§ Mr. Jay
I beg to move, Amendment No. 246, in page 69, line 32, after 'on', to insert:'(whether within or outside Great Britain)'.2402 With this we could also discuss Amendment No. 247 and Amendment No. 248.
The first and third of these Amendments clarify that the references in Section 13(1) of the principal Act to carrying on a general business mean the carrying on of that business anywhere in the world. That is rather clearer than some of the matters which we have recently been discussing.
The second Amendment is intended to bring the construction of the Clause more into line with Clause 62(1), and apply the reference to the minimum solvency margin of £50,000 to the company's first financial year only, that is to say, to the period during which there is no last preceding year as required for the calculation of the relevant solvency margin in the table in Clause 62(2). This problem arises for the first year only because there is no last preceding year. I do not think that the Amendment raised any major difficulty.
§ Amendment agreed to.
§ Further Amendments made: No. 247, in page 69, line 37, leave out from the beginning to first 'the' in line 38 and insert 'its first financial year'.
No. 248 in page 70, line 9, after 'on', insert:
'(whether within or outside Great Britain)'. —[Mr. Jay.]
§ Mr. Grant
I accept that "relaxative" appears in the Oxford English Dictionary and I believe that it was used as long ago as the 17th century by Ben Johnson when he referred to someone suffering from some kind of trouble and said, "It is a kind of stoppage you are troubled with and therefore you must use relaxative." But it has certain horrible medical undertones. This is the sort of phrase which would have provoked a very sharp and terse comment by the late Sir Winston Churchill if it had been put before him in any memorandum or Bill during the war.
2403 The Bill will be read by millions of people and not merely lawyers. They should be spared the agony of having to look at this revolting phrase. They should have something much more straightforward and honest in its place. If anyone suggests that my Amendment would put three words in the Bill as compared with the two which exist, may I assure the House that the number of letters involved is precisely the same.
§ Mr. Darling
I have a great deal of sympathy with the first proposition, and I wish that we could find some better words. But the words which the hon. Gentleman suggests should replace the words which he and I do not like would, if inserted in the Bill, have some rather unfortunate consequences.
As the Clause is drafted, it will allow the Board of Trade, for a limited period after the passing of the Bill, to reduce the amount of the solvency margin which an insurance company will be required to maintain. If the Clause were amended in the way proposed, the Board would be empowered, not merely to reduce the amount of the solvency margin, but to impose in substitution some other requirement as long as it were less onerous than the solvency margin requirement. We do not want this power at all, and it would not be very clear from the Amendment what criterion we should have to work on to find the degrees of onerousness to be assessed.
The best thing to do is to leave us with our "relaxative modifications" and to let us see whether we can find better words which do not involve us in the problems in which the use of the words "less onerous requirements" would involve us.
§ Amendment negatived.
§ Mr. Graham Page
I beg to move Amendment No. 118, in page 70, line 12, at the end to insert:(3) A copy of every direction given by the Board of Trade under subsection (2) of this section shall be delivered by the Board of Trade for registration to the registrar of companies.Clause 78 makes an alteration in the principal Act relating to the margin of solvency of insurance companies. It puts a new Section 13(1) into the principal Act providing that if a company is carrying on business it 2404shall be deemed for the purposes … of the Companies Act 1948 … to be unable to pay its debts if … the value of its assets does not exceed the amount of its liabilities by £50,000 Or "—and then there is an alternative calculation.
That is the criterion by which the public can judge whether the company is to be deemed to be solvent or not. With knowledge of the assets of the company, any member of the public might assume from the Clause that the company was insolvent and might, therefore, take steps to wind up the company.
The company may have one of these extraordinary things which we have been discussing, a relaxative modification. If the company is suffering from a relaxalive modification—I do not know whether "suffering" is the right word. If it has been awarded a relaxative modification by the Board of Trade, strangely enough, it will not be insolvent.
The public may be misled into thinking that the company is insolvent and start winding-up proceedings. It would be as well to inform the public that there is this modification, by publishing it on the register of the company, thereby announcing the fact, at least, to the public. We discussed this in Committee and the right hon. Gentleman gave an assurance that he would consider it. I am hoping that he has considered it sufficiently to accept our Amendment.
§ Mr. Darling
We have considered this again and the arguments that I put forward in Committee still seem sound, namely that if the Board of Trade made an announcement of this kind it might encourage people to think that although the company was not insolvent, it was probably not quite soundly run.
Any relaxation that may be granted by the Board of Trade under Clause 78 will not be effective after two years from the passing of the Bill, or after such shorter period as the Board may specify when granting the relaxation. That will not be granted unless the Board is satisfied that the company can safely operate at a lower solvency margin during this period. It is very unlikely that anyone would ever need to petition for the winding-up of a company during this 2405 period on the ground that the full statutory solvency margin was not attained by the company.
A creditor might need to petition for winding up in order to enforce payment of a debt, but such a creditor would not have to show failure to fulfil the statutory solvency margin, but merely the failure of the company to pay or to satisfy a particular debt. Any proceedings that the creditor might bring against the company would not therefore be affected by the temporary relaxing of the statutory solvency margin requirements.
It is not necessary that public notice of the temporary relaxation should be placed on an insurance company's public file. In these circumstances, we do not think that it would serve the purpose mentioned, and there is this nagging fear, in my mind at least, that if an announcement is placed on the company's file, even though it would show that the company was solvent, it would put a doubt in some people's mind about whether the property was properly run.
§ Mr. Graham Page
I am grateful for that reply. In view of the explanation, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.