AMENDMENT OF SECTION 174 OF THE 1948 ACT (Hansard, 20 October 1981)

§ Mr. Eyre
I beg to move amendment No. 91, in page 95, line 42, at end insert—

§ Mr. Deputy Speaker
With this it will be convenient to discuss Government amendments Nos. 97 and 100.

§ Mr. Eyre
These amendments to clause 85 make void, subject to one qualification, first, any agreement to transfer shares which are subject to restrictions imposed under section 174 as it is to be amended, and, secondly, any agreement to transfer any right to be issued with shares arising from the ownership of restricted shares or any right to receive any payment on those shares other than in a liquidation. The qualification is that agreements which are made contingent upon restrictions being lifted on the ground specified in the new subsection (3A)(b) to be introduced into section 174 by clause 85 are not invalidated. Agreements made before the new provisions come into force will not be invalidated.
Amendment agreed to.

§ Mr. Eyre
I beg to move amendment No. 92, in page 96, line 6, leave out "subsection (3B) below" and insert "subsections (3B) and (4A) of this section'.

§ Mr. Deputy Speaker
With this it will be convenient to discuss Government amendments Nos. 95 and 98.

§ Mr. Eyre
These amendments achieve three ends concerned with the implications in detail of restriction of shares under section 174 of the 1948 Act as amended by the clause. First, they provide that in circumstances in which an order has been made lifting the restrictions imposed under section 174(2)(a) and (b)—on transfers of shares and on voting rights respectively—but continuing 239 those imposed under section 174(2)(c) and (d), on issue of further shares and on payments from the company respectively, it will not be necessary to establish either of the grounds set out in what will be section 174(3A), as already contained in clause 85, before an order can be made lifting the continued restrictions. Second, they enable the court to direct that the costs of a person who has made an application under what would be section 174(3B) or (3C) should be paid out of the proceeds of sale of the shares. Finally, they make it clear that when the court directs that shares be sold it may continue the restrictions imposed by paragraphs (c) and (d) of section 174(2) if the court thinks fit.
Amendment agreed to.

§ Mr. Eyre
I beg to move amendment No. 93, in page 96, line 31, after 'under', insert 'subsection (3B) of'.
This amendment makes it clear that the proceeds of sale of restricted shares will be paid into court only when the court has ordered a sale under what will be section 174(3B) of the 1948 Act and not when the court or the Secretary of State has ordered that restrictions be lifted in order to facilitate a sale that has been approved under what will be section 174.
Amendment agreed to.

§ Mr. Eyre
I beg to move amendment No. 94, in page 96, line 33, after 'are', insert 'beneficially'.

§ Mr. Deputy Speaker
With this, it will be convenient to take Government amendment No. 96.

§ Mr. Eyre
These amendments to the new subsections (3D) and (3E) of section 174 already contained in clause 85 make it clear that only a person who had a beneficial interest in shares that have been sold in pursuance of an order of the court made under section 174, new subsection (3B), may apply for payment to be made to him out of the proceeds of sale. As presently drafted, the clause would allow a purely nominee holder to apply for payment.

§ Mr. Eyre
I beg to move amendment No. 99, in page 97, line 3, leave out from 'any' to 'subject' in line 5 and insert 'shares which on the appointed day are'.
The purpose of the amendment is to make it clear that the application of the existing provisions of section 174 for the purpose of restrictions applying to shares on the day the provisions of clause 85 are brought into force is preserved.