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Moved accordingly and, on Question, Motion agreed to.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 624 to 631. These new clauses restate Part 15 of the 1985 Act in so far as these provisions apply in relation to Part 22 of this Bill. Part 22 enables public companies and, indirectly, members of the company to ascertain the underlying beneficial owners of shares. The company may apply to the court for an order under Clause 607 directing that the shares in question be subject to various restrictions under Part 15 of the Companies Act 1985, which include voiding any transfers of the shares and providing that voting rights are not exercisable in respect of the shares. The provisions of Part 15 are restated without substantive change in the new clauses. Part 15 will remain in the 1985 Act, because it applies also to Part 14 of that Act, which will remain in force. Nevertheless, we think that it would be helpful to restate that in these new clauses, so that the reader can find all the relevant provisions for Part 22 in one place.
We have consulted on these clauses and are grateful to the Law Society, in particular, for its comments and I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 624 to 631.—(Lord McKenzie of Luton.)
On Question, Motion agreed to.
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Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 632 to 670.
Moved accordingly, and, on Question, Motion agreed to.
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Lord Sainsbury of Turville: My Lords, I beg to move that the House do disagree with the Commons in their Amendment No. 671. I have spoken to this amendment with Amendment No. 70.
Moved, That the House do disagree with the Commons in their Amendment No. 671.—(Lord Sainsbury of Turville.)
On Question, Motion agreed to.
Lord Sainsbury of Turville: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 672 to 674.
Moved accordingly, and, on Question, Motion agreed to.
Lord Sainsbury of Turville: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 675 to 709. I shall speak also to Amendment No. 845.
These amendments restate provisions in the 1985 Act relating to the registration of company charges and provide three new regulation-making powers, meeting the commitment that I gave when we withdrew our proposals for a general reform power. The new clauses inserted by Amendments Nos. 675 to 707 restate Part XII of the 1985 Act, which provides a system for the registration of charges created by a company. As I have already explained in relation to other amendments that restate the 1985 Act, while there has been an element of restructuring, no substantive changes have been made other than to ensure compatibility with the Bill. In that respect, I draw noble Lords’ attention to one such change—our decision to remove defective provisions relating to overseas companies. Instead, we have provided a new power in Amendment No. 845 to address the problems created by those provisions. I shall return to that shortly.
The approach to restatement of the existing provisions means that the new provisions retain the imperfections of the existing system. Amendment No. 709 meets the commitment that I gave to the Grand Committee and provides power to amend this part by altering, adding or repealing provisions. I should emphasise that this is not a power to replace the current system. The purpose of the power is to make changes within the confines of the existing system. I note that the Delegated Powers and Regulatory Reform Committee considers that to be an appropriate delegation of power. We intend to use that power to address the many imperfections of the present system, particularly those noted by the Company Law Review in its final report.
In particular, we intend to use it to update the list of charges to which the provisions apply, to provide that a copy of the instrument, rather than the instrument itself, be delivered to the Registrar of Companies, and for other measures to improve the existing system to reduce the burdens on companies and on the Registrar of Companies. But we do not expect to use the power immediately. Rather, we intend to consult fully, building on the discussions that have been continuing for some time, and to take
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The new clause inserted by Amendment No. 708 provides the power needed to ensure the operability of the new registration system for floating charges in Scotland. Without that provision, floating charges created under Scots law would have to be registered with the Registrar of Companies in addition to their registration on the new Scottish register of floating charges to be established under the Bankruptcy and Diligence etc. (Scotland) Bill. It is intended to use this power so that floating charges registered in the Scottish register of floating charges do not also have to be registered with the Registrar of Companies. This will be a deregulatory measure. However, the power will be used only if arrangements are in place, in particular those relating to information-sharing between the two registries, to ensure that third parties can still easily discover information about a company’s registrable charges.
Amendment No. 845 addresses the significant defects in the current system for the registration of charges as it applies to charges over the UK property of overseas companies. It provides a new regulation-making power to require those overseas companies that are registered with Companies House under Clause 700 to register charges over property in the United Kingdom when they grant specified charges over their UK property. Where the charge has been created before registration takes place, we intend to use the power in Clause 700 so that, when an overseas company registers its UK presence, it is required to file details of specified existing charge over its property in the UK.
Moved, That the House do agree with the Commons in their Amendments Nos. 675 to 709.—(Lord Sainsbury of Turville.)
On Question, Motion agreed to.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 710 to 756. These provisions concern reorganisations, arrangements and reconstructions within a company, and allow some types of merger or demerger to take place. They restate Part XIII of and Schedule 15B to the 1985 Act with only two changes of substance.
First, there are amendments concerning orders amending company constitutions that must be filed with the registrar. These are included for consistency with provisions concerning other such orders. Secondly, in the new clause introduced by Amendment No. 751 concerning the independent requirement of experts and valuers, we have taken a power to specify a disallowed connection for the purpose of determining whether a person meets the independence requirement. That is consistent with the approach that we have taken in Clauses 327 and 843. We have consulted on the draft clauses and are particularly grateful to the Law Society for its comments.
Moved, That the House do agree with the Commons in their Amendments Nos. 710 to 756.—(Lord McKenzie of Luton.)
On Question, Motion agreed to.
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The Deputy Speaker (Lord Geddes): My Lords, before calling the next amendment, I must advise the House that due entirely to my inability to read the Clerk’s handwriting, I misread the result of the vote on Amendment No. 245D. The results were, in fact, that the Contents were 48—as I read—but that the Not-Contents were 152, not 192 as I read out. I apologise to the House; it makes no difference to the result of the vote on that amendment.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 757 and 758.
Moved accordingly, and, on Question, Motion agreed to.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 759 to 777. I speak also to Amendment No. 995. This group of amendments is a further part of the restatement exercise. Clause 675, Schedule 3, which it introduces, and the amendments that we are dealing with now are all concerned with what are known in jargon as squeeze-out and sell-out rights. Squeeze-out and sell-out are designed to address the problems of, and for, residual minority shareholders following a successful takeover bid. These concepts are not new; they have long been part of UK companies legislation. Provisions in respect of them are currently to be found in Part XIIIA of the Companies Act 1985.
This clause and Schedule 3 had two main purposes in seeking to amend Part XIIIA of the 1985 Act. The first was to bring existing squeeze-out and sell-out rights entirely into line with Articles 15 and 16 of the takeovers directive, which introduces EU-wide rules on these matters for the first time. Secondly, we wished to implement a number of recommendations from the Company Law Review relating to squeeze-out and sell-out.
The present amendments would restate Part XIIIA—on takeover offers—of the Companies Act 1985 in a clearer and simpler form. In doing so, the restated provisions would absorb those changes proposed to Part XIIIA now to be found at Clause 675 of and Schedule 3 to the Bill. I hope that these amendments will be supported.
Moved, That the House do agree with the Commons in their Amendments Nos. 759 to 777.—(Lord McKenzie of Luton.)
On Question, Motion agreed to.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 778 to 784. This group also includes Amendments Nos. 894, 996 and 997.
The majority of these amendments form part of the overall restatement exercise. A number of them restate various provisions of the 1985 Act which in some way relate to offences or sanctions—for example, the provisions on fraudulent trading and unfair prejudice. No changes of substance have been made.
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Amendments Nos. 996 and 997 remove a large number of paragraphs from Schedule 4. The paragraphs in question purport to make changes to offences provisions in the 1985 Act. However, as a result of the restatement exercise, the relevant provisions have now all been included within the Bill, with the necessary changes incorporated. The paragraphs are therefore now redundant.
Finally, Amendment No. 784 adds a new clause to the unfair prejudice provisions. If the court makes an order amending the company's articles, the new clause ensures that updated articles are registered and that a copy of the court order is supplied with any copies of the articles issued by the company, unless they already incorporate the amendments. This additional provision has been included to ensure consistency with Clauses 31 and 36 as they now stand and with the way in which they deal with resolutions and agreements which affect a company's articles.
Moved, That the House do agree with the Commons in their Amendments Nos. 778 to 784.—(Lord McKenzie of Luton.)
Lord Hodgson of Astley Abbotts: My Lords, I am grateful to the Minister for that explanation. I intervene briefly because fraudulent trading is an issue that particularly concerns directors of smaller companies. They are, by their very nature, more financially vulnerable. Such companies are a very important part of our growing economy, and the position of their directors needs to be clear at all times, not least because the offence carries a penalty of up to 10 years’ imprisonment if they get it wrong.
I think that the Minister said “no changes of substance”. I want to make it absolutely clear that a company director’s position has not shifted. I want to ensure that this is a restatement and that we are not clawing back or changing the balance in any way. This is an important aspect for the generality of directors of Britain’s companies as a whole.
Lord McKenzie of Luton: My Lords, I can give the assurance that no changes of substance have been made. This is just a restatement of the 1985 Act provision.
On Question, Motion agreed to.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 785 to 832.
These amendments essentially restate provisions of the current law. Noble Lords will remember that, at an earlier stage, we introduced into the Bill a new administrative procedure by which companies which have been erroneously struck off the register can be restored to life, so to speak. We also introduced new clauses to streamline the existing court procedures for restoration.
It is clearly illogical that the new provisions on restoration to the register should appear in the Bill but that the provisions on striking off from the register, to which they logically relate, should remain
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In undertaking the restatement, we have made no significant changes of policy but we have benefited from close scrutiny of the clauses by the Law Society and others. A number of drafting changes have been incorporated as a result.
Moved, That the House do agree with the Commons in their Amendments Nos. 785 to 832.—(Lord McKenzie of Luton.)
On Question, Motion agreed to.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 833 to 846.
Moved accordingly, and, on Question, Motion agreed to.
Lord McKenzie of Luton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 847 to 861. This group also includes Amendments Nos. 866, 871, 872, 875, 879, 880, 884, 887 and 888.
Many of the amendments in this group are technical drafting changes—for example, correcting cross-references in the light of the restatement exercise—but a number of them make changes to the provisions on the delivery of documents to the registrar, and I want to say a few words about them.
Clause 725 already sets out very clearly what requirements a company must meet in order to have delivered a document properly under the Bill. But the Bill as it stands is not consistent in its treatment of a failure to comply with those requirements. For example, Clause 640 relates to the requirement for a company to submit an annual return. Clause 640(6) makes it clear that, for the annual return to be treated as delivered at all, it must have been properly delivered; in other words a company must have complied with all the requirements related to proper delivery set out in Clause 725.
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However, there are other provisions in the Bill, relating to other types of document, which do not make the same explicit link to the requirements in Clause 725. This inconsistency seems unhelpful. It might be seen as implying that in certain cases only some, but not all, of the requirements for proper delivery need to be complied with, which would seem to beg the question of why they were requirements in the first place. It would also leave the status of documents which have been in some sense delivered, but which have not met all the requirements for proper delivery, rather ambiguous.
Amendment No. 852, therefore, now introduces consistency by setting out the general rule that, in order for a document to be considered as delivered, it must have been properly delivered in the terms of Cause 725. I think this avoids any potential ambiguity and will be useful both to companies themselves in
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Moved, That the House do agree with the Commons in their Amendments Nos. 847 to 861.—(Lord McKenzie of Luton.)
On Question, Motion agreed to.
Lord Sainsbury of Turville: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 862 to 898.
Moved accordingly, and, on Question, Motion agreed to.
Lord Sainsbury of Turville: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 899. I shall also speak to Amendments Nos. 901 to 910, 998 to 1010, 1012 and 1013. These are essentially drafting improvements to the way in which the company communications provisions in the Bill operate. Government Amendment No. 1013 is the main one to note. It removes Schedule 7, which was inconsistent with the Financial Services Authority's draft transparency rules to implement the transparency directive. Instead, Schedule 6 will apply to all companies, subject to any additional requirements imposed on traded companies by the transparency rules. This simplifies the communications schedules.
I understand that there was no time to debate these amendments in another place. I therefore record our thanks to the Opposition for Amendments Nos. 999 and 1004 to Schedules 5 and 6, to which the Government put their name. It is clear that the requirement is for the person to post a prepaid envelope to the company. It is irrelevant whether that person or someone else pays the postage as long as it is not the company having to pay on receipt.
Moved, That the House do agree with the Commons in their Amendment No. 899.—(Lord Sainsbury of Turville.)
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