|Previous Section||Back to Table of Contents||Lords Hansard Home Page|
The noble Lord said: In moving Amendment No. A149, I shall speak to Amendments Nos. A150 and A151 as well. This is the first time I have spoken at this sitting of the Committee. We on these Benches associate ourselves with the opening remarks of the noble Lord, Lord Hodgson, on the Takeover Panel, which we too regard as one of the great successes of the regulatory regime in this country. These amendments are put forward in the same spirit of constructive scrutiny which we hope will make the Bill as effective as possible.
All the amendments deal with Clause 628 and the new criminal offence in which takeover bid documentation does not meet the standards required by the takeovers directive. The Government previously indicated that the only reason for creating this offence is validly to implement the takeovers directive.
Amendment No. A149 deals with subsection (1), which does not specify to which regulated markets the offence applies. Since the takeovers directive must be implemented by all EU states by the appointed date in May, it is presumed that each member state will legislate in respect of its own regulated markets only. Broader scope is unnecessary and inappropriate.
Amendment No. A150 deals with subsection (2), which sets out who may be found guilty of this offence. Subsection (2)(a), in particular, provides for a wide range of persons who may not in fact be responsible for the content or preparation of the document to be capable of committing the offence. This is not required validly to implement the takeovers directive and is
28 Mar 2006 : Column GC308
inconsistent with the proposal of the Department for Trade and Industry in its paper dated 29 July 2005. The offence should apply only to the person or persons making the bid and to persons named in the document as taking responsibility for it. There is an established responsibility regime, and the offence should not be inconsistent with that.
Amendment No. A151 deals with subsection (4), which we believe is unclear in its meaning. However, there is a danger of its being read as making any officer of a body corporate in breach of this provision automatically guilty of the offence. This kind of strict liability is not required by the takeovers directive and gold-plating of this nature is inconsistent with the Government's stated aim of minimising the change to the takeover regime. The provision is redundant as the scope of those subject to the offence speaks for itself. I beg to move.
Lord Goldsmith: I welcome the noble Lord to this afternoon's Committee sitting. He will have a success with his first contribution, I can tell him now. I am glad that he associated himself with what the noble Lord, Lord Hodgson, said about the Takeover Panel; he might have added that I said the same thing too.
We come back to the implementation of Article 17 of the directive and the need to put in place sanctions which shall be "effective, proportionate and dissuasive". We need to meet that obligation, but we do not want to impose unjustified potential liability on those involved in takeover activities. This is a balancing exercise and we need to test the amendments the noble Lord has tabled and also government Amendment No. A154 in this group, which I shall speak to.
Amendment No. A149 would make it clear that the offence will apply only to takeover bids for companies traded on a regulated market in the United Kingdom. By reason of a slightly complicated route, we believe that already to be the effect of the clause because of the jurisdictional provisions of the directive, and so forth. I do not think I need to go through that. Although the amendment does not substantively change the effect of the clause, it makes it clear and transparent, which seems to us a good thing, so I can accept Amendment No. A149.
However, I am afraid that I have to take a different position on Amendments Nos. A150 and A151. They are more substantial in their effect and would narrow considerably the coverage that the offence is intended to have. With regard to Amendment No. A150, the offence is trying to make sure that those associated with the preparation of bid documentation and offer and response documents take that job seriously. They have to take care to ensure that the information provided is accurate, complete and complies with the minimum requirements the directive sets out.
It is important that the duty should extend beyond the person named as taking responsibility for it, which is what it would be limited to by Amendment No. A150. The directors, the officers and so forth of the offeror and offeree company should be capable of being subject to the offence where the bid
28 Mar 2006 : Column GC309
documentation does not meet the required standards. If this is to work, it means that the responsible senior players in the bidder and target company need to have regard to whether the document is fit for purpose and meets those minimum legal requirements. It is not enough to limit the duty just to the person named in the offer document as taking responsibility for it, as suggested by Amendment No. A150.
Amendment No. A151 seeks to remove Clause 628(4). That would enable directors and officers in default to hide behind the shell of a company to avoid liability where an offence in relation to bid documentation is committed by that company. Given that the bidder will often be a company, it seems important to keep that provision, so we cannot accept Amendment No. A151 either.
As I said at the outset, we want to make sure that the overall approach is balanced. That is why Amendment No. A154 has been tabled, in the name of my noble friend Lord Sainsbury. As drafted, Clause 628 would apply not only in relation to bid documentation relating to takeover bids within the scope of the takeovers directive, but to other types of bids. We do not think that necessary, so the amendment would limit the ambit of the offence to documentation related to takeovers directive bidsthat is, bids for companies governed by the laws of a member state and whose shares are traded on a regulated market. We think that that will make the offence, the scope of it and those covered by it, proportionate in ensuring that there is an adequate sanctions regime in place and that it does not unduly impede honest directors, advisers and others in the proper exercise of their duties, but gives a proper incentive to make sure that the bid documentation and the response documentation are accurate and provide the minimum requirements. In due course, I will move government Amendment No. A154, for those reasons.
Lord Sharman: I am very grateful for the detailed explanation the Attorney-General has given. I should, of course, have associated my remarks with his, and for that I apologise, particularly since the director-general of the Takeover Panel is here.
I am pleased that the noble and learned Lord accepts Amendment No. A149. I should like to consider very carefully what he said about Amendments Nos. A150 and A151, as I may wish to come back to them later.
I quite understand the Attorney-General's stricture about the need for offer documents to be accurate. Those of us who have signed-off offer documents have
28 Mar 2006 : Column GC310
seen our lawyers staring at us and promising us eternal hellfire and damnation if we as much as get a comma out of place, so I am very much aware of that.
However, will it always be clear who the person making the bid is? In many cases, the offeror entity may be a "newco", which is either backed by a consortium of investors or owned by a single parent company. The newco itself will have no independent officers or, indeed, history. Under these circumstances, we wonder whether it will be clear who the person making the bid is. Therefore, would it not be better to refer either to the offeror or to those required to take responsibility for the contents of the bid documents?
The amendment follows the latter of these two options. It will make the clause clearer for all involved. It seeks to insert the words contained in the amendment at the end of line 20, and Amendment No. A149C seeks to remove paragraphs (a) and (b). I beg to move.
|Next Section||Back to Table of Contents||Lords Hansard Home Page|