Lords Sitting of 10 March 1947

Preamble
The House met at four of the clock, The Lola) CHANCELLOR on the Woolsack.
Prayers.
  AGRICULTURAL WAGES (REGULATION) BILL.
  Returned from the Commons with the Amendment agreed to.
EXCHANGE CONTROL BILL.
Returned from the Commons with the Amendments agreed to.

BUSINESS OF THE HOUSE.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON): My Lords, I beg to move the Motion which stands in my name.
Moved, That Standing Orders No. XXI and No. XXXIX be considered in order to their being suspended for, this day's sitting for the purpose of giving precedence to the Summer Time Bill over the other Notices and Orders of the Day, and for the purpose of passing the said Bill through its remaining stages.—(Viscount Addison.)
On Question, Motion agreed to, and ordered accordingly.

SUMMER TIME BILL.
2.36 p.m.
Order of the Day for the Second Reading read.
LORD AMMON: My Lords, in introducing this Bill to your Lordships perhaps I might adopt an opening which is sometimes used by the noble and learned Viscount on the Woolsack and say that although I do not like the Bill, and although very few people like it, the circumstances are such that it is necessary to proceed with it. One has to admit that considerable upset will he caused both to industrial and to social and domestic life, and, not least of all, in agriculture.
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I would like to emphasize what has already been expressed in another place—namely, our sense of gratitude and appreciation for the public Spirit shown by those in agriculture. The Government fully realize that the burden laid upon the agricultural community by the changes which they have proposed is a heavy one, and it is one which they would not contemplate imposing were the situation not so critical. The Government greatly appreciate the public spirit shown by the President of the National Farmers' Union when their decision was made known to him. He entered a protest against it, as he was fully entitled to do, but said that he trusted that, with the full co-operation of the workers, agricultural output would be maintained in the face of these new difficulties.
In that connexion perhaps I might also draw your Lordships' attention to the attitude taken up in another place by Captain Crookshank, who was leading what one might call the opposition to the Bill. He said:
"That is the whole issue—that this year is a year of crisis. Whose fault it is is another matter … Let us in this House accept the fact that, through one reason or another … we are in a position of really serious industrial difficulty. Therefore, it is up to the Government to make proposals … to mitigate the position."
He went on to say:
"I ask the right hon. Gentleman to accept our assistance in facilitating the Bill …."
That was the spirit in which this Bill went through another place; all the difficulties and disadvantages attendant upon it were admitted, but the position was accepted that without it matters would be very much worse indeed. The last remark which I have quoted referred to the proposed extension, in Clause 2 of the original Bill, to another year. Noble Lords will see that in Clause 2 (2) the Government have met the opposition and have there interpolated a provision ensuring that before any extension is made to another year the Order in Council shall first of all be laid before Parliament so that it may be there discussed. The announcement in the Press recently that Summer Time would be extended to another year is without foundation. There is no intention whatever of extending the operation of the Bill to the winter months.
The Bill proposes that as from Sunday next, March 16 (it seems something like a perverted sense of humour to talk

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about Summer Time on Sunday next) to April 12 the day shall be extended by a single hour, or what is known generally as Summer Time, and from the morning of April 13 until August 10 it shall be extended to Double Summer Time, or two hours. That is briefly the position. I need hardly trouble your Lordships by going through the Bill clause by clause. Clause 1 details the hours by which it is proposed to extend the day when Summer Time comes in, and Clause 2, as I have already mentioned, wholly meets the criticism raised in the other place by honourable members there.
As regards the meaning of "the period of summer time" in the Road Transport Lighting Acts, that is not interfered with at all. Under the Road Transport Lighting Act, 1927, lighting-up time for vehicles is (as respects the period of Summer Time under the Acts of 1922 and 1925) the time between one hour after sunset and one hour before sunrise, and as respects the remainder of the year, the time between half an hour after sunset and half an hour before sunrise. Those periods by virtue of Clause I (3) remain untouched by the Bill and stand as at present. I think that is all I need trouble your Lordships with at this moment with regard to this very brief Bill. It is an unwanted child but one which we feel, owing to the circumstances, we are bound to adopt. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Ammon.)
4.8 p.m.
LORD LLEWELLIN: My Lords, the noble Lord who has been good enough to present this Bill to us has done it in non-extended time. It is just as well that we should realize that, except in time of war, we have never had Summer Time for so long a period; and that neither have we had before, except in time of war, what is called Double Summer Time. It is just as well, if only briefly, to consider why we need it now, because this Bill gives permanent power to the Government to propose, subject to affirmative Resolutions of each House of Parliament, Summer Time and Double Summer Time, not only for this year but for ever, so long as this Bill is not repealed.
VISCOUNT ADDISON: If Parliament approves.
LORD LLEWELLIN: I think I have used the right form of words. The Bill entitles the Government to make proposals to Parliament for its approval without any further powers. I think it is relevant to draw attention, now that we are considering this as a permanent Bill, to what the Minister of Fuel and Power said when this crisis was suddenly disclosed to the public. I quote from the OFFICIAL REPORT:
"I have to repeat that the conditions now to be put into operation are entirely attributable to the short-fall that we have experienced in the past week and that we are likely to experience next week. It is hoped that this will not last longer than three or four days or, at the most, for a week. We must give ourselves a week …."
Well, it is some comment—and I think one is justified in making it—on the foresight of that Minister, that here we are only a month after he made that statement in another place, bringing in a permanent measure because of the shortage of electric power in this country.
I suppose there are really two underlying reasons for this measure. The first is the shortage of coal, and the other the shortage of electrical generating plant. Now this Bill is, at the best, a stop-gap measure, and what one wants to see is what affect it will have on the basic reasons for its being brought forward. It has been frankly admitted in another place by the Secretary of State for Home Affairs that it will not save us very much coal. It is calculated to save us only 150,000 tons of coal during both Summer Time and Double Summer Time. That, I believe, is the production of about only a quarter of a day. It is, however, hoped to facilitate the working of double shifts in the factories, which will naturally distribute the load more evenly. But I should like to press upon the Government three matters in regard to electrical generating machinery. First of all, I should think that we may quite well have been exporting too much generating machinery. I know we made a certain number of promises during the days of the war, but it is absurd to fulfil them if it means that our people will have to stagger their working hours, and that other difficulties will be placed upon the farmers, as is admitted on all sides.
I have had personal experience in the Board of Trade in regard to one of these matters. There is a department in the Board of Trade whose function seems to

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be to look after the export of capital machinery. As soon as they find machinery is ready in a manufacturing premises, they are liable to seize on it and say, "We must export it." It happened at a factory of which I have firsthand knowledge. A cigarette packing machine had been completed and was to be delivered to this factory. It was seized by the export people in the Board of Trade, and was not delivered to the factory in this country but was sent somewhere abroad. When the management explained to the particular department of the Board of Trade which looks after the export of cigarettes that this would, of course, hamper their export of cigarettes, and informed them that in three months, by the extra production of this machine, its entire value would have been covered by finished goods, the Board of Trade got together and said, "You must have the next one off the line." I should like this question to be looked into, to see whether something like that is not happening in regard to the export of electrical machinery.
It appalled me to see the other day, in the statement of the chairman of one of these electricity generating companies, how long it is now taking to erect electrical generating stations. I believe that each new station, and the progression of its machinery, ought to be watched week by week, to see whether there is any delay, exactly as we had to watch the putting up of an aircraft factory or indeed the making of any aircraft plant. I suggest that that should be done, so that if possible we shall not have to apply this measure again next year. A third thing I would suggest to the Government—I am rather doubtful whether they will agree—is that it is not the time to change horses in the management of the electrical industry. It seems to me quite absurd at this time to take the industry out of the hands of people who know the business (and who have done a wonderful job of work in expanding our electricity industry in the last twenty-five years) and try to put it in other hands. It obviously leads to stagnation at a time when there should be progress. If the Government will not adopt that view, it may well be the reason why this Bill has to be permanent in its nature.
On the other hand, we are all convinced that in the present crisis—and the noble Lord quoted the words of Captain Crook-
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shank in another place—the Bill is necessary at this time, and certainly we are in no way going to oppose it to-day in this House. It is an odd commentary on the advance in the education of our people that if you want to start a factory or a shift earlier, so as to enable a second shift to be done, both management and workers have to pretend to themselves that they are still only getting to their work at six or seven o'clock in the morning, whereas in fact under Double Summer Time they are getting there at four or five o'clock in the morning. It is rather an odd commentary on the advance of our education that we have to deceive ourselves to get up earlier in the morning. When the noble Lord, in introducing this measure, said that by it the day will. be extended, I do not think he used quite accurate words. That is one thing we cannot do by Act of Parliament. We can only get up a little earlier to see more of the daylight than perhaps we otherwise would.
It is perhaps worth while to make the comment that we seem in this country to be getting rather too inflexible in our arrangements. Because it will not be all factories, by any means, who can run these double shifts. It seems that if trams or trams have to be run earlier to serve one set of people in an area, then all trains and trams have to be run those one or two hours earlier. I wish that our arrangements could be more flexible in that regard. When one comes to the country districts, even if managements and men can persuade themselves that the hours are the same although they are different certainly nature will not take any different course, and it is quite clear that Summer Time and particularly Double Summer Time, is of considerable disadvantage to our farmers and farm workers.
I am not sure—and I would like this to be suggested to the Minister of Education—whether schools in some of the country areas could not alter their times of opening so that children will not have to get up so early, and so that housewives will not have to prepare breakfast at that very early time for school children. In -that way breakfast would be prepared at the later hour for the man on the farm and his work would start normally, at what one might call nature's time—some people would call it God's time—rather than at Summer or Double Summer Time.

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I believe that in a lot of areas that might well be done. There might, of course, be difficulties where there was an older child attending a secondary school in a country town, but there are some areas of the country where this proposal might be adopted to the great advantage of those who work on the land in those districts. I would like that point considered.
One must realize that there are going to be increased difficulties. Whether it will mean that the prices of produce will have to be altered for the farmers or not, I do not know. One must recognize that this means quite a lot of hanging about on the farms, waiting for the dew to rise off the crops. That is especially so at the time of the hay harvest. I am glad to think that Double Summer Time is not to extend to the normal time of the cereals harvest, because that would be an intolerable burden on the farmer. The hay harvest will be difficult enough for them. I hope that in every way possible some greater encouragement than is at present given will be offered to the farming community by the Government by. an effort to import more feeding stuffs. That would not only enable us to increase the pig and poultry populations again, but it would also help, in the best way, fertilization of the farm by ordinary farmyard dung, which is by far the better way. One has to realize that with this shutting down of many factories for a period of three weeks or a month, fertilizers will be in shorter supply than they would otherwise have been. We ought to try and do what we can to help farmers, not only because farming is practically the most vital industry in this country—it certainly will turn out to be so in the next couple of years—not only because we want their production, but because of the extremely patriotic way in which their organization have agreed to accept this proposal. So let us do everything we can, before next year, to see that this measure is not again necessary. Let us do everything in the immediate future to help the farmers in every way we possibly can.
LORD RENNELL: I have only one word to say. It is that while one must unwillingly accept the Bill which the noble Lord has moved in the spirit in which he moved it, nobody wants it. It is an unpleasant necessity, but I think it is only fair to say—the noble Lord may
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not relish it—that this is the outcome of the failure to take steps which should have been thought of, and could have been thought of, last year. The shortage of fuel was foreseeable last year, even if the weather was not. It was common ground a long time ago that Summer Time would mean some saving in fuel, and that in times like these it might be a necessity. With these, remarks, I beg to support the Bill.
4.28 p.m.
THE EARL OF ROSEBERY: My Lords, I take it we all have to agree that this Bill must be passed, but I hope, as my noble friend said just now, that due regard will be paid to the needs of agriculture. In this respect I am sorry to see that the representative of the Ministry of Agriculture in this House is not with us this afternoon. 1 would have thought he might have come here to help us with questions which we might want elucidated in regard to agriculture. Although the noble Earl, Lord Huntingdon, is not here, I am perfectly certain the noble Viscount the Leader of the House is just as sorry as anyone else from the agricultural point of view, that we have to have this Bill. Though in no way criticizing the noble Earl, Lord Huntingdon, I know that the noble Viscount the Leader of the House was our fuehrer as regards agriculture in Buckinghamshire for five years during the war, and that he now knows every bit as much about it as the noble Earl, Lord Huntingdon, if not more.
I would appeal to him to help the farmers. I am speaking not so much for England as from the point of view of Scotland, where this Bill will hit us even harder than it hits you. We shall have to wait another hour for the dew to go off the hay before we cut it. Milkmen will have to start an hour or two earlier, some of the farms are a very long way from the villages, and a large number of them want their cottages rehabilitated. This Bill will not allow us any opportunity to rehabilitate our cottages. In some cases the milkmen have only a bicycle, and some have to walk. There is often considerable difficulty in the early morning, before daylight, in the milking of cows. It is indeed a great hardship. And not only that; it makes farming much more expensive for the farmer, because he will have to keep men idle till noon before he can bring in the hay, and then pay them

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overtime for the hours in which he can use them; that is, in the ordinary time—the proper time, God's time—when the harvest may be gathered.
Another point affects children in the country villages—I am riot at all sure it is not just as bad in the towns. Children get up at an hour which is the Double Summer Time hour. They are obliged to get up, even if they do not go to school. The household is roused for early breakfast, and when it comes to night any one going round the villages or farms will find these children still up, at ten or eleven o'clock at night. They are not getting their proper sleep, and it is not the fault of the parents—it is not the fault of anybody, except the people who impose Double Summer Time. It is for that reason, and for the reason that it is an exceptional hardship generally and even more so the farther north you go, that I hope the Government will do all they can, not only to relieve farmers in the future but to make it quite clear that this scheme applies to this year only, and not to next year.
4.30 p.m.
THE DUKE OF NORFOLK: My Lords, I cannot allow this Bill to pass without making a few remarks on behalf of the farmers of this country and the agricultural industry in general. I must say that I, too, am a little sad that my successor at the Ministry of Agriculture and Fisheries is not here, for I was hoping that he would help me with one question, of which I admit I have not given notice. I do not propose to weary your Lordships with arguments that are already well known, as to why this Bill, and particularly Double Summer Time, is, to put it mildly, a great hardship upon, if not a menace to, the farmer. The remarks which I am going to make have, I know, the support of the members of the National Farmers' Union in my own home county of Sussex, and I am prepared to say that I think they will have the support of every farmer throughout the length and breadth of the land. It is true to say that no industry has a better record over the past few years than the farming industry. Farmers have met every call that has been made upon them. They met all calls even when they had Double Summer Time during the war. But because they met those calls it is not fair for people to say, as one sometimes hears them say: "Oh, yes, the farmers grumble and raise objections but they always manage to do the job. They managed it
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before with Double Summer Time so they can do it again." I think that is unfair but it is the sort of statement that has been made to me.
The fact is that the farmers have put their country before every other consideration, and that is the reason why they have always delivered the goods. At this moment we are six weeks to two months behind on the land, and it may well be that by April we shall be even more behind than that. We are suffering from a grave shortage of labour; I think that the figure that is usually accepted for this shortage in the country is 100,000 workers. If you add the time-lag to the shortage of labour, and then add to those two things Double Summer Time, it may well prove the last straw on the farmer's back. I would earnestly warn the Government against trying to overdo things. With regard to the labour shortage, I had proposed to ask a question, but I will try to make it into a suggestion. The Government seem firmly to have decided that on April 1 next the school leaving - age is to be raised to fifteen. Now the number of children in rural England who are between fourteen and fifteen, and are therefore affected by this change, is not known to me, but let us suppose that the figure is 50,000 (I think it is safe to say that it is considerably greater). If those children were allowed to work on the land for a year, and they worked half the time worked by adult labour, you would get the equivalent of 25,000 extra workers in a year, which is a quarter of the total number of workers of whom we are now supposed to be short in the industry. I wonder if the Government now, even at this stage, would consider not raising the school leaving age, as they propose, at any rate in the rural areas, until this period of crisis is over.
We are now told that industry is to work in double shifts. Possibly the figures and the hours have not yet been made public. But when this Bill was first introduced in another place we did not know about these double shifts; it is right, I think, to say that. The two shifts are going to alter many matters affecting people's lives—the hours of getting up, the hours of going to bed and the hours of feeding, for example. A large proportion of the community will be so affected, and I suggest that it may

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well prove that this Double Summer Time is not necessary at all. I would very much like to be assured that the Government have that consideration in their minds. I submit that, however you play with the hands of the clock, you cannot make your hours of daylight or your hours of darkness other than as God intended you to have them at the different seasons of the year, according to the sun's position, and it is only a matter of working out whether you get up earlier or go to bed later. I am not at all satisfied with the present food situation, and I, for one, shall not be surprised if in the not far distant future we find ourselves involved in a food crisis. I beg the Government ever to keep before them the claims of the farmer, and not for one moment longer than is necessary let this Double Summer Time affect a very loyal and very hard-working industry.
4.36 p.m.
LORD HARLECH: My Lords, I, too, am very sorry that on the occasion of the debate on this Bill which, I say quite frankly, is necessary and will be generally of great benefit to all town workers, the representative of the Ministry of Agriculture in your Lordships' House is not in his place. His is the Ministry which is most vitally affected by the passage of this Bill. I have one question which I particularly wish to put—I am speaking now as a dairy farmer in a dairying neighbourhood. We have had a great drive in our part of the world, which stretches from South Wales up to North Wales, to get the dairy herds clean, to get uniform accredited milk and, so far as possible, to get more and more T.T. herds. On my own property and among most of the farmers living around my property there has been notable progress in these matters. But the one great obstacle to this effort to ensure clean milk for hospitals and schools is milking in darkness. You are all right if you have electric light—the main runs through my property, and two of the biggest dairy farms in that area are connected with it. But for years I have been trying to get other farms, including my own, connected up.
Now the Electricity Bill has come along, and has, of course, held up all extensions. It is difficult enough in the winter to get really clean milk, but nothing like so difficult as in the summer. With
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the low temperatures, and the comparative absence of dust, it is much more easy to keep milk really clean, to get it cooled quickly and, in fact, to produce a pure article. But to get really clean milking conditions, clean animals, clean cow-houses, and so on, is almost hopeless if you have to work by the light of hurricane lamps. When the weather gets hot or warm, it simply cannot be done. I have known many cases in which "accredited" licences have been lost for that reason. It is Summer Time and Double Summer Time that make early morning milking such a hardship, owing to the darkness. We have to face conditions of darkness, in any case, for four months of the year—November, December, January and February—and at the present time we are just getting to the period when you can milk by daylight. This, of course, makes a tremendous difference. I know of dozens of farmers who are crying out for electricity, and they cannot get connected. I cannot help thinking that the Ministry of Agriculture might have done much more to get priority for the best class of dairy farmers, with the co-operation of the Ministry of Supply, the Ministry of Fuel and Power and all those other Ministries, in almost endless number, from whom you have to get a permit in order to get things done in that line. In view of the passing of this Bill the Minister of Agriculture ought to make a big fight on this matter, if he is really determined to have clean milk. I would advise that priority should be given to those who have T.T. accredited licences.
Of course, all the farmers will play their part, and will answer every new call, for they know that it is in the interests of the country. But this Double Summer Time is a desperate hardship on the hay harvesters, and it is especially hard on those who have to deliver milk by a particular hour to the big cities. From my part of the world the big containers go to Liverpool and Birmingham, and one cannot be later than the collecting lorries. Therefore, you are forcing people to get up to milk at your time—Government time. They will have to do this milking very early in the morning, and will then have a long wait before they can get to the hay. They then go back to finish the milking, and get the hay harvest in—a donkey's time after they have got up. I hope this Government as a whole, and the Ministry of Agriculture in particular,

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will press all the electricity undertakings from now on to connect up dairy farms which are on the list. At least give them a connection between their farm buildings, even if you do not put electricity into the farm houses. Electricity in the milking sheds would make a great difference and would mitigate the very serious difficulties which the passing of this Bill will have on so many aspects of the agricultural industry.
4.40 p.m.
LOAN AMMON: My Lords, I have no cause for complaint about the way in which this Bill has been debated. In fact, I am very grateful to the House for the kindly manner in which your Lordships have received it, particularly as I know that many who have spoken were labouring under a sense of real grievance. No one could be more alive to the hardships imposed upon the agricultural industry than my right honourable friend who introduced the Bill in another place. I remember remarking on hearing his speech that had there been a vote he would have voted against the Bill. The circumstances which necessitated this Bill are beyond our control, and certainly Dame Nature has not helped us in this respect. After all, we have to remember that this is not the first time that Summer Time has been introduced, as some noble Lords seemed rather to suggest in their speeches. We are, however, rather increasing the length of it, and adding to the burden so far as hours are concerned.
The main point behind the Bill is not the saving of fuel. That is negligible. It is to give us the opportunity to spread the burden of industry, and the remarks of the noble Lord, Lord Llewellin, about machinery will no doubt be taken notice of in the quarters concerned. I had no doubt that noble Lords would have a shot at the Electricity Nationalization Bill, but that is hardly germane to the Bill we are now debating, and I am not inclined to tread on anyone's coat in that respect. The noble Lord referred to the hardships of early morning rising. He will find no one more in agreement than myself that early rising is a greatly exaggerated virtue. I had to be at work at four o'clock in the morning when I was a youngster, and had to walk three miles to get there, so i would not have been pleased had this Bill been introduced then.
We are fully alive to all the hardships and all the difficulties but, when we have
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weighed up all these things with the crisis through which we are now passing, we realize that something like this has to be done. With regard to the proposals about education, and the difficulties that will arise, I have not the slightest doubt that my right honourable friend the Minister of Education will look at them. As he is well known for his practical common sense, I am sure he will be only too willing to do anything that can be done in that direction. It may be a matter for regret that my noble friend the Parliamentary: Secretary to the Ministry of Agriculture is not present, but I am afraid that, in all the circumstances, he could not do more than regret the hardship. In that, we are all on common ground. I thank the House for their sympathy and forbearance in the decision that we all have to face. In a time of common danger we have to pull together.
On Question, Bill read 2a; Committee negatived. Then, Standing Orders No. XXI and No.)(XXIX having been suspended, Bill read 3a, and passed.

COMPANIES BILL. [H.L.]
4.45 P.m.
House again in Committee (according to Order).
[The Earl of Drogheda in the Chair.]
Clause 92 [Amendment as to persons liable for certain offences]:
LORD CHORLEY LORD CHORLEY had moved, on the Fifth Day of the Committee stage, to insert at the end of Clause 92, the following subsections:
(2) In subsection (9) of Section one hundred and thirteen of the principal Act (which penalises directors for defaults in relation to the statutory meeting or the statutory report) for the words 'every director of the company who is guilty of or who knowingly and wilfully authorises or permits the default' there shall be substituted the words 'every director of the company who is guilty of the default or, in the case of default by the company, every officer of the company who is in default'.
(3) in subsection (3) of Section one hundred and forty-five of the principal Act (which, for default in giving the required particulars as to directors in trade catalogues, etc., penalises every director of the company and, in the case of a director being a corporation, also any officer of the corporation knowingly a party to the default)—

(a) for the words 'every director of the company' there shall be substituted the words 'every officer of the company who is in default'; and

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(b) for the words from 'and in the case of a director' to 'liable to a like penalty' there shall be substituted the words 'and for the purposes of this subsection, where a corporation is an officer of the company, any officer of the corporation shall be deemed to be an officer of the company';

and at I he end of paragraph (a) of subsection (4) of that section (which defines the expression 'director' to include persons in accordance with whose directions or instructions the directors are accustomed to act) there shall be added the words 'and the expression "officer" shall be construed accordingly'.
(4) The following provisions of the principal Act, that is to say—

(a) subsection (3) of Section forty (which penalises allotments of shares or debentures without registration of a statement in lieu of prospectus);

(b) subsection (2) of Section two hundred and eighty (which penalises default in stating. in invoices, etc., that the company is being wound up);

(c) subsection (2) of Section three hundred and eight (which penalises default in stating, in invoices, etc., that a receiver or manager has been appointed;

(d) Section three hundred and fifty-one (which penalises default in complying with the provisions of the principal Act regulating foreign companies carrying on business in Great Britain);

shall not penalise an officer, liquidator, receiver, manager or agent except for a contravention or default which he knowingly and wilfully authorised or permitted."
The noble Lord, resuming the discussion, on the proposed subsections, said: I would like to start by apologizing to your Lordships for not having done my homework properly, and for overlooking the fact that the first of the original subsections proposed in the Amendment had fallen as a consequence of the new clause on the subject of altering the Memorandum of Association. I am afraid I addressed some remark to your Lordships on the basis that it was still there. The noble Viscount, Lord Swinton, immediately came to my rescue, and I am very grateful to him. If I may say so, it was characteristic of the very helpful way in which he, and other noble Lords on the other side of the House, have acted in relation to this Bill during its Committee stage.
The object of this Amendment is to add some new persons to those already referred to in Clause 92. It substitutes the expression "every officer of the company who is in default" for a variety of similar phrases which are found in various sections of the Companies Act, and which
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are collected together in the Fourth Schedule of the Bill. The Amendment proposed makes a number of other alterations to secure a further unification and a tidying up, and it proposes to add three now subsections to Clause 92. The first of these deals with the position when there has been a default by the directors or by the company in relation to the statutory meeting or statutory report. The words which it proposes to insert are similar to those used in Section 238, subsection (6), of the Companies Act. The noble and learned Viscount, Lord Maugham, suggested that this Amendment was open to objection, and I imagine this was because subsection (9) of Section 113 of the principal Act, which it is to replace, uses the words: "knowingly and wilfully." They are now omitted in favour of the words "guilty of the default."
Under Section 365 (2) of the Companies Act there is a definition of the expression "officer who is in default," which states that it means "any director, manager, secretary or other officer of the company, who knowingly and wilfully authorizes or permits the default, refusal or contravention mentioned in the enactment." I should have thought that that was sufficient to make it clear that a director would not have been in default unless it were done "knowingly and wilfully." But, if there is any real doubt about that point, we shall be perfectly willing to insert the words "knowingly and wilfully" in order to make it quite clear that nobody will be penalized unless there is such knowledge and wilful conduct. In subsection (3) the proposal is to make liable to penalty where there is a default in relation to the requirements in connexion with trade catalogues. The Amendment, while it does add certain cases to the penal side, also takes away others. For example, it would let off the director who is not responsible for the default, and it would let off the corporation which is a director, while, on the other hand, it would penalize officers who were responsible for the default other than directors, and, as regards officers of corporations which are directors, it would substitute the phrase "knowingly and wilfully authorized or permitted" for the words "knowingly a party to." Finally it would penalize officers of, for example, a corporation which is a secretary of the company.
The proposed subsection (4), which consists of four paragraphs, deals with a number of different types of cases. In paragraph (a) it inserts the words "and wilfully" after the word "knowingly" in Section 40 (3) which penalizes the company and every director of the company who knowingly authorizes or permits the contravention of the prohibition on allotment of shares or debentures without registration of a statement in lieu of prospectus. The next paragraph, paragraph (b) of subsection 4, secures beyond doubt that the words "who knowingly and wilfully authorizes or permits the default" under Section 280 (2) of the Act apply to all the persons who are made liable by the subsection to penalty for default in stating in invoices and other documents that the company is being wound up.
Paragraph (c) makes a similar Amendment in Section 308 (2) of the Act, which lays down a penalty for the default in stating in invoices and other documents that a receiver or manager has been appointed, and the next paragraph (d), amends Section 351 of the Act; that is a section which penalizes default in complying with the provisions regarding foreign companies carrying on business in Great Britain. At present if the company fails to comply every officer or agent of the company is liable to a fine, and the object of the Amendment is to secure that he shall not be so liable unless he has acted knowingly and wilfully. Those are the main points involved in this Amendment, and I beg to move.
Amendment moved—
Page 85, line 46, at end insert the said subsections.—(Lord Chorley.)
VISCOUNT MAUGHAM: I should like to explain quite shortly why I was prepared to make a long speech, and also, still more shortly, why I do not think it is necessary to do so, having regard to the offer which has been most frankly made by the noble Lord. My reasons for objecting to the form of the Amendment to Clause 92 of the Bill were that I was very much afraid that, with that Amendment on the Statute Book, the director who was unintentionally guilty of not complying with Section 113 of the principal Act might be held to be liable to a fine, and for this reason. In the original clause the words "every director of a company who is guilty of, or who knowingly and wilfully authorizes or permits the default" were sufficient, as I thought, having regard to their close
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collocation, to show that innocent guilt was not in question at all. The phrase together meant, as I thought, "who is guilty in the sense of having a mens rea or who knowingly and wilfully authorizes or permits the default." To that I should have no objection at all. That is what I believed they meant, but, having regard to the alteration, I was afraid that the word "guilt" stood alone and thus a perfectly innocent director who might be said not to have complied with some provision of Section 113 would be liable.
Throughout the Act, where the words "knowingly and wilfully" or similar words are intended to be applied to the liability of a director or other officer, they are inserted. I have taken the trouble to go through the Act and I think, without being quite sure, that I have spotted them all. I have found nineteen cases where, after this Bill is on the Statute Book the words "knowingly and wilfully" will be applied to various defaults of the directors or other officers of the company, and I was afraid that in this particular case their absence in connexion with the word "guilty" as applied to the director might be held by a Bench of Magistrates or by a Judge to mean that innocence was no excuse where the words of the section were not strictly carried out. Section "13 I need not deal with, except to say this (which struck -me as one of the things which a director might well be guilty of without knowing it) that the Statutory Report is a thing which must be forwarded by the directors—that means, of course, the directors or their agent; they have not got to post the thing themselves—and under subsection (3) it has to be certified by two of the directors.
It occurred to me that if I was a director of a company—which I am not, and never have been—and if there were ten directors, and two of them certified -the report, it is conceivably unlikely that the other directors would go through the whole thing again to see that it was correct. If two directors, in whom they had, complete confidence, had certified it, they would not go any further, and yet they would not be complying in strictness with the obligation to send to every shareholder a report containing -certain provisions. That is only an example. Rut, as it is, as my noble friend, the Lord in charge of the Bill, is willing to resolve the doubts which I believed would be entertained on: hat matter by anybody who knows how

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narrow distinctions in a matter of this kind are seized upon when you come into a Court of law, I am perfectly content. I should add that the other subsections in the Amendment proposed, are matters which I have carefully considered and I am quite satisfied they are right and beneficial.
VISCOUNT ELIBANK: May I ask, before the noble Lord replies, whether this will apply in the case of the accounts? There was a question, when this originally arose, as to whether a director was guilty of an offence if he did not exactly understand the accounts. The question arose as to whether he was in default "knowingly or willingly."
VISCOUNT MAUGHAM: It arose on that, but it has nothing to do with the. present Amendment, which is confined to Section 113 of the original Act.
THE LORD CHANCELLOR: I do not think that point really bears on this Amendment.
VISCOUNT MAUGHAM: Only indirectly, of course.
THE LORD CHANCELLOR: What I propose to do is to put in on Report stage the words "knowingly or wilfully," if the Amendment is carried now.
On Question, Amendment agreed to.
Clause 92, as amended, agreed to.
LORD CHORLEY LORD CHORLEY moved, after Clause 92, to insert the following new clause:
Procedure on application for confirmation of reduction of share capital.
So much of subsection (I) of section fifty-six of the principal Act (which relates to confirmation by the court of a reduction of share capital) as requires proceedings thereunder to be by petition shall cease to have effect.
The noble Lord said: The proposal here is to add a new clause after Clause 92, in order to deal with a fairly obvious situation. The effect of the clause is that the procedure on application to the Court for confirmation of a reduction of share capital can be made in any way provided by Rules of Court. As the Act at present stands, it requires that an application of this kind should be made by Petition. It is considered that it might very well be much more satisfactory to have the application made in some other way, as, for example, by means of an Originating
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Summons, and it is obviously much better that a matter of this kind should be left to be dealt with by Rules of Court. I am sure your Lordships will agree that that is a sensible proposal. I beg to move.
Amendment moved—
After Clause 92, insert the said new clause.—(Lord Chorley.)
VISCOUNT MAUGHAM: I only want to mention this to the noble and learned Viscount. I think he will agree that such proceedings as are the subject of the present Amendment ought to be in public, as they are very important matters. An Originating Summons is almost always dealt with in Chambers. Petitions have to be heard in open Court, and I am well acquainted with the fact that that was the ground for saying that the proceedings should be by Petition. But an Originating Summons can be adjourned into Court. I presume it is intended that that shall be dealt with by Rules of Court. I mention this, because I feel very strongly that it ought not to be a hole-and-corner matter at all, but should be known to the world.
LORD CHORLEY: I am obliged to the noble and learned Viscount for pointing out a matter that is obviously of some importance. In drafting the rules the noble and learned Viscount, the Lord Chancellor, will certainly remember what he has said.
On Question, Amendment agreed to. Clauses 93 to 95 agreed to.
Clause 96 [Prospectus of foreign company]:
LORD CHORLEY: The next Amendment is purely consequential on the Amendment to Clause 52 which your Lordships have already accepted. I beg to move.
Amendment moved—
Page 87, line 43, leave out ("on the face of") and insert ("in").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The next Amendment is a drafting Amendment. I beg to move.
Amendment moved—
Page 87, line 49, at end insert ("so far as applicable").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY LORD CHORLEY moved, after subsection (2), to insert the following subsection:
"(3) The right under subsection (1) of Section three hundred and fourteen of the principal Act of inspecting, or of requiring copies or extracts of, documents kept by the registrar of companies, shall in relation to documents registered by virtue of paragraph (b) of the last foregoing subsection be exercisable only—

(a) during the fourteen days beginning with the data of the prospectus; or

(b) with the permission of the Board of Trade."

The noble Lord said: This is a consequential Amendment. Your Lordships have already dealt with this matter in respect of companies established in this country, and the proposal is to bring the obligations on foreign companies into line, so that these contracts will not be kept open indefinitely but will be open for the period specified, or during such time as the Board of Trade may direct. I beg to move.
Amendment moved—
Page 88, line 26, at end, insert the said subsection.—(Lord Charley.)
On Question, Amendment agreed to. Clause 96, as amended, agreed to.
Clause 97:
Power of foreign companies to hold land.
97. Section three hundred and forty-five of tae principal Act (which confers on companies incorporated in a British possession power to hold lands in the United Kingdom) shall apply also to all companies incorporated outside the United Kingdom elsewhere than in a British possession, being companies to which Part XI of the principal Act applies.
THE MARQUESS OF READING THE MARQUESS OF READING moved to leave out Clause 97. The noble Marquess said: I am a little puzzled by the presence of this clause in the Bill. Under the law as it stands, a company incorporated in a British possession is given power to hold lands in the United Kingdom, but that power is confined to companies incorporated in a British possession. Now comes this clause, which suddenly throws the door wide open to companies wherever they may be incorporated, and puts them on the same footing as companies incorporated in a British possession. It is quite true that up to now foreign companies have no doubt been able to get land by creating subsidiary companies in this country and operating through them, but those companies, being British companies, always had this feature to be considered:
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that they might be investigated under the existing powers of the Board of Trade and under the still stronger powers which are being conferred upon the Board of Trade in the present Bill. This clause is one of the few which does not derive in any way from the Cohen Report, and, as I have said, I am somewhat puzzled at its presence in the Bill. I do not know to what purpose it is directed, or what existing evil it is supposed to remedy. There may be a good explanation, and in that case I shall, of course, reconsider the action I have taken in putting down the Amendment. I beg to move.
Amendment moved—
Page 89, line =;, leave out Clause l7.—(The Marquess of Reading.)
VISCOUNT MAUGHAM: May I add one word to what my noble friend has said? I am not at all confident on this matter, but my general impression is that it would be rather undesirable, without any safeguards at all, that some company incorporated outside the United Kingdom, formed for some purpose which was not very reputable, acquiring assets of a very questionable character, should be incorporated here. It might be a company which is used for a very improper purpose. What I would suggest to the noble and learned Viscount, the Lord Chancellor, is that Clause 97 should be comined to cases where the Board of Trade gave consent to the power to hold land—if, for instance, the Board looked into it and said that the people seemed to be respectable and gave the necessary written authority, they would then be entitled to hold land. But I can well imagine some companies which certainly ought not to be allowed to own a square inch of land in this country.
THE LORD CHANCELLOR: The noble Marquess who moved the Amendment is, of course, quite right in having spotted that this is not in the Cohen Report, but, notwithstanding that, I think there is a very real need for it, and I will tell your Lordships why. It will be noticed that Section 345 of the Companies Act does not assert that any company cannot hold land; it merely asserts the particular classes of company which may. The barrier which prevents any company other than those prescribed in Section 345 from holding land is the law of mortmain. It is a necessity to get a licence in mortmain. A foreign company can get such

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a licence, but it is a troublesome and rather vexatious procedure, involving the payment of a fee. The reason why we want this clause is that we wish our companies trading in foreign countries to have facilities given to them. What we are finding to-day, when we come to consider commercial treaties and the like, is that foreign countries are saying to our people, "We are not going to allow your companies to trade here because you do not allow our companies to trade in your country." That is true, because they can only do it sub modo if they get a licence in mortmain. Though that can be done, it is a troublesome procedure.
As has been rightly said, there is no really effective provision against a foreign company holding land over here, because the difficulty can be overcome very easily, either by forming a subsidiary or by having the land held in the name of an individual, to which case Section 345 does not apply. At the present moment, therefore, we have this law of mortmain which can very easily be overcome, but the fact that a foreign country cannot hold land over here except under those conditions is being used as an argument against us when our companies are trying to negotiate in foreign countries. Consequently we have come to the conclusion that on balance we shall gain very much more than we shall lose by allowing those foreign companies to do directly what they can do indirectly.
VISCOUNT SWINTON: That is a very strong argument and one which carries conviction with me. The only thing about which I am not quite clear is the form of words. This clause, which likens foreign companies to companies registered in some parts of the British Empire, would give power to any foreign country anywhere to own land here. The reason—I think it is a sound one—which is advanced for that is that in negotiating commercial treaties the Board of Trade have found that they are being held up by a particular country saying, "I will not let you in unless you will let me in." Would it not be wiser to have this in the form of an enabling power, so that the Board of Trade could by certificate, by Order, or by some appropriate instrument, apply this to any other country? As a very old negotiator of commercial treaties, I do not much like giving away the trump cards in my hand before I begin to play the hand.
THE LORD CHANCELLOR: I will certainly look at that. If we do that, we have to remember that we shall have to do the same thing in foreign countries. We shall have to go to their Board of Trade, or whatever is the equivalent department, to get a licence, and that may not be easy. I will certainly look at the matter as requested by the noble Viscount, who has great experience in this branch of the law, but I am a little inclined to doubt whether, if we do that, our companies trading abroad will get the benefit which they would derive from this permission.
VISCOUNT SWINTON: Apparently I did not put my case quite clearly. I would not suggest that there should be power vested in the Board of Trade to license a particular foreign company—leaving a discretion as to which companies were licensed. I quite agree that the Board of Trade would give a licence every time, and quite properly give it every time, if that was the general understanding, and that we might not do quite so well in certain countries. What I mean is that there shall be power—by Order in Council, if that is the right way—to apply this to a particular country. That would be part of the treaty negotiations and there would then be two concurrent Orders in Council (I use that term for convenience, although I do not know what would be the appropriate instrument in any of the foreign countries) which would come into force on an identical date; and as from that date these would be in each country an absolute right for a foreign company to own land.
THE LORD CHANCELLOR: I quite follow the point. There is obviously force in the suggestion, and it shall be looked into.
VISCOUNT MAUGHAM: Before we finally depart from this, may I say that s it stands I am not quite sure what it means? The phrase "companies incorporated in a British possession" does not mean companies incorporated with any regard to our rules as to companies. A company incorporated in France, of course, is completely different, as I happen to know, from a company incorporated in this country, and that is so in certain other countries on the Continent. Mere incorporation according to foreign systems of law may have very different results from incorporation according to

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the English system. I confess that I am not in a position now to give your Lordships a lecture on French companies, though once I could have done so. I only want to see that the matter is looked into.
THE LORD CHANCELLOR: The words "company incorporated in a British possession" extend to all sorts of British possessions which have very different company laws from our own. Those are the words of Section 345 of the existing Act. I am going to look into this point generally, and I will at the same time look into that matter.
VISCOUNT ELIBANK: The noble and learned Viscount, Lord Maugham, in his first speech on this Amendment, raised the question of undesirable companies coming here. How can that be prevented if wq merely have a general omnibus arrangement that foreign companies can come here and buy land? I do not see how you are going to prevent that. You will get undesirable companies coming in. I do not want to bring up the question of, for instance, the Nazis in Germany, but we know that there are many still there and we also know that they have companies in various other countries, such as Switzerland, the Argentine, and so on. How are we to prevent those people from coming here and making further use of us, beyond the use which they arc making to-day? If we have a treaty with Germany, we say, "We shall let your companies come in here and buy land and operate freely, because our companies are doing the same." At the present moment, as I understand it, the Foreign Office have just arranged for British traders to go into Germany and trade. That is another question; that is merely a question of trading. The formation of companies raises an entirely different issue. I hope that the noble and learned Viscount will look into that point.
THE LORD CHANCELLOR: We cannot guarantee that undesirable companies do not hold land; we cannot guarantee that today. Even some British companies may be undesirable, and with regard to foreign companies, as I pointed out, they can get round the existing mortmain requirements in the simplest possible way, either by having an individual buy the land and hold it as their trustee, or by forming subsidiaries here. It is just this technical trouble about getting a licence in mortmain, which has no equivalent in foreign countries, which is handicapping us in our foreign relations.
VISCOUNT MAUGHAM: You have to remember, with regard to the existing Act, that "company" is defined as meaning "a company formed and registered under this Act or an existing company." So that the companies registered in British Possessions abroad have all to be registered, as I understand it, under this Act unless they were existing companies.
THE MARQUESS OF READING: I have no regrets for having moved this Amendment because it has produced a certain number of interesting and not unimportant points. I quite accept the cogency of the explanation which the noble and learned Viscount, the Lord Chancellor, has given of the main purposes of the Act and as he is going to consider before the Report Stage some of the matters which have been raised, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn. Clause 97 agreed to.
Clauses 98 to 100 agreed to.
Clause 101 [Bankruptcy]:
5.20 p.m.
LORD CHORLEY: On a previous occasion when we were discussing this matter your Lordships accepted a new clause which was inserted after Clause 84, the object of which was to give power to the Court to set aside executions in favour of creditors in certain circumstances. On moving that Amendment I pointed out that it would involve an Amendment to the Bankruptcy Act, in order to bring the two matters into line. This Amendment is the one which was consequential for the Bankruptcy Act. I beg to move.
Amendment moved—
Page 9o, line 19, at end insert:—
("(2) The rights conferred by sections forty and forty-one of the Bankruptcy Act, 1914, on the official receiver or trustee in bankruptcy in relation to executions against the goods or other property of the debtor and attachments of debts due to the debtor may be set aside by the court in favour of the creditor to such extent and subject to such terms as the court may think fit.")—(Lord Charley.)
On Question, Amendment agreed to
Clause 101, as amended, agreed to.
Clause 102 agreed to.
Clause 103:
Prevention of fraud (unit trusts).
103.—(I) In the Schedule to the Prevention of Fraud (Investments) Act, 1939 (which relates to the constitution of an authorised unit trust scheme for the purposes of that Act)—

(a) for any reference to the sale price of units there shall be substituted a reference to the manager's prices for units on a sale and a purchase respectively; and

(b) in paragraph 2 (which relates among other things to securing that the property will be vested in the trustee before unit certificates are issued) after the words "will be vested in him" there shall be inserted the words or, subject to any prescribed conditions, in a nominee for him approved by the Board of Trade".

VISCOUNT BUCKMASTER VISCOUNT BUCKMASTER moved, in subsection (i) (a), to leave out "for any" and insert: "in paragraph I for the." The noble Viscount said: It may be convenient if, with your Lordships' permission, I speak to the first two Amendments which stand in my name. The purpose of these two Amendments is to secure that the holder of units in a unit trust shall be able to dispose of these on an equitable basis. The two Amendments seek to achieve this purpose, first by stipulating that in paragraph 1 of the Schedule to the Prevention of Fraud (Investments) Act there should be a provision for determining the bid price as well as the offered price of the units. At present there is no provision for fixing any price at which units are to be repurchased from their holders. Nor can there, I feel, be any objection to this proposal, because the price which the unit is worth is a matter of simple and accurate calculation.
The second Amendment seeks to oblige the management to re-purchase units from unit holders at a price which has been correctly determined. Your Lordships appreciate that a unit trust represents a fractional holding in a large number of different securities. It appeals primarily to small people. There are times when those small people want their money, and they want it quickly. It is a hard thing for them if, when the price of the units can readily be ascertained, they should be denied the free market which they would enjoy if they had invested in any other way. I beg to move.
Amendment moved—
Page 91, line 11, leave out ("for any")
and insert ("in paragraph I for the").—(Viscount Buckmaster.)
LORD CHORLEY: We are in sympathy with the Amendment moved by the noble Viscount, but it has been suggested that if the Amendment were accepted it would place the managers under the onerous duty of buying these units in cases where it might not be altogether to the advantage of the trust to be under such an obligation. No doubt the difficulty can be overcome by a suitable alteration in the deed of trust, and it is thought that there are probably powers under the Prevention of Fraud (Investments) Act, 1939, to secure that there should be such alterations. However, the matter will be looked into before the Report stage. We are prepared to accept the Amendment now, but it will be necessary to make sure that these powers exist under the Act of 1939. On the basis that the noble Viscount understands that we may have to come back to the matter on the Report stage, we will accept the Amendment.
On Question, Amendment agreed to.
Amendment moved—
Page 91, line 13, at end insert ("at the end of that paragraph there shall be inserted the words 'and for entitling the holder of any units to require the manager to purchase them at a price calculated accordingly'; and").—(Viscount Buckmaster.)
On Question, Amendment agreed to.
VISCOUNT BUCKMASTER VISCOUNT BUCKMASTER had given notice that he would move, at the end of subsection (I) (b), to insert:
"and
(c) in paragraph 3 (which provides for securing that certain documents shall not be issued by or on behalf of the manager if disapproved by the trustee) for the words 'For securing that any advertisement, circular or other document containing any statement with respect to the sale price of units or the yield therefrom, or containing any invitation to buy units shall not' there shall be substituted the words 'For securing that any advertisement, circular, or other document containing any statement with respect to the units, or containing any invitation to buy units, shall rot be issued by or on behalf of the manager unless it specifies the yield therefrom, and that any such advertisement, circular or other document shall also not'".
The noble Viscount said: This is a perfectly simple Amendment. Its purpose is to ensure that the buyer of units shall know the correct yield, but, like many simple matters, there are difficulties in its achievement. It has been brought to my notice that as worded the Amendment is somewhat wide in its terms. It

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refers to any "other document containing any statement"; that is to say, if the Amendment, as now worded, were carried, you would have to put the yield on any document which discusses unit trusts at all. Therefore, with the permission of your Lordships, I would like to add certain words which I have endeavoured to circulate, although under the difficult conditions in which we exist it is not easy to achieve everything one wishes. I would like, therefore, for the convenience of your Lordships, to state what I propose: that is to say, to insert in line ro of the Amendment instead of the words:
"with respect to the units"
the words:
"with respect to the sale price of units or the payments or other benefits received or likely to be received by holders of units."
The clause would then read as follows:
"'For securing that any advertisement, circular or other document containing any statements with respect to the sale price of units or the payments or other benefits received or likely to be received by holders of units, or containing any invitation to buy ….'"
The yield on the unit is, of course, a vital thing to the person who buys it, and Paragraph r of the Schedule to the Prevention of Fraud (Investments) Act, provides that the yield shall be correctly calculated. This Amendment seeks, through the clause of this Bill, to amend Paragraph 3 of the Schedule to the Prevention of Fraud (Investments) Act so that documents as specified in the present Amendment shall show the yield as correctly calculated. This is a matter I think of real importance, because while I do not suggest any evil intent, it is perfectly clear that items of capital can be included as income. It is perfectly possible, and it is a thing which is done, to set out the price of the unit at which it can be bought and to set against it money paid out during the past twelve months or so, leaving the buyer to infer what is in fact an incorrect yield. I feel that those associated with unit trusts can only wish that the public should not be misled, and I hope they will support this Amendment.
Amendment moved—
Page 91, line 20, at end insert: "and
(c) in paragraph 3 (which provides for securing that certain documents shall not
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be issued by or on behalf of the manager if disapproved by the trustee) for the words 'For securing that any advertisement, circular or other document containing any statement with respect to the sale price of units or the yield therefrom, or containing any invitation to buy units shall not' there shall be substituted the words' For securing that any advertisement, circular or other document containing any statements with respect to the sale price of units or the payments or other benefits received or likely to be received by holders of units, or containing any invitation to buy units, shall not be issued by or on behalf of the manager unless it specifies the yield therefrom, and that any such advertisement, circular or other document shall also not: '".—(Viscount Buckmaster.)
5.32 p.m.
LORD RENNELL: May I say how much I feel myself in support of the noble Viscount, Lord Buckmaster, on this Amendment? The difficulties of calculating yields are notorious to all those who have tried it, and there are various legitimate differences of opinion about what a yield is or how a yield should be calculated. The object which the noble Viscount seeks to achieve is that obvious capital items should not be included, either by inference or directly, in the probable yield of unit trusts. That is a principle to which everyone can subscribe without any qualms of conscience even on practical issues. It really resolves itself into this: that where the legitimate yield of a unit trust is stated it should be so stated as to distinguish any item which was received in cash and was a non-recurrent item or an item on capital account. Otherwise there is quite frankly a suggestio falsi in regard to a return on a unit trust investment. It is the noble Viscount's object to try and remove any possibility of suggestio falsi, even if unwitting or fortuitous, and I do not think anyone in your Lordships' House could in any way be against it. Whether the actual wording is appropriate or not I could not say, and if the noble Lord opposite would say he would at any rate look into the matter, to achieve the object stated by the noble Viscount, Lord Buck-master, I feel that it would be a great advance on the present practice in many cases.
LORD HAWKE: I should like to associate myself with what the noble Lord, Lord Rennell, has said, because it is most important that in this matter of investments, especially in the case of the small investor, there should be no

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suggestio falsi as regards the yield. I have myself to confess ignorance as to whether the wording proposed meets the point, but I hope the Government will be able to deal with it before Report stage.
LORD PIERCY: The point raised by the two previous speakers is thoroughly laudable and in so far as this Amendment aims at achieving their object there is nothing to be said against it. The only think I would beg noble Lords to do is to dismiss from their minds, if they can, any innuendo that there is in the practice of unit trust management, as existing at the moment, extensive garbling of yields or setting them out falsely.
VISCOUNT BUCKMASTER: They can state against the price of the unit the amount paid in the past year. They are not allowed to state a false yield.
LORD PIERCY: There is an innuendo that by various methods the regulations of the Board of Trade with regard to the calculation of yield can be evaded and a suggestion conveyed amounting to suggestio falsi, which is, I feel, unjust as regard the actual practice of unit trust managers. As regards the wording, I would say that it is a very tricky piece of drafting to get this thing down in terms which do not involve some absurd consequences. Although I know that the new words were very carefully looked at, I rather doubt whether they do at this moment avoid absurd consequences. For instance there might be an advertisement to-morrow saying that holders of bearer units in trust XYZ are entitled to a distribution of so many pence and decimal points per unit which can be obtained if a surrender of coupons is made to the managers through the prescribed channels. It would be absurd to add to an advertisement of that sort any calculation of yield from the trust. I do not believe the words as they stand avoid that difficulty. In dealing with a detailed matter of this kind it is difficult to set down the matter in general terms appropriate to an Act and avoid that sort of consequence. I would myself be satisfied if the officials who are dealing with this subject would consult the principal unit trust interests on the wording, of this Amendment, to make certain that any untoward consequences in practice have been avoided.
LORD CHORLEY: I think it is obvious that if capital assets are brought into distribution one of the main objects of requiring unit trusts to state the yield will have been defeated. Therefore we accept in principle the Amendment which has been moved by the noble Viscount, Lord Buckmaster. The noble Lord, Lord Piercy, has however raised a question as to whether the actual form of words used is the right one. It does appear to us that probably this form of words is a good one, but, as with the last Amendment moved by the noble Viscount, I shall accept this Amendment on the basis that if after we have looked at it again rather more carefully during the longer period at our disposal, we find some slight change necessary in the wording, then the matter will against be brought before your Lordships' House on the Report stage. On this basis I am prepared to accept the Amendment.
VISCOUNT BUCKMASTER: I would like to thank the noble Lord for his patience and courtesy in dealing with these Amendments.
Amendment moved—
Page 91, line 20, at end, insert the said paragraph—(Viscount Buckmaster.)
On Question, Amendment agreed to.
Clause 103, as amended, agreed to.
Clauses 104 and 105 agreed to.
Clause 106:
Power to vary certain provisions by regulation or order.
106.—(1) The Board of Trade shall have power by regulation to alter or add to the First Schedule to this Act, and any reference in this Act to the said First Schedule shall be construed as a reference to that Schedule with any alterations or additions made by regulations for the time being in force under this subsection.
(2) The power of the Board of Trade under section three hundred and seventy-nine of the principal Act to alter or add to the provisions of the Schedules to that Act mentioned in that section shall be exercisable by regulations instead of by publishing the provisions as altered in the London Gazette, and the power to alter the table of fees in the Tenth Schedule to the principal Act shall include power to alter the section of this Act amending the said Tenth Schedule.
5.39 P.m.
LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved, after subsection (I) to insert:
(2) The Board of Trade shall not have power to alter or to acid to the First Schedule

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to this Act so as to impose upon a banking or discount company an obligation to show, disclose or publish in its balance sheet or profit and loss account or any consolidated balance sheet or consolidated profit and loss account or in a note or statement or report annexed thereto or in any other manner facts, figures, or information in excess of that required of such a company under the First Schedule to this Act as hereby enacted.
(3) For the purposes of this section the expression "banking or discount company" means any company which satisfies the Board of Trade that it ought to be treated as a banking or discount company for the purposes of this section."
The noble Lord said: This Amendment is one of considerable importance to people who carry on the business of banking in the City of London, and elsewhere. The Cohen Report devotes paragraph 101 to what they call undisclosed reserves and the Report stresses the importance of full information, a point with which, of course, your Lordships are all agreed and which it is one of the main objects of the Bill now before the House to secure. The Cohen Committee say that there are certain classes of companies which should have an exception made for them in this matter of the disclosure of the fullest information. The relevant passage in the Committee's Report states
"There are, however, three classes of companies where other considerations"—
that is, considerations militating against ale fullest information—
"must be taken into account, namely banking companies, discount companies and assurance companies …. In the case of banking and assurance companies the interests of the depositors and the policy-holders respectively outweigh the interests of the shareholders, and in the case of all three classes o companies considerations affecting the public interest must be taken into account."
Then the Committee go on to make very specific recommendations. I will read one more sentence from the end of the paragraph:
"We consider, therefore, that banking and discount companies should be absolved from the obligation of showing separately reserves anti provisions and transfers to and from such account."
I have drafted this Amendment as follows. I am going to ask your Lordships to allow me to refer to my two Amendments together, because the first one is mere drafting. The real effect of the Amendment is contained in these words:
"The Board of Trade shall not have power to alter or to add to the First Schedule of this
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Act so as to impose upon a banking or miscount company an obligation to show, disclose, or publish in its balance sheet, or profit and loss account … figures or information in excess of that required of such a company under the First Schedule to this Act."
The point is, of course, that it is in the First Schedule to the Act that permission is given, the saving is given, for banking and discount companies in the matter of undisclosed reserves. The recommendation of the Cohen Committee is perfectly specific. I rather hope that this Amendment will find favour in the eyes of the noble and learned Viscount, the Lord Chancellor. I know how much importance he attaches to the recommendations of the Cohen Committee, and I think that I may fairly say that the effect of this Amendment will be to come nearer to giving effect to the precise wishes of the Cohen Committee than does the Bill as at present.
The flaw in the Bill as it now stands, from our point: of view, is that: the Schedule in which this saving is given is entirely subject to the discretion of the President of the Board of Trade. In Clause ro6 it is laid down that the president of the Board of Trade can alter the Schedule. What I am seeking to do is to get this provision about undisclosed reserves enshrined in the Bill. The essence of an undisclosed reserve is that it should be undisclosed, and the less we talk about it the better from every point of view. The recommendation of the Committee is absolute. There is no suggestion that this can ever be altered, and however grateful I might be for an assurance that a President of the Board of Trade did not intend to alter it, and however grateful I might be for the passing of another Amendment which is on the Paper and which goes part of the way towards meeting me, I cannot see that there is any objection to putting this very important provision in the Bill. For that reason I beg to move.
Amendment moved:
Page 93, line 27, at end insert the said subsections.—(Lord Balfour of Burleigh.)
THE LORD CHANCELLOR: I should like to he able to feel that the noble Lord, Lord Balfour of Burleigh, and I had met half-way and embraced; but, at any rate, we are very nearly half-way. I confess that it strikes me, though I do not pretend to be a business man at all, as almost inconceivable that anything other than grave public harm would be clone by disclosure

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of reserves of banks. I cannot help thinking that any such disclosure would shake the fabric of our security. I think the noble Lord can say that he has an absolute recommendation in the Cohen Committee's Report, but although that Committee's Report brackets together banking companies, discount companies, and assurance companies, I have no doubt that there are distinctions between the three. I have no doubt that a concession asked for by one would also be pressed for by another. The length to which I have authority to go is to say this. Although we must have power, as we think, to alter the requirements of the Schedule, lest otherwise we find those requirements becoming too rigid, we consider that if we are going to make them more onerous, we ought to come to Parliament and get an affirmative Resolution to entitle us to do so.
The Amendment which I am moving shortly is to that effect. We shall be able to make the requirements less onerous: that is to say, to get out of difficulties in relation to these sorts of companies, by regulation, which will be subject to negative approval—any one may pray against it if he likes—but if we want to make requirements more onerous we must come to Parliament and get an affirmative Resolution authorizing us to do so. That is as far as I have been able to get. I need not tell the noble Lord, for I think he knows, that I have done my best to meet his wishes, as I always do. No doubt what he has said will be considered by those instructing me. Obeying instructions, as I always do, I can only tell the noble Lord that I cannot go further than the extent which I have indicated, and I hope that going to that extent will, at any rate, remove a great part of his fear.
LORD RENNELL: I may be anticipating matters a little, but I take my cue from the noble and learned Viscount, the Lord Chancellor, when he referred to the Amendment which he is moving to Clause 107, and venture to mention that there is an Amendment immediately following the one we are now discussing, in the names of Viscount Swinton, the Marquess of Reading and myself. I do not intend to speak to that Amendment at all in view of what I am going to say now. Frankly, I would have preferred the Amendment proposed by the noble Lord, Lord Balfour of Burleigh. At the time when the Amendment
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standing in the names of Viscount Swinton, the Marquess of Reading and myself, was put down, the Amendment of the noble Lord, Lord Balfour of Burleigh, had not been submitted. His Amendment was put down a little later, by which time we had already had a number of discussions on the exact bearing of Clause io6, as it now stands, on the subject of the Schedule, and had decided upon our Amendment. I, personally, would have liked to see the Cohen Committee's recommendations adopted once and for all. I am aware that the Schedule is to some extent an experimental document which may require amending. Of course the Amendment which the noble and learned Viscount, the Lord Chancellor, is to propose goes a very long way to meet our difficulties and, I should think, to meet the difficulties of the noble Lord, Lord Balfour of Burleigh, but, as I say, if Lord Balfour's Amendment had been put down earlier I would have liked to associate myself with it rather than with the one that stands in the names of my two noble friends and myself.
LORD BALFOUR OF BURLEIGH: I am very sorry that my Amendment was not down early enough to get the full support of the noble Lord, Lord Rennell. I shall know better another time. I am grateful to the noble and learned Viscount, the Lord Chancellor, for the very sympathetic answer which he has given, but with regard to one point I am afraid I must make a reply. I think that in the course of his reply the noble and learned Viscount said that if a concession were given to a company of one type, it must be given to companies of other types. I think he must have had in mind—and perhaps he mentioned them specifically—assurance companies. In answer to that, I must make the point that the relationship between a bank and a depositor, and that between an assurance company and a policy-holder, is a very different thing. In the case of a bank depositor, if he begins to have doubts—say he has a doubt as to whether he is likely to get his money—he can withdraw his money the next day. But if a policyholder has doubts about the assurance company's stability he has to think a great many times before he stops paying his premium. Honestly, I do not think that the analogy between a bank depositor and an assurance policy-holder should cause the noble and learned Viscount a moment's hesitation. But he

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has said the subject may be further pursued between now and the Report stage, and in view of that I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Loan SALTOUN Loan SALTOUN moved to leave out subsections (1) and (2). The noble Lord said: In view of what the noble and learned Viscount has just said, I have not very much hope of carrying my full Amendment. Although I shall riot say as much as I originally intended to say, it seems to me there is some real reason for the full extent of the Amendment I am moving. I honestly believe that if this Statute is going to take that very great place in our legislation which at the beginning of our proceedings the noble and learned Viscount said he hoped: it would, we ought to be sure before we pass these Schedules into law. We ought to take a lot of time over them. In the first place, up in Scotland an auditor does not get such fees as they do in the south, but I am prepared to say that no fee he gets for his first year's work anywhere ever pays the auditor at all. It is a dead loss because he has to consider the nature of the business, and lie has to plan his audit to answer the various questions he will have to answer in passing the account. At the present time, if any question arises, the auditor simply reaches for his "Bible"—the Companies Act—and settles the question not only from the Companies Act, but also from his own knowledge of the meaning of the Companies Act as it has been interpreted.
These Schedules impose a very much more onerous duty on auditors. I may have something more to say about that later, but the point I am now making is that when an auditor has planned his audit of the company's affairs according to the Act he has done a very important and skilful piece of professional work. On the passing of this Bill he will have to find out what is actually meant by all the clauses. When that has been done, he will have a code of practice on which he will he able to make his audit. If that is liable to be changed at any moment will make things very difficult for the auditor. While the intention of the noble and learned Viscount on Clause 107 goes a long way to meet the point, I would like to emphasize that whatever changes are made should be made with
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the very greatest reluctance. If changes are easily made, it will make the actual execution of the Government's aim in this Bill very much more difficult. I beg to move.
Amendment moved—
Page 93, line 22, leave out subsections (1) and (2).—(Lord Saltoun.)
THE LORD CHANCELLOR: I am afraid it is true that the poor auditor in future, instead of being able to have the Bible—the Authorised Version at any rate—will have to have the Revised Version with the Apocrypha, if the President of the Board of Trade makes these regulations. We must remember that this Schedule is largely experimental. We believe and we hope it will work. We have taken advice from the most eminent and distinguished accountants, who also hope and believe that it will work, but we should be very foolish if we did not take steps to guard against undue rigidity. It is. for that reason I must ask your Lordships to agree with me that we must have these subsections left in, so that if we find there is undue rigidity we have this measure of escape. I hope the Amendment I shall move presently will go a long way to meet the noble Lord, but I am sorry, for the reasons I have given, that I must maintain our right to alter our Schedule.
LORD SALTOUN: I am much obliged. After what the noble and learned Viscount has said, I will not press the Amendment, but I did not think it right to let this clause go by without pointing out the difficulty. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 106 agreed to.
Clause 107 [Laying of regulations and orders]:
THE LORD CHANCELLOR THE LORD CHANCELLOR explained the nature of this Amendment when I was dealing with the Amendment of the noble Lord, Lord Balfour of Burleigh. I beg to move.
Amendment moved—
Page 94, line 9, at beginning insert—
"(1) No regulations shall be made under subsection (I) of the last foregoing section so as to render more onerous the requirements of the First Schedule to this Act, unless a draft of the regulations has been laid before Parliament and has been approved by resolution of each House of Parliament."—(The Lord Chancellor.)
VISCOUNT SWINTON: I fully accept this as being a better Amendment than the one which I had on the paper. I entirely agree with the Lord Chancellor that the Schedule is experimental. Indeed, many of us are grateful to him for the trouble which he and many others have taken in order to make the Schedule better. The fact that he has a very large number of Amendments on the Order Paper, largely recasting the Schedule, shows how we must proceed in this matter, by trial and error and in the light of experience. It may well be that practice will show that we need to make changes. The noble Lord, Lord Saltoun, said it would be embarrassing to the accountants if changes were made. I have discussed this matter with some of the most eminent accountants in this country, and I think they would be greatly embarrassed if it were not possible to make a variation when experience showed that a variation was necessary. Otherwise we should have to wait until we could pass an amending Act of Parliament to do something which everybody—companies, auditors, and the Board of Trade—all agreed was a practical and desirable thing to do. I do not think that would be very sensible.
On the other hand, having taken great pains to put obligations into the Schedule, I think it would be wrong to put more stringent obligations upon companies or upon auditors without the equivalent of legislation. For that reason this Amendment proposes that if you are to make any provisions which are more onerous they must be made by affirmative Resolution in both Houses. I think that is a reasonable thing to do, and we ought not to insist upon having the full paraphernalia of an amending Act of Parliament. Full notice will be given, and if either House of Parliament does not like a Resolution which proposes to impose some new obligation they can reject it. I think this is a wise and practical compromise, and I am grateful to the noble and learned Viscount for having proposed it.
LORD RENNELL: Having regard to what I said on the Amendment of Lord Balfour of Burleigh, I do not think I have anything to add. I consider the compromise admirably meets the issue raised by the noble Viscount, Lord Swinton, and by my Amendment. I am very grateful for it.
On Question, Amendment agreed to.
THE LORD CHANCELLOR: This, and the succeeding Amendments are all consequential on the Amendment we have already made.
Amendment moved—
Page 94, line 13, leave out paragraph (b).—(The Lord Chancellor.)
On Question, Amendment agreed to.
Amendment moved—
Page 94, line 19, at end insert ("not being regulations to which subsection (I) of this section applies.")—(The Lord Chancellor.)
On Question, Amendment agreed to. Amendment moved
Page 94, line 23, leave out ("any such regulations or order as aforesaid are or is laid before it ") and insert ("any regulations or order are or is laid before it under the last foregoing subsection.")—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 107, as amended, agreed to.
Clause 108:
Construction and application of principal Act and this Act.
(2) In this Act, except where the context otherwise requires— the expression "financial year" means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in general meeting is made up, whether that period is a year or not;
THE LORD CHANCELLOR: By the next Amendment I propose to insert: "the expression 'bank holiday' means a day which is a bank holiday under the Bank Holidays Act, 1871." The ingenuity of my noble friend Lord Saltoun was responsible for his bringing to my notice an occasion which might lead to difficulties. Sometimes, as I gather, in particular Scottish burghs there are days on which banks are shut. He thought it right to call my attention to that fact lest I did not quite realize what I was doing in using the expression "bank holiday." I am grateful to him and I think that this Amendment will meet the difficulty which he was good enough to call to my attention.
Amendment moved—
Page 94, line 44, at end, insert ("the expression 'bank holiday' means a day which is a bank holiday under the Bank Holidays Act, 1871;").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment defines the expression "officer" as including a director, manager or secretary. This will make it possible to achieve greater uniformity in the references in various parts of the Act to the different officers of a company.
Amendment moved—
Page 95, line 17. at end insert ("(4) In the principal Act and this Act, the expression 'officer', in relation to a body corporate, includes a director, manager or secretary; and the references to officers in the provisions of the principal Act mentioned in the Sixth Schedule to this Act shall he amended in accordance with that Schedule.").—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD SALTOUN LORD SALTOUN moved, at the end of subsection (4), to insert: "References in this Act to a company shall be construed as not including an unlimited liability company." The noble Lord said: This Amendment proposes to exempt unlimited companies from the provisions of this Bill. Before moving this Amendment I thought it right to get as much information as I could about those companies. I learn that there are some 148 of them in Scotland. In England I have been informed that there are (I speak from memory, but I know I am about right) some 2,114, but the Registrar says that he is not quite sure that they are all alive. I do not think that many of them can be dead, because an unlimited liability company, as your Lordships arc aware, carries unlimited liability, and it is not the kind of thing that anybody leaves about. It has to make its annual return with the others. It is not going to leave growing debts, for fees and other things. Therefore I think your Lordships may take it that those 2,000 or so English companies are alive.
In proportion to the population, one would not expect so many unlimited companies in England compared with the number in Scotland. If there were only 148 in Scotland, I should have expected something like 1,200 to 1,40o in England. I think I can suggest to your Lordships why England has such a large proportion of unlimited liability companies. It is because in Scotland a private firm has a persona of its own, as the noble and learned Viscount, the Lord Chancellor, has pointed out many times during the discussion of this Bill. In England such a firm has not, and the only way in which a private firm or an association or partnership of persons in England can acquire a
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persona is by forming an unlimited company. I think that wall explain the difference. These unlimited companies are really only partnerships—neither more nor less; it is only that they have a company form—and I do not think there is any reason to apply this Bill to them. I have some hopes that the noble and learned Viscount, the Lord Chancellor, will meet me on this matter, because on several occasions during the discusson of this Bill indeed on a great many occasions—he has persuaded your Lordships to accept a drastic clause by saying,it is only right that, in return for this very great benefit of limited liability, these conditions should be imposed, and that, of course, implies that where there is no limited liability there is no reason to impose the conditions; and I submit that there is not. I have asked many of my noble and learned friends who sit in this House in a judicial capacity if they have ever had an unlimited company before them, and every' one I have asked has said "No." There may be occasions—perhaps my noble friend Viscount Maugham may know of some; I do not think I have asked him—
VISCOUNT MAUGHAM: I have, unfortunately, come across them.
LORD SALTOUN: I do not think they get into trouble very often. Then are a great many provisions in this Bill which would affect them very adversely. l can give your Lordships a few examples. Study may give me a great many more. The three weeks' notice before a meeting is absurd for a small group of persons who generally live in the same locality. Then there are other things, in the repayment of preference shares, which I do not think have any application to a firm with unlimited liability. There are certain things about winding-up—I will not go into all those. Then there is the matter of accounts. The members of unlimited companies know one another pretty well and know their affairs pretty well. I do not think they should be subjected to all those provisions about accounts, because accounts sometimes fall into wrong hands, and it would be very unfortunate if -hey had to suffer any disadvantage by their accounts falling into wrong hands, especially when their liability is unlimited.
But I have got an even stronger reason, and it is that the Cohen Report, upon which this Bill is founded, expressly did

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not examine the conditions of unlimited companies. You will find that mentioned several times in the course of reading that Report. I suggest that it is a wrong principle of Parliament, when you are making a very comprehensive Statute for certain parties, who are under conditions which have been examined, to extend it to quite different parties who are acting under conditions which have not been examined. That is legislating in the dark, if ever there was an instance of such a thing, and I submit that it is a very bad principle. I beg to move.
Amendment moved—
Page 95, line 22, at end insert the said words.—(Lord Saltoun.)
THE LORD CHANCELLOR: I am afraid I could not agree to this Amendment, but I can go some way to meet the noble Lord. It seems to me that there are many provisions of this Act which should apply to unlimited companies—for instance, take all the provisions that deal with the protection of a minority. You can have a minority in an unlimited company, just as you can in a limited company. On the other hand, to take another group of clauses—those that deal with the protection of the public, filing accounts and all that sort of thing, there I think you may fairly say that if you are not claiming the benefit of limited liability there is no reason why you should be put to the same trouble as a company which is. If the noble Lord (I am sorry to impose a holiday or a term task upon him) will look at the Bill and tell me where he thinks the shoe pinches with regard to the unlimited company—I will give him all the assistance I can—I am willing to go through the various provisions and except them from the sort of provisions I have indicated.
On the other hand, other provisions, such as those for the protection of minorities, apply to unlimited companies, it seems to me, just as much as to any other company. The noble Lord will, of course, remember that they are "caught" under the Companies Act as it is to-day, and they are under all sorts of obligations. In saying what I have said I have gone as far as I can—perhaps too far—to meet the noble Lord. I hope on that assurance he will withdraw his Amendment, and if between now and the Report stage he will tell me the sort of
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obligations from which he thinks these unlimited companies ought to be exempt, I will see what I can do to meet him.
LORD SALTOUN: I am obliged to the noble and learned Viscount for his offer, which I will gladly accept. I should like to say that although I have never come across a case of the kind, I am perfectly alive to the possibility of the oppression of minorities in unlimited companies. My own view is that that could be better dealt with by a special short Act. I am not at all sure that unlimited companies are not a better subject for an entirely different Act from this one. However, in view of the noble and learned Viscount's assurance, which I gladly accept, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 108, as amended, agreed to.
Clause 109:
Short title, commencement and repeal.
(2) This Act shall come into force on such day as the Board of Trade may by order appoint, and different days may be appointed for the purpose of different provisions thereof.
VISCOUNT SWINTON VISCOUNT SWINTON moved, in subsection (2), to leave out from "shall" to the end of the subsection and to insert:
"not come into force until such day as may be fixed by or under an Act consolidating the provisions of the principal Act and of this Act".
The noble Viscount said: On the Second Reading I think I carried all your Lordships with me when I said not only that I hoped we would make this Bill as good a Bill as we could, but that it was essential in a Bill which makes an enormous number of reforms in Company Law and which has a large number of clauses which have to be read by reference to other Acts of Parliament, that the new charter should not come into force until a Consolidation Act had been passed, so that there may be one charter of Company Law that he who runs may read. That was the course which was followed after the Greene Committee reported. I had the privilege of introducing the Bill which was then passed, amending the Companies Act, I think it was of 1908, and any preceding Acts. Then in the following year we had a Consolidation Act. As your Lordships know, a Consolidation Act passes automatically without discussion in both Houses on the certificate of the Parliamentary Counsel

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and Committee that the Consolidating Act contains nothing except a consolidating statement of law which Parliament has already passed.
This Bill is even more complex than the one for which I was responsible nearly twenty years ago. It imposes a number of new obligations which I think we are getting into the right form. The case for having the whole of the law set out in a single Act is even stronger than it was when the precedent was created twenty years ago. I can conceive that there may be one or two provisions in the Bill we are now passing which ought to -be brought into law in advance. For instance, it may be that the Government will say (I do not know whether they will; I think probably I should if I were in their place) that the provisions about inspection which we agreed upon last time ought to be brought in ahead of consolidation. If that were to be said, I should say at once that that was perfectly reasonable. Those stand in a class by themselves. A new and enlarged power is given to the Board of Trade, and nobody will suffer any disadvantage from that.
It is quite conceivable that there arc one or two other provisions that it may be desirable to introduce in advance of consolidation. If there were, and a case were made out for them, I am sure the House would readily consider it, on one understanding which I would respectfully seek to lay down. That understanding is that if there are to he any clauses in this Bill to be introduced in advance of consolidation, they should be complete in themselves, and the people who have to administer companies should not find it necessary to have two books open in front of them and, with the assistance of counsel, have to interpret one in the light of the other. Subject to any refinements of that kind, I feel sure the Government will accept the old precedent and give me an assurance that we shall have a Consolidation Act before the bulk of this Bill comes into force. I beg to move.
Amendment moved—
Page 95, line 31, leave out from ("shall") to end of line 33, and insert the said words.—(Viscount Swinton.)
THE MARQUESS OF READING: I would like very briefly to support the noble Viscount in this Amendment. The subject of Company Law is one which affects many people other than those who
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actually practise the law, and it is to the general advantage that it should be presented for their study in the most convenient and the simplest form. Certainly the simplest form is to have it consolidated and not to have it in the shape of two or more Acts. If I may say so, I am taking an extremely unselfish view in this matter, because I believe I am still Chairman of the Joint Committee Of the two Houses on the Consolidation Bill. At the same time, I think this is essentially a Bill which requires consolidation. If one required any convincing, one need only look back to Clause 92, which we dealt with to-day, which entails a certain number of references from this Bill back to the Act, from the Act back to the Bill, and then back to the Act again, so that when one had read it for a short time one would have had all the sensation of watching tennis at Wimbledon. In order that this may be placed in a convenient for n, I very much hope that the noble and learned Viscount, the Lord Chancellor, will be able to accept the Amendment proposed.
THE LORD CHANCELLOR: I am afraid I cannot accept the Amendment proposed, although I have complete sympathy with what the noble Viscount and the noble Marquess have said. I have already made my plans to try to get on with consolidation, and to try and set up a regular consolidation branch, and I think that this is the first Bill we ought to tackle. As I have already said, it is more than my position is worth to make any promise, and, therefore, your Lordships must not press me for a promise on the matter. At the same time, I think I may say this: I shall be very disappointed if we have to bring any part of this Bill into operation before we have got consolidation. There are certain clauses of the Bill which I agree should be self-contained. For instance, we might want the power, of which the noble Viscount opposite gave us an illustration, of investigation. That, after all, is something which does not concern the public very much. The Bill confers certain powers upon the Government. That is the sort of illustration I have in mind.
I agree that if another Bill has to be brought into effect it should be self-contained, and even then it should not be brought in without very adequate notice. Take, -for instance, the accounts, which we are going to cover in the Schedule.

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There, of course, we have now a little code setting out what the accounts must contain. It is conceivable that we might want to bring that code into force before the rest of the Bill, and before we have been able to get our consolidation. But there you have something which is self-contained. It would be grossly improper to contemplate bringing anything of that sort into force without giving at least six months' notice, or possibly more. I am afraid I cannot accept this Amendment, but I do accept the spirit behind it. I accept the arguments, and I shall do my very best to see that my Consolidation Bill is ready at an early stage, so that the noble Marquess will be able to get on with it very soon through the Parliamentary Counsel. With that assurance, I hope your Lordships will not press me further.
VISCOUNT SWINTON: I am obliged to the noble and learned Viscount, and I think what he has said goes a long way to meet me, because I know that when he gives an assurance of that kind, the assurance will be carried out. I will certainly withdraw this Amendment now. It would be convenient, probably on Report stage, when we come back to this part of the Bill and the clause stands part, if the noble and learned Viscount the Lord Chancellor could tell us whether there are any clauses in the Bill which he thinks it is likely may have to be introduced in advance of consolidation. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.20 p.m.
LORD COZENS-HARDY LORD COZENS-HARDY moved, at the end of subsection (2), to insert:
"Provided that section 43 shall not come into force before the expiration of six months from the date of passing of this Act."
The noble Lord said: Clause 43 lays down very stringent conditions with which a company must comply if it wishes to be exempt from publishing its balance sheet and accounts. A private company which is now exempt may very well wish to make re-arrangements in order to continue that exemption under the new Act. It may well be, for instance, that it will be necessary to call in debentures or to take some other action requiring several months' notice. To give time for such rearrangements, I beg to move.
Amendment moved—
Page 95, line 33, after ("thereof") insert the said proviso.—(Lord Cozens-Hardy.)
THE LORD CHANCELLOR: I am sure the noble Lord will agree with me that this much at any rate is clear—namely, that it would be most unfortunate and most unfair to private companies to contemplate bringing in the requirements as to accounts at a date before we have brought in the provisions with regard to exemption. It is quite clear that we must have the provisions with regard to accounts, and provisions in Clause 43 with regard to exemption, coming into force at the same time. It would be a dreadful thing if we made all these private companies conform with the provisions regarding accounts because we had brought that part of the Act into operation and had not brought into operation Clause 43, which exempts them from having to comply with those provisions. There is not the slightest possibility of this being done before the expiration of six months. We shall certainly give six months' notice, but, for the reasons I have given, we cannot accept the Amendment, and I shall therefore ask the noble Lord to rely on the assurance I gave in the discussion on the last Amendment and to withdraw this one.
LORD COZENS-HARDY: I am much obliged to the noble and learned Viscount for the assurance he has given, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
VISCOUNT ELIBANK: I wanted to raise this point before my noble friend Viscount Swinton withdrew his Amendment, but I had not the opportunity to do so. The noble and learned Viscount has informed us that if any provisions are to be brought into effect they will be published at least six months before they come into force. I want to suggest to the noble and learned Viscount that before the Consolidating Act comes into force, the same time should elapse, in order to enable all those who will have to use this Bill and to understand it, really to understand it before it comes into force. There are an enormous number of new provisions in it, and it is very complicated. All the company officers concerned, the secretaries and so on, will have to spend a great deal of time in making themselves acquainted with these provisions. I ask the noble and learned

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Viscount to say that he will not suddenly launch the Consolidating Act on the community, but will give us six months before it comes into force.
THE LORD CHANCELLOR: I do not absolutely pledge myself to six months or anything of that sort, but obviously in a case of this sort one wants to give reasonable time to the public to know what it is all about and to prepare themselves for it. On the other hand, one must bear in mind that when this Bill has been through this House and through the other place, those who are skilled in these matters will have a pretty general and shrewd idea of what the provisions arc. I think it is important that we should get the Consolidating Act into force as soon as we reasonably can. We must guide between the Scylla of undue delay and the Charybdis of undue haste, so that people do not suddenly find themselves under a new set of obligations before they have really been able to work out I what they are, I think there is substance in what the noble Viscount has said, and I feel confident that the considerations he has mentioned will be borne in mind.
Clause 109 agreed to.
First Schedule:

ACCOUNTS.

  PART I.
  General Provisions as to Balance Sheet and Profit and Loss Account.
  A. Balance Sheet.
  The first eight paragraphs of this Part of this Schedule apply to the balance sheet and are subject to exceptions and modifications in the case of a holding company and in the case of public utility companies, banking or discount companies and assurance companies.
  1. The reserves, provisions, liabilities and assets shall be classified under headings appropriate to the company's business, and fixed assets shall be distinguished from current assets
  2.—(1) The amounts of the fixed assets shall, subject to the next following sub-paragraph, be shown by stating

  (a) their cost or, in the case of assets standing in the company's books at a valuation, the amount of the valuation: and

  (b) the aggregate amount provided or written off for depreciation since the date of acquisition or valuation, as the case may be.

  THE LORD CHANCELLOR: This Amendment is consequential on a Govern-
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  ment Amendment which is coming shortly. The reason is that we are to allow the practice already followed by public utility companies—the practice that instead of showing their fixed assets at cost less depreciation, they can show them at cost and make separate provision for renewal—to be followed by any company. I beg to move.
  Amendment moved—
  Page 96, line 10, leave out ("public utility companies").—(The Lord Chancellor.)
  On Question, Amendment agreed to.
  VISCOUNT SWINTON VISCOUNT SWINTON moved, in the introduction to the paragraphs on A. Balance Sheet to leave out "and," where that word last occurs, and to insert, after "assurance companies," "and shipping companies." The noble Viscount said: This is an Amendment of considerably more substance. As your Lordships will see, the opening words of the Schedule exempt banking companies, discount companies, and assurance companies from the first eight paragraphs of the Schedule, that is to say, these companies are exempted from disclosing their reserves in the way that other companies are compelled under the Schedule to disclose their reserves. That exemption is given to banks and insurance companies, not in order to confer some special privilege upon them, but entirely because it is in the national interest that they should have reserves which are not disclosed. Of course, that provision does not confer any exemption from the important provisions in the Schedule as to keeping proper accounts, and from a provision to which I myself attach the greatest importance—namely, that if there is any drawing on reserves, whether disclosed reserves or undisclosed reserves, for any current purpose, that shall be made abundantly plain.
  But there are, think, very strong notional reasons for treating shipping companies in the same way as banks and insurance companies in regard to reserves. There may be other companies to which analogous reasons of national interest may apply, but in this Amendment I want to deal with shipping companies. I will briefly give your Lordships the reasons which I think apply—and apply to a unique degree—in the case of shipping companies. I base my case entirely on national grounds. First and foremost, I put defence. The Merchant Navy is just as necessary to us in war as the Royal

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  Navy itself. Together they are our lifeline, and two wars have shown us that our very life depends upon both. Another reason is that shipping is, and always has been, regarded in a very special sense as a national service, just as much as banking or insurance. It serves all our import and our export trade. Shipping is in itself the greatest invisible export we have. As the White Paper which we shall be discussing next week has shown, we are thousands of millions of pounds worse off than we were, and our other invisible exports have been largely exhausted to pay for the war. Shipping will be more important than ever as an invisible export. This peculiar position of shipping has always been accepted by all Governments. Before the war, by common consent, the Government of the day were considering special financial measures by which shipping could be aided.
  There is another reason. Shipping has more ups and downs than any other industry. It has had longer periods of depression than any other industry, and it has the unique feature, as distinct from all other industries, that you cannot protect shipping by a tariff. For all those reasons, it is absolutely vital that the shipping companies of this country should create and hold large reserves. Shipping has to face harder foreign competition than any other industry. It has to face competition from State-owned lines which are maintained and run regardless of profit and loss, or competition from national companies subsidized at almost unlimited expense and protected by the most extreme and exclusive forms of cabotage. In these circumstances, the disclosure of reserves shows the relative strength or weakness at any particular time of a shipping company's financial position, and that is just the very information a foreign competitor would wish to have. It is just the information which British shipping companies in almost every case do not and cannot get in respect of their foreign competitors.
  I think those are very strong reasons, and show that the British Merchant Navy has a unique position and special claims in the national life. I would add that the British Merchant Navy has just established another claim. Your Lordships will have been delighted to see the wide and far-reaching agreement which has just been made between the ship-owners
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  and the officers and men of the Merchant Navy with regard to wages and conditions. It is a fine agreeement, but it will be a costly one. It is an agreement worthy of a great service, and the companies which constitute that Merchant Navy must be as strong financially as the officers and men of that Navy have been strong and valiant in spirit. I beg to move.
  Amendment moved—
  Page 96, line 11, leave out ("and") and after ("assurance companies") insert ("and shipping companies").—(Viscount Swinton.)
  LORD RENNELL: Very briefly I want to support the noble Viscount who has just sat down, and for the reasons which he has so eloquently expressed. There was, I think, a remark made by the noble Lord, Lord Chorley, earlier in the Committee stage of this Bill, that shipping companies differ from other companies in this country. They are not industrial companies, but are carriers, and are, in a sense, public utility companies rather than industrial or commercial concerns. That should be sufficient excuse for making special provision. But the main reason for this Amendment and those which follow is that they are designed, as has been said by the noble Viscount, Lord Swinton, to safeguard the strength and position of the shipping companies in this country.
  THE LORD CHANCELLOR: Although I do not know that I go all the way with the noble Viscount opposite in regard to all his arguments, yet I must say that I think he has made out a case here. We must look at this matter from the point of view of the national interest, and I am not quite certain that it would be wise to confine this provision to shipping companies. I would, therefore, like to consider between now and the Report stage as to how to give effect to what he desires. Without pledging myself, I think the noble Viscount may rest satisfied that we shall be able to do something which will, in substance, meet his point of view. I ask him to withdraw his Amendment and leave me to deal with this between now and the Report stage.
  VISCOUNT SWINTON: I am very much obliged to the noble and learned Viscount, the Lord Chancellor. I will gladly withdraw my Amendment and leave it in his hands. I put it entirely

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  on the grounds of national interest, and know I am going to be met in that view.
  Amendment, by leave, withdrawn.
  THE LORD CHANCELLOR THE LORD CHANCELLOR moved, to leave out paragraphs 1 and 2, and to insert the following new paragraphs:
  "1.—(1) The reserves, provisions, liabilities and fixed and current assets shall be classified under headings appropriate to the company's business:
  Provided that—

  (a) where the amount of any class is not material, it may be included under the same heading as some other class; and

  (b) where any assets of one class are not separable from assets of another class, those assets may be included under the same heading.

  (2) Fixed assets shall also be distinguished from current assets.
  (3) The method or methods used to arrive at the amount of the fixed assets under each heading shall be stated.
  2.—(1) The method of arriving at the amount of any fixed asset shall, subject to the next following sub-paragraph, be to take the difference between—

  (a) its cost or, if it stands in the company's books at a valuation, the amount of the valuation; and

  (b) the aggregate amount provided or written off since the date of acquisition or valuation, as the case may be, for depreciation or diminution in value;

  or, in the case of assets acquired before the date of the coming into force of this Schedule for which the figures relating to the period before that (late cannot be obtained without unreasonable expense or delay, the difference between-

  (i) the net amount at which they stand in the company's books at that date (after deduction of the amounts previously provided or written off for depreciation or diminution in value), and

  (ii) the aggregate of the amount of the sales and the amount provided or written off for depreciation or diminution in value since that date.

  (2) The foregoing sub-paragraph shall not apply

  (a) to assets for which the figures relating to the period beginning with the coming into force of this Schedule cannot be obtained without unreasonable expense or delay; or

  (b) to assets the replacement of which is provided for wholly or partly—

  (i) by making provision for renewals and charging the cost of replacement against the provision so made; or

  (ii) by charging the cost of replacement direct to revenue; or

  (c) to any investments of which the market value (or, in the case of investments not having a market value, their value as estimated by the directors) is shown either as

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  the amount of the investments or by way of note; or

  (d) to goodwill, patents or trade marks.

  (3) For the assets under each heading whose amount is arrived at by one of the methods mentioned in sub-paragraph (r) of this paragraph, there shall be shown—

  (a) the aggregate of the amounts referred to in paragraphs (a) and (i) of that sub-paragraph; and

  (b) the aggregate of the amounts referred to in paragraphs (b) and (ii) thereof.

  (4) As respects the assets under each heading whose amount is not arrived at by any of the said methods because their replacement is provided for as mentioned in sub-paragraph (2) (b) of this paragraph, there shall be stated

  (a) the means by which their replacement is provided for; and

  (b) the aggregate amount of the provision (if any) made for renewals and not used."

  The noble and learned Viscount said: The object of this Amendment, over which we have taken a very great deal of trouble, is to try to make less rigid the requirements in Part I of the First Schedule. I have no doubt that a lawyer—and I speak as a lawyer—would like the requirements to be as definite and as far-reaching as possible. But, equally, the businessman would realize that however wise that may be in general cases, exceptional cases will arise and it would be most unfortunate if he were put to wholly unnecessary trouble and expense which would benefit nobody. I have endeavoured, in this Amendment, to draw up a fair compromise between those two points of view. I will give your Lordships some illustrations, because I think that is the best way to put the case for the greater latitude which is now allowed.
  For instance, if your Lordships will look at Paragraph I (I), you will observe that where the amount of any class of assets is not material it may be lumped together with some other class. If you have a small amount of some asset, to go to the length of a valuation and all the rest of it, which is not really material, would be putting people to great trouble, and therefore we say: "If it is not material, put it in with some other asset ". If your. Lordships will look at Paragraph 2 (I), you will see that that deals with assets acquired before the date of the coming into force of the Schedule, for which the figures relating to the period before that date cannot be obtained without unreasonable expense or delay. Compare those words with the corresponding words in the Schedule as printed. Your Lordships will

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  find them on page 96, line 23 and they are: "are not available". A thing may be available if you can get at it by a tremendous amount of research and all that sort of thing. We do not want that, so we are saying now: "If you cannot get it without unreasonable expense or delay, then treat it as though it is not available". That is another illustration.
  Paragraph 2 (2) (a) gives the same effect with regard to assets acquired after the coming into force of the Schedule, and will cover, for instance, such matters as loose tools and things of that sort. Paragraph 2 (2) (b) provides that the foregoing sub-paragraph should not apply to this Schedule for renewals treated on the same basis as repairs. This is reasonable, after all, because you need not write down what is replaced year by year. Paragraph 2 (2) (c) is a further illustration. Under the provisions of the Schedule as originally drawn an investment trust company would have to show its investments at cost, and their diminution in value, if any, whereas under the present dispensation they will have to show investments at book value with a note as to market value and, if there is no market value, the value in the opinion of the directors. These illustrations will show you what I have endeavoured to do.
  I have had very eminent advice about this matter and I hope and believe that in this Amendment I have been able to draw a happy compromise and clear up something which I know was troubling some of your Lordships. I beg to move.
  Amendment moved—
  Page 96, line 52, leave out lines 12 to 33 and insert the said new paragraphs.—(The Lord Chancellor.)
  VISCOUNT SWINTON: I am sure that in all quarters of the House there will be deep gratitude to the Lord Chancellor and the very experienced persons who have been, working with him, for the great amount of time and trouble which I well know has been given to this matter and for the very practical and successful results which have been achieved. I do not think it is difficult to say what are the general objects at which one wishes to arrive in provisions of this kind, but I do know—because when I set my hand to it I was singularly unsuccessful—how extra-
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  ordinarily difficult it is to put those principles into legislative practice. Frankly, I am most agreeably surprised that it has been found possible to set out so clearly and so well what I believe will be thoroughly sound practice.
  After all, as the noble and learned Viscount indicated, we are all after the same thing here. We all want there to be full and fair accounts, clear and individual accounts for a single company and clear consolidated accounts for a number of companies; but we want the form to be flexible and information put in the most convenient form. I had hesitated—and there was considerable support for this view, as your Lordships will remember, on Second Reading—as to whether or not there should be a disclosure of reserves. I have come to the conclusion that, with the exception of exempted companies for which there are very strong national reasons, the balance of convenience lies on the side of disclosure. I know how necessary it is—and it is even more necessary to-day—that strong reserves should be created, but I think it has to be done by the force of public opinion in the company. Shareholders have to realize that it is their interest—not shareholders who are jobbing in and out, but shareholders who have a real stake in the company—as well as the national interest, for the company to create strong reserves, and directors must be firm enough to propose that and to carry it.
  Having said that, obviously I go a long way towards saying that you must have requirements laid down for the balance sheet and the profit and loss account. But in doing that I am perfectly certain you cannot have a sealed pattern. It is very attractive to the draftsman, but, like so many things which sound perfectly logical, like so many of the best things in English life, what is logical is not best. You want requirements which are convenient and workable by different classes of companies—engineering companies, trust companies, stores and so on. Some sealed pattern could not possibly be applied effectively to them all. Then, again, you do not want to interfere with the practice which the best companies and the ablest accountants have designed and practised in the past, and which have been found useful in the interests of the company. You do not want to put companies to unnecessary trouble and expense by costly

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  valuations unless they are really necessary.
  In passing, I might say that I think practically 'all the Amendments I have on the Order Paper have been met by the far more comprehensive and effective Amendments moved by the Lord Chancellor, except one about provisions being not more than necessary. I now understand that this is covered. Then I am conpletely content that on questions of provisions there is a reasonable discretion. It would be extraordinarily unwise to deter a board or management from making a liberal provision for depreciation of stock at times when the markets are moving like fever charts, when the wise thing is to -make generous provision for contingencies of that kind. You -want, after all, to do the sound, wise thing which a good business man does. He ought not to be deterred in any way from taking a: liberal view, a generous, wide view as to what is prudent. In that case I can only say I -am intensely grateful for the immense amount of work which has been put in.
  LORD RENNELL: I rise to express my thanks to the noble Viscount, and particularly for the examples which the noble and learned Viscount quoted as being examples of how the Schedule had been given greater latitude. I think that those of us who have followed this Bill are very much aware of the amount of thought that has gone into the re-drafting of this Schedule, and in expressing my very sincere thanks I hope that the noble and learned Viscount will pass on whatever is necessary to his advisers in this matter. Undoubtedly it has taken weeks of effort to re-draft something which had already taken weeks of work to draft in the first place.
  LORD SALTOUN: I should like to say that in common with other noble Lords who have spoken I very much prefer the noble and learned Viscount's new form to the old one. But perhaps because I am alone in your Lordships' House to hold an opinion I will venture to express it at this stage. The object of this Schedule, of this new substitution, is to compel the fullest disclosure of reserves by public companies, and I am not at all sure whether that is really wise. It is extremely useful to people who buy shares with a view to selling them again, but I am not at all sure that it is useful
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  to those shareholders who buy their shares to keep. There is an argument which has been brushed aside more than once in the course of debates on this Bill, as having no material. importance, that disclosure of reserves would be of service to possible rivals. That argument has been brushed aside, but I venture to think that it has some material substance. I also venture to think that many of your Lordships are really in agreement with me about this.
  The noble Viscount, Lord Swinton, has just obtained a very valuable concession from the noble and learned Viscount. the Lord Chancellor—one that I think is essential for our national safety. He has obtained the exemption of shipping companies. What are the grounds on which he urged that exemption? The grounds were that these companies must be strong, and that disclosure of their reserves would be of use to possible rivals, foreigners, in this case—but still disclosure is of use to possible rivals. I submit that that is quite true in respect of a very large number of companies—many more kinds of companies than shipping companies. It may be the case that there is one where a Spanish proverb:" Por su mal le nacieron"—"It was an ill day for the ant when she grew wings"—is applicable.
  This certainly seems to me to be the appropriate moment to express my doubt, and I therefore beg to do so.
  THE LORD CHAIRMAN OR COMMITTEES: May I ask the noble Lord if he is not going to move his Amendment to leave out the word "provisions" from line 12 on page 96?
  Perhaps it would be more convenient if the noble Lord spoke on that matter now, otherwise I shall not be able to put the Lord Chancellor's Amendment as a whole.
  LORD SALTOUN: I have something of substance to say on this matter of provision. It is rather important and it may take a little time. If your Lordships will turn to page 103 of the Bill, you will see a definition of the word provision. It reads—
  "The expression 'provision' shall mean any amount retained by way of providing for diminution in value of assets or for any known liability of which the amount cannot be determined with substantial accuracy."

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  If you will turn to the next page you will see this:
  "The expression 'reserve' shall not include any amount retained by way of providing for diminution in value of assets or for any known liability."
  Those phrases are different, but they seem to me to express exactly the same thing. I have always understood that "provision" if it was to be distinguished from "reserve" was for a liability that was known with substantial accuracy. But the expression is very loosely used, and I submit to your Lordships that it is not worth while, in this Bill, to make a distinction between reserves and provisions. It is just as well to let the whole thing go as "reserves," because in any case we shall, I think, have to amend definitions later on. But very often you cannot tell the difference between a "provision" and a "reserve." Under the usual definition, I suppose that a "debenture reserve" is realy a "provision." I do not think it should be a matter of legislation. What does it matter, after all, how a painted curtain covering a hole should be designated? There is a substantial reason for dividing reserves available for dividends from reserves not available for dividends but the rest is immaterial. I submit, nevertheless, that a distinction between "reserves" and "provisions" is hardly worth making in the Bill.
  THE LORD CHANCELLOR: The noble Lord will have noticed, no doubt, that there is an Amendment coming on the effect of which will be to leave out the two expressions to which he has referred, "provision" and "reserve", and to substitute other words therefor. I do not know whether he is aware that there is also a manuscript Amendment because the expression "provision" is not quite properly defined. May I read out the first paragraph to which he referred as it will be if the Amendment which I am moving is carried? I am referring to the exact passage which the noble Lord quoted when he read from the bottom of page 103. My Amendment reads:
  "the expression 'provision' shall, subject to sub-paragraph (2) of this paragraph, mean any amount written off or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy."
  The paragraph with regard to "reserve" reads:
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  "the expression 'reserve' shall not, subject as aforesaid, include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability."
  I think that in that way I meet, very largely, the point which the noble Lord has in mind. My re-definitions arc really consequential on the new provisions relating to fixed assets which are contained in the Amendment to page 96, line 12. The second Amendment provides, in effect, that if any amount written off for depreciation of fixed assets, after the coming into force of the Schedule, or provided for any known liability, is more than necessary, the excess shall be treated as a reserve. For instance, supposing you have got some liability which it seems quite certain that you will require £100,000 to meat. That is a provision. You fix on that with substantial accuracy. Then suppose the unlikely event happens, and you find that you can get off with only £50,000. Thereafter you have to write £50,000 into your balance sheet, on the left-hand side, as a reserve, because previously it was a provision. I think that the noble Lord will see that I have gone some considerable way to meet the point which he has in mind.
  LORD SALTOUN: I am very much obliged to the noble and learned Viscount. I have not the same intelligence to follow him that he had to follow me but I shall not move my Amendment and I am immensely relieved that all the consequential Amendments which litter up your Lordships' Marshalled List of Amendments in my name will now fall away.
  On Question, Amendment agreed to.
  THE LORD CHANCELLOR: I am very grateful to the noble Lord for the kind things he said about me, but they are more due to those who work for me. It would, perhaps, be best to break off on this happy note.