HC Deb 17 July 1973 vol 860 cc382-5
Mr. Kenneth Baker

I beg to move amendment No. 41, in page 11, leave out lines 23 to 27 and insert: 'and for the purposes of this subsection share capital held for any person by a nominee shall (except where that person is concerned only in a fiduciary capacity) be treated as held by that person, and share capital held by a person in a fiduciary capacity or by way of security shall be treated as not held by that person' This is not linked with any other amendment. It is perfectly straightforward. This brings us to Clause 10 which the hon. Member for Farnworth (Mr. Roper), who was not on the Committee, but has obviously studied our proceedings with care, has already dealt with and occasioned a great deal of debate and no end of explanation.

The purpose of the amendment is to ensure that in determining whether a company is a subordinate of an insurance company first, shares in that company which are beneficially owned by the insurance company shall be taken into account whether or not they are actually registered in the name of the insurance company; secondly the shares in that company which are registered in the name of the company shall be disregarded if the insurance company holds those shares in trust for another person, or by way of security, and thirdly, shares in that company which are held by a subsidiary of the insurance company shall not be attributed to the insurance company.

The words which this amendment seeks to delete from the Bill would have achieved the first and second of the points I have made but would have caused shares held by a subsidiary of the insurance company to be attributed to the insurance company. The effect of the amendment is to reduce the scope of the concept of "subordinate company" and to reduce the number of such companies. It therefore reduces the freedom which the clause confers on life companies to invest in companies associated with them.

Amendment agreed to.

Mr. Millan

I beg to move Amendment No. 9, in page 11, line 42, at end insert: '(6)—(a) An insurance company which enters into a transaction to which this section applies shall, within such period as may be prescribed, furnish the Secretary of State with a statement containing such particulars of that transaction as may be prescribed; (b) the whole or any part of any statement furnished to the Secretary of State under subsection (5)(a) above may be deposited by him with the registrar of companies and may be published by the Secretary of State in such ways as he thinks appropriate'. The purpose of this amendment is to provide for any transaction entered into under the terms of the clause to be notified to the Secretary of State, who would deposit the information so obtained with the Registrar of Companies and might also publish the information if he felt that was an appropriate procedure. The amendment is related to the earlier amendments on Clause 6, but it is right that it should be dealt with separately because I want to say a word about Clause 10.

I shall not go over all the arguments which we have had on Clause 10, even if I could remember them and make them sound intelligible, but it is clear—the Minister admits this—that there are potential loopholes in the clause. It has been an incredibly difficult clause to draft, and no doubt it could be improved, but it is doubtful whether it is possible to draft a clause about which one could say with utter confidence that it was so tightly drawn that any undesirable transaction could be caught. As there are loopholes, and as the provisions about subordinate companies may be open to abuse, it is important that information about the transactions carried out under the clause should be given to the Secretary of State.

The amendment provides that transactions caught by the clause will be notified to the Secretary of State. The potential worth of the amendment to Clause 6 which we have just passed is that transactions between associated companies could potentially be caught by arrangements made under Clause 6 if the Secretary of State makes the necessary regulations. Therefore, Clause 6, potentially at least, with the amendment to it which we have just passed, enables wider powers to be taken and wider information to be made available to the Secretary of State.

But that is only potential; it depends on the regulations. If the Minister can say that regulations definitely will be made under Clause 6 which will catch the kind of transactions under Clause 10 which my amendment and others cover, I should be willing to withdraw the amendment. But since the matter is very much concerned with Clause 10 it is appropriate that we should discuss it under Clause 10.

Mr. Kenneth Baker

The amendments to Clause 6 moved by the hon. Member for Famworth (Mr. Roper) anticipated the purpose of the amendment moved by the hon. Member for Glasgow, Craig-ton (Mr. Millan). I can give the hon. Gentleman the assurance which he requires.

The amendment imposes a duty on insurance companies to report to the Secretary of State within a period to be prescribed transactions limited by the clause and to give particulars to be prescribed. Such statements may be placed on the company's public file or otherwise published in whole or in part at the Department's discretion. That is clearly desirable so that observance of the limitation may be monitored and possibly in some cases so that Clause 14 may be exercised to require realisation of "connected investments" even before they reach the 5 per cent. limit. But Clause 6 provides powers to make regulations for this and similar purposes which there is no point in duplicating.

I give the hon. Gentleman the assurance that the regulations made under Clause 6 will cover the points made in the amendment.

Mr. Milan

That was precisely the assurance which I wanted. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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