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Lord Hodgson of Astley Abbotts: I am content with these amendments, although I was slightly surprised to see Amendment No. A213 in the group. The new clause before Clause 762 concerns Part 29, "Companies: Interpretation", and is entitled "Hard copy and electronic form and related expressions". It covers the whole of the Companies Act, and we were surprised to see it debated in this slightly narrower group that relates only to the Takeover Panel. As I read Amendment No. A213, it has ramifications for the entire piece of legislation, all 885 clauses. I was surprised it was brought in at this slightly narrower point, but perhaps I am unduly paranoid.
Lord Goldsmith: The reason for doing that is that, in moving the earlier amendments and substituting this
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description of hard copy, we need to give a definition of what hard copy is. That is done in the clause made by Amendment No. A213. The noble Lord is absolutely rightit goes wider than that. If he has difficulties and if there are other issues he wants to raise on that, we will not get to move the amendment until we get to that part of the Bill, but I have given the reason why it is there. If he has any other difficulty with it, I am sure he will find an opportunity to raise it.
Lord Hodgson of Astley Abbotts: In the spirit of honesty, I could reserve our position on Amendment No. A213 as and when we get there, because it seemed to go quite wide and have more implications, as the Attorney-General has just said, but otherwise I am content.
The noble Lord said: We have moved now to Clause 623, "Restrictions on disclosure", an issue that has given rise to some comment to us. The protections from disclosure of information about an individual or a business provided by Clause 623 do not apply to any disclosure made for the purpose of facilitating the carrying out by the Takeover Panel of any of its functions. It has been argued to us that this is a very broad statement, and that it seems to allow the panel to disclose information in any case so long as it can attribute it to facilitate the carrying out of its functions. That could be argued to cover almost any disclosure made by the panel at all in any circumstances. With that in mind I return to the purpose behind the amendment, which is not to hinder the workings of the panel, but rather to probe the Government on the drafting in this case. We see no compelling argument as to why this exclusion is so widely drafted. I am sure if the Government come up with a case we would have no problem accepting it, but it seems unnecessarily wide, and I hope the Government will consider narrowing it. I therefore beg to move.
Lord Goldsmith: These clauses introduce provisions relating to the protection of confidential information and they do so for good reason. The takeovers directive would in any event require us to make provision under law for when disclosures can be made. I do not think that there is any disagreement between us that when a regulator can disclose confidential information should be set out and carefully
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considered. However, we need to make sure also that the gatewaysthe avenues for disclosureare sufficient to enable the regulatory body properly to carry out its functions where it legitimately needs to do so. Otherwise, the directive would preclude the disclosure of information.
We have approached this by looking at existing precedents in company and financial services law. Clear precedents exist in earlier legislation which Parliament has made; for example, in Sections 348 and 349 of the Financial Services and Markets Act 2000, together with regulations made under those provisionsthe Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001. Those apply in relation to the Financial Services Authority. Schedule 2 seeks to mirror the disclosure gateways approach in those regulations. The regulations also provide that the FSA and its staff may disclose information for the purposes of discharging public functions.
There is a clear precedent. There is nothing objectionable about enabling the panel to disclose information for the purpose of facilitating the carrying out of any of its functions. Indeed, it is essential. It is quite a narrow power, as it refers not to any disclosure, but to disclosure for the purpose of facilitating the carrying out by the panel of any of its functions.
I shall give a couple of practical examples of where it would be necessary for the panel to be able to use this power to pass on information. The first is in appeals against decisions of the panel that are referred to the Takeover Appeal Board, which will be a distinct body from the panel. Without the necessary powers, the panel could not put the Takeover Appeal Board in possession of the relevant facts and documents necessary to consider an appeal. Equally, in making an application to the court, which Clause 630 envisages the panel may make, it could not disclose the relevant information without the power.
One could have attempted to add to the gateways list to seek to address all the individual cases in which one might see the need for the disclosure. That can be a difficult process. I am personally aware of a recent Bill where we ended up failing to cover an important disclosure gateway because we sought to list the gateways separately. In this case, it was decided, rightly, to wrap up the disclosure right of the panel by reference to the purposes of the panel carrying out its functions. That is the explanation for the clause. It seems to be an entirely appropriate way of describing the gateway.
Baroness Noakes: We discussed this in a similar context when we examined Chapter 12 of Part 15, which related to the disclosure gateways around the Financial Reporting Council and the FRRP. Those gateways are similarly widely drawn to those in Schedule 2. We will wish to return to the issue in connection with Chapter 15 on Report. I suggest to my noble friend Lord Hodgson that the similarities between this and the other disclosure requirements merit being looked at further.
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A number of gateways have been set up in legislation over the past few years that raise significant issues. The noble and learned Lord the Attorney-General and I have debated them in connection with another Bill, where we were concerned to ensure that the delegation levels were the right ones to put the appropriate controls around the gateway provisions. Similar issues may well arise in connection with this Bill, which is why we intend to return to the issue on Report.
Lord Hodgson of Astley Abbotts: I am grateful to my noble friend for her contribution, and for reminding me of discussions that we had on another part of the Bill. We will look at the issue again but, in the mean time, I beg leave to withdraw the amendment.
The noble Lord said: The amendment inserts "and" into Clause 623(3)(a). It has been put to us that, although this may seem an insignificant amendment, it could be an important restraint on the unnecessary disclosure of information by the panel. At present, subsection (3) permits the panel to disclose information that facilitates the carrying out of its functions. We have just discussed our concerns about the breadth of the gateway, although we accept that there is the need for some freedom on that account. Paragraphs (b) to (d) appear to stand alone and cover parts 1 to 3 of Schedule 2.
Part 1 of Schedule 2it is on page 430lists 12 specified persons. Some are clearly unacceptable, such as paragraphs 4 and 5, "The Bank of England" and "The Financial Services Authority". Some take us into new ground, such as paragraph 6:
Some are extremely wide and of no obvious immediate relevance to the Takeover Panel, such as paragraph 10, "A constable". Read this in conjunction with part 2, entitled "Specified Descriptions of Disclosures", which is a 56-item list covering myriad activities not necessarily anything to do with the operation of financial markets. Estate agents, the OFT, the Charity Commission and the National Lottery all appear there.
To put it crudely, the Takeover Panel is a hybrid bodybasically self-regulated but with a statutory wrapper, and not subject to any particular parliamentary scrutinywhich could appear to be becoming an enforcement arm of the Government generally. The success of the Takeover Panel to date, as the noble and learned Lord the Attorney-General and I have already agreed, has been based on it being flexible, quick and commercial in its approach. That in turn has given its regulatees confidence that they can be candid and open with it. We wonder whether that reputation will be put at risk if we do not tighten the disclosure clause. We have no problem with disclosure
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of information in part 2 of Schedule 2 to the parties in part 1 of Schedule 2, where such disclosure facilitates the panel carrying out its work, but why it should be called on to assist, say, the OFT is less clear to me. Inserting "and" at the end of paragraph (a) would restrict disclosure of information by the panel to cases affecting its own performance. I beg to move.
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