Lords Amendment: In page 17, line 22, leave out paragraph (a) and insert:
(a) in relation to any distribution of a prospectus to which Section thirty-five or Section three hundred and fifty-four of the Companies Act, 1929, applies, or in relation to any distribution of a document relating to securities of a corporation incorporated in Great Britain which is not a registered company, being a document which—
(b) in relation to any issue of a form of application for shares in, or debentures of, a corporation together with—
§ This Amendment is, in the main, a drafting Amendment similar to the Amendment which has already been accepted in page 3, lines 11 and 12. There is, however, this added feature about it, that by the last three lines of the Amendment we exempt from the circularisation restrictions forms of application for shares which are distributed in connection with a bona fide invitation to a person to enter into an underwriting agreement. Under the Clause as originally passed in the House, there was no exemption from the circularisation provisions for such documents. I should add that forms of application for shares, when accompanying a bona fide invitation for underwriting, are excluded from the prospectus provisions of the Companies Act.
§ Subsequent Lords Amendments to page 17, line 31, agreed to.657
Lords Amendment: In page 17, line 33, at the end, insert:
and shall not apply in relation to any distribution of documents which is permitted by the Board of Trade.
§ The purpose of the Amendment is to make provision for legitimate circularisation which is not exempted under the Bill. It is in fact impossible to frame the prohibition of circularisation in such terms as to be quite certain that legitimate business shall not be interfered with, unless one at the same time opens the door to what is termed share-pushing. It is unsafe to exempt circulars offering shares for subscription which by a proviso to Sub-section (3) of Section 35 of the Companies Act are excluded from the requirements of that Act. Those are circulars offering share subscriptions which are not sent to the general public. As I have indicated, a general exemption would open the door to possible abuse. At the same time it may occur that a private company, on an increase of capital, might desire by circular to invite subscriptions from a limited number of persons not already members of the company who might be interested in it, and we have no desire to interfere with a legitimate practice of that kind. The object of the Amendment is to meet this and any similar difficulties that may occur in future by providing that the Board of Trade may, in their discretion, free from the circularisation restrictions documents not at present excluded but which are in the interests of legitimate business.
§ Subsequent Lords Amendments to page 18, line 29, agreed to.
§ Lords Amendment: In page 18, line 34, at the end, insert:
§ "(viii) made or given with respect to any securities in connection only with a sale or proposed sale of those securities by auction, or."
§ An Amendment was moved on the Report stage in this House by my hon. and learned Friend the Member for Ashford (Mr. Spens) to exclude from the circularisation restrictions of Clause 13 invita- 658 tions or information made or given with a view to the sale of securities by auction. That Amendment was withdrawn on my right hon. Friend giving an assurance that he would consider the matter, and as a result of that consideration it appeared that auctioneers' catalogues could be excluded from the circularisation restrictions without danger of abuse. If an auctioneer were to engage in frequent sales of stocks and shares, that would be carrying on the business of dealing in securities and would have to be licensed, but if he only sold shares occasionally in the ordinary course of his general business as an auctioneer and disposed of shares, say, in some local company for which there was no outside market, it does not appear likely that any harm would result in allowing him to include particulars of such shares in his catalogues, provided, of course, that the particulars were published solely for the purposes of the auction.
§ 11.4 p.m.
§ Mr. Bellenger
As I understand the hon. Member's explanation, the question simply revolves round the point whether the occasions on which the auctioneer offers stocks and shares for sale are frequent or infrequent. But might it not be that perhaps at one or two sales during the year large blocks of shares could be offered and the damage would be done possibly not in the number of occasions on which the auctioneer offered them, but in the volume of shares which he offered to the public for sale? I therefore think the reasons which were given on the Report stage for not accepting the Amendment moved by the hon. and learned Member for Ashford (Mr. Spens) are still sound to-day, when it is sought to re-introduce the Amendment which was not then accepted. I am not at all impressed by the reasons which the hon. Member has offered in order to induce the House to accept the Amendment.
§ Subsequent Lords Amendments to page 19, line 2, agreed to.