CLAUSE 22 (Final payment of dividends and interest.) (Hansard, 24 June 1947)

§ Mr. Shinwell
I beg to move in page 33, line 24, at the beginning to insert: In appointing an auditor under this Subsection in the case of any body, the Minister shall first offer the appointment to one of the auditors who signed the last balance sheet of the body or examined that balance sheet on behalf of the Electricity Commissioners, and. This is another example of the readiness of the Government to make concessions to the Opposition when they make a reasonable proposition, and as this matter was under consideration during the Committee stage and it was thought that the company's auditor would be the best person to decide the revenue available after the vesting date, I decided, because it was a reasonable request, to make the necessary alteration to the Clause. The accounts are subject to a double audit; first by the company's auditor, and again by the auditor appointed by the Commission.

§ Mr. Gaitskell
I beg to move, in page 34, line 35, at the end, to insert: 374 (5) Where the sums paid to the stock holders' representative under the foregoing provisioas of this section are insufficient to enable him—

(a) to make the interest payments referred to in paragraph (a) of Subsection (3) of this Section at the maximum rates permitted under the last foregoing Section; and

(b) to distribute to the holders of the securities referred to in paragraph (6) of that Subsection gross amounts equal to payments of interest or dividend on those securities at the maximum rates so permitted;
and the body possessed immediately before the vesting date reserves applicable for the purpose of maintaining payments of interest and equalising rates of dividend, the Central Authority shall, if the Minister authorises them to do so, pay to the stockholders' representative an additional amount equal to the total amount of the said reserves so possessed or to the total amount of the said deficiency, whichever is the less, and the stockholders' representative shall apply that amount in like manner as the other sums paid to him under this Section.", The Amendment which we have just accepted allows a company, with the approval of the Minister, to draw upon reserves if current revenue is insufficient. This, of course, applies only up to the vesting date. But after that it may be that the permitted rate cannot be paid by the stockholders' representative because of 375 lack of revenue. This Amendment allows the stockholders' representative to pay the full amount of reserves if the Minister approves. This is the same arrangement as we have already made for the final payment of dividend by the company.

§ Colonel Crosthwaite-Eyre
I am not quite clear about this Amendment. In most cases a company would make an equalisation of dividend payments not out of reserves, but out of the carry-forward. As I read this Clause, this practice would be prohibited. The only way in which a stockholders' representative could carry this out is if there was a reserve on the balance sheet, and I should like to hear what sort of reserve it is and if it would be possible for the stockholders' representative to carry out, what this implies, which is to make an equalisation of dividend possible. I submit that, as worded at the moment, the thing is quite impracticable because there is no reserve on the balance sheet which would be available for this purpose. If the word "funds" were introduced, they would be in a position to carry this out.

§ Mr. Gaitskell
I do not think there is any need to detain the House on this matter. We do not, in fact, attach too much importance to the words used, but we would like to make technical inquiries and, if necessary, to introduce an Amendment in another place.