INTERNATIONAL BONDS (Hansard, 19 October 1981)

HC Deb 19 October 1981 vol 10 cc71-8 71

§ '.—p(1) Section 71 of the 1980 Act (exclusion of things done in connection with international bonds from prohibition on 72 insider dealing) shall have effect subject to the following modifications.

§ (2) In subsection (1)—

after the word "debenture", in the first place where it occurs, there shall be inserted the words "or any right to subscribe for, call for or make delivery of any debenture";
in paragraph (a)(ii) for the words "before the date on which it is decided" there shall be substituted the words "before the decision is taken"; and
in paragraph (b) after the word "debenture", in both places where it occurs, there shall be inserted the words "or right".
(3) The following subsection shall be inserted after subsection (1)—
"(1A) Where an individual holds unpublished price sensitive information in relation to any securities but by virtue of subsection (1) above he is not prohibited by section 68 above from doing anything in relation to those securities, he shall not be prohibited by virtue of his holding that information by section 70(2) above (prohibition on counselling persons to deal on stock exchanges outside Great Britain, etc.) from doing any other thing in relation to those securities.".
(4) In subsection (2)—

in paragraph (b) of the definition of "international bond issue" for the words "are so offered" there shall be substituted the words "are or are to be so offered"; and
the following words shall be inserted after the definition of "issue manager", that is to say, "and "off-market dealer' has the meaning given by section 70(3) above.".

(5) The following subsection shall be inserted after subsection (2)—
"(3) The Secretary of State may by regulations made by statutory instrument make provision—

permitting persons of any specified class to be treated as issue managers for the purposes of subsection (1) or (1A) (or both) of this section;
permitting persons of any specified class to be treated as off-market dealers for those purposes;
permitting an issue of international securities of any specified class to be treated as an international bond issue for those purposes;
extending the exemptions conferred by subsections (1) or (1A) above (or both) for things done in relation to other advertised securities or other advertised securities of any specified class;
amending or disapplying paragraph (i) or (ii) (or both) of subsection (1)(a) above in relation to any international bond issue or any international bond issue of a specified class.

(4) In subsection (3) above, "international securities" means any securities (whether listed or advertised or other) which are in any way connected with a country outside Great Britain, for example, securities issued by a body which is incorporated or resident outside Great Britain or which are denominated in a currency other than sterling or which are dealt in by bodies incorporated or resident outside Great Britain or by individuals so resident.
(5) Regulations under subsection (3) above—

may make different provision for different cases or classes of case and may contain such incidental and supplementary provisions as the Secretary of State thinks fit;
shall not be made unless a draft of the instrument containing them has been laid before Parliament and approved by resolution of each House of Parliament.".'.—[Mr. Peter Rees.]

§ Brought up, and read the First time.

§ Mr. Peter Rees
I beg to move, That the clause be read a Second time.
This is a clause of greater complexity than the previous one, but I think that it can be put fairly simply. It is designed to relax to a small degree the provisions relating to insider dealing, as these might otherwise have had an effect on the market in international bonds. Part of the clause is designed to put right certain defects in section 71 73 of the 1980 Act, which provides a defence to a charge of insider dealing for certain operations of the international bond market. The rest of the clause gives the Secretary of State power to amend that section by order in certain respects.
The rationale underlying the clause is that the international bond market is essentially for professionals. If the regulations are drawn too tightly in respect of dealings on that market there is a substantial risk that the market will be driven overseas, to the detriment, as I put it to the House, of Britain. As it is essentially a professional market for professionals, there is not quite the same need for the protection of the unwary and inexperienced as that which is contained in section 71.
The international bond market has, of course, many international dimensions and its character alters rapidly. The possibility of the Secretary of State being able to introduce the necessary primary ligislation to make appropriate amendments year by year is remote. I feel that the House would be rather irked if a fresh Companies Bill were introduced every year purely to make the necessary amendments to the provisions relating to the international bond market.
I hope that the House will feel that in this instance it is appropriate for the Secretary of State to have power by regulation, which will be subject to the affirmative resolution procedure, to amend as he thinks proper, after due scrutiny by the House, the provisions relating to this rather specialised market.

§ 7 pm

§ Mr. Clinton Davis
If I am critical of the Government, I am in no way being critical of the Minister of State who bears no responsibility for the observations that I want to make.
We have many lessons to learn from the way in which we conduct our company legislation in the House. Part of the problem may be cured by the device of which we spoke in our discussions this evening.
I wish that the defects of the 1980 Act were confined to section 71. The trouble with the 1980 Act—to some extent like the Bill—is that it is legislation by second thoughts. The Government did not order their thoughts on the 1980 Act, and they have not done so for the Bill. In both cases they decided to limit the legislation. They then found that they could not do that because the long title of the Bill did not permit them to do so.
The Government changed their minds about the 1980 Bill, and by the time they did so the only ay in which any progress could be made was to get the parliamentary draftsman to work overnight on a defective brief because the time scale was against him. A massive number of new clauses were introduced in Committee—the hon. Member for Kensington (Sir B. Rhys Williams) and I were both on that Committee—in a way that did not enable the Committee to make any reasonable scrutiny of what was placed before it. On Report a number of new clauses were introduced, but there was little or no opportunity to consult about them. That cannot be a sensible way to conduct company legislation.
One would have thought that the Government would have learnt something from the experiences of last year, but evidently they have not. Unfortunately, we are today faced with a large number of new amendments and clauses and there has not been sufficient time in which to engage in effective and proper consultation. 74 This procedure is one on which we should not embark too quickly again in the near future. That applies not only to company legislation, but to all technical legislation. The House of Commons must devise a better way to deal with these matters. We have a new procedure, but I do not believe that it is more than experimental. I am not satisfied that it satisfactorily covers the scrutiny that we need to undertake when we consider matters such as the one in new clause 27, which is highly complex. I have consulted no one about it. I do not know what defects it contains, but I wish that the defects highlighted by the Government on this occasion represented the end of the matter.
Accountancy bodies have represented their extreme concern about other aspects of the 1980 Act. It is a pity that we are to be denied an opportunity to put them right. It would be better if we could put right those aspects by employing the procedures that were outlined by my hon. Friend the Member for Norwood (Mr. Fraser), the principles of which were accepted by the Government in a recent debate.
The Government must now consider carefully the much more extended use of the statutory instrument procedure, subject to the safeguards that we have outlined. They should not come forward at the last moment with substantial changes in the legislative proposals as compared with what was before the Committee. Having said that, I do not object to the principle underlying the new clause. I shall not recommend my right hon. and hon. Friends to vote against it.

§ Sir Brandon Rhys Williams (Kensington)
I believe that this is the appropriate stage on Report for me to make some serious remarks about which I have already warned Mr. Speaker.
It is proper to draw attention to the way in which the Department is handling company law, particularly in this Bill, although in earlier Bills as well. By my reckoning, when the Bill was first introduced to the Lords it had 109 pages and 62 clauses. When it came from the Lords, it had 131 pages and 79 clauses, many of which were extremely difficult and technical. However, they are not only important to a handful of people, but they make significant differences to the way in which many companies are run.
When the Bill emerged from Standing Committee, it had 165 pages and 106 clauses, many of which included entirely new matter which was not in the Bill on Second Reading in the House. Now on Report there are a considerable number of new Government clauses to be taken, some, like this one, of considerable complexity. There are at least 150 new Government amendments. That is not in accordance with the long-established procedures of the House. Someone should reprimand the Department for slipping into this way of conducting its business.
I am particularly disquieted because, knowing what we do about the way the Department plans to reform company law, we hear that there is unlikely to be another Companies Bill in this Parliament. But Clause 103, which is to cover amendments of the Companies Act, seems to give virtually carte blanche to the Department to amend company law in any way it likes and to put its amendments before the House to be rubber-stamped without discussion. That is a wrong approach. Many people are involved. Company law is a difficult matter, but it is a matter of wide application, not to be considered as purely a departmental concern.
I wish to raise another matter because I believe it to be germane. That is the question of the selection of hon. 75 Members for the Committee on the Bill, and probably for other Bills as well. The House knows that I have a particular interest in company law. I have introduced either a new Bill or a significant measure of reform for company law in every Session of the House since 1969. Company law is also very much a constituency interest for a large number of people in my division. I spoke on Second Reading and was looking forward to taking part in the Committee as I had taken part in the Committees on earlier Bills.

Mr. Deputy Speaker
The hon. Gentleman is now addressing himself to a matter that relates to the Committee of Selection. We are discussing a new clause in which the Committee of Selection is not mentioned.

§ Sir Brandon Rhys Williams
I entirely accept that. I took the precaution of consulting Mr. Speaker on this question before I raised it. If you will allow me to complete my remarks, Mr. Deputy Speaker, I think that you will see that they are germane to our consideration of the matter which the Minister has brought up for the first time in this new clause.
This matter could have appeared in the Bill on Second Reading and should have been included during the Committee stage because it is of sufficient interest and importance to have merited the discussions that such matters can have in Committee. In considering whether it should approve new clause 27, the House should take note that many of the clauses were not dealt with as completely as they might have been in Committee; and this is now a Committee point which is being brought up on Report. If I am not allowed to make these remarks now, I must seek your guidance on the appropriate time to do so, Mr. Deputy Speaker. Mr. Speaker's guidance was that it would be proper to raise the matter now. Therefore, I hope that you will allow me to continue, Mr. Deputy Speaker.
I understand that the policy of the Committee of Selection now is to ensure that on the Government side all the hon. Members appointed to the Committee are Members who have undertaken to support the Government on every clause. I was asked whether I would give such an undertaking if I were nominated to the Standing Committee. I was unable to give that assurance, because I do not think it would have been a proper assurance for any hon. Member to give, therefore I was not able to serve on the Standing Committee.

§ Sir Albert Costain (Folkestone and Hythe)
On a point of order, Mr. Deputy Speaker. I intervene as a member of the Committee of Selection. Is the House to be told by hon. Members about things that the Selection Committee is alleged to have done? I can assure my hon. Friend that such matters as he has raised are not taken into account.

Mr. Deputy Speaker
I have served on the Committee of Selection and am aware of the procedure. I think that the hon. Member for Kensington (Sir B. Rhys Williams) is now off that point. Perhaps, if he will remain off it, we can proceed with the business.

§ Sir Brandon Rhys Williams
Since I have been challenged, perhaps I might be allowed to conclude this section of my remarks by saying that I consulted the Chairman of the Committee at the time and he assured me what his policy was as Chairman. I spoke to him today and 76 he repeated it. I warned him that I was intending to raise the matter in the House today. If I have misunderstood him, I hope that he will correct the matter in the House, because I would not want the House to be under any misapprehension.

§ Mr. Clinton Davis
I make no reflection on the Committee of Selection, but I very much missed the independence of judgment that the hon. Member for Kensington (Sir B. Rhys Williams) has displayed on other Bills on which I have had the privilege of serving with him. I missed the expertise which he has clearly had to offer in respect of company legislation. What he has divulged to the House is not a reflection on the Committee of Selection but is a grave reflection upon the Government Whips.

§ Sir Brandon Rhys Williams
I do not want to apportion blame. I do not know that it is a blameworthy matter. Other hon. Members might think that it is perfectly proper. But the constitutional issue which arises in the consideration of the amendment—if it is proper that the House should take it in this way at this time—is whether the Committee should be constituted in such a way that the Government Members are Members who are prepared to give an undertaking to support the Government on every clause. If that is the way in which selections are made, hon. Members should bear in mind when the Bill comes back to the House on Report that a constitutional change is taking place, since this is the way in which the Committee of Selection, as I am assured, now deals with the question of selection of hon. Members to serve on the Government side.

§ Mr. Nicholas Baker
My hon. Friend seemed to suggest that an undertaking was required of Conservative members of the Committee on the Companies Bill that they would support Government policy. That was certainly not my experience. No undertaking was required of me.

§ Sir Brandon Rhys Williams
I was asked to give that assurance and, because I was not able to do so, I was not nominated to the Committee. Possibly the Committee stage was all the better because I was not a member of the Committee—that is a matter for the other hon. Members to consider—but it is right to draw attention to the fact that this constitutional change has taken place, and that the Department, particularly with reference to company law, is treating the House, as it seems to me, with contempt. I hope that the Chair, as the protector of minorities in this House, will take note of the position and reflect upon it, even if Mr. Speaker may not feel willing or ready to intervene in any way. I hope that—

Mr. Deputy Speaker
Order. As there have been several references to Mr. Speaker, perhaps I may say that I have no doubt that he will read this part of the Official Report with considerable care. I hope that the hon. Member will now move on.

§ Sir Brandon Rhys Williams
I hope, too, that an opportunity will be given to members of the Committee of Selection and the Chairman of the Committee to comment fully on what I have said, and that the whole matter may be resolved in the open. I would prefer that, and I think that all hon. Members would like to have some reassurance on this point.

77 7.15 pm

§ Mr. Neville Trotter (Tynemouth)
Like my hon. Friend the Member for Dorset, North (Mr. Baker), I was not asked to give any such assurance. It may be that my hon. Friend the Member for Kensington (Sir B. Rhys Williams), who is raising the issue, has a record of being against the Government on a number of matters. Perhaps it was for that reason that he was approached. But I do not believe that it was general with the members of the Committee, and it certainly did not happen in my case.

Mr. Deputy Speaker
I appeal once again to the hon. Member for Kensington to come back to the new clause.

§ Sir Brandon Rhys Williams
I do not want to say more about the new clause. As far as I am able to understand it——

§ Mr. Clinton Davis
Again I make no aspersions against the Committee of Selection, but the Government Whips knew who the "chocolate soldiers" were and that they could expect total compliance from them. I said that at the beginning of our debate. I was right and the hon. Member for Kensington is right.

§ Sir Brandon Rhys Williams
I think that the right thing for me to do, Mr. Deputy Speaker, is to obey your injunction and to draw my remarks to a close. I have not had the opportunity of looking at new clause 27 in the way in which it would have been looked at in Standing Committee, but I do not think that it would be right for me to dwell further on its merits and demerits. As far as I am able to judge, it is an admirable proposal, but it is one which ought not to have been introduced to the House in this way.
I hope that my protest will serve a useful purpose, and I am grateful to you for your forbearance, Mr. Deputy Speaker, in allowing me to make it.

§ Mr. Peter Rees
I intervene with some diffidence, for the hon. Member for Hackney, Central (Mr. Davis) and my hon. Friend the Member for Kensington (Sir B. Rhys Williams) have not directed much fire at the new clause. However, I should like to deal briefly with some of the general points which have been made.
The hon. Member for Hackney, Central said, in charming and epigrammatic phrase, that this was Government by second thoughts. But he, with his long experience of the Department and his long experience of company law—very much longer than my own—knows that this is a rapidly developing field, where the Government of the day—I am sure that it was as true of the Government of which he was a distinguished ornament—are subject to a great deal of outside pressure and representation, and very rightly so. As my hon. Friend the Member for Kensington well knows, it is a complex field which affects a wide range of interests and is of practical significance. Therefore it is right that the Government of the day should be sensitive to the points made to them.
In an ideal world, it would be right for every clause and major provision to be there for the House to see nd debate on Second Reading, before the Bill goes to a Committee. But my hon. Friend the member for Kensington, who has been in the House longer than I have, knows that we do not live in an ideal world. That is certainly the case with Finance Bills, on which I have had to labour for far too long. Unless the House is to be overloaded with primary 78 legislation Session by Session—and I do not think that that is the wish of the House as a whole—it is right that the Government of the day, of whatever party, should take an appropriate opportunity to fit in new measures.
The provision has, of course, fairly far-reaching effects, but it is primarily in relation to section 71 of the 1980 Act, so that it is not a new conception that has sprung from the forehead of my right hon. Friend the Secretary of State for Trade. It is the development of a series of provisions that were introduced in the 1980 Act.
I hope, therefore, on that basis—although I recognise that it is desirable that the House should have the maximum opportunity to scrutinise these provisions on the Floor of the House and in Committee—that the House will accept the clause, particularly since no substantial criticism has been levelled at its substance.
It would be quite inappropriate for me to come between my hon. Friend the Member for Kensington and the Committee of Selection, and I therefore pass over that matter. I am genuinely sorry, as I always listen with keen interest to the interventions of my hon. Friend in many fields—particularly that of company law—that the Standing Committee was deprived of his services, for whatever reason. But a virtue of the Report stage is that it gives hon. Members who did not have a chance to contribute to the proceedings in Standing Committee the opportunities to bring their considerable experience to our debate. That is perhaps its justification for our debate here this evening.
I hope that, notwithstanding the reservations about procedure to which I shall of course make a point of drawing the attention of my right hon. Friend the Leader of the House, the substance of the new clause has been thoroughly examined and will commend itself to the House.

§ Question put and agreed to.

§ Clause read a Second time, and added to the Bill.