§ Amendments made: No. 28, in page 47, line 20, after '(1)', insert 'and (1A)'.
§ No. 29, in page 47, line 21, leave out 'for the' and insert
'in any case where the acquisition of shares in question is or was an'.
§ No. 30, in page 47, line 27, leave out 'company's net assets' and insert
'company has net assets which'.
§ No. 31, in page 47, line 32, leave out 'for the' and insert
'in any case where the acquisition of shares in question is or was an'.
§ No. 32, in page 47, line 40, leave out 'for the' and insert
'in any case where the acquisition of shares in question is or was an'.— [Mr. Eyre.]
§ Mr. EyreI beg to move amendment No. 33, in page 48, line 12, leave out from 'contain' to first 'of' in line 13 and insert
'such particulars of the assistance to be given and'.
§ Mr. EyreAmendment No. 33 permits the particulars of financial assistance that a private company plans to give under clause 41, and which must be stated in the statutory declaration made by the directors, to be prescribed by the Secretary of State.
Amendment No. 34 adds an alternative basis for the directors' statutory declaration, that the company will remain able to pay its debts for a year after financial assistance for the purpose of acquisition of its shares is given. Their declaration will still have to be based on the present requirement in subsection (7)(b)(i) of clause 41 as to the company being able to pay its debts immediately after the assistance is given.
The new provision is intended to provide an alternative to the present requirement concerning solvency over the following year.
Amendment agreed to.
Amendments made: No. 34, in page 48, line 22, leave out from 'debts' to end of line 27 and insert
'and either—
() if it is intended to commence the winding up of the company within twelve months of that date, that the company will be able to pay its debts in full within twelve months of the commencement of the winding up; or
() in any other case, that the company will be able to pay its debts as they fall due during the year immediately following that date.'.
§ No. 35, in page 48, line 43, leave out
'for the acquisition of any shares'.—[Mr. Eyre.]
§ Mr. Eyre: I beg to move amendment No. 36, in page 49, line 6, leave out 'each such resolution' and insert
'that resolution (or, if more than one, each of them)'.
§ The amendment provides a justifiable exception to the requirement that a period of four weeks shall elapse between the passing of a resolution and the giving of assistance under the clauses that we have been discussing.
§ Amendment agreed to
§ Mr. Eyre: I beg to move amendment No. 37, in page 49, line 14, leave out 'seven' and insert 'eight'.
217§ The amendment increases the maximum length of time, after the directors have made their statutory declaration, during which the company can give the financial assistance, from seven weeks to eight weeks.
§ Mr. Clinton DavisWill the Minister explain briefly why that period has been extended?
§ 7 pm
§ Mr. EyreI am glad to do so. The amendment is put forward following comments that various representative bodies have made about the short amount of time allowed by these provisions for a company to complete a transaction involving the giving of financial assistance. There is a need to ensure that the statutory declaration by the directors is as recent as possible at the time when assistance is given, as this is often an important safeguard for creditors. However, the Government consider it reasonable to allow a little more time by this amendment, increasing the present seven-week period for the statutory declaration to eight weeks. This will allow the same maximum as those provisions permitting a company to purchase its own shares out of capital. The company will thus have a maximum of three weeks in which to give the financial assistance, because one week is allowed after the declaration for the assistance to be authorised by the company and a further four weeks must elapse before any payment can be made, to allow time for any application to the court for cancellation of the authority. The hon. Gentleman will realise that that makes eight weeks.
§ Mr. Clinton DavisI think that this is a useful proposal The standardisation of the procedure is also helpful as it tends to the avoidance of doubt and difficulty about the time scale for many of these matters. I therefore support the proposal.
Amendment agreed to.