HC Deb 02 April 1930 vol 237 cc1373-93

I beg to move, in page 18, line 13, at the end, to insert the words: Provided that no such scheme of amalgamation shall provide, without the consent of the owner of the undertaking, for the separation of the treating and disposing of coal from the working thereof, or, in the case of an undertaking of which the primary object is not coal mining, for the separation from the undertaking of any coal mine worked as ancillary for such primary object. There was objection to this Amendment in the Committee stage, but there was no dispute about its merits. There was no dispute about it being right in the case of a compulsory amalgamation to ensure, as in the case of absorption under the earlier Act, that where you have an undertaking which deals with the getting of coal and also with the treating and disposing of coal, you should not be able to sever the colliery from the other parts of the undertaking. It was said in the Committee stage that this Amendment was not necessary, but I would invite the Attorney-General to consider whether he was not wrong in what he said. I have read and re-read his statement. He dismissed the Amendment as unnecessary on the following grounds. He said that the distinction between amalgamation and absorption must be tested by looking at the point of view of the person who is being taken over. If he was unwilling, it was absorption; if he was willing, it was amalgamation. I should like to quote one passage in which he summed up the position. He said: The position is this: You may have a scheme in which A, B, C and D wish to come together. A, B and C may be willing, and D may be unwilling. I think the Attorney-General displayed rather less than his usual clarity of expression. In the first place, he says that A, B, C and D wish to come together, and then he says that D is unwilling. The first three would say, 'We are being amalgamated,' and D would say, 'I am being absorbed.' The provisions of the Act would protect D, and therefore the words are unnecessary from his point of view."—[OFFICIAL REPORT, 26th Feburary, 1930; col. 2348, Vol. 235.] I agree that where you have A, B and C who are willing and D is unwilling, clearly, D is being absorbed and is covered by the reference to the old Act. On that there is no dispute, but what the Attorney-General overlooked was this, that this Bill introduces something new, something foreign to the Act of 1926. There is such a thing as compulsory amalgamation as distinct from absorption; compulsory amalgamation where nobody is willing, where neither A, B nor. C are willing to be amalgamated. Under the 1926 Act—this is where the vice of legislating by reference, by merely introducing sections of an earlier Act, is so apparent—to talk about compulsory amalgamation would be a contradiction in terms, because it was of the essence of the amalgamation under Section 1 (1) that the persons had agreed and having agreed, they were permitted to put forward a scheme.

8.0 p.m. Compulsory amalgamation did not exist under the Act of 1926. The moment you had an agreement of two or more persons and you wanted to bring in a third party, if the party was unwilling, then there was compulsion, the third party being absorbed. That being so, Section 1 (1) of the Act of 1926 applies to absorption and applies to the case where a person is absorbed into an amalgamation where there are some willing parties and, unless the meaning of the words has entirely changed—there is no suggestion of that, because this Bill has to be read with the Act of 1926—absorption still assumes the existence of some unwilling party, and assumes that it is expedient that the party to be absorbed should be absorbed. CLAUSE 13—I think the President of the Board of Trade has nodded assent to this—contemplates a case where none of the parties may be willing; that the "two or more undertakings" referred to may none of them be willing to amalgamate. They may be undertakings which do not necessarily consist of coal mines but may only comprise coal mines. It is therefore possible, I do not say it will happen, to order a compulsory amalgamation of that part of a coal mine comprised in an undertaking which does not wholly consist of a coal mine. They may be required to produce a scheme, and in case of failure a scheme may be produced over their heads. In the end they may be compulsorily amalgamated. If there is any doubt about that it is made still clearer in the form which the clause originally took. It might have been possible under the form of the original clause to say that you were still referring to voluntary amalgamation because it referred to amalgamations which were entitled to submit schemes, and those who were entitled to submit schemes were those who had agreed to submit schemes under the Act of 1926. Agreement was a precedent condition to submitting a scheme. Those words have been taken out.

It cannot be disputed that we are dealing here with two sets of things, both of which are compulsory; compulsory amalgamation of A. B. and C. none of whom are willing to be amalgamated, and compulsory absorption, where A and B are willing, but where the third party is unwilling. I invite the Attorney-General to consider whether in the case we want to cover—this only refers to compulsory amalgamation where none are willing—it is not necessary to have this protection against the severance of undertakings to which I have referred. I submit that these words are necessary, or failing that that some words should be inserted which will make it perfectly plain that in the case where none are willing to amalgamate all are to be treated as if they were being absorbed.


I beg to second the Amendment.

I hope the Government will accept the proposal. At an earlier stage I put a question to the President of the Board of Trade as to what would happen in the case of a coal mine which had been acquired and worked for the benefit of a particular industry, and the reply I received was that the Commissioners would have power to compel the inclusion of this coal mine in any amalgamation. I can conceive the case where such a coal mine may be compulsorily included in a scheme which is composed largely of the majority of those who had previously been somewhat antagonistic to this particular mine. In that case it would not be a very good or desirable thing, and there should be some sort of appeal.


The hon. and learned Member for Rusholme (Sir B. Merriman) will not expect me to pronounce on the law of the matter but rather on the question of fact, and I can indicate at once that the Amendment is acceptable to the Government. Under the first part of the Act of 1926 amalgamation, to put it broadly and generally but I hope accurately, is on a voluntary basis. When we pass into compulsion we pass into absorption. There is a provision later in the Act of 1926 which provides against the segregation of the alliances mentioned in this Amendment. During the Committee proceedings there was some little doubt, as there always is in legislation by reference, but in order to remove any doubt, and as we are on the basis of compulsion applied to amalgamations as well as to absorptions, there is no reason in the world why we should not meet the hon. and learned Member's views, and, accordingly the Government are quite willing to accept the Amendment.

Captain PEAKE

Before the Amendment is passed I should like to say a word on this matter because it is one on which I have taken peculiar interest. I moved it during the Committee stage and I received certain reassurances from the Attorney-General which led me to withdraw it. I am glad that upon second thoughts the Attorney-General has accepted the interpretation of the law put forward on this side of the House rather than the interpretation which he said was the correct one.


I hope the hon. Member will not say that. What I said was that if there is any doubt about it it is much better to clear it up.

Amendment agreed to.


I beg to move, in page 18, line 13, at the end, to insert the words: (2) If the owner of any undertaking (in this Sub-section referred to as the 'transferor undertaking') proposed by any scheme submitted by the Coal Mines Reorganisation Commission to be amalgamated with, or absorbed in, any other undertaking (in this Sub-section referred to as the 'transferee undertaking') satisfies the Railway and Canal Commission that any money or securities belonging to the transferor undertaking formed, at the date of the passing of this Act, a reserve which, when the scheme was submitted, was not required for the efficient carrying on of the transferor undertaking, the Railway and Canal Commission shall not confirm the scheme except after making such modifications, if any, as may be necessary for securing that the money or securities will not be transferred to the transferee undertaking. This Amendment has been put down in lieu of the one which was moved by the hon. Member for Lancaster (Mr. Ramsbotham) in Committee stage, which the President of the Board of Trade was good enough to say he would consider. I understand that in its present form the right hon. Gentleman will accept the Amendment. The purpose is that where a concern has been putting aside reserves to meet the termination of a wasting asset, such as a coal mine, and these reserves are outside the business and not needed for the present day, they shall not be compulsorily taken into the amalgamation. That is what it means. May I take this opportunity of thanking the right hon. Gentleman for the courteous way in which he has met us on this matter.


I beg to second the Amendment.


In a single sentence, the position is as stated by the hon. Member and have pleasure in accepting the Amendment.

Amendment agreed to.


I beg to move, in page 18, line 23, at the end, to insert the words: Notwithstanding anything contained in Section six of the Act of 1926, the Board of Trade shall not refer to the Railway and Canal Commission any scheme prepared and submitted under Sub-section (1) of tins Section, from which all the owners of the undertakings concerned dissent. My right hon. Friend is in such a reasonable and accommodating frame of mind that I hope he will be able to accept this Amendment also. As he does not signify his readiness to do so, I must briefly outline the merits of the proposal. The Amendment proposes that the Commission shall not have power to put forward absorption schemes where every single one of the collieries it is proposed to absorb dissent from the absorption. I should have thought that one only had to state that proposition for it to command universal assent. The only case that can be made out for Government interfering in order to promote these amalgamations is when they are amalgamations which are sound business and ought to go through, but for some reason or other something is keeping the parties apart. In a case like that some Government intervention is necessary—a sort of combination of ginger and persuasion.

There are probably cases where some of the parties would be quite willing to amalgamate but they do not like to take a dissentient owner into court themselves. I have known cases like that, and in such a case, if the amalgamation was put forward by the Mines Department with or without the assistance of the Commission, you would probably find that a large majority of the people it was proposed to amalgamate were quite prepared to assent. But what we are asked to contemplate here is not only the case where some of the parties are willing but a case where no single member, no single firm, of what is to be the new combine, is willing to come in. Not one single firm thinks it good business or that it will be to their advantage. They are all opposed to it. They all think it unsound, and will do better outside.

It is fantastic to force amalgamation in a case like that. I should have thought the proper thing in a case like that was for the Board of Trade to say, "We will buy you out and run the show. We think it can be better run as a single concern, and we will buy you out." I am not fond of nationalisation, but there might be something to be said for that. But what is proposed here is that you should force five or 10 companies to get together when not one single one of them thinks it a sound business proposition. You are going to force them to come together, without taking any financial responsibility yourselves. That is theoretical amalgamation run mad; and I should have thought one only had to state the nature of the case for the right hon. Gentleman to accept it. I do not think he has an exaggerated belief in what amalgamation will do, and if that is his position do not let him leave a blemish on this Bill which forces him to take an action to which every single party is opposed.


It is difficult to indicate that the Government cannot accept this Amendment, in view of the terms in which my right hon. Friend has proposed it; but perhaps he will bear in mind that the two preceding Amendments have been accepted, and that that is not a bad quota. The short reply to the right hon. Gentleman is this: that, of course, primâ facie it seems rather strong that a proposal should be made where all the parties in any district are

against it; but we must remember that there might be quite strong forces in each individual undertaking, although not commanding a majority, which were in favour of amalgamation. The effect of the Amendment would be, in some parts of the country, that there would simply be a stand in united form against amalgamation, and that it would be quite beyond the power of the amalgamation commissioners and the Railway and Canal Commissioners even to consider the case. On the other hand, if the clause remains as it is in the Bill the reorganisation commission, that is the amalgamation commission, can propose a scheme, and that will go to the Railway and Canal Commission. The initial body can decide whether it is desirable to put up a scheme at all, and the Railway and Canal Commission has to decide whether it is in the national interests that it should proceed and whether the proposal is fair as amongst the parties affected. I do not think it will be possible for the Government to go back upon that procedure without exposing amalgamation to the risk of not proceeding at all.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 103; Noes, 277.

Division No. 248.] AYES. [8.18 p.m.
Acland-Troyte, Lieut.-Colonel Everard, W. Lindsay Rentoul, Sir Gervais S.
Allen, Lt.-Col. Sir William (Armagh) Fremantle, Lieut.-Colonel Francis E. Reynolds, Col. Sir James
Amery, Rt. Hon. Leopold C. M. S. Graham, Fergus (Cumberland, N.) Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Ashley, Lt.-col. Rt. Hon. Wilfrid W. Greene, W. P. Crawford Roberts, Sir Samuel (Ecclesall)
Atkinson, C. Gritten, W. G. Howard Ross, Major Ronald D.
Baldwin, Rt. Hon. Stanley (Bewdley) Guinness, Rt. Hon. Walter E. Ruggles-Brise, Lieut.-Colonel E. A.
Balniel, Lord Gunston, Captain D. W. Russell, Alexander West (Tynemouth)
Beamish, Rear-Admiral T. P. H. Hannon, Patrick Joseph Henry Samuel, A. M. (Surrey, Farnham)
Beaumont, M. W. Hennessy, Major Sir G. R J. Samuel, Samuel (W'dsworth, Putney)
Birchall, Major Sir John Dearman Hills, Major Rt. Hon. John Waller Sandeman, Sir N. Stewart
Boothby, R. J. G. Hope, Sir Harry (Forfar) Shepperson, Sir Ernest Whittome
Bourne, Captain Robert Croft Hudson, Capt. A. U. M. (Hackney, N.) Skelton, A. N.
Bracken, B. Hurd, Percy A. Smith, Louis W. (Sheffield, Hallam)
Braithwaite, Major A. N. Jones, Sir G. W. H. (Stoke New'gton) Southby, Commander A. R. J.
Brown, Col. D. C. (N'th'I'd., Hexham) King, Commodore Rt. Hon. Henry D. Spender-Clay, Colonel H.
Brown, Brig,-Gen.H.C.(Berks, Newby) Lamb, Sir J. Q. Stanley, Maj. Hon. O. (W'morland)
Buchan, John Lane Fox, Col. Rt. Hon. George R. Thomson, Sir F.
Carver, Major W. H. Law, Sir Alfred (Derby, High Peak) Tinne, J. A.
Castle Stewart, Earl of Little, Dr. E. Graham Titchfield, Major the Marquess of
Chamberlain, Rt. Hn. Sir J.A. (Birm.,W.) Lymington, Viscount Todd, Capt. A. J.
Chamberlain, Rt. Hon. N. (Edgbaston) MacRobert. Rt. Hon. Alexander M. Train, J.
Chapman, Sir S. Makins, Brigadier-General E. Tryon, Rt. Hon. George Clement
Colfox. Major William Philip Margesson, Captain H. D. Vaughan-Morgan, Sir Kenyon
Colville, Major D. J. Merriman, Sir F. Boyd Ward, Lieut.-Col. Sir A. Lambert
Courtauld, Major J. S. Mitchell, Sir W. Lane (Streatham) Warrender, Sir Victor
Cranbourne, Viscount Mond, Hon. Henry Waterhouse, Captair Charles
Croft, Brigadier-General Sir H. Monsell, Eyres, Com. Rt. Hon. Sir B. Wells, Sydney R.
Crookshank, Capt. H. C. Moore, Sir Newton J. (Richmond) Windsor-Clive, Lieut.-Colonel George
Culverwell, C. T. (Bristol, West) Morrison, W. S. (Glos., Cirencester) Womersley, W. J.
Cunliffe-Lister, Rt. Hon. Sir Philip Morrison-Bell, Sir Arthur Clive Worthington-Evans, Rt. Hon. Sir L.
Dalkeith, Earl of Muirhead, A. J. Young, Rt. Hon. Sir Hilton
Davidson, Major-General Sir J. H. Oman, Sir Charles William C.
Davies, Dr. Vernon Peake, Capt. Osbert TELLERS FOR THE AYES.—
Davies, Maj. Geo.F.(Somerset, Yeovil) Peto, Sir Basil E. (Devon, Barnstaple) Sir George Penny and Captain
Dixey, A. C. Ramsbotham, H. Wallace.
Edmondson, Major A. J. Remer, John R.
Adamson, Rt. Hon. W. (Fife, West) Hall, Capt. W. P. (Portsmouth, C.) Montague, Frederick
Adamson, W. M. (Staff., Cannock.) Hamilton, Mary Agnes (Blackburn) Morgan, Dr. H. B.
Addison, Rt. Hon. Dr. Christopher Harbord, A. Morley, Ralph
Altchison, Rt. Hon. Craigie M. Hardle, George D. Morris-Jones, Dr. J. H. (Denbigh)
Alpass, J. H. Hartshorn, Rt. Hon. Vornon Morrison, Herbert (Hackney, South)
Ammon, Charles George Hastings, Dr. Somerville Morrison, Robert C. (Tottenham, N.)
Angell, Norman Haycock, A. W. Mort, D. L.
Arnott, John Heyday, Arthur Moses. J. J. H.
Aske, Sir Robert Hayes, John Henry Mosley, Lady C. (Stoke-on-Trent)
Attlee, Clement Richard Henderson, Arthur, Junr. (Cardiff, S.) Mosley, Sir Oswald (Smethwick)
Ayles, Walter Henderson, Thomas (Glasgow) Muff, G.
Baker, John (Wolverhampton, Bilston) Henderson, W. W. (Middx., Enfield) Muggeridge, H. T.
Baldwin, Oliver (Dudley) Herriotts, J. Murnin, Hugh
Barnes, Alfred John Hirst, G. H. (York W. R. Wentworth) Naylor, T. E.
Barr, James Hirst, W. (Bradford, South) Noel Baker, P. J.
Batey, Joseph Hoffman, P. C. Oliver, George Harold (Ilkeston)
Bellamy, Albert Hopkin, Daniel Oliver, P. M. (Man., Blackiey)
Bennett, Captain E.N. (Cardiff, Central) Hore-Belisha, Leslie Owen. H. F. (Hereford)
Bennett, William (Battersea, South) Horrabin, J. F. Palln, John Henry
Benson, G. Hudson, James H. (Huddersfield) Paling, Wilfrid
Bentham, Dr. Ethel Hutchison, Maj.-Gen. Sir R. Palmer, E. T.
Bevan, Aneurin (Ebbw Vale) Isaacs, George Parkinson, John Alien (Wigan)
Bowen, J. W. Jenkins, W. (Glamorgan, Neath) Perry, S. F.
Broad, Francis Alfred John, William (Rhondda, West) Pethick-Lawrence, F. W.
Brockway, A. Fenner Johnston, Thomas Phillips, Dr. Marion
Bromfield, William Jones, F. Llewellyn- (Flint) Picton-Turbervill, Edith
Bromley, J. Jones, Henry Haydn (Merloneth) Pole, Major D. G.
Brooke, W. Jones, Morgan (Caerphilly) Potts, John S.
Brothers, M. Jones, T. I. Mardy (Pontypridd) Price, M. P.
Brown, C. W. E. (Notts. Mansfield) Jowitt, Rt. Hon. Sir W. A. Quibell, D. J. K.
Brown, Ernest (Leith) Kelly, W. T. Ramsay, T. B. Wilson
Brown, Rt. Hon. J. (South Ayrshire) Kennedy, Thomas Raynes, W. R.
Brown, W. J. (Wolverhampton, West) Kenworthy, Lt.-Com, Hon. Joseph M. Richards, R.
Buchanan, G. Kinley, J. Richardson, R. (Houghton-le-Spring)
Burgess, F. G. Kirkwood, D. Riley, Ben (Dewsbury)
Buxton, C. R. (Yorks. W. R. Elland) Knight, Holford Riley, F. F. (Stockton-on-Tees)
Buxton, Rt. Hon. Noel (Norfolk, N.) Lang, Gordon Ritson, J.
Caine, Derwent Hall- Lansbury, Rt. Hon. George Roberts, Rt. Hon. F. O. (W. Bromwich)
Cameron, A. G. Lathan, G. Romeril, H. G.
Cape, Thomas Law, Albert (Bolton) Rosbotham, D. S. T.
Carter, W. (St. Pancras, S.W.) Law, A. (Rosendale) Rowson, Guy
Charleton, H. C. Lawrence, Susan Salter, Dr. Alfred
Chater, Daniel Lawrie, Hugh Hartley (Stalybridge) Samuel, Rt. Hon. Sir H. (Darwen)
Church, Major A. G. Lawson, John James Samuel, H. W. (Swansea, West)
Clarke, J. S. Lawther, W. (Barnard Castle) Sanders, W. S.
Cluse, W. S. Leach, W. Sandham, E.
Cocks, Frederick Seymour Lee, Frank (Derby, N.E.) Sawyer, G. F.
Compton, Joseph Lee, Jennie (Lanark, Northern) Scrymgeour, E.
Cove, William G. Lees, J. Scurr, John
Cowan, D. M. Lewis, T. (Southampton) Sexton, James
Daggar, George Lindley, Fred W. Shaw, Rt. Hon. Thomas (Preston)
Dallas, George Lloyd, C. Ellis Shepherd, Arthur Lewis
Dalton, Hugh Logan, David Gilbert Sherwood, G. H.
Davies, E. C. (Montgomery) Longbottom, A. W. Shield, George William
Davies, Rhys John (Westhoughton) Longden, F. Shiels, Dr. Drummond
Denman, Hon. R. D. Lovat-Fraser, J. A. Shillaker, J. F.
Dickson, T. Lowth, Thomas Shinwell, E.
Dukes, C. Lunn, William Simmons, C. J.
Duncan, Charles Macdonald, Gordon (Ince) Simon, E. D. (Manch'ter, Withington)
Ede, James Chuter MacDonald, Malcolm (Bassetlaw) Sinkinson, George
Edmunds, J. E. McElwee, A. Smith, Alfred (Sunderland)
Edwards, E. (Morpeth) McEntee, V. L. Smith, Ben (Bermondsey, Rotherhithe)
England, Colonel A. Mackinder, W. Smith, Frank (Nuneaton)
Foot, Isaa McKinlay, A. Smith, H. B. Lees- (Keighley)
Freeman, Peter MacLaren, Andrew Smith, Rennie (Penistone)
Gardner, B. W. (West Ham, Upton) Maclean, Nell (Glasgow, Govan) Smith, Tom (Pontefract)
Gardner, J. P. (Hammersmith, N.) MacNeill-Weir, L. Smith, W. R. (Norwich)
George, Megan Lloyd (Anglesea) McShane, John James Snell, Harry
Gibbins, Joseph Mander, Geoffrey le M. Snowden, Rt. Hon. Philip
Gibson, H. M. (Lancs. Moesley) Mansfield, W. Stamford, Thomas W.
Gill, T. H. March, S. Stephen, Campbell
Gillett, George M. Marcus, M. Stewart, J. (St. Rollox)
Glassey, A. E. Markham, S. F. Strachey, E. J. St. Loe
Gossling, A. G. Marley, J. Strauss, G. F.
Gould, F. Marshall, Fred Sullivan, J.
Graham, D. M. (Lanark, Hamilton) Mathers, George Sutton, J. E.
Graham, Rt. Hon.Wm. (Edin.,Cent.) Matters, L. W. Taylor, R. A. (Lincoln)
Grenfell, D. R. (Glamorgan) Melville, Sir James Taylor, W. B. (Norfolk, S.W.)
Griffiths, F. Kingsley (Middlesbro' W.) Messer, Fred Thorne, W. (West Ham, Plaistow)
Griffiths, T. (Monmouth, Pontypool) Middleton, G. Thurtle, Ernest
Grundy, Thomas W. Millar, J. D. Tinker, John Joseph
Hall, F. (York, W.R., Normanton) Mills, J. E. Toole, Joseph
Hall, G. H. (Merthyr Tydvil) Milner, Major J. Tout, W. J.
Townend, A. E. Watts-Morgan, Lt.-Col. D. (Rhondda) Wilson, C. H. (Sheffield, Attercliffe)
Trevelyan, Rt. Hon. Sir Charles Wellock, Wilfred Wilson, J. (Oldham)
Turner, B. Welsh, James (Paisley) Wilson, R. J. (Jarrow)
Vaughan, D. J. Welsh, James C. (Coatbridge) Wise, E. F.
Viant, S. P. West, F. R. Wright, W. (Rutherglen)
Walkden, A. G. Wheatley, Rt. Hon. J. Young, R. S. (Islington, North)
Walker, J. Whiteley, Wilfrid (Birm., Ladywood)
Wallace, H. W. Wilkinson, Ellen C. TELLERS FOR THE NOES—
Wallhead, Richard C. Williams, David (Swansea, East) Mr. Charles Edwards and Mr.
Watkins, F. C. Williams, Dr. J. H. (Llanelly) William Whiteley.
Watson, W. M. (Dunfermline). Williams, T. (York, Don Valley)

I beg to move, in page 18, line 43, after the word "Act," to insert the words: except for the purpose of determining any question upon an objection lodged under proviso (b) of Section seven (2) of that Act. In order that hon. Members may understand the object of this Amendment, it is necessary to ask the House to consider one or two of the Sections of the Mining Industry Act, 1926. In Section 1, Subsection (1), of that Act, it is provided that where two or more undertakings desire to amalgamate, they may submit a scheme to the Board of Trade. If the Board of Trade approves of that scheme they refer it to the Railway and Canal Commission, and once a scheme has been referred to the Railway and Canal Commission, certain objectors have the right to be heard by that tribunal. In particular, under Section 7, holders of securities in the companies affected have the right to be heard. The Section provides that the Commission may in particular, if, upon an objection lodged by the holder of any securities in a constituent or absorbed company to whom by the scheme securities in the amalgamation or principal company are allocated in substitution therefor, they are satisfied that the substitution would not be fair in his case, order that in lieu of the proposed substitution his existing securities shall be purchased at a price to be determined in such manner as the Commission may direct. Of course, there are cases in which the amalgamation, if purely voluntary in character, can go through without coming under the Mining Industry Act at all. Schemes can go through under the Companies Acts, but the advantage of bringing a scheme within the Mining Industry Act is that Section 5 of that Act provides that no stamp duty shall be payable in respect of any amalgamation or absorption scheme, or on any debentures, or in respect of any share or loan capital of any company, issued in pursuance of any such scheme. In other words, although a purely voluntary scheme could be put through under the Companies Acts, in that event it would be necessary to pay stamp duty, whereas if the scheme was brought within the Mining industry Act, and referred to the Railway and Canal Commission, the advantage gained was that the promoters escaped the payment of stamp duty. But the price of escaping that payment was that people who held securities in the affected companies had the right to have their objections heard by the court, and if the court thought that they were being unfairly treated it could order that the securities should be purchased at a price to be determined in such manner as the Commission might direct. That is a perfectly fa[...]r provision, because if they were not being unfairly treated, their petition would be dismissed, but if the court thought they were being unfairly treated, then the court had the power to see that they were protected. That, if I may so express it, was part of the price which the amalgamated companies had to pay for coming before the Commission and getting the advantage of escaping stamp duty. What does clause 13 of this Bill do? Sub-section (5) provides: Where an amalgamation scheme submitted to the Board of Trade by the owners of two or more undertakings under Subsection (1) of Section one of the Act of 1926 is certified by the Coal Mines Reorganisation Commission to be in the national interest, and the owners submitting the scheme represent to the Board that it is unnecessary for the purpose of giving effect to the scheme that it should be confirmed by the Railway and Canal Commission under the Act of 1926, it shall not be necessary for the Board to refer the scheme to the Railway and Canal Commission under that Act, but if the Board certify that the provisions of the scheme as to any debentures or as to the issue of any share or loan capital are reasonably required for the purpose of the amalgamation"— then they get the benefit of escaping stamp duty, without going before the Railway and Canal Commission at all. That cuts out the protection which the present Act gives to the holders of securities which are being unfairly treated. At present the law is that, in order to save the paying of this duty, you have to go to the Canal and Commission Court, when these holders of securities who are being unfairly treated have an opportunity of having their objections dealt with, but under this clause, if the Board certify a scheme as in the national interest—and these applying companies, of course, always say it is unnecessary to go to the court—they are to get the benefit of escaping the payment of this duty without going to the court and without these people having an opportunity of having their objections heard. Therefore, what the Amendment proposes is that you need not go to the court except for the purpose of determining any question upon an objection lodged under that particular proviso.

I do not know whether or not it has been overlooked, but I should not have thought it could have been the intention of the framers of this Bill that the holders of securities should be sidetracked. Surely these people have a right to be heard at some stage, but under this Bill instead of being given this opportunity of presenting their case before the court, that opportunity can be taken away from them by the amalgamating companies simply saying that in their view it is unnecessary for the purpose of giving effect to the scheme that it should be confirmed by the Railway and Canal Commissioners. The only result of inserting the Amendment will be, as I think, the eminently fair result that debenture holders who have got a legitimate objection may have their interest protected.

Commodore KING

I beg to second the Amendment.


It is difficult for Members to keep in their minds all the points which have arisen on the Committee stage. At the same time, if an hon. Member is going to move an Amendment of this sort on Report, I think we might assume that it would always be the case that he would look to see what took place on the Committee stage. I dealt with this very Amendment on the Committee stage at some length. I pointed out then that I believe this Amendment is raised under a complete misapprehension, and it is some satisfaction to me to observe that the hon. and learned Member for Altrincham (Mr. Atkinson) has not endeavoured in any way whatever to controvert any state- ment which I then made, or to qualify in any way the few and simple propositions of law which I then set up.

This Amendment is dealing with an amalgamation scheme submitted to the Board of Trade by the owners of two or more undertakings under Sub-section (1) of Section (1) of the Act of 1926. Therefore, the first thing to observe is that it is dealing only with a case where the two companies concerned want to amalgamate. Then the Amendment is dealing with a case where, although the concerns as a whole want to amalgamate, yet there are certain shareholders who do not want to go into the scheme. That is the position which this Amendment is designed to cover. Under the Mining Industry Act, 1926, a dissentient shareholder under these circumstances had this satisfaction, that if such a scheme was brought before the Railway and Canal Commission Court, he had a right to apply to the Court to ask that he might, to put it bluntly, be bought out, but the House will observe that the question whether or not this sort of scheme, where everybody agrees, went to the Railway and Canal Court depended upon what was, from the point of view of the dissentient shareholder, a mere accident. It depended upon the fact whether the new proposed concern proposed to issue new capital. That was the sole reason why, under Sub-section (1), any two concerns ever went near any Court at all. Therefore, the question as to whether the dissentient shareholder got any protection there depended upon a mere accident, so far as he was concerned.

The whole point of the Amendment, as was stated in Committee, depends on this: The hon. and learned Member for Rusholme (Sir Boyd Merriman) on the Committee stage said he was not convinced that the right which shareholders in any ordinary company had under the Companies Act was really an efficient right. I propose to ask the House to consider whether the general law of the land, altogether apart from the Mining Industry Act, does not give shareholders just the same protection as they get under the Mining Industry Act. First of all, alter the Mining Industry Act of 1926 was passed, we had a new Companies Act, the Act of 1929, and I am certain that the hon. and learned Member for Altrincham will agree with me that this type of amal- gamation scheme must either involve a winding-up or not. So far, we are clearly on common ground. If a winding-up is involved, as it would be in all cases save two, Section 234 of the Companies Act, 1929, applies, and the relevant Sub-section is as follows: (3) If any member of the transferor company who did not vote in favour of the special resolution expresses his dissent therefrom in writing…he may require the liquidator either to abstain from carrying the resolution into effect, or to purchase his interest at a price to be determined by agreement or by arbitration in manner provided by this Section. Therefore, a dissentient shareholder has the right to say that he can require the liquidator to pay him in cash or to give up the scheme. The other two Sections under the Companies Act under which this can be done are Sections 154 and 155. I set all these out on the Committee stage, and I do not propose to refer to them again at any length. I will only repeat the relevant provisions under Section 154. The whole matter goes before the Court, and the various matters which the Court has to consider are set out. One of them is paragraph (e)the provision to be made for any persons, who within such time and in such manner as the court direct, dissent from the compromise or arrangement. Under Section 155 the terms on which the shares of the dissenting shareholder are to be acquired shall be such terms as the court may by the order direct instead of the terms provided by the scheme or contract. These are the only three provisions, and let me make this quite plain. You cannot compel a dissentient shareholder to come in, you cannot force a scheme through at all, except under the provisions of one of these three Sections of the Companies Act. Under each one of these Sections, the shareholder has the right to go to the Court, and has the right to ask the Court to say that he shall be paid out in cash. That is the provision of the Companies Act of 1929, and I stated in Committee that the protection afforded by the Companies Act was quite as efficient as the protection afforded by Section 7 (2, b) of the Mining Industry Act, 1926. I have checked that position since; I have had expert advice on this matter, and I am confident that this is the true position, and that it is a complete fallacy to suppose that a dissentient shareholder gets any benefit by Section 7 (2, b) of the Mining Industry Act which he does not already get under the Companies Act. The object of inserting it in the Mining Industry Act was that the Companies Act, 1929, did not exist when the Mining Industry Act was passed, and it was thought desirable, if you were going to the Railway and Canal Court, to let that one Court deal with both the matters, instead of having one application to the Railway and Canal Commission, and another application to the Chancery Court. I remain of the opinion that I held on the Committee stage, that this Amendment is a complete misapprehension. Altogether apart from that, as drafted, it would not work at all. Let us see what it seeks to do. I read from line 41, Sub-section (5): It shall not be necessary for the Board"— that is, the Board of Trade— to refer the scheme to the Railway and Canal Commission under that Act, except for the purposes of determining any question upon an objection lodged… But it is plain from a consideration of Section 7 of the Mining Industry Act that that objection can only be lodged after you have gone to the Railway and Canal Commission. Therefore, this Amendment, apart from it being a misapprehension on the grounds which I have explained, is simply unworkable. You cannot possibly have a point arising under proviso (b) of Section 7 unless and until you have already gone to the Railway and Canal Commission and taken certain preliminary steps. So on that ground also, the Government cannot possibly accept this Amendment.


I naturally feel diffident in dealing with the point that has been so elaborately dealt with by the Attorney-General, and I thank him for having advised the House as he has done in great detail. I may be quite wrong, but I will ask him a further question. He has dealt with this as if it were a case of a shareholder dissenting, and the three Sections of the Companies Act to which he referred all deal with the position of a dissentient shareholder. A dissentient shareholder was entitled to give notice, and unless the liquidator refrained from carrying out the scheme, the shareholder was to be paid out; but the case which my hon. and learned Friend made was not with regard to shareholders only; indeed, it was not in regard to shareholders at all. He was taking the case of someone who had a debenture. A debenture is not covered, I believe, by any one of the Sections to which the Attorney-General referred. The Amendment refers to Section 7 of the Mining Industry Act, which does not refer to shareholders only; it refers also to the holder of any security in a company—


The right hon. Gentleman will find that Sections 153 and 154 of the Companies Act do refer to creditors of a company. A debenture holder is not a shareholder, but he is a creditor.


That is under a scheme for dealing with the creditors of a company. That surely is not a case such as is contemplated by this Bill. That case is an amalgamation, and does not deal with creditors in a semi-composition between the company and its creditors, in a company that has failed and cannot carry on its business and has to meet its creditors. That is the kind of case to which the Attorney-General has referred. These cases are something quite different. They are amalgamations of companies which are not necessarily insolvent at all, and which do not necessarily want to make any arrangement with their creditors at all. On the contrary, they are quite able to carry on, but they are to be absorbed under this Bill. What we ask is not that the owner of a security, a debenture holder, or even a shareholder, should be forced to go to the Court of Chancery, but we ask by this Amendment that those who think that in their case it is not fair that they should be asked to take a substituted security should, as the Act of 1926 contemplated, have the right to put their case before the Railway and Canal Commission.

Surely it is not right for the Government to say, "The Companies Act gives you rights, and you can initiate proceedings on your own account before the Law Courts under the Companies Act." It is intended by this Bill to have an ad hoc tribunal—the Railway and Canal Commission—who are to consider the terms of an amalgamation, and who are to give sanction to the amalgamation; but I want them to be able to say, as they can under the 1926 Act, "We do give sanction, but in the case of that particular individual he has got debentures"—he has perhaps to pawn the debentures—[Interruption.] Yes, those debentures are going to be exchanged for something else which a bank would not accept as security, and unless you give some protection of this sort, you may bankrupt some individual who thought that he had a decent security. It is unwise from the Government's point of view that an individual should be made to run those risks. Do not forget that the Government are doing something that no Government have ever done before in dealing with individuals. [Interruption.] They may think that it is right to do it, and treat it as a precedent for the future, but I warn the Government that if they do these things, they ought to do them with a show of justice to the individual; for if they do not, they will never be able to carry through this type of amalgamation.

As to whether the words of the Amendment are right, I ask the Attorney-General to be kind enough to advise us what words are right. The House is entitled to the advice of the Attorney-General, and I feel that if we get these words in, and he does not like them, there is another place where the words can be altered. They are not very far wrong, anyhow, and the object is quite plain. Let me state it again. It is to protect an individual who might quite possibly be ruined if the amalgamation went through, an amalgamation which might be fair as between company and company and yet create an unnecessary hardship upon the individual. If you are going to carry out this type of amalgamation it is unwise to burden yourself with the hard cases which will arise, and it is wise to accept this Amendment. If it is not in the exact words which are considered appropriate, then alter the words in another place.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 106; Noes, 286.

Division No. 249.] AYES. [8.56 p.m.
Acland-Troyte, Lieut.-Colonel Dixey, A. C. Remer, John R.
Allen, Lt.-Col. Sir William (Armagh) Duckworth, G. A. V. Reynolds, Col. Sir James
Amery, Rt. Hon. Leopold C. M. S. Edmondson, Major A. J. Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Fremantle, Lieut.-Colonel Francis E. Roberts, Sir Samuel (Ecclesall)
Atkinson, C. Gibson, C. G. (Pudsey & Otley) Ross, Major Ronald D.
Baldwin, Rt. Hon. Stanley (Bewdley) Graham, Fergus (Cumberland, N.) Ruggles-Brise, Lieut.-Colonel E. A.
Balniel, Lord Greene, W. P. Crawford Russell, Alexander West (Tynemouth)
Beamish, Rear-Admiral T. P. H. Gunston, Captain D. W. Samuel, A. M. (Surrey, Farnham)
Beaumont, M. W. Hannon, Patrick Joseph Henry Samuel, Samuel (W'dsworth, Putney)
Birchall, Major Sir John Dearman Haslam, Henry C. Sandeman, Sir N. Stewart
Boothby, R. J. G. Hennessy, Major Sir G. R. J. Sassoon, Rt. Hon. Sir Philip A. G. D.
Bourne, Captain Robert Croft Hills, Major Rt. Hon. John Waller Shepperson, Sir Ernest Whittome
Bracken, B. Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Smith, Louis W. (Sheffield, Hallam)
Braithwaite, Major A. N. Hope, Sir Harry (Forfar) Southby, Commander A. R. J.
Briscoe, Richard George Hudson, Capt. A. U. M. (Hackney, N.) Spender-Clay, Colonel H.
Brown, Col. D. C. (N'th'l'd'., Hexham) Hurd, Percy A. Stanley, Maj. Hon. O. (W'morland)
Brown, Brig.-Gen.H.C. (Berks, Newb'y) Iveagh, Countess of Thomson, Sir F.
Buchan, John Jones, Sir G. W. H. (Stoke New'gton) Tinne, J. A.
Carver, Major W. H. King, Commodore Rt. Hon. Henry D. Titchfield, Major the Marquess of
Castle Stewart, Earl of Lamb, Sir J. Q. Todd, Capt. A. J.
Chamberlain, Rt.Hn.Sir J.A. (Birm.,W.) Lane Fox, Col. Rt. Hon. George R. Train, J.
Chamberlain, Rt. Hon. N. (Edgbaston) Law, Sir Alfred (Derby, High Peak) Tryon, Rt. Hon. George Clement
Chapman, Sir S. Leighton, Major B. E. P. Vaughan-Morgan, Sir Kenyon
Christle, J. A. Little, Dr. E. Graham Ward, Lieut.-Col. Sir A. Lambert
Colfox, Major William Philip Lymington, Viscount Warrender, Sir Victor
Colville, Major D. J. MacRobert, Rt. Hon. Alexander M. Waterhouse, Captain Charles
Courtauld, Major J. S. Makins, Brigadier-General E. Wells, Sydney R.
Cranbourne, Viscount Mitchell, Sir W. Lane (Streatham) Williams, Charles (Devon, Torquay)
Croft, Brigadier-General Sir H. Monsell, Eyres, Com. Rt. Hon. Sir B. Windsor-Cilve, Lieut.-Colonel George
Crookshank, Cpt.H.(Lindsey,Gainsbro) Moore, Sir Newton J. (Richmond) Womersley, W. J.
Croom-Johnson, R. P. Morrison, W. S. (Glos., Cirencester) Worthington-Evans. Rt. Hon. Sir L.
Culverwell, C. T. (Bristol, West) Morrlson-Bell, Sir Arthur Clive Young, Rt. Hon. Sir Hilton
Cunliffe-Lister, Rt. Hon. Sir Philip Muirhead, A. J.
Dalkeith, Earl of Peake, Captain Osbert TELLERS FOR THE AYES.—
Davidson, Major-General Sir J. H. Penny, Sir George Captain Wallace and Captain
Davies, Dr. Vernon Peto, Sir Basil E. (Devon, Barnstaple) Margesson.
Davies, Maj. Geo. F.(Somerset, Yeovil) Ramsbotham, H.
Adamson, Rt. Hon. W. (Fife, West) Church, Major A. G. Griffiths, T. (Monmouth, Pontypool)
Adamson, W. M. (Staff., Cannock) Clarke, J. S. Groves, Thomas E.
Addison, Rt. Hon. Dr. Christopher Cluse, W. S. Grundy, Thomas W.
Altchison, Rt. Hon. Cralgie M. Cocks, Frederick Seymour Hall, F. (York. W.R., Normanton)
Alpass, J. H. Compton, Joseph Hall, G. H. (Merthyr Tydvil)
Ammon, Charles George Cove, William G. Hall, Capt. W. P. (Portsmouth, C.)
Angell, Norman Cowan, D. M. Hamilton, Mary Agnes (Blackburn)
Arnott, John Daggar, George Hamilton, Sir R. (Orkney & Zetland)
Aske, Sir Robert Dallas, George Harbord, A.
Attlee, Clement Richard Dalton, Hugh Hardie, George D.
Ayles, Walter Davies, E. C. (Montgomery) Hartshorn, Rt. Hon. Vernon
Baker, John (Wolverhampton, Bliston) Davies, Rhys John (Westhoughton) Hastings, Dr. Somerville
Baldwin, Oliver (Dudley) Denman, Hon. R. D. Haycock, A. W.
Barnes, Alfred John Dickson, T. Hayday, Arthur
Barr, James Dudgeon, Major C. R. Henderson, Arthur, junr. (Cardiff, S.)
Batey, Joseph Dukes, C. Henderson, Thomas (Glasgow)
Bennett, Captain E.N. (Cardiff, Central) Duncan, Charles Henderson, W. W. (Middx., Enfield)
Bennett, William (Battersea, South) Ede, James Chuter Herriotts,J.
Benson, G. Edge, Sir William Hirst, G. H. (York W. R. Wentworth)
Bentham, Dr. Ethel Edmunds, J. E. Hirst, W. (Bradford, South)
Bowen, J. W. Edwards, C. (Monmouth, Bedwellty) Hoffman, P. C.
Broad, Francis Alfred Edwards, E. (Morpeth) Hopkin, Daniel
Brockway, A. Fenner Elmley, Viscount Hore-Belisha, Leslie.
Bromfield, William England, Colonel A. Horrabin, J. F.
Bromley, J. Foot, Isaac. Hudson, James H. (Huddersfield)
Brooke, W. Forgan, Dr. Robert Hunter, Dr. Joseph
Brothers, M. Freeman, Peter Hutchison, Maj.-Gen. Sir R.
Brown, C. W. E. (Notts. Mansfield) Gardner, B. W. (West Ham, Upton) Isaacs, George
Brown, Ernest (Leith) Gardner, J. P. (Hammersmith, N.) Jenkins, W. (Glamorgan, Neath)
Brown, Rt. Hon. J. (South Ayrshire) George, Megan Lloyd (Anglesea) John, William (Rhondda, West)
Brown, W. J. (Wolverhampton, West) Gibbins, Joseph Johnston, Thomas
Buchanan, G. Gibson, H. M. (Lancs, Mossley) Jones, F. Llewellyn- (Flint)
Burgess, F. G. Gill, T. H. Jones, Henry Haydn (Merioneth)
Burgin, Dr. E. L. Gillett, George M. Jones, Rt. Hon. Le[...]f (Camborne)
Buxton, C. R. (Yorks. W. R. Elland) Glassey, A. E. Jones, Morgan (Caerphilly)
Buxton, Rt. Hon. Noel (Norfolk, N.) Gossling, A. G. Jones, T. I. Mardy (Pontypridd)
Caine, Derwent Hall- Gould, F. Jowitt, Rt. Hon. Sir W. A.
Cameron, A. G. Graham, D. M. (Lanark, Hamilton) Kelly, W. T.
Cape, Thomas Graham, Rt. Hon. Wm. (Edin., Cent.) Kennedy, Thomas
Carter, W. (St. Pancras, S.W.) Gray, Milner Kenworthy, Lt.-Com Hon. Joseph M.
CharletoR, H. C. Grenfell, D. R. (Glamorgan) Kinley, J.
Chater, Daniel Griffith, F. Kingsley (Middlesbro' W.) Kirkwood, D.
Knight, Holford Moses, J. J. H. Smith, Ben (Bermondsey, Rotherhithe)
Lang, Gordon Mosley, Lady C. (Stoke-on-Trent) Smith, Frank (Nuneaton)
Lansbury, Rt. Hon. George Mosley, Sir Oswald (Smethwick) Smith, H. B. Lees- (Keighley)
Lathan, G. Muff, G. Smith, Rennie (Penistone)
Law, Albert (Bolton) Muggeridge, H. T. Smith, Tom (Pontefract}
Law, A. (Rosendale) Murnin, Hugh Smith, W. R. (Norwich)
Lawrence, Susan Naylor, T. E. Snell, Harry
Lawrie, Hugh Hartley (Stalybridge) Newman, Sir R. H. S. D. L. (Exeter) Snowden, Rt. Hon. Philip
Lawson, John James Noel Baker, P. J. Stamford, Thomas W.
Lawther, W. (Barnard Castle) Oliver, George Harold (Ilkeston) Stephen. Campbell
Leach, W. Oliver, P. M. (Man., Blackley) Stewart, J. (St. Rollox)
Lee, Frank (Derby, N.E.) Owen, H. F. (Hereford) Strauss, G. R.
Lee, Jennie (Lanark, Northern} Palin, John Henry. Sullivan, J.
Lees, J. Paling, Wilfrid Sutton, J. E.
Lewis, T. (Southampton) Palmer, E. T. Taylor, R. A. (Lincoln)
Lindley, Fred W. Parkinson, John Allen (Wigan) Taylor, W. B. (Norfolk, S.W.)
Lloyd, C. Ellis Perry, S. F. Thorne, W. (West Ham, Plaistow)
Logan, David Gilbert Pethick-Lawrence, F. W. Thurtle, Ernest
Longbottom, A. W. Phillips, Dr. Marion Tinker, John Joseph
Longden, F. Picton-Turbervill, Edith Toole, Joseph
Lovat-Fraser, J. A. Pole, Major D. G. Tout, W. J.
Lowth, Thomas Potts, John S. Townend, A. E.
Lunn, William Price, M. P. Trevelyan, Rt. Hon. Sir Charles
MacDonald, Gordon (Ince) Quibell, D. F. K. Turner, B.
MacDonald, Malcolm (Bassetlaw) Ramsay, T. B. Wilson Vaughan, D. J.
McElwee, A. Raynes, W. R. Viant, S. P.
McEntee, V. L. Richards, R. Walkden, A. G.
Mackinder, W. Richardson, R. (Houghton-le-Spring) Walker, J.
McKinlay, A. Riley, Ben (Dewsbury) Wallace, H. W.
MacLaren, Andrew Riley, F. F. (Stockton-on-Tees) Wallhead, Richard C.
Maclean, Nell (Glasgow, Govan) Ritson, J. Watkins, F. C.
MacNeill-Weir, L. Roberts, Rt. Hon. F. O. (W. Bromwich) Watson, W. M. (Dunfermline).
McShane, John James Romeril, H. G. Watts-Morgan, Lt.-Col. D. (Rhondda)
Mander, Geoffrey le M. Rosbotham, D. S. T. Wellock, Wilfred
Mansfield, W. Rowson, Guy Welsh, James (Paisley)
March, S. Salter, Dr. Alfred Welsh, James C. (Coatbridge)
Marcus, M. Samuel, Rt. Hon. Sir H. (Darwen) West, F. R.
Markham, S. F. Samuel, H. W. (Swansea, West) Wheatley, Rt. Hon. J.
Marley, J. Sanders, W. S. Whiteley, Wilfrid (Birm., Ladywood)
Marshall, Fred Sandham, E. Wilkinson, Ellen C.
Mathers, George Sawyer, G. F. Williams, David (Swansea, East)
Matters, L. W. Scrymgeour, E. Williams, Dr. J. H. (Llanelly)
Melville, Sir James Scurr, John Williams, T. (York, Don Valley)
Messer, Fred Sexton, James Wilson C. H. (Sheffield, Attercliffe)
Middleton, G. Shaw, Rt. Hon. Thomas (Preston) Wilson, J. (Oldham)
Millar, J. D. Shepherd, Arthur Lewis Wilson, R. J. (Jarrow)
Mills, J. E. Sherwood, G. H. Wise, E. F.
Milner, Major J. Shield, George William Wood, Major McKenzie (Banff)
Montague, Frederick Shiels, Dr. Drummond Wright, W. (Rutherglen)
Morgan, Dr. H. B. Shillaker, J. F. Young, R. S. (Islington, North)
Morley, Ralph Shinwell, E
Morris-Jones, Dr. J. H. (Denbigh) Simmons, C. J. TELLERS FOR THE NOES.—
Morrison, Herbert (Hackney, South} Simon, E. D. (Manch'ter, Withington) Mr. Hayes and Mr. William
Morrison, Robert C. (Tottenham, N.) Sinkinson, George Whiteley.
Mort, D. L. Smith, Alfred (Sunderland)