of the debates, as I think the right hon. Lady will agree, and although there are no issues that I want to raise in detail in relation to this series of amendments and new clauses, I do not think that it is proper to let this opportunity go past without saying that there are a lot of other issues in the rest of the Bill that I would want to raise if we had time. There is no other opportunity to say that. The point about the House of Commons is that it is increasingly true that the Bills that we pass are badly thought out, badly understood and badly debated. That is the fault of this Government, who use the House of Commons disgracefully. There are whole areas of the Bill that my constituents want me to debate, but the Government and the Minister have stopped me doing so. It is a disgrace.
Clause read a Second time, and added to the Bill.
Question, That Government new clauses 19 to 57 be brought up, read the First and Second time, and added to the Bill, put and agreed to.
‘(1) The effect of an order under section 803 that shares are subject to restrictions is as follows—
(a) any transfer of the shares is void;
(b) no voting rights are exercisable in respect of the shares;
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