§ 4.20 p.m.
§ THE MINISTER OF STATE FOR FOREIGN AFFAIRS (THE EARL OF DUNDEE)My Lords, with your Lordships' permission, I should like to repeat 678 a statement which is being made in another place by my right honourable friend the Chancellor of the Exchequer, in answer to a Question about the proposal made to the Burmah Oil Company by British Petroleum. I understand that on the 27th of June the British Petroleum Company and the Shell Petroleum Company made proposals to the Burmah Oil Company for the capital reconstruction of the Burmah Oil Company, and the acquisition by British Petroleum and Shell Petroleum of the whole of its share capital as reconstructed. As this involved the issue of new shares in British Petroleum and thus affected the capital structure of British Petroleum, Her Majesty's Government were consulted beforehand by the company and saw no reason to object. The Government's right to appoint ex-officio directors to it is unaffected by the changes proposed.
§ EARL ALEXANDER OF HILLSBOROUGHMy Lords, when the noble Earl says "unaffected", may I ask whether it alters the Government's strength in voting power within the company in relation to the number of shares held? That is the first point. The second point is that there seems to be a good deal of complaint in the country about the lack of information apparently held by the board of directors of the Burmah Oil Company as to what offer was likely to be made, or anything else. Many shareholders of Burmah Oil Company were misled about the position and continued to sell their shares, and have suffered very severe losses compared with what they might have done if they had had information and retained their shares. What has the Government to say about that, as they are part of British Petroleum who are making the offer?
§ THE EARL OF DUNDEEMy Lords, on the first question, I would say that the powers of the Government to appoint directors are not affected. They appoint two directors who have a power of veto in certain circumstances. The noble Earl particularly asked about the proportion of shares held. I understand that after reconstruction the proportion of shares held by the Government, which was 51 per cent., will be about 48 per cent. That does not affect the Government's 679 powers; no alteration can be made in the Articles of Association without the consent of 25 per cent. of the voting power.
§ A NOBLE LORD: Seventy-five per cent., surely.
§ THE EARL OF DUNDEEMy Lords, I do not think I can answer the question about the information which may, or may not, have been obtained by various people on the Stock Exchange in the circumstances to which the noble Earl alluded. I have no knowledge of that and I do not think it has anything to do with the position of the Government in this matter.
§ LORD MORRISON OF LAMBETHMy Lords, I am not doubting the word of the Minister when he talks of the right of the Government to two directorships—which is, of course, a minority of the directors; and they did not take a great part. But has that not a relationship to the fact that the Government had 51 per cent. of the shares and now they will have about 48 per cent.? Will the noble Earl tell us how the Government will secure their two directors in an undertaking in which they have only 48 per cent. of the shares?
§ THE EARL OF DUNDEEMy Lords, the right to appoint two directors, which is held by the Government, is contained in the Articles of Association of the Company.
§ LORD SHEPHERDThat is, my Lords, "B.P.".
§ THE EARL OF DUNDEEYes, my Lords, "B.P.". It does not depend on the amount of shares held.
§ LORD SHEPHERDThe noble Earl said that the Government directors—if that is the right phrase—had the power of veto. Did that arise from the fact that they were representing 51 per cent. of the shares, or did it arise from the Articles of Association?
§ THE EARL OF DUNDEEThat also is contained in the Articles of Association.
§ LORD OGMOREMay I ask the noble Earl whether there are two directors now appointed by the Government; and, if so, did they agree to the arrangements made with the Burmah Oil Company?
§ THE EARL OF DUNDEEYes, my Lords, the Government saw no reason to object to it.
§ LORD LATHAMMy Lords, surely the power of veto relates only to constitutional matters and not to the day-to-day business of the company.
§ THE EARL OF DUNDEEYes, my Lords, it relates only to certain matters in connection with the company's business.
§ VISCOUNT STUART OF FINDHORNMy Lords, is it not a fact that the 48 per cent. holding by the Government or any group of individuals constitutes control; because you would never be able to get more than 48 per cent. out of all the different shareholders to agree on any point together?
§ THE EARL OF DUNDEEThat is true, my Lords; but, as a matter of fact, the Government in this matter do not necessarily need even the 48 per cent., because their power is in the Articles of Association.