HL Deb 25 March 1947 vol 146 cc782-9

2.—(I) The rules contained in the following sub-paragraphs of this paragraph shall apply for the purposes both of the basic conditions and of the exceptions from those conditions.

(2) Where any share or debenture or any interest in any share or debenture is subject to a charge in favour of a banking or finance company by way of security for money lent in the ordinary course of its business as such

  1. (a) any interest under the charge, whether of the banking or finance company or a nominee for it, shall be disregarded; and
  2. (b) if the barking or finance company or its nominee is the holder of the sharer debenture, the person entitled to the equity of redemption shall be treated as the holder, whether he has a present right to redeem or not.

(3) Any interest under a contract for the transfer of any share or debenture or of any interest in any share or debenture shall, until execution of an instrument of transfer by the parties, be disregarded unless execution thereof is unreasonably delayed.

(4) Subject to sub-paragraph (2) of this paragraph, on execution of an instrument of transfer of a share or debenture, the transferee shall be treated as the holder, notwithstanding that the transfer requires registration with the company unless registration is refused.

Exceptions for cases of death and for family settlements.

3.—(I) The basic conditions shall be subject to exceptions, for—

  1. (a) any shares or debentures held by the personal representatives of a deceased holder 783 thereof, so icing as administration of his estate has not been completed; and
  2. (b) any shares or debentures held by trustees on the trusts of a will or family settlement disposing of the shares or debentures, so long as no body corporate has for the time being any immediate interest under the said trusts.
(2) For the purposes of this paragraph—
  1. (a) the expression "family settlement" means a settlement made either—
    1. (i) in consideration or contemplation of an intended marriage of the settlor or any of the settlor's issue or in pursuance of a contract entered into in consideration or contemplation of any such marriage; or
    2. (ii) otherwise in favour of any of the following persons, that is to say the settlor, his parents and grandparents, and any other individual who at the date of the settlement is a member of the company or, in the case of a settlement of debentures, a member or debenture holder of the company, and the wife or husband and issue, and the wife or husband of any of the issue, of the settlor, his parents, or any such other individual, and persons taking in the event of a failure of the issue or any class of the issue of any person taking under the settlement;
  2. (b) the expressions "parent", "grandparent" and "issue" shall be construed as if the stepchild, adopted child or illegitimate child of any person were that person's child;
  3. (c) any reference to a wife or husband shall include a former wife or husband and a reputed wife or husband;
  4. (d) the expression "will" includes any testamentary disposition;
  5. (e) any reference to a will or family settlement disposing of any shares or debentures shall include a will or family settlement disposing of an interest under another will or family settlement disposing of the shares or debentures.

Exception for shares held by exempt private companies.

4.—(I) The first of the basic conditions shall be subject to an exception for shares held by another private company which is itself an exempt private company:

Provided that this exception shall not apply if, taking all the following companies together, that is to say—

  1. (a) the company whose exemption is in question (hereafter in this Schedule referred to as "the relevant company");
  2. (b) any company holding shares to which this exception has to be applied in determining the relevant company's right to be treated as an exempt private company; and
  3. (c) any further company taken into account for the purposes of this proviso in determining the right to be so treated of any company holding any such shares as aforesaid;
the total number of persons holding shares in those companies is more than fifty, joint shareholders being treated as a single person and the companies themselves being disregarded.

(2) Where the relevant company and another company hold shares in each other, the other company shall he treated for the purposes of the foregoing sub-paragraph as an exempt private company if—

  1. (a) in determining its right to be so treated the exception in that sub-paragraph would apply to the shares in it held by the relevant company, on the assumption that the relevant company was an exempt private company; and
  2. (b) in all other respects the other company is entitled to be so treated;
and where another company's right to be so treated depends on the application to any shares in it of that sub-paragraph, and the application thereof to those shares depends indirectly on the relevant company's right to be so treated, this sub-paragraph shall apply as if those shares were held by the relevant company.

(3) Where by virtue of this paragraph any shares are excepted from the first of the basic conditions, the second of those conditions shall be subject to an exception for any interest in those shares which any person has by virtue of debentures of the company holding those shares.

Exception for banking or finance company providing capital.

5.—(I) The first of the basic conditions shall be subject to an exception for any shares or debentures held by or by a nominee for a banking or finance company, where the banking or finance company acquired the shares or debentures or its interest therein in the ordinary course of its business as such and by arrangement with the relevant company or its promoters:

Provided that this exception shall not apply if the banking or finance company has the right (or, where there is more than one such company holding shares or debentures to which this exception has to be applied in determining the relevant company's right to be treated as an exempt private company, they have between them the right) to exercise or control the exercise of one-fifth or more of the total voting power at any general meeting of the relevant company.

(2) Where by virtue of the foregoing subparagraph any shares or debentures are excepted from the first of the basic conditions, the second of those conditions shall be subject to an exception for any interest in those shares or debentures which any person has by virtue of debentures of the banking or finance company.

Meaning of "banking or finance company."

6. In this Schedule the expression "banking or finance company" means any body corporate or partnership whose ordinary business includes the business of banking and any other body corporate whose ordinary business includes the business of lending money or of subscribing for shares or debentures, except that it does not include any such other body corporate unless either—

  1. (a) its shares are quoted or dealt in on a recognized stock exchange; or
  2. (b) it is designated for the purposes of this paragraph by order of the Board of Trade; or
  3. (c) it is a subsidiary of a body corporate whose shares are so quoted or dealt in or which is so designated.")

The noble and learned Viscount said: This Amendment transfers to a schedule the bulk of those conditions which have to be satisfied by a private company in order to qualify as an exempt private company. It takes care of the various undertakings I gave—an undertaking to the noble Viscount, Lord Swinton, to make it plain that a company should not be disqualified from being exempted because some of its shares were held by another exempt company, and an undertaking to the noble Viscount, Lord Bridgeman, dealing with banking and finance companies. The stipulation, however, that there shall be no more than fifty members is, I think, as far as I can go. I think we should be rather careful about extending this privilege of not having to publish accounts. Although I know there are many very worthy schemes whereby workers in the business get shares and so on—and I certainly do not want to discourage them—I think that if a company gets beyond fifty members it reaches a stage at which it ought not to be relieved from the obligation which attaches to any ordinary company, private or public, to publish its accounts. Anticipating something which the noble Lord, Lord Cozens-Hardy, asked me just now, may I say that I cannot go above the figure of fifty, which to my mind is the absolute limit, no matter what the quality of the shareholders may be. I beg to move.

Amendment moved— After the Second Schedule, insert the said new Schedule.—(The Lord Chancellor.)

VISCOUNT SWINTON

So far as I am concerned, this is very nice, neat and clear, and I think it gives effect to all the undertakings which were given by the Government.

LORD COZENS-HARDY

I am afraid I did not exactly follow the noble and learned Viscount in what he said just now. I was not suggesting that there should be any increase in the numbers; I was merely suggesting that because a particular exempt private company happens now or in the future to have trustees for employees as shareholders it should not thereby either cease to be an exempt private company or be unable to become an exempt private company. It does not seem reasonable that one of the reasons determining whether a company can be exempt or not should merely be whether some generous shareholder happens to have given some of the shares of the company to a benevolent fund.

LORD HAWKE

May I raise a point which I think the noble and learned Viscount will be able to answer at the same time? Subparagraph (b) of paragraph r uses the words "that no person other than the holder has any interest in any of the shares or debentures". Where you have a family trust represented by certain names, the income from that holding may be divided among a considerable number of persons—a number of persons which will be diminishing by death and increasing by birth at perhaps frequent intervals. Does this affect the limit of fifty for the shareholders of a private exempt company?

THE LORD CHANCELLOR

I think the noble Lord will find that that is covered by the family settlement provisions in paragraph 3. Your Lordships will see it is there said that the basic conditions—and the noble Lord, Lord Hawke, referred to the second of those conditions—"shall be subject to exceptions for", and then there are set out the exceptions. I think it will be found that we have met that sort of point. We certainly do not want to prevent a company of the sort described from keeping its exemption. If the noble Lord looks at paragraph 3 I think he will see that we have managed to achieve that result. I will look at the point put to me by the noble Lord, Lord Cozens Hardy, to see if I can meet it.

LORD HAWKE

I thank the noble and learned Viscount. It is the assurance that I value more than my interpretation.

On Question, Amendment agreed to.

Third Schedule [Amendments to Third and Fifth Schedules to Principal Act]:

LORD CHORLEY

This Amendment is consequential on an Amendment to Clause 52. I beg to move.

Amendment moved— Page 110, line 6, at end insert ("2.—,(I) In the said Third Schedule there shall be inserted at the end of the entry relating to the vendors of property purchased or acquired or proposed to be purchased or acquired the words 'except where the contract for its purchase or acquisition was entered into in the ordinary course of business or the amount of the purchase money is not material'.

(2) At the end of the corresponding entry in the Fifth Schedule to the principal Act there shall be inserted the words 'except where the contract for its purchase or acquisition was entered into in the ordinary course of the business intended to be carried on by the company or the amount of the purchase money is not material'.").—(Lord Chorley.)

LORD RENNELL

This is consequential upon an Amendment, but that Amendment was amended by the noble and learned Viscount. That involves a consequential Amendment to this Amendment, does not it?

LORD CHORLEY

This is the consequential Amendment.

LORD RENNELL

The wording used here is the wording of the first Amendment which was down on the Marshalled List and not the Amendment finally adopted by the Committee.

LORD CHORLEY

I will look into that, but I understand this is consequential on the Amendment as agreed.

LORD RENNELL

I think it is consequential on the Amendment as stated in the Marshalled List but not consequential on the Amendment as finally agreed by the Committee.

LORD CHORLEY

I am much obliged to the noble Lord for pointing that out. We will certainly look into it and make quite sure.

On Question, Amendment agreed to.

LORD CHORLEY

This is a further consequential Amendment, this time on an Amendment to Clause 54.

Amendment moved— Page 110, line 10, at end insert—

("(2) In both the said Schedules there shall be inserted at the end of the entry relating to a time and place for inspection of material contracts the following words— 'or (I) in the case of a contract not reduced into writing, a memorandum giving full particulars thereof, and (2) in the case of a contract wholly or partly in a foreign language, a copy of a translation thereof in English or embodying a translation in English of the parts in a foreign language, as the case may be, being a translation certified in the prescribed manner to be a correct translation.'")—(Lord Chorley.)

On Question, Amendment agreed to.

Third Schedule, as amended, agreed to.

Fourth Schedule agreed to.

Fifth Schedule [Provisions applied to unregistered companies]:

LORD CHORLEY

There are two Amendments which, with your Lordships' permission, I will take together. They are both consequential on the insertion of new clauses in the Bill. I beg to move.

Amendment moved— Page 113, line 25, leave out ("seventeen") and insert ("eighteen").—(Lord Chorley.)

On Question, Amendment agreed to.

Amendment moved— Page 113, line 37, leave out ("thirty-nine") and insert ("forty").—(Lord Chorley.)

On Question, Amendment agreed to.

LORD CHORLEY

The next Amendment is a drafting Amendment. It is necessary to bring in the Eleventh Schedule in order to give effect to Section 362 of the Act. I beg to move.

Amendment moved— Page 113, line 56, leave out ("Schedule") and insert ("and Eleventh Schedules").—(Lord Chorley.)

On Question, Amendment agreed to.

Fifth Schedule, as amended, agreed to.

Sixth and Seventh Schedules agreed to.

Eighth Schedule [Enactments of Principal Act Repealed]:

LORD CHORLEY

This is consequential on the Amendment to Clause 17. I beg to move.

Amendment moved— Page 116, line 26, leave out from ("subsection (2)") to ("in") in line 27 and insert. ("and subsection (3)").—(Lord Chorley.)

On Question, Amendment agreed to.

LORD CHORLEY

The first part of this Amendment is consequential on the Amendment to Clause 20, and the second part is consequential on the existing provisions of Clause 20 (4). I beg to move.

Amendment moved— Page 116, line 45, at end insert ("In paragraph (a) of subsection (I) of Section one hundred and forty-four, the words 'and, if that nationality is not the nationality of origin, his nationality of origin'.

Paragraph (d) of subsection (I) of Section one hundred and forty-five.")—(Lord Charley.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

The next Amendment is the last, and may I take this opportunity of thanking your Lordships very much for the way in which you have assisted as to get this Bill through. This Amendment is consequential on the Amendment to Clause 102, and I hope you do not think that I was inconsequential myself in tendering my thanks to all your Lordships. I beg to move.

Amendment moved— Page 118, line 17, at end insert—

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