HC Deb 06 July 1954 vol 529 cc1948-51
14. Mr. E. Fletcher

asked the President of the Board of Trade what steps he proposes to take in view of the report of Mr. E. Milner Holland on his investigation into the affairs of the Savoy Hotel Limited.

15 and 16. Mr. Roy Jenkins

asked the President of the Board of Trade (1) whether, in view of the Report of the investigation conducted by Mr. Milner Holland, he proposes to take any action against the directors of the Savoy Hotel Company;

(2) how he proposes to ensure that directors of public companies do not in future make an invalid use of the powers of management conferred upon them.

Mr. H. Strauss

My right hon. Friend would like to take this opportunity of thanking Mr. Milner Holland for his admirably clear Report. The House will agree that it deals most fully with the issues placed before him. Since the Report states that the directors acted in good faith, my right hon. Friend does not propose to take any action against them. Mr. Milner Holland, after careful consideration, has expressed the view that their use of their powers was invalid. My right hon. Friend has no reason to apprehend that, in the face of this opinion, other directors will seek to carry out any similar transaction, but, if they did, it should be possible to get a decision from the courts. As at present advised, my right hon. Friend does not consider that any amendment of the Companies Act is required, but he is keeping the matter under consideration.

Mr. Fletcher

Is the Minister aware that it is difficult to regard this Report as very satisfactory? It does not reflect much credit upon the directors, it gives no comfort to the shareholders, and leaves the law on the subject in a very uncertain and unsatisfactory condition.

Mr. Strauss

If the hon. Member examines the very clear conclusions, I think he will find that the Report elucidates the matter very much. I think that it clarifies the law, as far as the law can be clarified without a judicial decision.

Mr. Jenkins

As the Parliamentary Secretary says that the Report is completely clear, will he tell us what, in the view of his Department, "invalid" means, since I understand the normal meaning of the word to be "not being in force, ineffective"? Clearly it was most effective, whatever else it was. Secondly, will the hon. and learned Gentleman take into account that there have been grave expressions of concern about the uncertainty of company law both here and in a leading article in "The Times"? Does he not really think that he ought to clear the matter up either by a test case or by amendment?

Mr. Strauss

I appreciate that until there is a decision by the courts there must be an element of uncertainty, but, in view of this closely reasoned Report, I think there is no reason to apprehend other directors taking similar action. If they did, I think it extremely probable that the matter would be tested in the courts. On the first part of the hon. Member's supplementary, I am not going to attempt to improve on the language of the distinguished lawyer concerned.

Lieut.-Colonel Lipton

Why should it be left to litigation to decide an important point of this kind when it can be simply and effectively disposed of by legislation which would clarify the matter without any doubt?

Mr. Strauss

If the hon. and gallant Gentleman tried to draft the legislation, he would find that it was by no means so simple.

25. Mr. Snow

asked the President of the Board of Trade whether he will introduce legislation to make obligatory the publication of the identity of the individuals or corporation responsible for guaranteeing the purchase of stock at prices considered by the appropriate authority to indicate abnormal circumstances.

Mr. H. Strauss

No, Sir.

Mr. Snow

How can the hon. and learned Gentleman and his Department regard with equanimity the purchase of stock by individuals or corporations at the price of 62s. 6d. when the current price of the same stock is 39s. 3d.? Does not he know who guaranteed this purchase? Is it not a fact that it was Barclays Bank? Is the public interest well served by this sort of anonymity?

Mr. Strauss

I was not quite certain what the hon. Member had in mind in asking this Question.

Sir H. Williams

Neither have I.

Mr. Strauss

If he is referring to what might have been material in the inquiry which was recently conducted into the affairs of the Savoy Hotel, it would have been open to the Inspector to look into this matter, had he thought it relevant. If the hon. Member desires to ask any Question about the borrowing of money or other financial assistance in this case, that Question should be addressed to the Treasury.

26. Mr. Snow

asked the President of the Board of Trade whether he proposes to introduce legislation to make it an offence for secretaries of companies to publish as unanimous decisions of boards of directors, unless it is demonstrable that all directors, notifiable under the articles of the company, had in fact been notified of the time and place of the meeting where such decisions were taken.

Mr. H. Strauss

No, Sir. I do not think that such legislation is necessary.

Mr. Snow

Is it not a fact that at least one director of the Savoy Group—and probably two—was not informed of the Hoard meeting, that decisions were taken which should properly have been considered by the board and the shareholders as a whole, and that had that action been taken this rather unsavoury business would have come to light and received publicity?

Mr. Strauss

In this case the Inspector has found that the mistake was not deliberate. If mistakes of this sort are not made innocently, the criminal law is not without resources as things are, and, in addition, those responsible might find themselves liable to civil proceedings.