Clause 27.—(OBLIGATION OF DIRECTOR OF A COMPANY TO NOTIFY IT OF INTERESTS OF HIS IN SHARES IN, OR DEBENTURES OF, THE COMPANY OR ASSOCIATED COMPANIES.) (Hansard, 19 July 1967)

§ Mr. Darling
I beg to move Amendment No. 189, in page 24, line 7 at the end to insert, 'and to any exceptions for which provision may be made by regulations made by the Board of Trade by statutory instrument'. Clause 27 requires a director of a company to notify that company of any interest that he has in the company's shares or debentures or in the shares or debentures of other companies in the same group.
The rules that are laid down in Clause 28 give a very wide meaning to the expression "being interested in shares or debentures." The possibility has been put to us that some of the interests in shares or debentures which directors will be required to notify will be interests of no significance. To some extent, I suppose, this is unavoidable if the Clause is to achieve its real purpose of ensuring that all interests of significance are notified to the company so that they may be entered on the register. However, I am sure that there will be interests of no significance which can be identified, and we should like them to be covered in the way proposed.
It has been suggested, for instance, that the pre-emptive right which directors in some private companies have to acquire the shares of the company is an interest of no significance, as also might be the interest of directors as beneficiaries in the shares held by pensions funds If interests of no significance can be identified, it will be in the interests of all concerned that they be excluded for the purposes of the Clause. The Amendment would do that.

§ Mr. Graham Page
I am sure that it is right to preserve flexibility in a case 2349 like this by means of Statutory Instrument. My only complaint is about what happens to the Instrument. It is merely "made" by the Board of Trade. There is not even a requirement in the Bill or the 1948 Act that it be laid before the House, let alone be subject to Parliamentary procedure of annulment or affirmative Resolution. I do not say that it needs even the procedure of annulment, but at least it should be provided that the Statutory Instrument must be laid. The right hon. Gentleman may be able to tell me that this is provided for somewhere else. For the Board of Trade just to make the Order and tuck it away in a pigeon-hole so that only the Department knows about it would be futile.

§ Mr. Darling
The hon. Gentleman has a good point there. I shall try to find out what the answer is and let him know.

§ Mr. Darling
I beg to move Amendment No. 188, in page 24, line 27, to leave out 'any such shares or debentures' and to insert: 'shares in. or debentures of, the company or any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company'. This is a drafting Amendment. The words "any such shares or debentures" in subsection (1,b,i), are a reference to 'shares in, or debentures of, the company or any other body corporate being the company's subsidiary or holding company or a subsidiary of the company's holding company' in lines 10 to 13 of paragraph (a). The Amendment does away with the somewhat long reference back from line 27 to line 10. Even a layman will now be able to read the Clause and understand it.

§ Mr. Darling
I beg to move Amendment No. 190, in page 25, line 11, to leave out 'seven' and to insert 'fourteen'.

§ Mr. Deputy Speaker (Sir Eric Fletcher)
I think that it will be for the convenience of the House to consider at the same time Amendments Nos. 61, 191, 62, 192, 63, 193, 64, 72, 194, 200 and 202 to 208.

§ Mr. Darling
I am glad that we can get this long group of Amendments out of the way in one, I hope, short debate. All the Amendments relate to the periods 2350 of seven days in the various parts of the Bill within which a director of a company is required to notify the company of an interest in shares or debentures or of the occurrence of an event which is related to such an interest.
In Committee, the Opposition asked us to extend the period to 21 days. We thought that that was too long, and in our spirit of helpfulness and compromise we now suggest that the period should be 14 days. I hope that this will be accepted.

§ Mr. Corfield
I do not want to quibble about this, but by accepting 21 days and leaving out subsection (12)—which states: In reckoning, for the purposes of subsection (3) above, any period of seven days, a day that is a Saturday or Sunday or a bank holiday in any part of Great Britain shall be disregarded."— we are only one day apart, because in any three-week period there are likely to be six Saturdays and Sundays, three of each. There may even be a bank holiday. There is also the advantage that if one is dealing with a company registered in England or Wales, we do not have to bother about whether there happens to be a public holiday in Northern Ireland, with which we are not always familiar.
I suggest that although 21 days may appear to be a long time, it is much more sensible to take 21 days and to cut out the problem of dealing with Saturdays and Sundays, and wondering whether there is a bank holiday, than to stipulate 14 days. I hope that the Minister will have second thoughts about this, because we are only one day apart.

§ Mr. Darling
We thought on those lines, but the rather clumsy arrangements for dealing with bank holidays are already in our legislation, and to accept the hon. Member's suggestion would involve us in far more work than we would like to have in drafting the Bill. The best thing to do is to accept the compromise for the time being, although I concede that the hon. Member has a point.

§ Mr. Temple
I must confess disappointment with the Minister of State, who has been offered an opportunity for shortening the Bill but has rejected it. It is most ungenerous of the right hon. 2351 Gentleman at this stage, when everybody is depressed by the length of the Bill, not to accept the opportunity which we have offered him. It is very disappointing.

§ Mr. Michael Shaw
I beg to move Amendment 71, in page 26, line 42, to leave out subsection (9).
We had a very short discussion about this matter in Committee, as reported at cols. 814 and 815 of the OFFICIAL REPORT. The question arises because under the Clause there is an obligation for a director to notify the company of his interests in shares and debentures. Of course, as a consequence there is an obligation to notify any movement of shares or debentures he may own or have owned.
It seems to us that in the vast majority of cases this will lead to the needless task, not only of having to fill in the usual transfer form, but at the same time of having to write a separate letter stating that he is writing the letter to confirm the transfer and also to remind the secretary to fill in the appropriate register. There are various categories of cases—for instance, the director who has to write to himself in his capacity as secretary; and the vast majority of private company cases, and, indeed, others, where what obviously will happen is that the poor, luckless secretary will have to write to the director, sending him a pro forma letter, saying he must write back to the secretary on the lines of the pro forma letter. We think that in the vast majority of cases this is unnecessary.
Finally, I suspect that what will happen will be that a form of transfer will be devised whereby the notice is actually printed on the bottom, so that the whole thing will go through as one document just as if it were a normal transfer, which, I think, while obeying the letter of subsection (9), is getting round the 2352 spirit—though, frankly, I think that that probably would be the most sensible thing to do.
We cannot have a great deal of sympathy for this Clause. We can see that in certain circumstances an interest may be disguised; therefore it is right, in this case, that the secretary should be put on guard, and instructed to enter up the register accordingly. The vast majority of cases, however, are absolutely straightforward, and we believe that a notice of this sort will be honoured more often in the breach than in any other way.

§ Mr. Darling
I always defer to the hon. Member's greater knowledge of accountancy. In fact, I have none at all, and he is a professional accountant, so I must defer to his knowledge, but I have been advised that if we took out subsection (9) many people would find it extremely difficult to know in which register to make the entry. It is for that reason that that subsection is in the Bill. If the hon. Member is telling me that we do not really require it because companies would not be in this difficulty if we took out subsection (9), we might look at it again, but I have been advised that companies might find it difficult to know in which register to make the entry unless we had subsection (9).