CLAUSE 23.—(Restrictions on disposal of stock issued for compensation of companies.) (Hansard, 10 July 1946)

§ Mr. Shinwell
I beg to move, "That this House doth agree with the Lords in the said Amendment."
This is a concession which we think will be acceptable to those concerned. There are certain other Amendments which follow. They are all designed to the same end. The intention is to enable a parent company holding nontransferable compensation stock to sell it in order to raise capital needed for the purposes of a subsidiary. This is a point that emerged in the course of the Debate on Committee stage. It is thought that, in the circumstances, it is desirable that this Amendment should be proposed, and I hope that it will be accepted

§ Mr. H. Macmillan
This, as I understand it, raises a point of very considerable importance, on this much debated Clause, as to the restrictions on the disposal of stock. I think that this concession may be of substantial importance in allowing operations, obviously for the general benefit of the nation, to take place, by enabling companies, not merely to sell their stock or to borrow on it—and in order to part with it they must be able to sell it—for their own operations, but also for those of a subsidiary company. This Clause, which has been considerably modified in the course of 426 this Bill, is, I think, pro Canto, made more acceptable by this additional increase of its scope. It is subject to getting the Treasury to agree, but to the extent that it is an enlargement of the scope, it does prove a benefit and reduces the restrictions, which might have a very ill effect, at a later stage, upon the general economy of the country.

§ Mr. Orr-Ewing (Weston-super-Mare)
As both the Minister and my right hon. Friend have welcomed the words now moved, I think that it would be very churlish if I did not welcome them too, but for one thing. Both the Minister and my right hon. Friend used the word "concession." I would like to draw attention to the fact that both right hon. Gentlemen have, in fact, omitted the case that these words improve the actual Measure itself. If an improvement is going to be a concession, I am quite sure that the Minister would like to put on record that he does not regard an improvement as a concession, but as an improvement in itself.

§ Mr. Shinwell
I beg to move, "That this House doth agree with the Lords in the said Amendment."
This Amendment is to protect purchasers of Government stock who procure it on account of unauthorised disposal of such stock by a colliery company at an early stage. I will not call this a concession: I will say it is an improvement.

§ Mr. H. Macmillan
Does that mean that the purchaser of any such stock will have a good title to it whether it is sold with Treasury permission or not?

§ Mr. Shinwell
I should say offhand, yes. These provisions are very legalistic in character and will be subject to different interpretations, but on the face of it, I would say that the purchaser of Government stock would be protected, and, therefore, the title could not be questioned on account of any unauthorised disposal by a colliery company. If a colliery company disposed of the stock at an early stage, it would not prejudice the rights of the actual owner.

§ Mr. Macmillan
I ask this only because we are aware that this is a legal point, and at the moment we are deprived of our legal advisers who appear to be otherwise engaged. It seems to me on the face of it to be a rather new doctrine, and in the absence of our legal advisers I hesitate to press it. I thought, however, the doctrine was that a person could not pass op to anyone a better title to property than that person had, and if a person disposed of a title it was up to the purchaser to make sure that he had a right to sell it. I do not know whether this Amendment is going to affect that doctrine or not. If the right hon. Gentleman wanted to make the Clause inoperative, he should have listened to the arguments presented from this side of the House in the course of the various Debates. This does seem to make rather nonsense of the controlling points of the Clause, and I would press for an answer to the question—If a colliery owner, being possessed of compensation stock, disposes of same, without obtaining the sanction of the Treasury, will the purchaser have a good title to it under this Amendment?

§ Mr. Shinwell
My answer is in the affirmative, and I think that explains the matter without the assistance of the legal advisers to whom reference has been made.

§ Mr. Macmillan
With the permission of the House, I would like to say if that is the answer it is a very bad system of legislation, because, first, we pass a Clause in which it is laid down that we are giving in compensation for property certain stock and attached to that stock is a rule that it may not be disposed of, may not be borrowed on, and may not be sold except under certain conditions clearly laid down in Clause 23 of the Bill. Then we come along and say, "It is quite all right if you do dispose of it, because nobody can do anything about it, and the person who gets it will have a good right to it and the Government will acknowledge the title." I cannot believe that that is a tidy way of legislating. I ask, if it is not too late, that it should be looked at again, because it does not seem to me, on the face of it, to be a normal method of legislation. Indeed, it is merely inciting people to break the conditions we have laid down. If Par- 428 liament wishes to lay down these conditions, it should make them enforceable.

Major Roberts
Is it the case that this is going to create a form of black market? As the law is, property to which there is not a good title can only be passed on in certain markets like those in the East End; certainly not in an open market. Without a proper title to property, it is difficult to dispose of it. I would ask this question—assuming one got hold of a man of straw, who did not mind going to prison for a short time, he got some of this stock against the regulations, and somebody bought that stock, are we then really letting that person who buys it get the title to it, without any trouble? It seems to me an extraordinary thing. The Minister has just said that the title will pass. The man of straw admittedly goes to prison, but possibly there are people who would not mind doing that, if given a certain amount of pecuniary advantage. It seems to open wide a most improper method by which stock can pass in a most back-handed way.

§ Captain Crookshank
This seems to be a difficult legal point and as has been said we have no law adviser present. Would it be possible to postpone further consideration of this Amendment and return to it when a Law Officer is present to give us his advice?

§ Mr. Shinwell
There is no need for the presence of the Law Officers on a matter of this sort. The paint is perfectly clear and I thought I made it clear. To a colliery concern, undertaking, company or whatever one likes to call it will be transferred stock to which it is entitled. In the first place, the stock is not transferred to the individual shareholder. That, of course, was made perfectly clear when we were discussing the financial Clauses in Committee. That is the first point I wish to make. However, it is conceivable that some illegality may occur in spite of the precautions taken, and however much the provisions and regulations are tightened up, there may be unauthorised disposal of stock by a colliery company. In those circumstances, some protection must be afforded to the actual owner of the property, the individual shareholder, and the intention, therefore, is to protect the person concerned and at the same time to protect the purchaser of Government stock. There must be a 429 balance created and there must be fairness on both sides. That is the intention, and I should have thought that this is a common commercial practice to which no one could take exception. This matter has been carefully looked at, and it was discussed in another place. It was dealt with fully by the Lord Chancellor, and I should imagine, having been accepted there, that no question could be raised. At any rate, the point is perfectly clear to us.

Major Roberts
May I ask one question? The right hon. Gentleman says that the shareholder should be protected. Assuming that the shareholder illegally got rid of his stock, why should he be protected? That is improper and why should protection be afforded for something which is improper?

§ Mr. Shinwell
We are protecting those concerned in these transactions. I thought we were affording a solatium to first recipients of Government stock in the first instance and also to the second recipients. Apparently hon. Members opposite do not regard this as any concession.

§ Mr. Deputy-Speaker
I am sorry, but the right hon. Gentleman must remember that we are not in Committee but in the House. The right hon. Gentleman has already made some three speeches and so has the Minister, who has certain privileges in that respect. I do not think we can go on ad infinitum. We must come to a decision on this question.

§ Captain Crookshank
Could we adjourn further consideration of this Amendment, and take the other ones, and then come back to it in half an hour or so? Would it be in Order to make that proposal, particularly as the Minister said that it had been discussed in another place, and we cannot find any reference to it in the OFFICIAL REPORT of another place?

§ Mr. Deputy-Speaker
I am afraid not. The matter has now been fully discussed, and I must now put the Question.