Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Goldsmith: Before the noble Lord withdraws his amendment, I really must help to lower the temperature. I felt we were being criticised for not having brought a very long speaking note to enable me to take noble Lords through each and every one of the gateways. The noble Lord knows—we met only this morning—that we are trying very hard to work constructively on the Bill and that we welcome scrutiny. If there are problems with any particular aspects, we will look at them. All I was seeking to do was to say that, because there is going to be a general prohibition, it is obvious that there will need to be gateways—and this is the way in which we have approached the issue. We can continue this discussion outside, I am sure, or, if necessary, at later stages of the Bill.

Lord Hodgson of Astley Abbotts: I am grateful to the Attorney-General. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.15 pm

Lord Hodgson of Astley Abbotts moved Amendment No. A143B:

The noble Lord said: It is with some trepidation that I return to the issue of gateways—but this time it is on a slightly wider basis than merely UK gateways.

This is a probing amendment relating to an issue which has been raised with us by lawyers at Travers Smith. We discussed at some length the exclusions to the protections from disclosure in the previous amendment. Under Clause 623(7) the protections from disclosure do not apply to onward disclosure to, first, the Financial Services Authority; secondly, an authority exercising powers under Article 4.1 of the takeovers directive; or, thirdly, an overseas equivalent to the takeover panel if disclosure is made either to facilitate the takeover panel's functions or in a manner or to a person set out in Schedule 2.

We have no problem with the first exclusion and we probably have no problem with the second, but the third is another matter. The words in the last two lines of Clause 623(7)(c)—

provide a very broad and all-encompassing gateway. What would be the redress for a company whose confidential information was somehow leaked? How would this operate on a pan-European scale?

Without wishing to repay the Attorney-General in his own coin, it would be helpful if he could explain the background to the first and second exclusions and—
28 Mar 2006 : Column GC298
I say this with my tongue firmly in my cheek—perhaps he can give examples of when he thinks this power will be needed. I beg to move.

Lord Goldsmith: I shall respond to Amendment No. A143B and take the opportunity to speak to government Amendments Nos. A144 and A156.

The purpose of Amendment No. A143B is to remove Clauses 623(6) and (7). The problem is that without those subsections we would not meet the requirements in the takeovers directive. To ensure full compliance with the directive, we need to go one step further, which is why we have brought forward the government amendments I have identified. Article 4.4 of the directive requires that whenever a takeover or financial services supervisory authority passes information to another such authority in a different member state, the relevant disclosure rules shall be those of the member state of the authority receiving the information. The provisions do not disapply the disclosure rules that apply to the panel in cases where that information is passed by the receiving authority to another party.

That means we need to amend what we have provided in the way set out in government Amendment No. A144. The noble Lord has asked why all three categories are necessary. The takeovers directive identifies two types of body. In Article 4.4 it talks about the supervisory authorities of the member states for the purposes of the directive and other authorities supervising capital markets. That appears to be two sorts of bodies. So far as we are concerned, we know what those bodies are in this country, but we cannot be absolutely confident what they will be in another country. That is why it is necessary to identify not just, as in subsection (7)(b),

but also any person or body that exercises functions of a public nature under legislation in an EU state other than the United Kingdom that are similar to the panel's functions or those of the Financial Services Authority. That is to ensure that we have caught the same sort of body in another state.

The noble Lord asks an important question: what is the obligation on those bodies regarding the disclosure of information they receive? The answer is that they will be similarly required by Article 4 of the takeovers directive to maintain professional secrecy except in so far as it is provided by law. There will have to be parallel provisions in the other relevant country about the disclosure of information, and the body that receives this information will be bound by those rules rather than by our rules, hence the need for the amendment.

I hope I have explained sufficiently the government amendments and why we have a problem with the noble Lord's amendment.

Lord Hodgson of Astley Abbotts: I am grateful to the Minister for the teaching on the takeovers directive. I have noted that. What gave rise to concern outside was that category C was separated from A and B; that
28 Mar 2006 : Column GC299
is to say, it was not the Financial Services Authority or an equivalent body in an EU jurisdiction, and ditto for the Takeover Panel. It was the idea that category C was something completely different that gave rise to concern that there were a whole series of other bodies out there that people did not quite understand, which might be involved and therefore brought into this network. Can you have a network of gateways? I do not know. I will read carefully what the Minister said. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Goldsmith moved Amendment No. A144:

"(6) Subsection (2) does not apply to—
(a) the disclosure by an authority within subsection (7) of information disclosed to it by the Panel in reliance on subsection (3);
(b) the disclosure of such information by anyone who has obtained it directly or indirectly from an authority within subsection (7)."

On Question, amendment agreed to.

Lord Hodgson of Astley Abbotts had given notice of his intention to move Amendment No. A144A:

The noble Lord said: I think that we have hacked this issue to death already and I do not propose to move the amendment.

[Amendment No. A144A not moved.]

Clause 623, as amended, agreed to.

Schedule 2 [Specified persons, descriptions of disclosures etc for the purposes of section 623]:

Lord Goldsmith moved Amendment No. A145:

" A disclosure for the purpose of enabling or assisting an enforcement authority under the Financial Services (Distance Marketing) Regulations 2004 (S.I. 2004/2095) to exercise its functions under those Regulations."

The noble and learned Lord said: In moving Amendment No. A145, I shall speak also to Amendments Nos. A146 and A147. My speaking notes say that this is a very simple amendment but, in the light of what has taken place, it may not be quite as simple as that. It is intended to extend the Takeover Panel's powers to pass information under the disclosure gateways set out in Schedule 2, and it does that in two ways.

First, it enables the Takeover Panel to pass information for the purposes of helping an enforcement authority under the Financial Services (Distance Marketing) Regulations 2004 to do its job. That closely mirrors the existing disclosure gateway at paragraph 43 of Schedule 2 in relation to enforcement authorities under the Consumer Protection (Distance Selling) Regulations 2000.

Secondly, it allows disclosure by the panel in connection with disciplinary proceedings against a foreign lawyer. Such a disclosure gateway already
28 Mar 2006 : Column GC300
applies in relation to members of the domestic legal profession. Members of the Committee will be well aware that we now operate very much within an international takeover marketplace—perhaps not quite as international in some respects as we would want but that is another issue.

Lawyers who advise bidders are frequently members of a legal profession from outside England and Wales. To ensure good conduct, we believe it is right that the panel should be able to forward to the relevant disciplinary bodies information concerning transgression of the UK takeover rules in which such lawyers are involved. If we can send information to the regulatory bodies applying to English and Welsh lawyers—the Law Society and the Bar Council—it is right that the Takeover Panel should be able to do the same in relation to foreign lawyers if they see information which shows that they have transgressed the rules. I beg to move.

Next Section Back to Table of Contents Lords Hansard Home Page