Clause 3.—(STATEMENT IN HOLDING COM PANY'S ACCOUNTS OF IDENTITIES AND PLACES OF INCORPORATION OF SUB SIDIARIES, AND PARTICULARS OF SHAREHOLDINGS THEREIN.) (Hansard, 19 July 1967)

§ Mr. Darling
I beg to move Amendment No. 144, in page 2, line 33, Clause 3, to leave out paragraph (b) and to insert: (b) if it be incorporated in Great Britain and it be registered in England and the company be registered in Scotland (or vice versa), the country in which it is registered, and if it be incorporated outside Great Britain, the country in which it is incorporated; and. I think that it may be convenient if you, Mr. Deputy Speaker, and the House agree to take Government Amendments Nos. 147 and 148 to Clause 4 with this Amendment.

Mr. Deputy Speaker
If the House agrees, so be it.

§ Mr. Darling
Thank you, Mr. Deputy Speaker.
These Amendments are to carry out an undertaking which was given in Committee to the hon. Member for South 2244 Angus (Mr. Bruce-Gardyne), who made the point that the accounts of companies should show whether a subsidiary incorporated in Great Britain was registered in England or in Scotland. This Amendment provides for that. If the reporting company is registered in England it has to say nothing about the place of incorporation or registration of a subsidiary which is registered in England. But it will have to state, if it has a subsidiary registered in Scotland, that it is registered in Scotland. Similarly, a reporting company registered in Scotland will have to state in respect of a subsidiary registered in England that it is registered in England.
Section 2(1,b) of the principal Act requires the memorandum of a company to state whether its registered office is to be situated in England or Scotland. Section 12 requires that the memorandum and articles of a company should be delivered to the Registrar of Companies for England or the Registrar of Companies for Scotland in accordance with whether the registered office is in England or Scotland. I hope that I shall be able to get away with my next statement, which is 2245 that, for the purposes of this legislation, England includes Wales.

§ Mr. S. O. Davies (Merthyr Tydvil)
Shame!

§ Mr. Darling
As hon. Gentlemen will see, the second and third Amendments make similar alterations to Clause 4.

§ Mr. Michael Shaw
I want to thank the right hon. Gentleman on behalf of my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). He regrets that he is not with us at the moment, but I can assure the right hon. Gentleman that he will be for the evening shift.

§ Mr. Nott
I beg to move Amendment No. 2, in page 2, line 35, after 'shares', to insert 'or options over shares'.

Mr. Deputy Speaker
I think that it would be for the convenience of the House if, at the same time, we discuss Amendment No. 3, after 'class', insert 'or loan stock'.

§ Mr. Nott
I shall be very brief in mentioning this point, which was discussed in Committee. The Clause concerns the disclosure of shareholdings in a company's accounts, and the Amendment proposes that options over shares should also be disclosed. In Committee, The Minister of State suggested that he might look at the point again, and I shall be interested to hear what new arguments he has against accepting this Amendment.
Options over shares may be a very much more relevant factor than the holdings of shares themselves. One can envisage a situation where a subsidiary company has £1,000 worth of shares and perhaps holds £1 million worth of options over shares. Clearly, it would be very much more relevant that the options should be disclosed in such a case. Likewise, it is possible to envisage a company holding £1 million worth of convertible debentures in its subsidiary company. That also would be clearly relevant. Under the terms of Clause 3, convertible debentures do not have to be disclosed.
As the President of the Board of Trade said in Committee, on conversion of convertible debentures or when options are taken up, the shares have to be disclosed. That is perfectly true. But if disclosure means anything at all, it should 2246 mean, surely, the disclosure of rights over assets as well as the disclosure of the assets themselves.

§ Mr. Darling
I do not think the hon. Member for St. Ives (Mr. Nott) will accept my arguments for not accepting the Amendments as at all convincing. As he knows, not only in regard to these two Amendments, but also with regard to the succession of provisions which have gone into the Clauses in the Bill, we are following the recommendations of the Jenkins Committee. While, in certain circumstances, it may be true that it would be useful to have information about holdings on options or loan stock in a subsidiary, it did not seem to us, or to the Jenkins Committee, to be necessary to require such information to be disclosed about all subsidiaries, which would be the case if we accepted the Amendments.
Representations were made to us—and I am surprised to see the name of the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) to these Amendments—that from the point of view of the accountants we were in danger of cluttering up the accounts with an excess of detail. For these reasons we thought that the best thing to do at this stage in company legislation was not to accept the hon. Gentleman's well-reasoned, and I think in other circumstances quite useful, Amendments.

§ Mr. Michael Shaw
I fully accept that the Government are in serious danger of cluttering up the accounts with a lot of what we regard as unnecessary information. We fully accept that much of the information required by the Bill is necessary, and we go along with the right hon. Gentleman in the proposals that he has made. As he knows, however, there are certain important features which we regard as unnecessary, and which in some cases could be harmful.
I support the views put forward by my hon. Friend the Member for St. Ives (Mr. Nott), particularly with regard to Amendment No. 2. I do not feel nearly so strongly about Amendment No. 3, because there is no question of control coming into loan stock, but I believe that unless the words "or options over shares" are included in the Clause in certain circumstances a very misleading picture will be given to whoever is reading the document. Unless the picture that is 2247 presented by the information disclosed is accurate and certain in its meaning, the information might, in certain circumstances, do more harm than good. Everyone must know that it can be relied on as complete.
I support the Amendment so ably moved by my hon. Friend, but I do not know whether he wants to go as far as taking the matter to a Division. Perhaps he will tell us what he intends to do.

§ Mr. Nott
I do not find the right hon. Gentleman's answer very satisfactory, but we have made our point and I hope that he will consider it when the famous second Bill, about which we have heard more than enough, comes along. I beg to ask leave to withdraw the Amendment.

§ Mr. Darling
I beg to move Amendment No. 145, in page 3, line 16, to leave out 'shall' and to insert 'need'.

Mr. Deputy Speaker
I think that it might be convenient if, with this Amendment, we take Amendments Nos. 149 and 151.
If the House agrees, so be it.

§ Mr. Darling
We are back to Fowler. We had a discussion about these words in Clauses 3, 4 and 5, and I quoted Fowler, as I thought to the satisfaction of the Committee, but I was told that Fowler was now old-fashioned, and that we must have a new grammatical approach to these matters. I am willing to respond whenever possible to the wishes of the Opposition in such matters as this, and, therefore, we have tabled these Amendments to write the Bill in the form in which the Opposition want it to be written.

§ Mr. Corfield
This, again, is something that we welcome. I hope that later in the night's proceedings we shall be able to get rid of the expression, "property of its". I have never known a possessive preposition to come before a possessive pronoun in this way—but perhaps it does. I am glad that we have improved the Bill to this extent and I congratulate the right hon. Gentleman on the broadmindedness with which he has thrown aside the advice with which he is normally regaled.