HC Deb 28 June 1965 vol 715 cc245-8
Sir Eric Fletcher

I beg to move Amendment No. 52, in page 13, line 17, at the end to insert: () Section 3 of the principal Act, as applied by section 6, shall have effect as if, in subsection (4), the reference to bodies corporate becoming interconnected bodies corporate included a reference to enterprises being brought under common control otherwise than by reason of their becoming enterprises of interconnected bodies corporate, and to enterprises ceasing to be carried on as mentioned in subsection (1) above, and, in subsection (5), the reference to the division of a trade or business as therein mentioned included a reference to the separation, by the sale of any part of any undertaking or assets concerned or other means, of enterprises which are under common control otherwise than by reason of their being enterprises of interconnected bodies corporate. This is a drafting Amendment, consequential upon Amendments discussed on an earlier Clause.

Mr. Channon

This is a very difficult Amendment to understand at first sight, but, in view of the assurance that it is purely a drafting Amendment, I do not think we would be disposed to oppose it.

Amendment agreed to.

Mr. Peter Emery

I beg to move Amendment No. 54, in page 13, to leave out lines 19 to 32 and to insert: shall be deemed to have control of a body corporate if he or they have—

  1. (a) the control of powers of voting on all questions, or on any particular question, affecting the body corporate as a whole which if exercised would yield a majority of the votes capable of being exercised thereon; or
  2. (b) the capacity to exercise, or to control the exercise of any of the following powers, that is to say, the powers of a board of directors of the body corporate, power to nominate a majority of directors thereof, power to veto the appointment of a director thereof, or powers of a like nature;
or if he or they could obtain such control or capacity by exercise of a power exercisable by him or them with his or their consent". We seem to be making such excellent progress and the Government are so co-operative that I have great hopes that as we move into Clause 7 dealing particularly with definition, we shall have helped the Government by putting down this Amendment dealing with the application of the general provisions about mergers.

Mr. Speaker

I hope the hon. Member will forgive my interrupting him. I think we clearly ought to discuss with this Amendment No. 5, in page 13, line 19, leave out "or materially to influence". No. 55, in line 26, leave out "or materially to influence", and No. 56, in line 29, leave out from "enterprise" to end of line 32.

Mr. Emery

That would certainly be to the convenience of this side of the House, Mr. Speaker.

What we are trying to do is to make clear the powers of a group of persons who shall be deemed to have control of a body corporate. We consider that the definition at the moment is wide open. We do not believe that this subsection deals in any sensible manner with a number of problems, and I hoped during the Committee stage that we would have these points met by the Government. I believe that the Government saw that there was a considerable amount of substance in our point of view.

I suggested that it was within the power of a Minister or a number of outside forces to influence a company but that they would have no real control or working power. Indeed, as the Minister will see, we have attempted to spell out in paragraphs (a) and (b) of the Amendment that the exercise of powers here is quite definite and precise.

2.30 a.m.

If I may just refer to Amendment No. 53 and those later to line 19 of Clause 7, it is quite obvious here that the words "materially to influence" might well apply to some person who really has got no control or place in that company whatsoever. It may be that my hon. Friend the Member for Southend, West (Mr. Channon), with no control of the company, because he happens to know somebody or happens to live in a certain place, may be able slightly, but in a material manner, to influence the operation. It really is nonsense to apply this to him, if he has no control or power, and that he should be defined as someone "materially influencing" that specific aspect.

I am hopeful that with the spirit of co-operation that we may be able at this later hour to engender—perhaps somewhat against the content of a certain Motion on the Order Paper—that the Minister of State may be able to accept the Amendment. It really is quite amazing how much the House is able to achieve at these late hours. An immense amount of co-operation takes place between the Government and Opposition Front Benches. Only the people who are directly interested in the Bill are here, the experts are here, to discuss these particular subjects. Therefore, I am hopeful the Amendment will be accepted.

Mr. Darling

At this late hour, I will not try to point out to the hon. Member for Reading that, taking this group of Amendments together, the Amendments are defective in drafting. For instance, one of the defects is that Amendment No. 54 refers only to bodies corporate and therefore would not catch a partnership.

The important point is that during the Committee stage the Government gave an undertaking that we would look at the words "materially to influence" to see if we could find another form of words that would meet the objections raised in Committee. We have considered this provision very carefully indeed, but we still believe that it is desirable to keep the reference to "materially to influence" for all the reasons that we gave during the committee proceedings.

It was suggested during those proceedings that the words "materially to influence" could be interpreted absurdly far. We have been advised by our legal advisers that in their context, the words would not be interpreted in that particular way. They would be applicable only in cases for which they are intended, where a person obtains substantial financial influence in a company although failing to have effective control.

We explained in Committee, as the hon. Member will remember no doubt, that we had in mind developments of this sort which had the effect that previously independent undertakings would be liable in future to be directed by a common mind, and if there is to be legislation on mergers it is our view that a transaction of this kind should be open to scrutiny like any other merger in which full control of a company is acquired by another. We have gone into the matter carefully but we have not been able to find words which would achieve the purpose more aptly than those which are in the Bill. I advise the House to reject the Amendment on this substantial argument of policy quite apart from the fact that the drafting is defective.

Amendment negatived.