RE-REGISTRATION OF PUBLIC COMPANY AS PRIVATE COMPANY (Hansard, 27 February 1980)

§ Mr. Eyre
I beg to move amendment No. 16, in page 13, line 6, leave out "and".

Mr. Deputy Speaker
With this it will be convenient to take Government amendments Nos. 17 to 20 and No. 22.

§ Mr. Eyre
Once again, these amendments arise from points made in Committee by my right hon. Friend the Member for Crosby (Sir G. Page). He questioned why it was necessary to provide criminal sanctions in clause 10 when directors of public companies did not forward to the registrar the application for a public company to be re-registered as private within the relevant period. We agreed with him that that provision was misconceived in these circumstances, and said that we would reconsider it.
The effect of the amendments that we are proposing would be that criminal sanctions would be removed from the clause. The approach would instead be analogous to that under clause 8(8). The registrar would be able to issue the certificate required for re-registration as a private company either when the period during which an application may be made to the court for cancellation of the resolution has expired or after any such application has been withdrawn or refused, if later.
The argument against criminal sanctions in this clause is essentially, as my right hon. Friend put it when he raised the matter, that it is a rather Draconian measure for an idle director. There could be civil remedies available where the directors have ignored the wishes of the shareholders, and, of course, there would be the sanction of an ordinary resolution to remove the directors. Criminal sanctions are not provided in similar circumstances under clause 5, when directors of a private company do not apply, follow- 1500 ing a special resolution, to become public. Nor are there such sanctions in the 1967 Act, where unlimited companies wish to be re-registered as limited, and vice versa.
I said in Committee that, however, we needed to ensure that a company does not seek re-registration before the time allowed for minority shareholders to apply to the court for relief. That is achieved in the amendments by providing that the registrar shall not issue a certificate until that period has elapsed. The registrar will receive notice of that resolution by reason of section 143 of the 1948 Act. The registrar will also receive note of any application to the court under clause 11 by virtue of subsection (5) of that clause. The amendments will therefore ensure that the rights provided to minority shareholders are protected.
Finally, a minor change incorporated in the amendments is that a reference in line 12 to the memorandum and articles being "added to" as well as altered by the resolution is removed. As was recognised in a large number of amendments agreed in the Committee, an addition to the memorandum and articles is also an alteration. We were able therefore to simplify the verbiage by removing the references to additions. We overlooked that reference to additions in clause 10, and now propose to remove it.
I believe that my response demonstrates that we try to meet my right hon. Friend's view when we reasonably can.