New Clause 22.—(EXTENSION OF SECTION (OBLIGATION OF A DIRECTOR OF A COMPANY TO NOTIFY IT OF INTERESTS OF HIS IN SHARES IN, OR DEBENTURES OF, THE COMPANY OR ASSOCIATED COMPANIES) TO SPOUSES AND CHILD REN.)

HC Deb 19 July 1967 vol 750 cc2185-205

(1) For the purposes of section (Obligation of a director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies) of this Act an interest or her or his right to subscribe therefor of the wife or husband of a director of a company (not being herself or himself a director thereof) in shares or debentures shall be treated as being the director's interest or right, and so shall an interest or right of an infant son or infant daughter of a director of a company (not being himself or herself a director thereof) in shares or debentures.

(2) A director of a company shall be under obligation to notify the company in writing of the occurrence, while he or she is director, of any event in consequence of whose occurrence his or her wife or husband infant son or infant daughter (not being a director of that company) becomes or ceases to be interested in or entitled to subscribe for shares or debentures of that company; stating the number or amount, and class, of shares involved; and an obligation imposed by this subsection on a director must be fulfilled by him before the expiration of the period of twenty-one days beginning with the day next following that on which the occurrence of the event that gives rise to it comes to his knowledge.

(3) A person who fails to fulfil, within the proper period, an obligation to which he is subject by virtue of the last foregoing subsection, or who, in purported fulfilment of an obligation to which he is so subject, makes to a company a statement which he knows to be false or recklessly makes to a company a statement which is false, shall be guilty of an offence and liable?—

1. (a) on summary conviction to imprisonment for a term not exceeding three months or to a fine not exceeding £50 or to both;
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2. (b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or to both.

(4) The rules set out in section (References to persons having an interest in shares or debentures of this Act shall have effect for the interpretation of, and otherwise in relation to subsection (1) of this section, and subsections (9) to (13) of section (Obligation of a director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies) of this Act shall, with any requisite modification, have effect for the purposes of this section as they have effect for the purposes of that section.

(5) In this section, "son" includes stepson and adopted son and "daughter" includes step-daughter and adopted daughter, an "infant" means, in relation to Scotland, pupil or minor.

(6) For the purposes of section (Provisions for securing that information furnished under section (Obligation of a director of a company to notify it of interests of his in shares in. or debentures of, the company or assocated companies), and certain other information about directors' interests, is recorded and made available) of this Act, an obligation imposed on a director by this section shall be treated as if imposed by section (Obligation of a director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies) of this Act.—[Mr. Corfield.]

Brought up, and read the First time.

Mr. Corfield

I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker (Mr. Sydney Irving)

With this new Clause it will be convenient to discuss new Clause No. 23— Obligation of director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies", and also the Amendment to subsection (11) of that new Clause, to leave out "seven" and insert "twenty-one", and also new Clause No. 24— References to persons having an interest in shares or debentures". New Clause No. 25— Provisions for securing that information furnished under section (Obligation of a director of a company to notify it of interests of his in shares in, and debentures of, the company or associated companies), and certain other information about directors' interests, is recorded and made available". New Clause No. 26— Provisions for securing disclosure of substantial individual interests in share capital carrying unrestricted voting rights". New Clause No. 27— Provision for securing that information furnished under section (Provisions for securing disclosure of substantial individual interests in share capital carrying unrestricted voting rights) is recorded and made available", and also Amendments Nos. 308, 309, 310, 307, 78, 311 and 312.

Mr. Corfield

These new Clauses are put forward in substitution of corresponding Clauses in the Bill. It is fairly clear which corresponds to which. New Clause No. 22 corresponds to Clause 31, new Clause No. 23 corresponds to Clause 27, new Clause No. 24 corresponds to Clause 28, new Clause No. 25 corresponds to Clause 29, new Clause No. 26 corresponds to Clause 33 and new Clause No. 27 corresponds to Clause 34.

The new Clauses which we put forward in substitution of the Clauses in the Bill form a more or less coherent series which it is convenient, at any rate in the context of the points raised by them, to consider together. Indeed, it is essential to do so.

The crucial Clause is Clause 28, or new Clause No. 24 under the alternative proposals. It is first necessary, however, to refer briefly to Clause 27 of the Bill, the object of which is to ensure that directors' dealings in the shares or debentures of their own company are made known to the company itself and then, in accordance with Clause 29, with which new Clause No. 25 corresponds, are kept in a register available to the shareholders.

We all agree that this is a desirable reform. Indeed, we on this side of the House would go further, as was indicated when we were discussing new Clause No. 3, in an endeavour to make this information which is to find its way into the register not only available to those who ask to see it, but, in the case of the 10 percenters under subsequent Clauses, to the Board of Trade and thence to the public.

Clause 33 is a somewhat similar Clause, though with an entirely different purpose, namely, to provide for disclosure of substantial shareholdings which the Government have defined as 10 per cent. For convenience we can refer to these people as the "10 percenters". Unlike Clause 27, it applies only to quoted companies. This is a reform which we would all welcome, because this information is important for two very obvious reasons. First, the control of a company, or a large shareholding indicating a very close association with a company, by a person of high repute in these matters is of considerable importance both to existing shareholders and to potential investors. If it appears that such a man's shareholdings are rapidly dwindling, this can be a very important fact which people who invested on the strength of his name ought to know about. Conversely, any substantial change in a large shareholding indicating, as it may well do, a pending take-over or something of that sort is of equal importance no matter who the individual may be.

As I say, we would all accept that this is a desirable reform, but the great difficulty arises from the approach adopted in Clause 28—to which new Clause 24 corresponds—which defines for both these purposes what amounts to an interest in the shares or debentures for the purposes of registration. This is obviously the crucial factor, because what is clearly of interest and importance to shareholders in the case of Clause 27, or to members of the public in the case of Clause 33, are the shareholdings or changes in shareholdings which are likely to affect control of the company. Obviously, a remote interest such as a reversionary beneficial interest under a trust is of far less importance—it may have no relevance at all—than, for example, a direct purchase by a director, in the first case, or a member of the public, in the other case, with an absolute interest in his own name and for his own benefit.

6.0 p.m.

Our objection to the series of Clauses in the Bill which we are discussing is that Clause 28 fails to draw that distinction. I cannot do better than remind the House at this stage how wide the terms of Clause 28 are. Subsection (1) provides: References to a person's being interested in shares in, or debentures of, a company shall, subject to the following rules, be construed so as not to exclude an interest on the ground of its remoteness or the manner in which it arises or by reason of the fact that the exercise of a right conferred by ownership thereof is, or is capable of being made, in any way subject to restraint or restriction. Subsection (2) provides: A person who has an interest under a trust whereof the property comprises shares or debentures (other than a discretionary interest) shall be deemed to be interested in the shares or debentures. Subsection (4,c) provides that a person shall be deemed to be interested in shares in or debentures of a company if not being a registered holder thereof, he is entitled to exercise any right conferred by the holding thereof or is entitled to control the exercise of any right so conferred. It is noteworthy that subsection (4) covers further types of interest but does not carry the corollary that interests which are outside subsection (4) are not registrable.

On Second Reading, and again in Committee, several of my hon. Friends and I gave examples of remote interests in this connection which, as a result of Clause 28 as drafted, will have to be notified and registered. I do not want to be repetitive, but it is important again to give examples. It would mean that everyone having an interest in a pension fund for employees would have an interest which might be notifiable. Again, on the death of a person intestate, each of the next of kin would immediately acquire an interest in all the shares in the estate, which similarly might be notifiable. So would every annuitant and life tenant, however small his interest, under a will or other trust. Yet, on the other hand, a person who may have a far bigger interest, including a director, will be privileged from disclosing it under either of the Clauses if such interest takes the form of an interest, however substantial, under a discretionary trust, or where there is an absolute sole reversion to a fund of which the only life tenant may be a very aged person.

So one can go on. All creditors under a trust to pay debts would have a registrable interest. So would all sureties under guarantees in regard to shares given as security for the guaranteed debt by the principal debtor. So would the Public Trustee, in fact, although there is a Government Amendment down designed to cure that one. So will the donee of, or the settlor reserving, a power of revocation or general power of appointment.

It is clear that interests of the kind which I have been discussing have no relevance in judging whether control of a company is changing, in the case of Clause 33, or whether a director is dealing in shares, with inside knowledge, to his own benefit.

What is important here is that it should be clear from the register that the dealings there entered indicate something of value. There are obvious disadvantages in cluttering up the register with entries which would be meaningless in relation to the object of the Clauses, namely, interests which do not indicate any change of control or impending change of control simply because they are interests which do not themselves give control to the people who own them and have to register them.

There is the danger that too much information of this sort will obscure the really significant information which we all want to see clearly disclosed. Because there may be a great number of entries of remote interests, there is always the danger that the significant entries of absolute interests may be missed.

Another problem arises from the fact that these matters are inevitably somewhat complex, and, understandably, will in many cases be wholly beyond the lay shareholder or lay investor. It cannot always be taken for granted that they are within the competence of financial journalists either, and, as a result, entirely misleading conclusions may be drawn from the registers because of the sheer complexity and multiplicity of the entries required.

We have, therefore, tried to redraft the relevant Clauses, starting with the new Clause corresponding to Clause 28, drafting them in such a way that the interests which have to be registered are clearly classified according to the likelihood of their conferring control of the company. We have begun in new Clause 24 with three categories of interest. Class A is the absolute beneficial interest wherever the legal title to the shares may reside. Class B is the fiduciary interest of a trustee or settlor of settled property. Class C is the remoter interest under a trust, subject to the qualifications set out in subsections (7), (8) and (9) of the new Clause. In our submission, this is a far more suitable and sensible approach than the one adopted by the Government.

With the redrafting of Clause 28 in the form of new Clause 24, the remaining new Clauses are, in broad terms, merely a redrafting of the other corresponding Clauses in the Bill in order to absorb within them the consequential amendments. I say "in broad terms" because there are one or two minor amendments as well, but at this stage at least, in order to reduce this somewhat complex matter to a simple compass, it seems wise to confine oneself to the main issue.

At an earlier stage, when I put down some notes on these new Clauses, I noted that I thought it impossible to imagine that the Government were still attached to their own approach and, as they had not put down Amendments of their own I assumed that they would accept ours. I no longer feel that confidence. But, however that may be, realising that logic is not the strong point of the party opposite, I can only hope that the Government will accept that, if one is to carry out this exercise properly and have disclosed in the registers information which will be not only meaningful to people who understand it—which is doubtful under the Government's Clauses but meaningful to the ordinary person who is not an expert on trusts and such matters, our approach is by far the most logical and sensible. I commend the new Clauses to the Government, with the assurance that they have been drafted not by me but by someone with great professional knowledge, just as much knowledge as the draftsmen available to the Ministry, and in the confidence that they will serve the country far better than the Government's effort.

Mr. Jay

I think that we all seek to achieve the same objective. The only difference between us is about the method by which we shall get there. I entirely accept the statement of the hon. Member for Gloucestershire, South (Mr. Corfield) that the Clauses have been drafted with professional skill, though I would not agree that they would have been any less skilfully drafted if he had drafted them himself. Nevertheless, having carefully examined the Clauses, into which a great deal of effort has been put, we still believe that we shall achieve our object better by the Bill as it stands.

We are dealing with both types of register—that of directors' share dealings, on the one hand, and that of persons with a substantial interest in the shares of a quoted company, on the other—the 10 per centers, as the hon. Gentleman said. I gather that one of the main anxieties felt by the Opposition about the Bill's present provisions is that the registers will be liable to be cluttered up with an excessive number of entries, recording all sorts of items of information which may not be of great interest, and that the hon. Member wishes to limit the interests which will be involved.

To do that, he and his draftsmen have sought to divide the interests into three classes—A, B and C—and to limit the entries to the more important types of information. On examining the matter, we consider that the hon. Gentleman's fears about the cluttering up of the register are probably exaggerated, judging by the information and evidence on this point. The register of directors' interests to be kept under Clause 29 will be concerned only with the directors of the company, and only with their inerests in the shares and debentures of that company or of other bodies corporate in the group to which it belongs. There is, therefore, a substantial resemblance to the register which must at present be kept under Section 195 of the 1949 Act and the evidence of that does not lead us to believe that an unmanageable volume of information would be forthcoming and have to be recorded on the register.

As to the 10 per centers, the register of those with a 10 per cent. interest, it is not really very probable that there will be a very large number of individuals who personally hold more than a 10 per cent. interest of the shares of a class of capital of a quoted company. I think that there is already a considerable natural limitation there which will cut down the amount of information involved.

The other main difference between us is that the hon. Gentleman wants to limit the definition of "a person's being interested in shares". He wants to limit its meaning for the purpose of the register of 10 per cent. interests, which he would do by excluding the class C interests, as he calls them. However, examination of the Bill as it stands shows that quite a large number of these interests would be disregarded under our proposals. To give some examples: the rule in Clause 28(7) disregards for the purpose of the 10 per cent. register the interests of a remainder man under a trust. Clause 33(4,a) disregards, again for the purpose of the 10 per cent. register, a life interest in an irrevocable settlement in which the settlor has no beneficial interest.

The effect of these provisions would be that in the majority of the ordinary family trusts and settlements, I am advised, the only interests to be taken into account for the purpose of the 10 per cent. register are those of the trustees. Again, the Board of Trade intends to use its power under Clause 33(4,e) to disregard the interests of the trustee when the trustee is a bank or insurance company, as it often is.

6.15 p.m.

Therefore, taking those examples alone, we see that many of the class C interests which the Opposition, with reason, wish to see disregarded, would be disregarded anyway under the Bill as it stands. Those are some of our grounds for thinking that these entries will not really be as seriously likely to clutter up the register as has been feared. First, we believe that it is unlikely that a very large number of entries will be on the register. Secondly, the Clauses already in the Bill disregard for the purpose of the 10 per cent. register many of what the hon. Gentleman has defined as the class C interests.

Therefore, although I think that our objective is entirely the same—to ensure that the information is made public as efficiently and intelligibly as possible—it seems to us for these reasons that that is more likely to be achieved by our provisions than those which the hon. Gentleman and his advisers have very ingeniously drafted.

Mr. Frederic Harris (Croydon, North-West)

I shall detain the House for only a few moments. There is obviously very little difference between the Government view in this matter and the views expressed by my hon. Friend the Member for Gloucestershire, South (Mr. Corfield). I naturally support his views in as much as the Clause would limit the amount of disclosures, make them more definite, and mean less detail and cluttering up of the intended register.

I say this with some feeling, because I suppose that almost every time one speaks on the Bill one has to disclose an interest if one is in business. Although we have had assurances from the Government on this, I am very concerned that business people may genuinely slip up through lack of information. During the debates on the Bill, Ministers have reassured business people that there will not be any witch-hunting, but nevertheless there is a worry.

On the new Clauses and Amendments, I want to put this point. One can clearly see a situation in which a businessman who has built up a business from nothing, and he and his family have become substantial shareholders in the company, must part with some of their interest. This is often necessary to pay tax, perhaps Surtax. Estate Duty might also be involved, and money must be realised. What worries me is that in the disclosures which the directors will have to make an impression will undoubtedly sometimes be given which is entirely erroneous and will cause a great deal of embarrassment.

I support the Bill basically, but I am very worried about the tremendous amount of detail which must be provided and which, in many respects, could be very misleading and harmful to the individuals concerned, such as directors, who may be managing directors or chairmen of companies, and the 10 percentres, the shareholders who may have retired but still have a big holding and, perhaps for taxation purposes, must dispose of a considerable part of a shareholding and disclose this in the register. We appreciate that it is fair to other shareholders that they should know what is happening to the control of the companies in which they are also interested. But I find this very disturbing, and wish that the President of the Board of Trade could give some reassurance on this point.

I know that the details must be put on the register, but is there any way of making quite clear the reasons for which a person must disclose a sale of shares of this kind through the register in a way that will not bring harm to him? However, I can see that it will, and I find it extremely worrying. In so far as the Clauses in the name of my hon. Friend the Member for Gloucestershire, South, complicated as they are, seem to restrict the amount of detail to be provided, I very much support the views expressed by my hon. Friend.

Sir J. Foster

The Clauses drafted by the Opposition have been based upon the Securities and Exchange Commission in America. The problem has been very much to the forefront in the consideration in America of insider dealings, directors' holdings and persons getting control of a company. It is a pity that the Government—in Committee we were assured that they had considered the procedure adopted by the Securities and Exchange Commission—did not proceed from that basis.

As to the advantages of the Opposition Clauses, first, they restrict the disclosures of certain interests which are unimportant. I gather that in one instance the Government have adopted our criticism of their Clause by enabling banks which are in the position of being trustees of many settlements resulting from business transactions not to have to disclose in each case that they may hold through their various branches 10 per cent. in some company. But it is a pity that the Government did not recast all the Clauses as the result of the debates in Committee. So the first point is that we exclude certain interests which need not be disclosed if one has in mind the objects of the Clauses, which are directors' holdings and 10 percenters.

Another aspect of the Opposition Clause is that it is wider in certain respects than the Government Clause. I think I am right in saying that under the Government Clause the object of a discretionary trust does not have to disclose the fact, because it is of no interest. In other words, that is where one has a discretionary trust where the other objects of the discretion are of no importance. One often has this in a trust. For tax or Estate Duty purposes one has items (a), (b), (c) and (d), and one deals with the director, and then one has (e) and (f), and (f) is usually a charity to act as a long stop. The only important object of the discretionary trust is the director.

The point was brought out in Committee, but I am not sure that we ever thrashed it out. However, I do not think that the object of a discretionary trust has to disclose his holding as a director or that he is personally interested in 10 per cent. In this case the disclosure may well fall on the trustees. So this gap, if it is a gap, is more evident in relation to the director's holdings. In our Clause there is a form of words saying that the object of a discretionary trust is a disclosable interest under class (c), so that we cure the matter there.

It is important in respect of all these Clauses to recall the argument of my hon. Friend the Member for Crosby (Mr. Graham Page), that if it is more efficient it saves time, and it reduces the coefficient of friction on production because it enables people to get on with their main job instead of having to make unnecessary disclosures or worry their heads about some difficult legal point. If a director is the object of certain trusts and the trustee in other circumstances and also the mortgagee of certain shares he will have a hard enough time deciding which have to be disclosed and which do not. His task will be immeasurably helped if he has the divisions (a), (b) and (c). He may have certain difficult questions to answer, but in the great majority of cases it will be much easier for him to put it on the appropriate register.

It will also be much easier for the person who is reading the register, the person who wants to obtain information because he is interested in acquiring shares in the company and wants to know to what extent the director has an interest in the shares of the company. That information may affect his judgment as to what the director's policy in the company is. Inevitably, owing to the taxation system sometimes the interests of a large shareholder are very different from those of a small shareholder. With the best will in the world, and the most honest motives, a person may well be unconsciously influenced by the fact that if he has an interest in a large number of shares as a director his policy, depending on his age, may be to keep the value of the shares down for death duty purposes.

That is why when one is investing in a company in which the family holds a preponderant share one has to gauge what the policy of the company may be, whether it is looking a long way forward in building up the resources of the company, perhaps looking 10 or 20 years ahead, which may suit the family, certainly if the present holders are old, or whether it is a company in which the directors, as in many of our big companies, are in the position of managers who have no great interest in the number of shares and whose interest may, therefore, be in building up the immediate income of the company. It is very necessary to study the register from that point of view.

It is obviously also necessary to study the register to ascertain whether directors who may quite properly have interests in cognate businesses elsewhere are likely to want to amalgamate or merge the interests of the two companies. Again, the amount of holdings that they have and where they are acquired from are necessary items of information to the person who is considering making the investment.

Contrary to what a large number of hon. Members on the other side of the House believe, the investing public play a very important part in the financial and monetary life of the country. Good investment in unit trusts and investment trusts by individuals is very necessary in order to induce risk capital into further productive works.

This is the reason why the Government have introduced their type of Clause. They hold, I imagine, rightly, that the public must be protected against losing money through shares being sold at the wrong moment and against being caught perhaps on some false financial path by the owners of a large proportion of the shares taking a particular view. Also, it is necessary for the raising of new money for the persons who are asked to deal with a bonus issue or a rights issue to give financial advice and to provide market facilities. It is also necessary for them to be able to test the bona fides of those who are asking them to provide this extra money.

6.30 p.m.

It is, therefore, desirable that the persons interested in the company, either as directors or as 10 percenters, should appear clearly so that the merchant bank, the joint stock bank or the stockbrokers who are assisting the company may have some kind of check on the representations that have been made to them about the need for the extra money and the general policy of the company. That was why the Jenkins Committee took all this into account and made recommendations.

I entirely agree with the President of the Board of Trade that we both want the same thing, but it seems a pity that a rather deeper study was not given to it after the various Amendments were put forward in Committee. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) put forward an Amendment which was founded more directly on the S.E.C. It contained all the arguments which are being put forward by my hon. Friends and myself about the desirability of making the matter more efficient, easier to understand and likely to lead to greater efficiency in the attitude and the dealing with companies from the financial and monetary point of view.

I therefore ask the Government to abandon their Clauses and to accept ours on the ground purely of efficiency, which we need so badly today in the economy, a principle which has been rejected in the Government's new Clauses.

Sir D. Glover

I am not a company lawyer or an accountant or anything else and, therefore, I hesitate to intervene in the debate. I was very impressed by what my hon. and learned Friend the Member for Northwich (Sir J. Foster) has said. My general approach to this sort of legislation is that in the House of Commons over recent years we have tended to become rather hag ridden with tax, company organisation and the like and with getting something that is foolproof, whereas in human relationships one will never get anything that is completely foolproof.

We have to begin to take notice of whether what we produce is reasonably practical, covers 95 to 97 per cent. of the cases and is understandable by the bulk of the people who deal with these matters, accepting that some high-powered disreputable person will probably find a way round the regulations.

It is, however, a little disturbing that, for instance, in commercial activities companies are sold not on a commercial basis, but because we in the House of Commons have produced taxation or regulations that make it in their interest to dispose of their interest. That cannot be a good thing for the commercial activities of the nation.

While accepting that it is a complicated lot of Clauses, it seems to me that ours—I will not say that they are simple; that would be carrying it a little too far—are a little clearer and a little more narrow than the Government's. Holding the philosophy that I do, I think that we have already probably gone too far in the direction of regimentation and control. I hope that the Government will find it possible to accept the new Clauses which have been put forward from this side of the House.

Mr. Darling

I intervene, and I hope that I may wind up the debate because I remember that in Committee I said that the best way to deal with the series of Amendments from the Opposition on this matter was to spell them out into the Clauses, put them side by side with the Clauses in the Bill and see which appeared best likely to fulfil the purpose that the hon. Member for Ormskirk (Sir D. Glover) has put forward.

I sincerely congratulate whoever was responsible in the Opposition for the drafting of the new Clauses on responding to what I thought was at the time a completely hypothetical question. I did not realise that it would be done. Having seen the two sets of Clauses side by side, however, and having gone through them with my right hon. Friend and our advisers, I am confident that the Government Clauses will serve the purpose better.

At first sight, it would appear that the Government Clauses proposed that nearly every kind of interest should be recorded, whereas the Opposition propose that only what are referred to in various of the Clauses as class A and class B should be recorded. That is very much an oversimplification and ignores the many interests which, for the purposes, for instance, of the 10 per cent. register, would be disregarded under the Government Clauses.

I do not want to go into detail, but I have to say that there are differences of drafting and that even if we accepted the new Clauses put down by the Opposition, we would be in grave difficulty because, without spelling out the reasons—it is an unfair argument to use when discussing matters of principle—there are defects of drafting that we would have to take into consideration.

The answer to the hon. Member for Croydon; North-West (Mr. Frederic Harris) is that under the Government and Opposition Clauses the situation which he has raised would not be very much different. The main shareholder in a family business who for one reason or another has to sell his shares would be compelled to disclose both under the Opposition Clauses and under our own. That is a problem which we might consider. I am not sure to what extent it would cause hardship, but it is something at which we can, perhaps, look.

Mr. Frederic Harris

I thank the right hon. Gentleman for his assurance that he will reconsider the matter. My point basically is that there is a world of difference between a director who dabbles in his company's shares and another who has to dispose of them, as so often happens, for tax purposes.

Mr. Darling

That was the point which I had in mind to see whether any kind of hardship could arise in the case of the person who has to disclose the shares, even as a result of having to sell them as the hon. Member suggests, for tax purposes.

For the reasons given, however, by my right hon. Friend in his intervention and the reasons which I have just given, I very much regret that we cannot accept the incredibly good job of work which has been done by those who drafted the Opposition's new Clauses.

Mr. Graham Page

The Minister of State said that he hoped he was winding Jp the debate, but his last few words were so disappointing to us, although complimentary to my hon. Friends on the drafting of their Clauses, that we ought to out one or two points on record.

The right hon. Gentleman's last speech reminded me of a popular song of about 20 years ago which had a title like this: I don't know why I love him, but he's just my Bill. That, I am sure, is the attitude of the right hon. Gentleman throughout. We have produced some extremely good Clauses, but he prefers his own Bill. So be it.

On previous new Clauses and Amendments we have discussed registers and the work entailed in keeping them. There is no doubt that the Clauses impose new burdens on company administration. It is essential that we should see that those burdens are not imposed for nothing and that there is purpose, and a practical purpose, in this reform.

We are talking about two registers, the directors' share dealings and the register of those who have a substantial interest and to whom my hon. and learned Friend the Member for Northwich (Sir J. Foster) referred as 10 per centers. As to the first, the register already does this, although not quite in the form that either the Bill or the new Clauses propose. Let us face it, however, that that register is not generally well kept unless it is kept professionally by registrars. Very frequently it is incomplete and unintelligible.

The way one needed to tackle a reform of it was to take the really practical view of what interests really are of interest—if I may double the use of the word in that way—to those concerned. We do not feel that the Government have tackled it from that practical point of view in the Clauses in the Bill. We have tried to deal with it in that way in the new Clauses. As to the second lot, what is called the register for the 10 percenters, surely in the new Clause is a formula tidily setting out the classification of those interests which are of interest to other people—what I would call an anti-cluter formula and, therefore, a pro-clarity formula.

I believe that we have put forward the right way to do it here. In some respects there is a restriction on important disclosures in the formula in the new Clauses. I was interested to hear that the Government intend by regulation to remove the obligation on corporate trustees to disclose. I am a little doubtful about this because in my own profession —I must declare an interest—we always dislike corporate trustees, as against an accountant or solicitor or other professional trustee; but I think that it is right in this case; they should be relieved. We think that our Clauses go a little further in making certain what interests should be disclosed, such as in the discretionary trusts.

I may sum it up in this way. We look on the Clauses in the Bill as more theoretical than practical. We have tried to tackle the matter from the practical point of view, and to see what is required by way of reform in the practice of keeping registers and disclosing interests. We believe that our Clauses will work and are a great practical advantage, and on that score we should like to record that fact in the Division Lobby.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 126, Noes 200.

Division No. 478.]	AYES	[6.44 p.m.
Allason, James (Hemel Hempstead)	Hall-Davis, A. G. F.	Pearson, Sir Frank (Clitheroe)
Astor, John	Hamilton, Michael (Salisbury)	Peel, John
Atkins, Humphrey (M't'n & M'd'n)	Harris, Frederic (Croydon, N.W.)	Pounder, Rafton
Baker, W. H. K.	Harrison, Col. Sir Harwood (Eye)	Powell, Rt. Hn. J. Enoch
Balniel, Lord	Harvey, Sir Arthur Vere	Pym, Francis
Barber, Rt. Hn. Anthony	Hawkins, Paul	Ramsden, Rt. Hn. James
Bell, Ronald	Hill, J. E. B.	Ronton, Rt. Hn. Sir David
Bennett, Or. Reginald (Gos. & Fhm)	Holland, Philip	Ridsdale, Julian
Bessell, Peter	Hooson, Emlyn	Robson Brown, Sir William
Biffen, John	Hunt, John	Rodgers, Sir John (Sevenoaks)
Bromley-Davenport, Lt.-Col.SirWalter	Hutchison, Michael Clark	Rossi, Hugh (Hornsey)
Brown, Sir Edward (Bath)	Irvine, Bryant Godman (Rye)	Royle, Anthony
Bruce-Gardyne, J.	Johnston, Russell (Inverness)	Russell, Sir Ronald
Bryan, Paul	Kaberry, Sir Donald	Shaw, Michael (Sc'b'gh & Whitby)
Buchanan-Smith, Alick(Angus,N&M)	Kimball, Marcus	Stainton, Keith
Buck, Antony (Colchester)	Kirk, Peter	Steel, David (Roxburgh)
Bullus, Sir Erie	Kltson, Timothy	Stoddart-Scott, Col. Sir M. (Rlpon)
Campbell, Gordon	Knight, Mrs. Jill	Summers, Sir Spencer
Cary, Sir Robert	Lancaster, Col. C. G.	Taylor, Sir Charles (Eastbourne)
Cooke, Robert	Legge-Bourke, Sir Harry	Taylor, Edward M,(G'gow, Cathcart)
Corfield, F. V.	Lewis, Kenneth (Rutland)	Taylor, Frank (Moss Side)
Costain, A. P.	Lloyd, Ian (P'tsm'th, Langstone)	Temple, John M.
Craddock, Sir Beresford (Spelthprne)	Loveys, W. H.	Thatcher, Mrs. Margaret
Crosthwaite-Eyre, Sir Oliver	Lubbock, Eric	Thorpe, Rt. Hn. Jeremy
Cunningham, Sir Knox	McAdden, Sir Stephen	Turton Rt. Hn. R H.
Currie, G. B H.	Maclean, Sir Fitzroy	Vaughan-Morgan, Rt. Hn. Sir John
Dalkeith, Earl of	McMaster, Stanley	Wainwright, Richard (Colne Valley)
Dance, James	Maginnis, John E.	Walker, Peter (Worcester)
Davidson, James (Aberdeenshire, W.)	Maude, Angus	Ward, Dame Irene
Dean, Paul (Somerset, N.)	Mawby, Ray	Weatherill, Bernard
Deedes, Rt. Hn. W. F. (Ashford)	Mills, Peter (Torrington)	Webster, David
Dodds-Parker, Douglas	Montgomery, Fergus	Whitelaw, Rt. Hn. William
Emery, Peter	More, Jasper	Wills, Sir Gerald (Bridgwater)
Errington, Sir Eric	Morrison, Charles (Devizes)	Wilson, Geoffrey (Truro)
Fortescue, Tim	Munro-Lucas-Tooth, Sir Hugh	Winstanley, Dr. M. P.
Foster, Sir John	Nabarro, Sir Gerald	Worsley, Marcus
Giles, Rear-Adm. Morgan	Neave, Airey	Wright, Esmond
Gilmour, Sir John (Fife, E.)	Nicholls, Sir Harmar	Wylie, N. R.
Glover, Sir Douglas	Nott, John	Younger, Hn. George
Cower, Raymond	Onslow, Cranley
Gresham Cooke, R.	Osborne, Sir Cyril (Louth)	TELLERS FOR THE AYES:
Griffiths, Eldon (Bury St. Edmunds)	Page, Graham (Crosby)	Mr. R. W. Elliott and
Grimond, Rt. Hn. J.	Page, John (Harrow, W.)	Mr. Anthony Grant.
Gurden, Harold
NOES
Abse, Leo	Brown, Bob (N 'c'tle-upon-Tyne, W.)	Edwards, Rt. Hn. Ness (Caerphilly)
Allaun, Frank (Salford, E.)	Brown, R. W. (Shoreditch & F'bury)	Edwards, Robert (Bilston)
Allen, Scholefield	Buchan, Norman	Edwards, William (Merioneth)
Anderson, Donald	Buchanan, Richard (G'gow, Sp'burn)	Ellis, John
Archer, Peter	Butler, Herbert (Hackney, C.)	English, Michael
Armstrong, Ernest	Cant, R. B.	Ennals, David
Atkins, Ronald (Preston, N.)	Carmichael, Neil	Ensor, David
Atkinson, Norman (Tottenham)	Carter-Jones, Lewis	Evans, Albert (Islington, S.W.)
Bagier, Gordon A. T.	Coleman, Donald	Evans, Ioan L. (Birm'h'm, Yardley)
Barnett, Joel	Concannon, J. D.	Faulds, Andrew
Baxter, William	Corbet, Mrs. Freda	Finch, Harold
Beaney, Alan	Craddock, George (Bradford, S.)	Fletcher, Raymond (Ilkeston)
Bencs, Cyril	Crosland, Rt. Hn. Anthony	Foley, Maurice
Benn, Rt. Hn. Anthony Wedgwood	Grossman, Rt. Hn. Richard	Ford, Ben
Bennett, James (G'gow, Bridgeton)	Cullen, Mrs. Alice	Forrester, John
Blackburn, F.	Darling, Rt. Hn. George	Fraser, John (Norwood)
Blenkinsop, Arthur	Davidson, Arthur (Accrington)	Galpern, Sir Myer
Boardman, H.	Davles, Dr. Ernest (Stretford)	Gardner, Tony
Booth, Albert	Davies, Harold (Leek)	Garrett, W. E.
Bowden, Rt. Hn. Herbert	Davies, S. O. (Merthyr)	Gourlay, Harry
Boyden, James	Dell, Edmund	Gray, Dr. Hugh (Yarmouth)
Braddock, Mrs. E. M.	Dempsey, James	Gregory, Arnold
Bradley, Tom	Doig, Peter	Grey, Charles (Durham)
Brooks, Edwin	Driberg, Tom	Griffiths, Will (Exchange)
Broughton, Dr. A. D. D.	Dunnett, Jack	Hamilton, William (Fife, W.)
Brown, Rt. Hn. George (Belper)	Dunwoody, Mrs. Gwyneth (Exeter)	Hamling, William
Brown, Hugh D. (G'gow, Provan)	Dunwoody, Dr. John (F'th & C'b'e)	Harper, Joseph
Hart, Mrs. Judith	Mallalieu, J.P.W. (Huddersfield, E.)	Robertson, John (Paisley)
Haseldine, Norman	Manuel, Archie	Rogers, George (Kensington, N.)
Herblton, Rt. Hn. Margaret	Mapp, Charles	Rose, Paul
Hooley, Frank	Marquand, David	Ross, Rt. Hn. William
Howarth, Harry (Wellingborough)	Mason, Roy	Rowlands, E. (Cardiff, N.)
Howie, W.	Maxwell, Robert	Sheldon, Robert
Hoy, James	Mendelson, J. J.	Short, Rt. Hn. Edward (N'C tle-u-Tyne)
Huckfield, L.	Millan, Bruce	short, Mrs. Renée (W'hampton, N.E.)
Hughes, Emrys (Ayrshire, S.)	Miller, Dr. M. S.	Silkin, Rt. Hn John (Deptford)
Hughes, Hector (Aberdeen, N.)	Milne, Edward (Blyth)	Silverman, Julius (Aston)
Hughes, Roy (Newport)	Mitchell, R. C. (S'th'pton, Test)
Hunter, Adam	Morgan, Elystan (Cardiganshire)	Slater, Joseph
Hynd, John	Morris, Alfred (Wythenshawe)	Small, William
Irvine, A. J. (Edge Hill)	Morris, Charles R. (Openshaw)	Spriggs, Leslie
Jackson, Peter M. (High Peak)	Moyle, Roland	Steele, Thomas (Dunbartonshire, W.)
Jay, Rt. Hn. Douglas	Murray, Albert	Swingler, Stephen
Jones, Dan (Burnley)	Newens, Stan	Taverne, Dick
Jones, J. Idwal (Wrexham)	Noel-Baker, Francis (Swindon)	Thomas, George (Cardiff, W.)
Jones, T. Alec (Rhondda, West)	Norwood, Christopher	Thornton, Ernest
Kenyon, Clifford	Ogden, Eric	Tinn, James
Kerr, Dr. David (W'worth, Central)	Orbach, Maurice	Tomney, Frank
Kerr, Russell (Feltham)	Orme, Stanley	Tuck, Raphael
Lawson, George	Owen, Dr. David (Plymouth, S'tn)	Urwin, T. W.
Lestor, Miss Joan	Owen, Will (Morpeth)	Walnwright, Edwin (Dearne Valley)
Lever, L. M. (Ardwick)	Padley, Walter	Walker, Harold (Doncaster)
Lewis, Arthur (W. Ham, N.)	Page, Derek (King's Lynn)	Wallaco, George
Lewis, Ron (Carlisle)	Pannell, Rt. Hn. Charles	Watkins, Tudor (Brecon & Radnor)
Lomas, Kenneth	Park, Trevor	Wellbeloved, James
Loughlin, Charles	Parkyn, Brian (Bedford)	Whitlock, William
Luard, Evan	Pavitt, Laurence	Williams, Alan (Swansea, W.)
Lyon, Alexander W. (York)	Pearson, Arthur (Pontypridd)	Williams, Clifford (Abertillery)
McBride Neil	Pentland, Norman	Willis, George (Edinburgh, E.)
McCann, John	Perry, Ernest G. (Battersea, S.)	Wilson, William (Coventry, S.)
MacColl, James	Perry, George H. (Nottingham, S.)	Winterbottom, R. E.
McCuire, Michael	Prioe, Christopher (Perry Barr)	Woodburn, Rt. Hn. R. A.
Mackenzie, Gregor (Rutherglen)	Price, Thomas (Westhoughton)	Woof, Robert
Mackle, John	Price, William (Rugby)	Yates, Victor
Mackintosh, John P.	Probert, Arthur
MacMillan, Malcolm (Western Isles)	Rankin, John	TELLERS FOR THE NOES
McMillan, Tom (Glasgow, C.)	Roberts, Albert (Normanton)	Mr. Alan Fitch and
McNamara, J. Kevin	Roberts, GOronwy (Caernarvon)	Mr. Walter Harrison.
MacPherson, Malcolm
Mahon, Peter (Preston, S.)