§ Mr. TebbitI beg to move amendment No. 22, in page 6, line 32, after 'may', insert '(a)'.
§ Mr. Deputy SpeakerWith this we may also take Government amendment No. 23.
§ Mr. TebbitThese amendments are partly a consequence of Government amendments Nos. 11 and 12 to clause 5(1) dealing with the type of security that the Government will be able to acquire under the Bill, and partly to extend the circumstances in which clause 6(4), as originally drafted, was applicable.
1205 Clause 6 provides for an upper limit to be set on the size of the Government shareholding in the successor company, and subsection (3) imposes a duty on the Secretary of State to exercise his powers so as to ensure that that limit is not exceeded. The intention of subsection (4) is to provide a derogation from that duty to cover circumstances where it is necessary for the Government to take action if they wish to be sure of retaining a given shareholding but where it is possible, because of the unforeseeable behaviour of other people, that the action will result in the Government shareholding being increased. If that happens the Government are required to comply with the limit—that is, in practice to sell the excess shares as soon as is reasonably practicable.
The most obvious case where this might occur is in a rights issue where the Government subscribe to the full extent of their existing shareholding but where other existing shareholders decide not to do so. That is the only case covered by the subsection as presently drafted. However, a similar problem could arise where the Government held securities, other than as a member, which were convertible into or carried the right to subscribe for ordinary shares in the successor company.
For example, the terms of convertible stock might provide for conversion on a certain day or within a certain period. If the Government wished to be sure of retaining their existing proportionate shareholding they would have to convert all their stock in the expectation that all other shareholders would convert their stock. Some might decide not to exercise their conversion rights, with the result that the Government shareholding would be increased so that, inadvertently, the target investment limit was exceeded. The amendment is designed to deal with that eventuality.
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Clause 5, as reported from the Committee, provided for the Secretary of State to acquire convertible securities of the successor company. The Government amendment to clause 5 also provides for the acquisition of rights to subscribe to ordinary shares, and securities that carry rights to subscribe for ordinary shares, of the successor company. It would be 1206 wrong for the Secretary of State to be inhibited from exercising the right conferred by the securities for fear of exceeding the target investment limit. The amendments will ensure that he can exercise such rights without restriction, or direct his nominees to do so, provided that any excess shares above the target investment limit acquired as a result are disposed of in accordance with the provision of clause 6(4). The provisions will be generally regarded as helpful, and I commend them to the House.
§ Amendment agreed to.
§
Amendment made: No. 23, in page 6, line 33, leave out
'a member of the successor company' and insert 'an existing holder of shares in or securities of the successor company or as an existing holder of a right to subscribe for any such shares;