§ Not amended (in the Standing Committee), considered.
§ Motion made, and Question proposed, That the Bill be now read the Third time.
§ 1.20 p.m.
§ Mr. Graham Page (Crosby)
The Bill has reached this stage in the House without being debated and I hope, therefore, that the House will bear with me if I put on record what it is all about. Briefly, 848 the intention of the Bill is to simplify the procedure upon the transfer of shares. The ideas embodied in the Bill have been canvassed for many years. It has long been realised that Section 75 of the Companies Act, 1948, as well as certain other Sections of that Act and certain other statutes relating to companies, have crystallised a process in the transfer of securities which is cumbersome in modern share dealing.
Section 75 of the 1948 Act states:Notwithstanding anything in the articles of a company, it shall not be lawful for the company to register a transfer of shares in or debentures of the company unless a proper instrument of transfer has been delivered to the company".By custom, practice or convenience, a proper instrument of transfer has become fairly well known as one which relates the number of shares passing from the transferor to the transferee, states the consideration, is signed by transferor and transferee, their signatures are witnessed, and so on.
In 1959, a committee was set up under the chairmanship of Lord Ritchie of Dundee, chairman of the London Stock Exchange, to consider whether the process of transfer of securities could be simplified. That committee set up an advisory committee to go into the matter in more detail. Represented on the advisory committee were the Issuing House Association, the Committee of London Clearing Bankers, the Accepting Houses Committee, the Chartered Institute of Secretaries, the Bank of England and the Council of the Stock Exchange.
Thus one had what might be called a high-powered committee representing the issuing, the registration of and the dealing with securities. That advisory committee issued its report in December, 1960. At that moment, I happened to be spending a month or two in hospital, with a certain amount of time on my hands, and while sitting up in bed in hospital I drafted a Bill to embody the recommendations of the advisory committee.
The committee had recommended, and my draft Bill included, a system of transfer by stock transfer forms to which I will refer in more detail presently. Although that Bill received a First Reading in 1961, it was not fortunate in finding Parliamentary time for a Second Reading. Nevertheless, it served a useful purpose 849 in that it brought comments from those who were involved in the procedure of share transfer and it was then possible to produce this scheme in the form of a Bill, almost wholly agreed by all those concerned, for the present Session. That is the Bill to which the House is now asked to give a Third Reading.
I express at once my gratitude to my hon. Friend the Economic Secretary to the Treasury and to his Department for the help they have given to ensure that this is a Bill which comes before the House with the approval of all concerned—lawyers, accountants, stockbrokers, the secretaries and registrars of companies, banks, and so on.
The only major alteration from the previous Bill is that in the present Measure power is given to the Treasury to change by order the form of stock transfer, which is set out in Schedule 1 to the Bill. This, I hope, will give a flexibility to the system and allow slight alterations to be made as one sees how the procedure works out in practice. The power for the Treasury to amend the form by order is given in Clause 3(2).
The Bill has already been through another place, where it was so ably piloted by Lord Clitheroe that until this stage it has needed no debate in this House. What emerges as the new form of procedure which the Bill will authorise is shown in Clause 1 and I will endeavour to explain it by means of example.
Let us suppose that the owner of shares desires to sell them. He instructs his broker, who arranges the sale and then completes a stock transfer form, which is set out in Schedule 1 to the Bill. As hon. Members will see, the form of transfer is simple to complete. The first alteration in the law to which I want to call attention is that the transfer will be under hand and not by deed. There will be no need for a transfer of shares to be by deed in future.
At the stage when the selling broker completes the form, he leaves out the purchaser's name, because at that stage, having arranged the sale with the other broker, he would not know the purchaser's name until the accounting day. The seller then signs the transfer. Here, I come to the second reform in the law. The transferor will not need to obtain a witness to his signature. Attestation of 850 the signature will no longer be necessary. Therefore, having signed the stock transfer form, the transferor returns it to his broker with the share certificate.
§ Mr. John Hall (Wycombe)
There is one point which worries me a little. Does not this mean that the registrar will have a greater duty to compare the signature of the transferor with the original signatures which used to appear on the old forms of transfer, to make sure that there is no forgery?
§ Mr. Page
The fact that at present there must be a witness to one's signature does not make it any more authentic. Even with the witnessed signatures, I imagine that if they thought that there was any suspicion about the transfer, registrars would compare them with the previous signatures. There will always be a duty on the registrar of a company, if he suspects anything wrong, to investigate. I do not think that this procedure will make it any more difficult for him to investigate or any more necessary to do so.
At the stage which I have reached in my example, a document signed by the transferor is ready to be dealt with on the accounting date. At that date, the selling broker will learn by ticket who is the purchaser. If the sale is to a single purchaser, the broker will affix his stamp to the stock transfer form; he will insert the consideration and he will put the Inland Revenue Stamp on the transfer. He will have it stamped at that stage. He then delivers it to the buying broker with the ticket to identify the purchaser and with the share certificate. The buying broker will insert the buyer's name, put his stamp on the transfer, and lodge the transfer with the certificate for registration with the company.
Here is the fourth item of reform. That transfer form will not in future require the purchaser's signature. The transferee will not have to sign the form in future. That transaction, as I have described it, can apply to the sale and purchase of shares either on or off the Stock Exchange. It need not be a Stock Exchange transaction when it is done by the stock transfer form alone.
If, however, there is more than one buyer of a block of shares which the 851 seller desires to dispose of, the system which I am now going to describe must be restricted to Stock Exchange transactions. Where there is more than one buyer this process is the same up to the accounting date, but then, on the accounting date, when the selling broker learns of the several purchasers, he will cancel the lower half of the stock transfer form which hon. Members will see in the First Schedule and he will turn the form over and complete the list of purchasers on the back of the form.
He then puts his stamp on the transfer form and proceeds to complete the broker's transfer forms, the form of which appears in the Second Schedule to the Bill. He signs in the broker's transfer form the number of shares and the consideration for each purchaser, making a separate broker's transfer form for each purchaser. At that point there is no need for the transferor to sign again. The transferor has his own transfer form and there is no need for him to sign the broker's transfer form or separate transfers to the separate purchasers.
The broker for the seller then signs the stock transfer share certificates and the broker's transfers to the company for certifying by the company. The company will return them. The broker puts his stamp on the broker's transfers and the selling broker will have each transfer stamped. He will put the consideration on the broker's transfer form so it can be stamped with the appropriate Inland Revenue stamp. Having stamped the transfer forms he attaches the tickets to each and delivers them to the buyer's brokers, who lodge them for registration.
When one describes an example of this sort it may sound rather long-winded and perhaps a little complicated, but in action it boils down to a very simple process, and the result of it is that no witnesses will have to sign either for the transferor's signature or the transferee's signature. In future no transferee will have to sign, and no transferor need sign more than once.
§ Mr. Leslie Hale (Oldham, West)
I concede at once that I have been trying to look at an exceedingly complicated document, but I am wondering what happens in cases of shares where calls are to be made on the owner of shares. What evidence is there that the transferee has 852 assented to the obligation he is undertaking to pay calls in the future?
§ Mr. Page
This cannot apply to shares on which there is to be a call. If the transferor is undertaking an obligation he must sign on the transfer. This is the sort of process which the hon. Member will know applies in ordinary conveyancing and has applied for centuries. The purchaser of real property does not need to sign the conveyance unless he is entering into a covenant of some sort, and this principle is now to be applied to the transfer of shares. I personally am delighted that those of us who do conveyancing in solicitors' offices have been vindicated over this, that our old and stodgy conveyancing procedure is now to be applied to the stock form of procedure in the transfer of shares on the Stock Exchange.
§ Mr. John Hall
This brings up the point I raised earlier. In the future there will be no need for the signature of the buyer on the transfer form, as I understand it. That means that if the registrar at some future date is in some doubt about the authenticity of the signature of the seller he has no specimen to which he can refer to compare the signatures, if he wishes to check a signature or resolve some doubt in his mind as to the authenticity of the signature of the seller.
§ Mr. Page
This does not prevent, nothing in the Bill prevents, the registrar from requiring specimen signatures, or using the signature on a direction for payment of dividends.
If the registrar feels nervous about this procedure he can require, as many of them do on separate forms already, a specimen signature, but I think there is no real danger through the reduction in the number of signatures in the process of transfer of shares.
I have not calculated exactly how many signatures are to be saved, but I imagine that the number of transfers which occur every year must run into the millions. We are saving at least three signatures on each, those of two witnesses and the 853 transferee, and so one can multiply those millions by three, and so we are saving some considerable time in the signing of documents.
§ Dr. Alan Glyn (Clapham)
I think this is an important point, raised by the hon. Member. Is my hon. Friend suggesting that if a company is worried it should use as a specimen signature that on a dividend allocation? In that case would he go so far as to say that registration would be refused till the purchaser had applied on an entirely different form?
§ Mr. Page
No. I think that the registrar would be under the obligation to satisfy himself of the authenticity of the transfer before accepting it for registration. If he has any doubt I suggest comparison with the previous signature on the form he may have obtained.
In addition to this simplification there is, as I mentioned, the fact that transfer will no longer have to be by deed. But, as the hon. Gentleman the Member for Oldham, West (Mr. Hale) rightly called my attention to just now, this process is limited to fully paid securities and under Clause 1(4) the House will see that is limited to a list of securities there set out in which there are certain exceptions mentioned. For example, Government stock, stock in the Post Office Register, has its own form of transfer. Obviously one cannot use this new form of transfer for Premium Bonds, Tax Reserve Certificates or National Savings Certificates, or, indeed, Defence Bonds, which, again, have their own form of transfer.
I pass to Clause 2 which sets out the supplementary provisions for the simplified form of transfer. Subsection (1, a) preserves the right of a company to refuse to register the transfer in some other cases than the form in which the transfer is made. It also preserves the requisites of a company if indeed a company is a party to the transfer—the requisite as to company execution by use of a seal. Perhaps it is a pity that this Bill is not the appropriate vehicle to do away with some of those formalities of sealing for companies which frequently seem to me to be pure formalities and quite unnecessaryy. At any rate, the Bill preserves those requisites.
Clause 2(2) deals in particular with a Section of the Companies Act, 1948, which speaks of the certification of an 854 instrument of transfer. The subsection provides that the new forms—the stock transfer form and the broker's transfer form—are instruments of transfer within Section 79 of the Companies Act, 1948.
Clause 2(3) was inserted to remove any doubts particularly about Stamp Duty. It would perhaps be better if I left any comments on that subsection to my hon. Friend the Economic Secretary.
To turn to Clause 2(4), it is amazing what comes to light under the glare of reforming zeal. One thinks one has a nice, simple, little reform of the law, and then one finds that a Scottish Act of 1896 somehow stands in the way. The Clause is intended to say that the Scottish Act of 1896 which might have the effect of making blank transfers null and void shall not harmfully affect the Bill. It was also discovered that another Scottish Act, the Conveyancing (Scotland) Act, 1924, needed specific mention. That is an Act in which law agents, notaries public and justices of the peace are required to sign on behalf of blind persons. So it is necessary to insert these saving provisions.
I have already referred to Clause 3 as being the one which gives flexibility in the application of these forms. It gives the Treasury power to amend the two Schedules to the Bill and to provide different forms or different parts of the forms from those set out in the Schedule. This, I am sure, is wise. When one is setting up a new process one wants to see how it works out in practice. If minor amendments are needed, it should not be necessary to have to come back to the House to ask for new legislation; it can be done without harm, I should think by the Treasury.
These Orders are, of course, subject to Prayer in this House—subject to negative Resolution procedure—and if it is thought that they go beyond what one reasonably expects in a Bill of this sort, objection can be made to them on the Floor of the House.
The remaining Clauses of the Bill need be mentioned only very briefly. Clause 4 sets out the definitions. Clause 5—and I trust—
§ Mr. Hale
Before we leave the definitions, I was hoping that the 855 moment had come when the hon. Member for Crosby (Mr. Graham Page) was going to convey the glad tidings of the amount that would be saved by the humble buyer or seller of stocks by this considerable reduction in the work to be done by the brokers. As I understand the situation, if I ask my bank to buy some stock for me, the brokers may have to send me half a dozen transfers of odd bits and odd sizes. But we are now saving them that. What will the brokers do about it? By how much will they reduce their commission?
§ Dr. Alan Glyn
Will my hon. Friend deal with the point raised by the hon. Member for Oldham, West (Mr. Hale), which is whether my hon. Friend's method of transfer includes the type of transfer where shares are bought in packages from a certain person and from different owners?
§ Mr. Page
If there are a number of sellers, there will be only the one form, the stock transfer form, which will cover "packets" to the one purchaser. There must also be a transfer from the owner of the shares. There is no new process for that in the Bill. One cannot simplify that process.
To proceed with my summing up of the Bill, Clause 4 gives certain definitions which I do not think need any elaboration from me. Clause 5 also will not, I hope, 856 need any elaboration from me. I understand that it is in the common form. It deals with Northern Ireland. Frankly, I have not a clue what it is about, but I am assured that it is in the common form. Clause 6 states when the Bill is to come into operation. I hope that the Economic Secretary will make some comment on this, for the date when the Bill may come into force is put in the hands of the Treasury. I hope that it need not be too long delayed.
I hold the view that a useful function of private Members' legislation is to delegislate rather than to create more law, to remove some of the useless laws which we have, to cut away some of the dead-wood of the Statute Book rather than put more restrictions on it. This Bill, I hope, cuts away a number of unnecessary legal formalities.
I think that in legislating we ought to have in mind the burden which the law places on ordinary commercial practice and on the ordinary individual. In so many cases in legislation we are imposing on the individual some duty which he has to carry out on the part of government, whether it be local government or central government. One of the greatest saboteurs of productive effort, in commerce at any rate, is what I might call the "hidden boss"—the local authority or the central government—which is making the office workers do its job for it, sticking on the receipt stamps, calculating P.A.Y.E., sticking the stamps on the cards. All those things are done by the office worker to carry out the job of government. The more we can cut down the processes which the law requires office workers to undertake, the better.
I apologise for keeping the House so long, but the Bill did not receive any discussion on Second Reading and I felt it right to put on record what it endeavours to do.
§ Mr. G. R. Mitchison (Kettering)
Before the hon. Member sits down, will he help me on one point? It seems to me that the effect of the Bill will be to decrease the revenue from Stamp Duty to some extent, owing to the way in which the Stamp Act is drawn. Can he make any comment on that?
§ Mr. Page
In my view, this process will not have that effect. At present, 857 it is possible to use blank transfers—transfers without the name or signature of the transferee on them—for certain purposes. The Bill makes no change in that procedure. It makes it possible to use a stock transfer form without the name of the transferee in it. Whether it is a purchase by one purchaser or a transaction where there are several purchasers, the process will be that the seller's broker has the document stamped. That will be the practice as foreseen by this Bill, and I doubt whether the Bill can be carried out unless that practice is observed.
Before passing the stock transfer to the buyer's broker it will be stamped by the seller's broker. Before passing the broker's transfer forms to each of the buyer's brokers they will be stamped by the seller's brokers. The seller's broker can pass them on unstamped in the same way as at present he can pass on blank transfers unstamped. It makes no difference in the law.
On the other hand, my hon. Friend the Economic Secretary and his Department have thought that perhaps there should be some protection over this, and no doubt the hon. and learned Gentleman has seen on the Order Paper in connection with the Finance Bill a provision which makes quite sure that the Treasury will lose no duty over this.
In Committee, I felt rather like the young lady who goes to a party with her music and is not asked to play. I had no opportunity to say anything in Committee, beyond thanking the Chairman for taking the Chair. That is my excuse for using up so much time of the House on this occasion.
§ 1.52 p.m.
§ Mr. Leslie Hale (Oldham, West)
I shall not delay the House for more than a few minutes, and I shall certainly not take part in any obstruction because, in the first place, I do not like doing it, and, secondly, because I have an interest to delare later in the list of Orders of the Day.
It is, of course, difficult to get a complicated Measure like this very clearly explained by the hon. Member who moved it, and it would seem to be an eminently sensible Bill. One of the problems is that I imagine that, except for those who were on the Committee, 858 there are many hon. Members who have not taken cognisance of the Bill.
I know nothing about the Stock Exchange. Only recently, I got a little money because my life has lasted long enough to enable me to draw some life insurance. I therefore sold some shares a fortnight ago and found that in the slump that followed the shares that I had sold were the only ones that had gone up by 2s. 6d. each in about a week. They were British sugar and authority investments, so I have another loss to regret.
There are problems which may have been explained in Committee and, if so, I apologise for raising them now but, from my point of view, as the hon. Member for Oldham, West, there is a serious problem. It arises from the definition of stock exchange which is contained in Clause 4. Oldham is the only provincial town of its kind which has a recognised, reputable and respectable stock exchange which continues to operate. I would have thought that a recognised stock exchange would have been recognised in the Statute, instead of by the extraordinary provision that only the Stock Exchange in London automatically has the right to operate and that the Treasury, by order, will decide what others are recognised stock exchanges within the meaning of the Bill.
I would have regarded it as almost a fatal defect but for the presence of the Economic Secretary, who, I hope, will say that it is perfectly clear that the Oldham stock exchange will be authorised by the Treasury to act in present circumstances, that an order will be made, and that I need not fear the loss of another industry in Oldham, even if it is less productive than some. I hope that I can have that assurance. Subject to that, I conclude by saying that, once again, we on this side should give benevolence to a Bill produced from the other side on a Friday, and I hope that spirit of conciliation will continue throughout the day.
§ 1.58 p.m.
§ Mr. John Hall (Wycombe)
When I first came into the House to listen to the Bill which preceded this one I had the pleasure of hearing the hon. and learned Member for Kettering (Mr. Mitchison) call upon the support of his 859 right hon. and hon. Friends. It so happens that he had no right hon. and hon. Friends present to support him. Since that time the attendance on that side of the House has gone up by 100 per cent., which shows how misleading percentages can be.
I think that the House would wish to congratulate my hon. Friend the Member for Crosby (Mr. Graham Page) on bringing this Bill forward so successfully to this point in its procedure. I must congratulate him, too, on having withdrawn his original Bill so that a similar Bill should be introduced in the other place to speed up the procedure and get it on the Statute Book rather quicker than otherwise might have been the case. Greater love has no man than to give up his own Bill to others to present for him. This is a matter for congratulation.
I think that my right hon. Friend will agree that the inspiration for the Bill was given by Lord Ritchie, when he was chairman of the Stock Exchange and set up a committee under the secretary ship of the Shares and Loans Department of the Stock Exchange, Mr. Wells. It is that committee, under the excellent guidance of Mr. Wells, which has done so much valuable work. It is quite remarkable that the report of that committee, which, I think, was published in December, 1960, should have been acted on within two-and-a-half years. It must be almost a record for any report to result in legislation quite so quickly. It shows, perhaps, the need for it.
I have some professional interest in the Bill because I am a chartered secretary myself, although I no longer practise. I started my business career as a junior assistant, assistant secretary in the days of my youth, which, I must say, nowadays are rather like looking at those days through the wrong end of a telescope. During my long course as a junior assistant, assistant secretary I was called upon to undertake most of the registration work for a large public company, at a ludicrous salary—grossly underpaid—but at least I had a great deal of experience in handling registration work of this kind.
I remember only too vividly the amount of detail that I had to watch in checking transfers. I had to check the signatures both of the transferor and 860 the transferee, make sure that they were properly witnessed and make certain that no wife witnessed her husband's signature or vice versa. I had to see that all the transfers were properly certificated, and where I had a number of transactions out of one shareholding involving a number of transferees all this work increased tremendously.
I understand that under the Bill—as the hon. Member for Oldham, West Mr. Hale) has said, it is a complicated Bill—all this will be rendered unnecessary, apart from the necessity of watching the transferor's signature. I am a little concerned about this. I can remember many occasions when I was a little doubtful about the authenticity of the transferor's signature, but I had at least available the original transfer form on which his signature had appeared when he first bought the shares, and, therefore, it was possible, by reference to the archives, if they were properly recorded and maintained archives, to compare the two signatures. This will not be possible in future, as I understand it. This will make one slight problem for registrars in future, although much of their work in other respects will be reduced.
Therefore, I welcome the Bill, because it will help the parties to these share transactions and reduce the amount of work carried out by stockbrokers. Incidentally, I doubt whether they will find any way of reducing charges. I think that their answer will be that their expenses are rising so rapidly that this relief will merely enable them to keep the charges at their present level. However, like the hon. Member for Oldham, West, I would like to think that perhaps they might be persuaded to reduce their charges. Above all, I welcome the Bill because it will reduce the burden of work on registrars, always an overworked and underpaid body of men in my experience.
I want also to refer to the form which appears in Schedule 2. As was mentioned in another place, this is a novel form, owing its origins to Mr. Bell, of the Bank of England. The Bank is not an institution notable for being highly original in itself, so that it is interesting to find this particularly acceptable idea emanating from that source.
861 One point I wish to raise has been touched on a little already. In Committee, the hon. Member for Gloucester (Mr. Diamond) drew attention to what was said on Third Reading in another place that, under certain circumstances, this might lead to the avoidance of Stamp Duty. There is an Amendment to the Finance Bill on the Notice Paper which, I believe, is designed to avoid this happening, and I would like an assurance from the Economic Secretary that in his view that Amendment will completely meet the point. It is not, perhaps, quite so important as it was when the Bill was introduced, because the Stamp Duty is being reduced from 2 per cent. to 1 per cent. To that extent it is half as important as it was. Nevertheless, it remains quite important.
Another point which is not covered by the Bill is that of the registration fee. This is a very irritating fee charged by companies for registering transfers with them. In many cases it is 2s. 6d. The fee is a nuisance to collect and irritating to pay. With the reduction of work on registrars which will come from this Bill, I hope that the companies will abolish this fee.
The Bill does not extend to overseas companies which have their registrations here. The reasons for this are acceptable but perhaps it will be possible for such companies, by a simple alteration in their articles of association, to permit the adoption of the procedures outlined by the Bill, and I hope that they will do so.
I hope that will also be possible for Commonwealth and Government stocks to be included as well. If I understand it aright, it will be quite simple for registrars, by a change in their regulations, to make it possible for these Government stocks once again to be included within the scope of this Measure. In some cases, it may require legislation by the Commonwealth Governments concerned but I hope that it will not be long before they introduce it.
That brings me to Clause 5, to which my hon. Friend the Member for Crosby (Mr. Graham Page) referred. If I understand it correctly, Northern Ireland will be excluded from the provisions of the Bill, including securities and companies in that country. Again, by legislation in Northern Ireland, it would be possible to 862 bring them within the purview of the Bill, and I hope that that will be done.
I welcome the introduction of the Bill, which has gone through with the minimum amount of trouble.
§ Mr. Hale
The hon. Gentleman says that he has experience as a chartered secretary. Suppose an elderly and impotent bedridden husband owns £20,000 worth of securities which have been transferred to him and registered in his name, and that certificates have been issued in respect of the transfers which he has not signed. What is there now to prevent his wife from transferring the whole of these to a gigolo, on what would admittedly be a forged and criminal document, for a figure inserted in the transfer which is never paid and which is not intended to be paid? Would not that now be registered, continue to be registered, and, indeed, go on being registered until the husband's death, without any question arising because letters addressed to the husband have been opened by the wife?
§ Mr. Hall
I do not think that the situation is very much different from that applying today. The only difference is that the signature has to be witnessed and, therefore, there is the possibility of making forgery difficult in that way. But if one set out deliberately to perpetrate a fraud, I do not think that it would be very difficult to get a forged signature witnessed by the gigolo or friend.
§ Mr. Hall
This is a possible weakness and it was suggested that perhaps company registrars might secure that a purchaser of shares should provide a specimen of his signature, perhaps on a dividend mandate form, or something of that kind, which would give them a signature to compare for future transactions.
§ Mr. Graham Page
This process is really meant to apply mainly to Stock Exchange transactions. Certainly, where the two forms are used, this is restricted to Stock Exchange transactions. It is an established practice of law that when an agent delivers a transfer to a company for registration he warrants the signatures on it. That is accepted.
§ Mr. Hall
This point has caused anxiety on both sides of the House. Perhaps my hon. Friend the Economic Secretary will give his views. Subject to that small proviso, I welcome the Bill very much. It will relieve the burden of a great many people engaged in these transactions and in so far as it reduces the amount of paper and the filling of forms it must be welcomed.
§ 2.8 p.m.
§ Mr. Alan Hopkins (Bristol, North-East)
I, too, welcome the Bill. In doing so, I have no wish to obstruct the hon. Member for Oldham, West (Mr. Hale) who has a Bill down for consideration later in these proceedings. I also pay tribute to my hon. Friend the Member for Crosby (Mr. Graham Page). He said that he gave birth to this Bill in hospital, which is perhaps not an appropriate place so to do. I must confess that it did not occur to me when I was in hospital to dream up Bills. I will bear it in mind for the future, however.
I also pay tribute to Lord Clitheroe who, I believe, was a predecessor of my hon. Friend the Economic Secretary at the Treasury some years ago. Like other hon. Members I feel that it would be right to pay tribute to the report of the Stock Exchange Committee which looked into this matter about three years ago, and particularly the part played by Mr. Wareham. It would be appropriate for me to declare an interest in that I am a director of an issuing house which has a large registrar's department.
Having said that, I assure my hon. Friend the Member for Wycombe (Mr. John Hall) that this Bill will not alter substantially the amount of work which will fall upon registrars of companies. Having paid heart-felt tribute to my hon. Friend the Member for Crosby I wish to make three specific points. The first is that I should like my hon. Friend the Economic Secretary to tell me why this Bill is necessary. The procedure of buying and selling shares is one carried out on the Stock Exchange. Is it not possible for a transfer, which is merely a document intended to pass the ownership of shares, to be altered by agreement with the Stock Exchange?
I appreciate the point made by my hon. Friend the Member for Wycombe. 864 There is a parallel if one takes the definition of a bank. What is a bank? The answer is that it is anything which engages in banking business. Who engages in banking business? The answer is that it is those people whom the Board of Trade decides are engaged in banking business. That problem arises elsewhere, too. Is it really necessary to have the Bill? Could this not be done otherwise?
Secondly, when is it the intention to bring this Bill into force? Having said that this is a good Bill, I should like to see it come into force as soon as possible. The present position is difficult. I do not intend to go over the ground already covered, but in the case of a family trust it is frequently difficult to get the signatures of all the trustees for any purchase of shares. I can well remember an occasion when there were three trustees, of whom I was one, the other two being octogenarians, and it was a question of whether we could get their signatures witnessed in time before one of them passed to the other side. This sort of difficulty would be obviated by a change such as my hon. Friend has proposed.
I should like to reiterate the remarks of the hon. and learned Member for Kettering (Mr. Mitchison) about Stamp Duty, and I hope that my hon. Friend the Economic Secretary will be able to assure us on this point.
Before giving the Bill a welcome push, I should like to assure my hon. Friend the Member for Wycombe that the registration fees are a matter for the company and are normally inserted in the company's articles. They are a means of deriving some money from transfers which are themselves extremely expensive to the registrar. If the registration fees were to be abolished by the company, it would mean only that the charge to the company for undertaking this work would be increased. The cost would therefore fall not upon the shareholder, but upon the company. Having said that, I welcome the Bill.
§ 2.13 p.m.
§ Dr. Alan Glyn (Clapham)
It is right that the Bill should be reasonably aired because this is the first opportunity which we have had of discussing it in 865 the House. I should like to thank my hon. Friend the Member for Crosby (Mr. Graham Page) for the very full way in which he went into the provisions of the Bill, and at the same time I pay my tribute to Lord Clitheroe who has done so much in another place towards making the Bill a possibility, I am sure that the Bill has a general approval, but, as the hon. Member for Oldham, West (Mr. Hale), who made a number of pertinent points, we all have a duty to ask my hon. Friend the Economic Secretary a number of questions about it. In this connection I should like to say how glad I am that my hon. Friend the Economic Secretary is in his place today, because this is a matter in which he is very experienced.
This is an extension of a Bill which we had the other day in which local authorities were at last allowed to simplify their methods with this kind of issue by using the procedure of bonds. I am sure that any method of transfer of shares between individual companies or trusts which is simplified will be welcome not only by the House but by the general public and by stock exchanges and those connected with the laborious process of the transfer of shares.
I am glad that the Bill has been limited to fully paid shares because, as the hon. Member for Oldham, West said, if it were not it would be almost impossible to operate. I am equally glad that my hon. Friend the Member for Crosby has had the foresight to take out of it specifically methods of transfer such as the Post Office Register and various other special procedures for which there are already laid down clear methods of transfer.
I should like to ask my hon. Friend—and I hope that this is not a fast ball and I ask it as a matter of interest—what the Bill represents in the amount of transfers which are not dealt with through the stock exchange as compared with those transactions which go through the stock exchange. I should like immediately to meet the point raised by the hon. Member for Oldham, West and say that I mean not only the London Stock Exchange but all stock exchanges.
I should like further clarification about signatures, a question raised during 866 the speech of my hon. Friend the Member for Crosby by myself and by my hon. Friend the Member for Wycombe (Mr. John Hall). As we all know, at the moment when making a transfer the registrar of a company has a specimen signature of the original purchaser. This will not be the case today. My hon. Friend the Member for Crosby reasonably suggested that companies have another method of getting a signature, that is to say, through the dividend mandate. That is perfectly correct and I suppose that any company can reasonably demand that that mandate shall be completed, but it would have to say that it was complete before the further transfer; and normally the dividend mandate would not in practice be sent out until the transfer was complete, so there is a time interval. If the transfer took place very rapidly, the specimen signature would not be available and the company would have one of two alternatives—either to authorise the transfer without the signature, or hold up the transfer until such time as the dividend mandate specimen signature had been obtained. We may be making rather heavy weather of this, but I should like to ask my hon. Friend whether we are running any additional risk of fraud and, if so, whether that risk is not balanced by the simplification of the procedure.
The necessity for the Bill was dictated by a clause in the transfers which said that any transfer had to be effected by the proper instrument. I presume that the old method can be used if it is so desired. That question has not yet been asked, but I think that it is fairly reasonable to assume that that would be the case. The hon. Member for Oldham, West stressed the importance of the other stock exchanges. I agree with him that Oldham is an important and well-established stock exchange, but I remind him that there are also Manchester and Liverpool and other stock exchanges which are well founded. I agree with him that it is now up to my hon. Friend to say which other exchanges can be included. I think that that is fair because others might be created in the future and all my hon. Friend would have to do would be to include them in the list. That would not be a problem because any stock exchange which was recognised by the public and in which dealings were carried out would have no 867 difficulty about being recognised by my hon. Friend.
The hon. Member also asked about the position when shares were purchased from a large number of owners. I think that my hon. Friend the Member for Crosby answered this when he said that as they were different vendors each would have to have a separate transfer. I think that that is fairly obvious because they would be individual dealings with the purchaser from whom the blocks of shares were being acquired.
I hope that my hon. Friend the Economic Secretary will also assure us about the revenue, because if the Bill in any way diminished the revenue there would obviously be two methods of transfer, one more attractive to the revenue than the other. I may be wrong, but it struck me that the revenue would not be affected by this process.
I should like to refer to the transfer fee which companies levy. This is rather a matter for the company. Some companies, especially smaller companies, may have to employ a staff which they would have to pay and I have often wondered whether accounts for the sums collected when the fee is only 1s. do not offset the financial advantage given by the charge. The answer is for the companies themselves to consider the matter. As the hon. Member for Oldham, West suggested, this charge for transfers is a vexatious one and perhaps in the future many companies will think that it is not only economic but helpful to abolish this fee. It is entirely within the purview of a company to charge what it thinks fit.
This Bill accords with a view to which many of us on this side of the House strongly adhere. We hope that members of the public in all walks of life will continue to take an interest in all forms of security. We hope that as time goes on the public will become not only property owners, but owners of property in the true sense of the word, by owning their own shares.
It would not be out of order to say that the simplification which this Bill introduces will attract people from all walks of life to become share owners. This is one of the most democratic processes which can take place, particularly if the person concerned happens to be the 868 owner of shares in the company in which he works, and I hope that this Measure will enable many ordinary members of the public to buy shares in small denominations and thus become part of our property-owning democracy. The Bill is simplicity, security, and simplification, with, I hope, security and safety, and I welcome it and congratulate my hon. Friend on introducing it.
§ 2.22 p.m.
§ Mr. Peter Walker (Worcester)
I agree with my hon. Friend the Member for Clapham (Dr. Alan Glyn). I very much welcome the Bill and congratulate my hon. Friend the Member for Crosby (Mr. Graham Page) on all that he has done in connection with it. I am delighted to see my hon. Friend the Economic Secretary to the Treasury in his place, because I know that over the years he has in many ways supported the theme of a property-owning democracy and the passing of this Bill will bring great pleasure to him.
Although, in terms of legislation and of improving and simplifying the process of stock transfers, this Bill is important, it will have no great impact and importance unless those connected with making available the services to enable people to purchase shares take advantage of the simplification which has been brought about by it. There is, unfortunately, in existence the situation that the City of London has shrouded itself in a mystique with lots of jargon and words which the normal person does not come across in every-day life. As a result there is a basic fear of the unknown when the ordinary family man living in the provinces contemplates the possibility of purchasing some shares.
One of the best things which I welcome in the Bill is the fact that the actual stock transfer form is in modern English and in languge which the ordinary man can comprehend. When confronted with the previous forms, I think that there are many occasions when the stockbroker or the bank manager concerned has to assist in the filling in of the form, partly because the person concerned is not quite certain as to what the various pieces of jargon and certain words and terms mean; and I very much welcome the easily understood wording of these new forms.
I suggest, however, that there has now to be a process of educating the 869 public as to what actually physically happens when a share changes hands. This is a task for the London and provincial stock exchanges. It is absurd that at this time when there is a need to encourage investment in the private sector of industry—and I think that both sides of the House will agree that there is this need—this investment should be confined basically to persons who happen to have contact with a stockbroker or with a bank manager who is not prejudiced against equity investments—and we all know that certain bank managers are so prejudiced.
It is, therefore, important that the stock exchanges see that there is created a system whereby the small investor is able to constantly make contact with persons who are able to buy and sell shares on his behalf, and I hope that as a result of the step which I trust the House will take later in supporting the Bill stock exchanges will take action to see that there are very few provincial towns lacking all the facilities and services of a branch of a stockbroker's office.
It is absurd that the process of purchasing shares should be handicapped by the fact that it is against the regulations of the London Stock Exchange for branch offices to be opened in other parts of the country. I think that much more expenditure has to be encouraged to advertise the facilities of stockbrokers in selling shares, to outline how simple it is, particularly after the passing of this Bill, and to make the ordinary member of the public feel convinced that the purchase of shares in a company which provides him with employment, or perhaps a company whose goods he admires and considers are typical of a progressive company, is as simple a process as going to the Post Office and investing a small amount in a Post Office Savings Bank or buying a National Savings Certificate.
I am sure that this is what my hon. Friend envisages and hopes he will achieve by the contribution that he has made to simplifying the administrative process of purchasing shares. I hope that the initiative he has taken will be followed by a similar initiative by men of responsibility and power in this sphere to see that their services are readily available to the British public.
§ 2.28 p.m.
§ Mr. Alan Brown (Tottenham)
I support the Bill because I believe that in the short term its provisions will prove advantageous to the small investor—and it is on his behalf that I am taking part in this debate—and, in the long term, will prove advantageous to the nation.
As my hon. Friends have said, this new system will unquestionably save a great deal of time and correspondence with stockbrokers, but the important thing is the simplification which the Bill introduces. This simplified system will be readily understood by the man in the street, and I am sure that this will be of great benefit to everyone.
I think that hon. Members on both sides of the House will agree that for far too long the average citizen has tended to avoid investing his money in stock exchange securities because of the difficulties, under the present system, of buying and selling shares. Reference has been made to the obscure terms used, such as bulls and bears, and, of course, this jargon, as with the system, has not been readily understood by the average citizen.
It is essential that we should do everything we can to encourage the spread of ownership of industrial shares over as wide a range of the population as possible. It is vitally important that employees in our industrial undertakings should be encouraged to become shareholders. It gives them a real stake in their business—and who can deny the incentive of the pride of ownership? Compared with the United States, Western Germany and certain other prosperous countries, Britain lags far behind in the matter of the spread of ownership of industrial shares.
I am sorry that the Bill does not go further. The 2 per cent. Stamp Duty has been mentioned. This imposition is just as great a deterrent to the average citizen who is considering investing part or whole of his savings in industrial shares as is the present difficulty of doing so. The ownership of industrial shares is an essential part of any plan directed towards the development of a property-owning democracy, and I sincerely hope that the House will give the Bill a Third Reading.
§ 2.31 p.m.
§ Mr. G. R. Mitchison (Kettering)
This, again, is a rather limited Bill. On its Third Reading we are now apparently discussing the principles of a property-owning democracy. However that may be, I have never quite understood what the phrase means. The party opposite seem very fond of it, but whenever the democracy has got any property the Government take the necessary legislative and administrative steps to take it away from the democracy and hand it over to their friends in the City. However, that argument is perhaps beyond the scope of the Bill. I want to confine my remaining remarks to the Bill.
One of its substantial objects is to avoid the practical nuisance of a large number of small transfers when there is a seller of a large block of shares and a considerable number of buyers of small parcels, making up the total amount of that block. Another thing that has gone by the board is the necessity to face the difficult problem of describing ourselves. A lady of my acquaintance, faced with the task of signing a number of these transfers, and called upon to describe herself on each one, went through a number of quite correct descriptions. She started off by describing herself as a married woman—and, incidentally, I can never understand why "married man" is never considered to be a sufficient description—and then as an authoress, and after that one thing and another, finally becoming so impatient with the possibilities that she wrote under "Description" the words "You know what". That description was rejected by the people who had to deal with the transfer. The requirement was a trifle absurd, and I am glad that it has now disappeared.
There is one small but serious point that I should like to mention concerning Stamp Duty. I hope that the Economic Secretary will be able to deal with it. It may be that I am slightly anticipating matters by referring to a table in the Finance Bill, but it is convenient to do so. Let us suppose that we have a single transaction, effected on one form, by which a seller sells to six buyers a similar parcel of shares in each case, amounting to £81, making £486 in all, and another block worth £14 to a seventh buyer. The total sum involved 872 is £500, but if it is to be treated as a transaction dealing with a consideration of £500—and that is the total consideration—the amount of Stamp Duty charge able is considerably less, in this instance, than it would be if the transaction were carried through by way of seven separate transfers. That is due to the way in which the Stamp Act table and the present table in the Finance Bill are prepared. I can give the House the figures if necessary, but the point is clear enough.
No great principle is involved; it is not the sort of thing that would cause one to reject the Bill. Nevertheless, I should like to know what the position is, and what the Treasury thinks about it.
§ Mr. Graham Page
Surely, under the present procedure, the transaction given as an example by the hon. and learned Gentleman would be carried out by separate transfers from transferor to transferee, and the same result would come about in respect of Stamp Duty. I cannot see that the present Bill alters the position.
§ Mr. Mitchison
With respect to the hon. Member—I may have misunderstood his Bill—I doubt whether that is so. Taking, for the sake of convenience, what I hope is a pardonable anticipation on a Friday, the ordinary rates of Stamp Duty under Schedule 9 of the Finance Bill, it is clear that a consideration of £500 will attract a duty of ten times 10s., or £5, and that each of the £81 transfers, of which there were six, will attract a duty of £1, making £6, besides the 3s. attracted by the other £14. If that is the way it works the duty payable appears to be definitely less than what would be paid if the same transaction were effected by a number of transfers.
I mention the point not as a vital objection to the Bill—I would not wish to reject a useful Bill for that reason—but since the Treasury deals with these matters, and no doubt has done so in this case, I should like to hear what steps have been taken or are being taken to ensure that there is no substantial Joss of revenue.
§ Mr. Hale
The Treasury has been collecting revenue in this way for years from the unfortunate buyer. If I instruct my broker to buy £1,000 worth of shares I have no option as to whom he buys 873 them from. I am spending £1,000, and I pay duty on £1,000. He writes to me and says, "I have bought £70 from one person, £72 from somebody else, and £47 from somebody else" and so on. I then sign, say, 15 transfers, and have to pay the duty, and the Treasury gets the money because the transaction is split up. Surely that is being put right.
§ Mr. Mitchison
I think that my hon. Friend and I can at any rate agree that the Treasury must have gone wrong somewhere, whether in the past or in the present. Perhaps, on a Friday, I may be relieved from speculating about the intentions of the Stamp Act. They are a little difficult to ascertain.
On broader points I welcome the Bill. I notice that the Bill is supposedto amend the law with respect to the transfer of securities.But it does not repeal anything. That makes me wonder how far his hon. Friend the Member for Bristol, North-East (Mr. Hopkins) was correct in suggesting that all this could be done without legislation. The hon. Member for Crosby (Mr. Graham Page) has his uses. He reminds us of very welcome little points that the public at large have often forgotten. His Cheques Act certainly had that effect. It reminded people that they could do things, which they have been doing ever since, because those things appeared in the Statute. Perhaps this Bill is similar. No doubt the Economic Secretary will tell us how far the Bill is necessary and how far it is a convenient way of making arrangements, in a statutory form, which will undoubtedly be an improvement on the present ones.
I hope that I shall not be considered ungenerous in the comments that I have made, because I sincerely welcome the Bill on behalf of hon. Members on this side of the House. It removes a number of inconvenient and sometimes rather absurd things that have grown up in the past. It will make life simpler for people in this respect, and, therefore, it is surely a Bill which we ought to welcome. Again I would say I am very glad that the Bill has come forward, but I hope that it will not be necessary for hon. Members to fall ill and to go into hospital and draft Bills there in order 874 to get the Government to attend to matters of this sort which are really their business.
§ 2.40 p.m.
§ The Economic Secretary to the Treasury (Mr. Edward du Cann)
I am glad to have the opportunity to say a few words about the Bill. I should like, shortly, to describe the Government's attitude to it and to refer, in particular, as appropriate, to the Government's intentions towards the matters raised by the Bill. I will, of course, do my best to answer the several questions that my hon. Friends and others have asked me during the course of our most interesting debate.
First, I would say as clearly as possible that I am convinced that the Bill is a worthwhile Measure and that there are substantial benefits to be gained from simplifying transfer procedure. There is no doubt that the present system is extremely laborious. It often causes delay, not only because one has to deal with several transfers when one only is necessary. The hon. Member for Oldham, West (Mr. Hale), the hon. Member for Clapham (Dr. Alan Glyn) and the hon. Member for Wycombe (Mr. John Hall), who, apparently, had a great deal of experience of these matters as a young man, all said something on this point, and, indeed, they were entirely right.
I was interested in the point made by my hon. Friend the Member for Worcester (Mr. Walker), who explained that he could not be here to listen to the winding-up speeches this afternoon, when he approved of the fact that the new transfer forms are written in English as opposed to jargon, a point on which my hon. Friend the Member for Crosby (Mr. Graham Page) also commented. But having given my hon. Friend the Member for Crosby full marks for his knowledge and command of simple English, my hon. Friend the Member for Worcester then went on to split an infinitive in a most appalling way. I hope that Hansard will record it and that my hon. Friend will take note of the opprobrium of the House on the point.
I was interested, too, about the point of description which the hon. and 875 learned Member for Kettering (Mr. Mitchison) made in his example of the married woman. I have always thought that an even more fatuous description was that of "gentleman" which is open to all sorts of people in all sorts of circumstances and often seems to be severely misplaced. But today we have been agreeing on all sides that there are substantial benefits to be gained from a new system.
The old system can perfectly well continue, but the legal obligation is upon persons using the old forms only to complete them to the extent that the new system requires. They can volunteer more information and more signatures if they think that appropriate, but there is no legal requirement now, or will not be if the Bill receives the Royal Assent, to do so.
We are not considering the reform of a process which is a rare thing. Quite the reverse. Markings on the London Stock Exchange have varied in recent years between 3½ million and 4¼ million in a year, and as the House knows very well much business takes place on the Floor of the London Stock Exchange which is not marked at all. So perhaps we can express the hope that we shall before very long have complete figures of turnover. I think that they would be useful and desirable, when it is possible to obtain them.
But in addition, as the hon. Member for Oldham, West very rightly reminded us by inference, there are all the transactions on the more than 20 other stock exchanges in the United Kingdom. Most of our great cities have their own stock exchanges—Glasgow, Edinburgh, Liverpool, Bristol and many other cities. And, of course, last but by no means least there is the somewhat independent and thoroughly effective Stock Exchange in the ancient and fine old Borough of Oldham.
In addition still, there are, of course, certain associations, in particular, the Provincial Brokers' Stock Exchange, which cover many more and much smaller towns on the whole throughout the United Kingdom. Furthermore, endeavouring to catalogue those transactions, those institutions, those persons, those professional people to whom this Bill will be of use and of benefit, a large number of 876 transfers, of course, never come through the stock exchanges at all. There are all those entered into by solicitors, by executors and so on—a great mass of transfers that involve, for example, private and non-quoted companies.
In sum, therefore, the overall saving of time and trouble to people concerned with the transfer of securities which will result from the introduction of this new procedure is bound to be considerable. The particular point which has a bearing on the subject raised by a number of my hon. Friends including my hon. Friend the Member for Tottenham (Mr. A. Brown) is that it must have a similarly beneficial effect in the future, and an increasingly beneficial effect.
Let us take the position today. There are, we understand from surveys, between 3½ million and 4 million shareholders. Lord Ritchie, to whom tribute has very rightly been paid during the debate, estimates that another ½million potential shareholders are on the threshold of investment. The Inland Revenue's 105th Report of January, 1963, stated that the number of ordinary shareholders rose between 1960 and 1961 by 130,000 and that the number is growing at the rate of about 10,000 a month.
There are remarkable new developments, the sort of "Do-it-Yourself" or unit trust clubs. There are about 1,200 of them today. Five years ago, I believe, there were about 100. There are now about 1 million unit trust holders, all of whom will benefit; and the potential, I suggest, is even greater. I will not go into the detail of the direct side. There is also the indirect side. So many today, of course, invest through insurance companies, through pension funds and through the trade unions—and how wise the unions are in this regard. The indirect investors will also benefit.
I hope that I have said enough to indicate the sound reason why the Government should be anxious to congratulate my hon. Friend the Member for Crosby and to welcome the introduction of this Measure. Indeed, I think it most appropriate that it should have been introduced by my hon. Friend the Member for Crosby, for this reason particularly. Its whole purpose, as my hon. Friend the Member for Clapham and my hon. Friend the Member for Worcester pointed out, is 877 simplification. It is in the tradition of other Measures in which my hon. Friend has taken a leading part.
On the Third Reading of the Cheques Bill, in 1957, my hon. Friend said that if that Bill was, in fact, accepted it would result in the saving of the time spent in making no less than 630 million signatures a year. My hon. Friend the Member for Clapham asked if I could do some precise calculations of the numbers of transfers that go through in the course of a year. I am sorry that I cannot; I do not have this information, and I cannot conceive of any way of getting it. All one can do is to make an estimate. My estimate is that my hon. Friend must have saved a further 20 million signatures a year by the introduction of his Bill, if the House sees fit to give it its Third Reading and if it receives the Royal Assent. So I think that it adds not insubstantially to a score which was itself not insubstantial. But, quite apart from that, perhaps it is not an inappropriate Measure for National Productivity Year. I hope that I may be allowed to make one comment in passing. It is sometimes said by learned commentators who watch our Parliamentary affairs and write and speak about them that the day of the private Member is over, that he has no contribution to offer and that he is mere Lobby fodder. I believe that my hon. Friend the Member for Crosby has quite clearly indicated that there is much that any hon. Member on the back benches can do to bring about reforms and appropriate progress which are both desirable and necessary.
I have been specifically asked by the hon. and learned Member for Kettering and by my hon. Friend the Member for Bristol, North-East (Mr. Hopkins) why this legislation is necessary for what might be regarded as purely a change in administrative practice. The answer is, as the hon. and learned Member himself said, that there as both practical and legal reasons for legislating on this subject of a new system of transfer. From the practical point of view, it is necessary, if there is not to be confusion on the stock exchanges, that the new system should come into operation in relation to as great a number of securities as possible at one single time.
The Bill, by over-riding provisions in articles of association and similar instru- 878 ments, will save companies time and trouble in which they would otherwise be involved in changing the instruments governing their operations—changes which a few companies might be unwilling to make or dilatory in making. In a rather similar way, this legislation has the effect of over-riding much subsidiary legislation in relation to the transfer of Government and local and public authority stocks. If investors and stock exchanges are to get the full benefit of the new system, it is obvious that it should come into operation over as wide an area as possible at a given date.
Even, however, if companies have been left to amend their own articles of association, and so on, the legal validity of the new system might still have been in some doubt because of the provisions in various older statutes. I am told that there are examples of that in the Company Clauses Act, 1845, and certain sections of the Companies Act, 1948 and the Finance Act, 1946. In relation to Scotland, it has also been necessary to over-ride the old provisions of an Act of the Scottish Parliament which might have had the effect of making a blank transfer null.
The Bill makes it clear that any contrary provisions relating to transfers of registered securities in other Statutes are over-ridden. It also contains provisions which remove uncertainties arising from the use of two transfer documents—for example, in deciding by reference to which document the date of lodgment is ascertainable. It is one thing to decide how a system should be reformed, but another to put those proposals into a suitable legislative framework—although, if I may say so, my hon. Friend the Member for Crosby has succeeded very well in doing this. I think, however, that it is clear from the discussion—or, to cap what my hon. Friend the Member for Crosby said, perhaps the absence of discussion—in earlier stages that this Bill, which implements the Report of Lord Ritchie's Committee, has commanded general support.
I should like to pay tribute here to Lord Ritchie. I have not always agreed with everything that he has said on all occasions, but I believe that he and his Committee—and some of his officials, like Mr. Wareham, and other distinguished names—have done a great service by sorting the matter out, considering it with 879 great care, and by making the clear and wise recommendations which this Measure follows.
I was asked particularly by the hon. Member for Oldham, West—for what, I am sure, are very good reasons, he is not now in his place, but no doubt he will read my words in Hansard—why we gave London a particular place in the Bill and neglected to mention specifically by name other stock exchanges about which I have already spoken. I would assume that the reason is that my hon. Friend has followed word for word the provisions of the Prevention of Fraud Act, 1958.
It is clear, as was stated by my hon. Friend the Member for Clapham, that new stock exchanges can appear and that old stock exchanges can, perhaps, die. At any rate, there may well be changes, and the present provisions would enable the Treasury to incorporate, if it was thought appropriate, associations of brokers—as, for instance, the Provincial Brokers' Stock Exchange. I can tell the hon. Member very clearly that it would be our intention to include Oldham.
Another point raised by my hon. Friends the Members for Wycombe and Crosby related to the considerable number of operations begun on one stock exchange and completed on another. This is very often the case in transactions that are routed to London through the provincial stock exchanges. In this connection, I have been very interested to see that the Northern Ireland Parliament has introduced a Measure of similar intent to this Bill. Assuming that that Measure becomes law in Northern Ireland and that this Bill is enacted here, transactions between the Belfast and London stock exchanges, or those relating to purchases or sales by residents in Northern Ireland where the register is in Great Britain, or vice versa, will operate under the new system.
Perhaps I can now also answer an ancillary point made by my hon. Friend the Member for Wycombe on the subject of Commonwealth Government stocks. Commonwealth Governments and their registrars will certainly be invited to bring their stocks under the new transfer procedures. I am sure that would be right.
880 There are four other matters about which I have been asked and to which I have to refer. The first is the protection of investors generally, and the avoidance of fraud. The hon. Member for Oldham, and my hon. Friends the Members for Wycombe and Clapham asked particularly about this, and I thought that my hon. Friend the Member for Crosby spoke some wise words in answer. My hon. Friend the Member for Clapham asked whether we were not making rather heavy weather of this point. There is, perhaps, something in that comment. On the other hand, it is right to give serious consideration to a matter as important as this.
The first point I want to make, additional to the remarks of my hon. Friend the Member for Crosby, is that, as I understand it, company secretaries and registrars have seen this Bill, and have thoroughly approved it. I am very content to leave judgment in such a matter to the experts. Many other bodies have seen this Bill besides company registrars and secretaries—the people whom my hon. Friend the Member for Wycombe indicated from his own experience are so much concerned with the practical aspect of the matter.
The point has already been made that much information is in any case available to company registrars and secretaries but, even if that were not so, they are free—they may even think it necessary and desirable in certain cases—to obtain further information if they wish; for example, through protection letters which, although not sent out as much as they once were, can still be sent out to establish the bona fides of an apparent transferor. Of course, nothing in the Bill in any way affects the civil rights, so to speak, of people engaged in such transactions.
Then there is the question of the powers given to the Treasury under Clause 3 to amend the specimen forms—to which my hon. Friend the Member for Crosby made some reference—either by alterations in the forms themselves or by the substitution and introduction of new forms. The general object of the Clause is to give some discretion to the Treasury and, in other words, to introduce a degree of flexibility into the Bill.
I certainly agree that we must have regard to the possibility of new means 881 of handling documents becoming available in future. In the short time during which I have been concerned in the past with registration work, I have been astonished at the enormous development and changes which have come about. One can foresee further changes, particularly through the introduction of computing and transferring machinery of the most modern kind, and in the immediate future. We therefore must have regard to the possibility of new means becoming available which will make it desirable perhaps to change the forms which are set out in the Schedule without changing the formalities.
This is a wise safeguard in present circumstances though the new forms should serve well enough in the immediately foreseeable future. The Treasury will not have to approve every tiny alteration made. Clause 3(1), in any case, will give stock exchanges the opportunity of using forms larger in size than those scheduled in the printed Bill.
This has a bearing on what my hon. Friend the Member for Worcester said. He was kind enough to say that the forms were clear. They will be clearer when printed in a different size and when different kinds of type are used. I also understand that it will be the intention of the Stock Exchange that the brokers transfer forms specified in Schedule 2 will be printed on blue paper so that registrars may readily distinguish them from stock transfer forms. That is obviously sensible and an example of the sort of small improvements which can be made without reference to the Treasury—and a very good thing too.
The third matter is perhaps much more important. It was raised in Committee by the hon. Member for Gloucester (Mr. Diamond) and the hon. Member for Westhoughton (Mr. J. T. Price). It was also raised very clearly today by the hon. and learned Member for Kettering and my hon. Friends the Members for Clapham, Wycombe and Tottenham. This is the question of safeguarding the Revenue. The point which we were considering in Committee was the fundamental question of those who, because they are naughty people, might attempt to avoid Stamp Duty altogether. In Committee, I said it was necessary to make provision which 882 would have the effect of preventing the circulation of blank transfers with consequent loss of Stamp Duty revenue.
I also said that if the Committee thought fit to approve the Bill a new Clause would be tabled for the Report stage of the Finance Bill. This has now been done and I hope that it will be generally welcomed when we discuss it next week. I might mention to the hon. and learned Member for Kettering, in reply to something I was asked in Committee, that not only has this been done but I hope that he and the hon. Member for Gloucester will think that it has been done in good time with plenty of notice.
I cannot now go into all the reasons why we thought it appropriate to put the new Clause down for the Finance Bill rather than at the time of the passage of this Bill, since I have already discussed the matter earlier. On the other hand, we now come to an entirely fresh subject which was raised by the hon. and learned Member for Kettering when he asked, "Do not we have a position here where although it may be the intention of the Government to block up, so to speak, an avenue through which ad valorem transfer duty might be avoided altogether yet less duty might be paid if a series of transactions were dealt with than if there were a single transaction?"
The hon. and learned Member was interrupted by the hon. Member for Oldham, West, who complained of the earlier system. He said that the Treasury had been behaving outrageously in the past and taking more duty than it was entitled to take. He said, by inference, that it was good that the position was being regulated. Therefore, the new is wrong, and the old is wrong, which makes me fancy that at the Treasury, for once, we have it about right. To be serious on the subject, you, Mr. Speaker, would not wish me to pursue now that matter of Schedule 9 of the Finance Bill, but I will pay strict attention to what the hon. and learned Member for Kettering said. I should like to check the figures which he gave, not that I suspect them of being incorrect, but to see how they compare over a wide range of examples.
The fourth and final matter was the question of Clause 6, raised by my hon. 883 Friend the Member for Crosby and my hon. Friend the Member for Bristol, North-East. Subsection (2) puts the responsibility on the Treasury to decide the date on which the main provisions of the Bill will come into force. It is quite clear that stock exchanges, their members and staffs will have to undertake a considerable amount of preparatory work. Forms must be printed. The new procedures must be studied and understood by those who will have the practical management of them, and the general arrangements for the handling of transfer documents will have to be reviewed. I am given to understand that attention has already been given to these matters and, indeed, I have seen some of the very good and clear notes prepared by the London Stock Exchange in that connection.
I see no reason to revise the estimate I gave during the Committee stage to the effect that we would envisage a period of three months from the Royal Assent as being appropriate. One would, therefore, perhaps expect to see the Bill come into effect in October or November.
I was not asked specific questions, but none the less many comments were made, on the subject of company registration work in general. My hon. Friend the Member for Worcester made a powerful plea to the effect that those concerned—company registrars and others—should take full advantage of this simplification by simplifying their own procedures. My hon. Friends the Members for Clapham, Wycombe and Bristol, North-East all similarly referred to the point.
I do not think there is any doubt at all that the length of time which many companies allow to elapse between the lodgment of the transfer and the issue of a new share certificate causes general inconvenience and additional work. I hope very much that when the Bill reaches the Statute Book companies in general will re-examine their internal arrangements for the issue of certificates and, in particular, audit procedure.
There is the question of sealing. Often sealing does not take place at sufficiently frequent intervals, and it seems in these days that it may well be appropriate for companies to dispense with some of the 884 formalities of signing certificates which may have been appropriate and desirable in the past, but which now, with modern techniques, machinery and protection systems, might be dispensed with.
We have heard a lot about registration fees. This is a matter for the companies themselves. Many companies have already abolished them. But whether or not it is appropriate to do so in individual cases, I think that the point made by my hon. Friend the Member for Worcester was entirely valid. The more that companies can do to take advantage of these improvements in the law, so much the better, because then it will be a case of following up the work that has been done in the introduction of this Bill by my hon. Friend the Member for Crosby.
A great deal has been said on the subject of brokers' charges. I would not wish to comment on that; my hon. Friend said some wise words on the subject. But, of course, brokers' charges are not only made to pay for transfer work. They are also made in order to provide for all the research and effort which go into advising their clients. My hon. Friend the Member for Worcester is only too anxious that brokers should spend much more money on expanding, and so on. It is a matter for them to decide.
It is true that one can make comparisons with other international centres, and it is essential that those who wish to see London developing as an international capital market—a process which I hope will be assisted by this Bill—should keep their eyes on this point. I do not doubt that this matter frequently engages the attention of the Stock Exchange Council. I am sure, too, that the Council will heed some of the things which have been said during this debate.
The object of the Bill is not to prevent anyone doing anything. On the contrary, as I see it, its essential object is to enable companies and other bodies issuing securities to take advantage of the simplified arrangements for their transfer and to enable those simplified arrangements to be introduced in the most efficient manner. I am sure the House owes my hon. Friend the Member for Crosby and Lord Clitheroe, a former Financial Secretary to the Treasury, who introduced the Bill in another place, a deep measure of gratitude for the part they have played in bringing it forward 885 and, I hope, finally onto the Statute Book.
The changes which the Bill makes may appear unexciting, but they are not without their legal interest, as the hon. and learned Member for Kettering said, nor, I am sure, was the drafting of the Bill without its legal complications. I agree with the hon. and learned Member; I hope that we do not all find that the only place in which legislation can be drafted is in hospital.
Speaking for the Government, I join in the general welcome which has been given to the Bill and express again the hope that all who can will take advantage of its provisions. I express the hope particularly, as I said a moment ago, that the Bill may assist London to obtain an increasing share of international stock transfer business. I am sure that that is very much in the general national interest, besides the fact that the more that stock transfer procedures are simplified, the more it is possible for people more readily to comprehend them and thus to take part in processes of stock ownership which I have always believed, and which I know many of my hon. Friends have always believed, to be thoroughly desirable.
§ Question put and agreed to
§ Bill accordingly read the Third time and passed, without Amendment.