HC Deb 14 February 1939 vol 343 cc1621-7

6.20 p.m.

The Solicitor-General

I beg to move, in page 12, line 22, to leave out from "which," to the second "and," in line 27, and to insert: by virtue of the Companies Act, 1929, must conform to the requirements of Section thirty-five or Section three hundred and fifty-five of that Act with respect to the contents of prospectuses, or which in fact conforms to the requirements of either of those sections, or (b) in relation to any document the issue or publication of which is required or authorised by any Act other than this Act or by any enactment of the Parliament of Northern Ireland. The object of this Amendment is to put the Clause in form and also to remove the difficulty which has been felt by people who have issued a prospectus in which they have really tried to comply with the requirements of the Companies Act, and yet might find themselves hit by the provisions of this Clause when there was obviously no criminal intent on their part. The Companies Act itself provides a method of dealing with any error that might be committed, and the revised words which we propose to insert here follow those used in the Companies Act for dealing with cases of that kind. The phrase "which in fact conforms to" would allow chartered companies and so on, which do not have to comply with the conditions as to prospectuses laid down in the Companies Act, to take advantage of Sub-section (2) of this Clause. The new paragraph (b) will free from the restrictions of the Clause offers and notices required to be sent by one company to the shareholders in another company, and this also follows Section 355 of the Companies Act, which provides for such offers and notices where an amalgamation is proposed. The wording of the paragraph is in general terms, and covers any circularisation required or authorised by any Act of the United Kingdom or Northern Ireland.

Amendment agreed to.

Further Amendment made: In page 12, line 27, leave out the second "and," and insert: (3) This section."—[The Solicitor-General.]

6.23 p.m.

The Solicitor-General

I beg to move, in page 12, line 43, after "by," to insert "or to creditors of."

It is sometimes necessary for a company, in arranging with its creditors, to circularise them offering shares in satisfaction of their debts, and the object of the Amendment is to ensure that that process will not be prohibited.

Amendment agreed to.

The Solicitor-General

I beg to move, in page 13, line 7, after "given," to insert: by or on behalf of the manager of an authorised unit trust scheme. This and the following Amendment are drafting Amendments, and can be taken together. They would make sub-paragraph (iv) reads as follows: made or given by or on behalf of the manager of an authorised unit trust scheme with respect to any securities created in pursuance of that scheme. Later on we propose to insert a definition of "manager."

Amendment agreed to.

Further Amendments made:

In page 13, line 8, leave out from "of," to "or," in line 16, and insert "that scheme."

In line 26, leave out "securities," and insert: shares in the share capital.

In line 27, after "or," insert: loans or deposits which may be made to or with the society, or."—[The Solicitor-General.]

The Solicitor-General

I beg to move, in page 13, line 29, after "by," to insert "or on behalf of."

This Amendment is almost a drafting Amendment. It has been suggested that, say, an accountant or solicitor acting for beneficiaries under a trust deed should not come within the Clause.

Amendment agreed to.

6.26 p.m.

Mr. Spens

I beg to move, in page 13, line 30, at the end, to insert: (viii) made or given with a view to a sale of securities by auction, or. Sub-section (1) of Clause 11 would, as I understand it, prohibit any person from distributing or having in his possession any document containing an offer for sale or an invitation to sell. Auctioneers' catalogues, whether they are sent round or whether they lie about in the auction room, would, if they included any stocks or shares, come within the wording of Sub-section (1). If my right hon. Friend intends to stop altogether the sale of stocks and shares by auction, the Clause would stand as it is, but I should like to remind him that in that case it will interfere with existing business of an innocent kind, and, therefore, it seems to me that, in this Clause relating to documents, some exception ought to be made so as to enable these sales by auction to go on. I am not, of course, dealing with the person whom my right hon. Friend wants to have licensed because he makes a practice of dealing in stocks and shares by auction, but am taking the case of casual and occasional sales by auction, say where there is included in an auctioneer's catalogue a block of shares or a reversion in a block of shares. As the Clause stands, even if such a thing be done casually, the unfortunate auctioneer who prints and circulates catalogues will, by the mere fact that they are in the auction room, be committing a criminal offence under the Bill, as will anyone who distributes them. I cannot imagine that that can be really intended. Unless my right hon. Friend thinks it necessary to stop the whole business of selling stocks and shares by auction, which I hardly imagine is the case, something of this sort is required in order to prevent a lot of innocent people from accidentally and unintentionally committing a criminal offence under the Bill.

Mr. Duncan

I beg to second the Amendment.

6.29 p.m.

The Solicitor-General

My hon. and gallant Friend will of course recognise that he is asking for an exception to be made to the general rule set up by the Clause, that you cannot circularise the public with regard to the sale of stocks and shares. On the other hand, my right hon. Friend appreciates that there is perhaps a difficulty as regards the position of an auctioneer under this Clause. There may be a case where, if there is a genuine trade of this kind, as I understand there is, it would be a hardship that every possibility of circularising should be closed. My right hon. Friend cannot accept this Amendment as it stands, but if my hon. and learned Friend will withdraw the Amendment he will look into the matter before the Bill reaches another place.

6.30 p.m.

Mr. Johnston

Before the Amendment is withdrawn, I would like to ask a question. Earlier to-day the hon. and learned Gentleman stated the case for the continuance of the right of these auctioneers to buy and sell shares without a licence under this Measure, continuing what would appear to be a recognised business conducted by these auctioneers. The Government, rightly in our view, refused to accept that, on the ground that it would open the door to a very dangerous practice. It might be that the existing auctioneers are very estimable men, but once this Bill is passed and you have plugged up a large number of holes through which the share-pusher has crept, it might well be that the share-pusher would creep in through the door you would have opened in the auctioneers' sale rooms. I beg the Government to be very careful. I cannot see what is the auctioneer's difficulty. If he wants to continue what is the objection to registering? The bona fide auctioneer will get his licence. I cannot see what are the arguments that have weighed with the President of the Board of Trade to induce him to make an exception on this question with regard to auctioneers.

6.32 p.m.

Mr. Stanley

Let me first make it plain that I am giving no pledge that in another place anything of this kind will be done. But it struck me when my hon. and learned Friend moved his Amendment that there was at any rate a point for investigation. I do not at all regret the arguments with which I rejected the previous Amendment. Dealing with a case where an auctioneer would be allowed to sell shares, I pointed out that if he did it only casually he would not come within the terms of the Act; he might be allowed to sell shares once or twice in the year, but he would not be allowed to set out a catalogue containing the shares that he was going to sell. It struck me that there, at any rate, was a case for investigation. I am not certain that anything can be or should be done, but to my mind there is a distinction between the proposed new Clause and Clause 11. That is why, although I asked the House to reject the proposed new Clause without giving any pledge, I think there is a case for investigation here.

6.34 p.m.

Mr. Ede

Does what the right hon. Gentleman has just said cover the case where a public utility company promotes a Bill, which is considered upstairs, to increase its share capital, and one of the Clauses in the Bill provides that the shares shall be disposed of by public auction? Usually, these shares have a very limited appeal. They are usually disposed of by a public auction held in the neighbourhood in which the public utility undertaking operates. I do not think it could be said that an auctioneer disposing of shares in that particular way was carrying on a business, because he might do it only once in seven or 10 years. But one might see advertisements of this kind of thing on the railway station near where the public utility undertaking is carried on. Would the right hon. Gentleman make quite sure that, for that very limited purpose, the auctioneer is not prohibited from making a public announcement that on a certain day he will be disposing of newly authorised capital for the public utility undertaking?

6.36 p.m.

Mr. Muff

I would like to amplify that, because in my own district I have noticed advertisements announcing the sale of effects of persons deceased, and I have noticed, in some cases, a small number of shares to be sold with other things. It may be a public utility company's shares, a few banking shares, or something of that kind. I have seen these advertisements in papers of the standing of the "Yorkshire Observer" and the "Yorkshire Post," announcing that a certain number of shares are to be sold by auction along with a grand piano or something like that.

6.37 p.m.

The Solicitor-General

The point raised by the hon. Member who has just spoken is just the point my right hon. Friend is going to look into. It is the case of a casual sale by an auctioneer who might not have a licence. With regard to the point raised by the hon. Member for South Shields (Mr. Ede), I think that would probably be covered by the Bill as it stands, because the Bill exempts advertisements of such sales by or on behalf of a statutory or municipal corporation, and under the extended definition we are giving to statutory or municipal corporations I think his case would be met.

Mr. Spens

In view of my right hon. Friend's promise to look into the matter, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Further Amendments made:

In page 13, line 38, after "in," insert "paragraph (a) of."

In line 41, leave out "or the doing of," and insert: and nothing in paragraph (b) of this Sub-section shall authorise any person to do.

In page 14, line 13, at the end, insert: (5) A person shall not he taken to contravene this Section by reason only that he distributes documents to persons whose business involves the acquisition and disposal, or the holding, of securities (whether as principal or as agent), or causes documents to be distributed to such persons, or has documents in his possession for the purpose of distribution to such persons."—[The Solicitor-General.]