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Lord McIntosh of Haringey moved Amendment No. 24:
- Page 33, line 32, at end insert--
On Question, amendment agreed to.
Lord McIntosh of Haringey moved Amendment No. 25:
("( ) In prescribed cases, a contravention of that kind which would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty.").
After Clause 86, insert the following new clause--
(".--(1) Listing rules may make provision for the competent authority, if it considers that a sponsor has contravened a requirement imposed on him by rules made as a result of section 86(3)(c), to publish a statement to that effect.
(2) If the competent authority proposes to publish a statement it must give the sponsor a warning notice setting out the terms of the proposed statement.
(3) If, after considering any representations made in response to the warning notice, the competent authority decides to make the proposed statement, it must give the sponsor a decision notice setting out the terms of the statement.
(4) A sponsor to whom a decision notice is given under this section may refer the matter to the Tribunal.").
The noble Lord said: My Lords, in moving Amendment No. 25 I wish to speak also to Amendments Nos. 26, 27, 28, 137, 138, 174 and 175.
The government amendments in this group are necessary to fill three gaps in the provisions of the Bill dealing with the competent authority for listing. The first covers the arrangements for sponsors where we need to ensure that the competent authority continues to have available the range of disciplinary sanctions which it possesses at present. We signalled that we would make this change during the debate in
It may be convenient for me to say a few words about the Opposition amendment to the proposed new clause. I see that the Opposition nod in the affirmative. The Opposition Amendment No. 26 would extend the power of public censure to cover not only breaches of rules imposing requirements on sponsors, under Clause 86(3)(c), but also to cover rules specifying,
The purpose of Clause 86(3)(b), in contrast to Clause 86(3)(c), is not to allow the competent authority to make rules which bind sponsors, but to allow it to make rules which bind issuers of listed securities, or persons seeking admission to the list. Rules of this kind would tell issuers, not sponsors, what activities they were not to perform themselves, but would need to ask a sponsor to take on their behalf. If such rules were breached, the breach would then be on the part of the issuer, not the sponsor. If this happened, the competent authority already has the power to impose sanctions on the issuer, including a public censure, if appropriate, under Clause 88. If, however, the competent authority wanted to make a rule requiring sponsors to do any particular thing, it will do so under subsection (3)(c).
The second change we are making, with Amendments Nos. 174 and 175, is to align the provisions on the legal immunity of the complaints investigator, when investigating complaints against the FSA as competent authority, with those applying when he is investigating the FSA as regulator. This will ensure that he is able to carry out any investigations without being inhibited by the fear that he may be subject to legal action.
Finally, I turn to Amendments Nos. 27 and 28. These pick up on a point raised by the noble Lord, Lord Kingsland, at Report stage, when he noted that this clause referred to a,
[Amendment No. 26, as an amendment to Amendment No. 25, not moved.]
On Question, Amendment No. 25 agreed to.
Clause 92 [Competition scrutiny]:
Lord McIntosh of Haringey moved Amendments Nos. 27 and 28:
On Question, amendments agreed to.
Clause 101 [Control of business transfers]:
Clause 102 [Insurance business transfer schemes]:
Lord McIntosh of Haringey moved Amendments Nos. 30 to 34:
The noble Lord said: My Lords, I beg to move Amendments Nos. 30 to 34 en bloc.
On Question, amendments agreed to.
Clause 103 [Banking business transfer scheme]:
Clause 109 [Effect of order sanctioning business transfer scheme]:
Lord McIntosh of Haringey moved Amendment No. 37:
"services which must be performed by a sponsor",
under Clause 86(3)(b). I think that I understand what lies behind the amendment, but I do not believe that it is necessary.
"significant adverse effect on competition",
whereas the test used elsewhere in the Bill was one of a "significantly" adverse effect. This was, as the noble Lord quite rightly concluded, an error on the Government's part, and I am grateful to him for bringing this to our attention. These amendments are intended to correct this error. I beg to move.
Page 45, line 13, leave out ("significant") and insert ("significantly").
Page 45, line 24, leave out ("significant") and insert ("significantly").
Page 50, line 29, leave out ("deal in") and insert ("effect or carry out").
Page 50, line 35, leave out ("deal in") and insert ("effect or carry out").
Page 50, line 40, leave out ("deal in") and insert ("effect or carry out").
Page 51, line 7, leave out ("reinsurance business carried on") and insert ("business which consists of the effecting or carrying out of contracts of reinsurance").
Page 51, line 28, leave out ("reinsurance business") and insert ("the effecting or carrying out of contracts of reinsurance").
After Clause 113, insert the following new clause--
("Modifications
. The Treasury may by regulations--
(a) provide for prescribed provisions of this Part to have effect in relation to prescribed cases with such modifications as may be prescribed;
(b) make such amendments to any provision of this Part as they consider appropriate for the more effective operation of that or any other provision of this Part.").
On Question, amendment agreed to.
Lord McIntosh of Haringey moved Amendment No. 40:
After Clause 115, insert the following new clause--
(".--(1) The Authority may include in a code issued by it under section 115 ("the Authority's code") provision to the effect that in its opinion behaviour conforming with the City Code--
(a) does not amount to market abuse;
(b) does not amount to market abuse in specified circumstances;
(c) does not amount to market abuse if engaged in by a specified description of person.
(2) But the Treasury's approval is required before any such provision may be included in--
(a) the Authority's code; or
(b) a proposed code published by the Authority under section 116.
(3) "City Code" means the City Code on Takeovers and Mergers issued by the Panel on Takeovers and Mergers as it has effect at the relevant time.
(4) "Specified" means specified in the Authority's code.").
The noble Lord said: My Lords, in moving Amendment No. 40 I wish to speak also, for the sake of clarity, to opposition Amendment No. 41--which is an amendment to Amendment No. 40--and to opposition Amendments Nos. 42, 63, 64 and 65.
We come now to an issue which has occupied a good deal of space in the public prints in the past few days, indeed, in the past few weeks. I hope, nevertheless, that I need not detain noble Lords too long. However, it is necessary to set out some of the background.
I have made it clear that we support the work of the Takeover Panel. We believe that it has done a good job in regulating the conduct and process of takeovers. We want it to continue to do that job in the way that it has been doing it. We also believe that it is vital that our financial markets are protected from the effects of market abuse wherever and whenever it occurs. That is why we have introduced the new market regime in the Bill.
I do not think that these aims are in conflict in any way. It is, of course, the case that market abuse, indeed serious market abuse, can occur during takeovers. Because of that it is important that proper procedures and arrangements are in place between the FSA and the Takeover Panel. We do not want unnecessary duplication or to create unnecessary uncertainty.
At the beginning of this week I wrote to noble Lords who had taken part in the earlier debates, attaching the paper which I had asked the FSA to produce after our previous debate. This sets out the progress that has been made to date on finalising procedures and agreements. As that paper makes clear, the FSA and the panel are working on three fronts: first, identifying provisions which can provide safe harbours in the FSA's code of market conduct; secondly, on an operating agreement which sets out liaison and information sharing arrangements; and, thirdly, on a policy statement on the circumstances in which the FSA would expect the Panel to lead, and the circumstances in which it might take the lead itself.
It is clear to me that this is the right way forward, as it is in the case of recognised investment exchanges which are also working with the FSA on similar arrangements to deal with possible overlap. Concern has been expressed, however, that these arrangements by themselves are not enough in the case of the Takeover Panel. Quite why the Takeover Panel is in such a special position compared with exchanges, I am not sure. But, be that as it may, the concern is, apparently, that the FSA would be forced to intervene by the courts, regardless of its stated policy that it will not seek to intervene except in exceptional circumstances.
As I said in our previous debates, fears have been grossly overstated. It is clear to us and to the FSA that the FSA could adopt a policy of not intervening where it thought that it was being dragged in for tactical reasons. It is clear that the FSA could adopt a policy of leaving it to the panel to take action where it was satisfied that the panel could deal with the mischief adequately.
It is also clear that the courts would not look kindly on parties to a bid, and on others involved in the bid, seeking to circumvent the clear position that the courts have adopted as regards judicial interference in takeovers. As I said in our earlier debate, in my view the courts would frown on any such attempt and would view favourably any effort on the part of the FSA to avoid that happening. The FSA will, of course, have to consider making exceptions to any policy it adopts--in this area as well as anywhere else--but, as long as it acts reasonably, there will be nothing to fear.
Let me make two further points. First, there is overlap now between the regulatory regime and the Takeover Panel's code, as there is between the panel's code and the criminal offences of insider dealing and market manipulation. No one has thought to frustrate takeover bids to date through these means; the only change following the introduction of the new market abuse regime will be the potential degree of overlap, not the nature of it.
Secondly, it is extremely difficult to see how involving the FSA will have any effect on the timetable of the bid. Despite this being the main concern expressed by the panel, no one has plausibly explained how this might occur. The panel has stated that it is worried about injunctions for market abuse. But such injunctions would be aimed at the abuse, not at the merits or otherwise of the bid; they would not interfere in the takeover process.
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