HL Deb 24 January 1967 vol 279 cc456-509

4.22 p.m.

Report stage resumed.

LORD OGMORE

My Lords, as we are back on the Companies Bill I should like to follow up something said by the noble and learned Lord on the Woolsack and also by the noble Lord, Lord Conesford; that is to say, to what extent we as a House should deal with a matter of this kind which was not in the original Bill. As I understand it, in the past in this House, if a matter was within the Title of a Bill any noble Lord was quite entitled to put down an Amendment or a new clause, if he thought fit, for it to be discussed. This is particularly the case when it is a House of Lords Bill. The only time in my recollection when I have heard the kind of argument we have heard adduced to-day from the Woolsack, and also adduced by the noble Lord, Lord Brown, yesterday, has been at the end of a Session, when the Government, Labour or Conservative, would in case of need come forward and more or less put a pistol to the head of the House and say, "Look, we think this is an admirable thing, but if you press it we shall not get the Bill at all". We have always grumbled even then; I have grumbled many times myself and talked about pistols and blackmail, but it has not made any difference at all. One had to give way because the Government turned round and said, "Either/or—either you let this go through as it is, or you do not get the Bill".

There is no question of that position arising on this Bill. This is a House of Lords Bill. I assume that the Lord Chancellor was talking about a fourth year for the Government; he does not think they are going to collapse very quickly. Therefore, according to the Government's view, there is no need to think that they are going to the country in any short space of time and that therefore the Bill will not be taken through the House of Commons. So I, for my part, cannot see why we should not deal with this new clause on its merits, irrespective of what administrative difficulty it may cause the Government. That is one of the purposes we are here for: to cause administrative difficulty to the Government. That is their look-out, not ours.

The noble and learned Lord the Lord Chancellor, or the noble Lord, Lord Brown, said that they had to consult a lot of Departments and some of the Departments would not like it if the Amendment went in. What has that to do with us? We do not care whether they like it or not. We put in Bills what we think should be in them, and if some backroom boy in the Treasury or the Board of Trade does not like it, it is just too bad. If we had taken a firmer line, even at the end of a Session, it would have been better, because in my experience a number of Bills have gone through this House which could have been much improved by our taking a firm line with the Government.

To-day I would suggest to your Lordships that we stand on our rights, and if we think that this is the sort of new clause that ought to be in the Bill, then let us put it in the Bill; and if the noble Lord, Lord Drumalbyn, decides to divide on it we must exercise our individual judgment on whether we like the clause or whether we do not.

LORD BROWN

My Lords, I have not been in this House a great length of time, nor have I a great deal of experience of this House, but I am a little shocked to hear that it is the duty or right of noble Lords here to put in the Bill whatever they like without regard to the circumstances. The Labour Governments of this country since the war have been the only Governments which have introduced Companies Bills. This is not a political debate, but in view of what has been said I am going to say that in their thirteen years in office the Opposition Party never introduced a Companies Bill.

This Government see the urgent necessity of amending the Companies Act. It is urgent. We have a crowded timetable of legislation, but the Government have proceeded on to the Companies Act and have taken the Jenkins Report as a basis. There is not in this Bill a third of the recommendations which appear in the Jenkins Report; there are twice as many recommendations, most of which seem very sound, in the Jenkins Report as we have in this Bill. It is open to anybody in respect of a vast mass of potential Amendment to advance precisely the same arguments which the noble Lord on the Liberal Benches has just put. If anyone in the House took up this irresponsible attitude we should send out a Bill two or three times as long as the one we have here.

It is not wrong or stupid, but wise, to point out from the Government Benches that there is a limit to the length of the Bill. We have started dealing with the matter, and I feel a little cross when noble Lords say what has been said. It is as though a committee were trying to run a sports meeting and had decided that in order to attract the public it would be necessary to limit it from 2 to 5 o'clock, and then people came along and said, "Surely we can have a hop, skip and jump. It will only take five minutes." The reply is, "We are trying to limit it from 2 till 5 o'clock, and if we put that in we shall have to put other things in as well." But they keep saying, "It will only be an additional five minutes." We get this argument every time, without reference to the real argument which this side of the House is making. Noble Lords are entitled to ignore the main argument I have made and which others have made as well, but we shall not respect Members from the other side for completely ignoring our argument, which is a cogent argument.

LORD OGMORE

My Lords, the noble Lord ignores my argument. If you want to limit the scope of the Bill it is done by the Title. If something is within the Title we can move an Amendment upon it. The noble Lord is trying to introduce a completely new procedure in Parliament.

LORD BROWN

My Lords, so long as the procedure results in the Government spokesman standing up and being entirely objective about the situation, I see nothing wrong with such a new procedure and perhaps it would be a good idea if this House became a little more objective and faced the issue of Parliamentary time. There is not untold time in which to get these Motions through. If you want to move an Amendment on this matter you are entitled to do so. The content of this Amendment is perfectly sound; there is no mistake about that. But if we go on amending the Bill and extending it, the same thing will happen in another place and a great deal of time will be wasted.

VISCOUNT ECCLES

My Lords, I must say a word because I was responsible for the no-par-value shares Amendment. It seems to me that the Government are saying that the scope of every Bill shall remain what it was when they introduced it. I must draw on my experience in another place. Take the Finance Bill. Year after year honourable Members in another place try to get into the Finance Bill, to effect some relief or other in taxation, new clauses for which they think there is a good case, and from time to time they get them in. It has never been assumed in another place that the scope of the Bill was absolutely fixed when the Bill arrived. It was always considered the right of an honourable Member to try to make the legislation better.

If we put in good Amendments—and I hope any Amendments on which we chose to divide the House would be good Amendments—and if they are sound, the Members in another place will not waste any time on those Amendments, especially if the Government admit them in principle. What the Government are saying to us is, "We are afraid, even with our majority of one hundred in another place, that if you here set an example of putting something good into the Bill, the Members there will follow it and we shall not be able to keep our people in order".

This is a rather difficult doctrine to swallow, because a man is elected a Member of another place to do what he thinks right. If a majority of another place wants to put in Amendments and they win the Division, that is the way our country is governed. To start now and say we must take every precaution that there are no majority votes in another place for Amendments which will enlarge the scope of the Bill is, I think, constitutionally very dangerous. I am sorry we have to say this. I have always thought the Executive was getting more and more powerful all the time, and I think I see certain reasons why that is so, but I did suppose that Members of Parliament on the Back Benches would always have the right to try to make legislation better. If that is taken away from them it is not very clear what we come here for.

LORD DRUMALBYN

My Lords, I wonder whether I may follow up some of the remarks that have been made on the attitude of the Government. May I put this to the noble Lord opposite and to the noble and learned Lord on the Woolsack: that they are saying to us that if we in this House put Amendments into the Bill then another place is likely to bring in a great many other Amendments which will take a great deal of time, Amendments which it will be difficult to resist. I wonder whether they would look at it from the other point of view? If they are suggesting to us that it is provocative to put Amendments in, what do they think it is to say, "You must not put Amendments in"? This Bill will go to another place, a Bill on which the Government have said, "On no account will we accept any Amendments in here". What is another place going to think of that? What would your reactions be, my Lords? What would be the attitude of noble Lords opposite in similar circumstances, if they were in Opposition? They would find out every single Amendment they could get and the Bill would go on and on in Committee. Surely that is human nature, and it cannot be described as irresponsible. Because what we are here to do is to discuss Acts of Parliament and to legislate and to move into those Acts of Parliament those things which we think will be of benefit to the public.

LORD BROWN

My Lords, I know the noble Lord does not intend to be unfair, but I think he is very unfair when he uses words to suggest that our attitude has been that no Amendments to the Bill are to be allowed, particularly as a large number of Amendments have been accepted. It is ungenerous to say that. We have leant over backwards to try to take note of the very wide counsel from the Opposition Benches. But we do not want to extend this Bill outside certain limits.

LORD DRUMALBYN

My Lords, I accept that, and we are grateful to the noble Lord for making improvements to the Bill. None of these improvements have involved new clauses. The Amendments I was talking about were new clauses. This is what is at issue. We pride ourselves on being a democratic community, and one would imagine that the Government would be prepared to accept advice on improvements that they themselves admit are improvements being added to the Bill. This is partly what we are here for. But, instead of that, we are accused of an irresponsible attitude for wanting to improve the Bill. This is just the pure fact of the matter. This is what the noble Lord said: "If you try to improve the Bill by extending it to cover things which the Government themselves admit will be to the benefit of the public, you are irresponsible". That is what the noble Lord said, in terms, on this particular Amendment. All we have had from him is that this Amendment is sound. My Lords, what on earth are we expected to do in those circumstances?

SEVERAL NOBLE LORDS: Carry it.

LORD DRUMALBYN

It seems incredible that noble Lords should get up from the other side and say that the Amendment is sound and then say, "But we must not have it in the Bill". It has been in the Jenkins Report. It is within the scope of the Bill. What does he expect us to do? I think he has put us in a terribly difficult position. In a way I was almost hoping he would not say anything at all, as the noble and learned Lord on the Woolsack did, about the content, although I must say it is very odd we should be moving an Amendment here. I have nearly passed my majority of twenty-one years in Parliament, but I have never on any occasion, so far as I can remember, known an Amendment to be moved but the substance of it not discussed at all by the Government. All the noble Lord can say to us is, "The Amendment is sound, but we reject it". My Lords, he is really being extraordinarily provocative to the point of irresponsibility himself. I must invite noble Lords to take what action they think on this matter, because it is only right that there should be a protest against the treatment that Parliament is receiving.

LORD PEDDIE

My Lords, I beg permission of the House to speak twice on this Amendment, although precedent will indicate that such begging of leave is not necessary. I think we are getting a long way wide of the mark in this debate. I appreciate the attitude of the Government in seeking to restrict the scope of the Bill. That I think is completely justified—

LORD CARRINGTON

My Lords, I hesitate to interrupt the noble Lord, who has the great respect of this House and who is very popular on all sides, but I think it is an abuse of the procedure of this House to get up and say, "May I have the leave of the House?" and then to speak a second time. I think it is just permissible, as we said earlier to-day, to intervene to ask a question, but to make a speech I think is out of order.

LORD PEDDIE

My Lords, I was proceeding, possibly in too long-winded a way, to ask for an answer to a question which I put to my noble friend and which apparently has been lost in the welter of discussion on matters which had no strict relevance to this particular Amendment. I would request my noble friend to give an answer to the question I put as to whether or not this particular Amendment came within the scope of the Bill.

LORD BROWN

I think the answer is, No. It is difficult to draw hard and fast lines. I am not going to pretend that it is easy to draw a line on one side of which fall all matters which should be included in the Bill and on the other all matters which should not be included. It is a question of judgment in trying to get a reasonable limitation. I think this falls on the wrong side of the line.

LORD HAWKE

My Lords, I do not believe the noble Lord the Minister who has just replied has any sound grounds for saying that. I look at this particular matter as one of disclosure. You are asking a company to disclose its true business. Before it starts business it has to disclose it to the Board of Trade, and they have to agree what sort of name it will have. It must not be a deceptive name. After it has started to trade, for some reason or other it manages to work itself away into a position where its actual trade bears no relation to its title. Therefore, it is proposed to insert this clause, in order to cause the company to disclose what it should have disclosed at the beginning. Therefore, I submit that it is well within the spirit of this Bill. It is merely carrying the doctrine of disclosure a little further, and while I do not regard it as a terribly important Amendment, in view of the difficulties the noble Lord has been making about accepting it I think we should be quite justified in putting it into the Bill.

VISCOUNT DILHORNE

My Lords, I am astonished that the noble Lord should say that this Amendment is not within the scope of the Bill. I do not think he can possibly justify that observation. This Amendment seeks to amend a section of the principal Act. Furthermore, if the Amendment is made it will not involve any alteration to the Title of the Bill. If it were not within the scope of the Bill, then to make the Bill right the Long Title would have to be amended; but no such Amendment is required. No doubt it was convenient

Resolved in the affirmative, and Amendment agreed to accordingly.

4.50 p.m.

BARONESS ELLIOT OF HARWOOD moved, after Clause 37, to insert the following new clause:

Amendment of section 188 of principal Act

". Section 188(1) of the principal Act (which provides for the restraint of fraudulent

to the noble Lord to say, in answer to his noble friend, that in his opinion the Amendment was not within the scope of the Bill. But if he consulted anyone with any experience of these matters they would be bound to say that, whether or not the Amendment is desirable, clearly it is within the scope of the Bill.

4.42 p.m.

On Question, Whether the said Amendment (No. 55) shall be agreed to?

Their Lordships divided: Contents, 77; Not-Contents, 36.

CONTENTS
Ailwyn. L. Ebbisham, L. McCorquodale of Newton, L.
Airedale, L. Eccles, V. Macpherson of Drumochter, L.
Albemarle, E. Effingham, E. Merrivale, L.
Amulree, L. Elliot of Harwood, Bs. Merthyr, L.
Atholl, D. Erroll of Hale, L. Morrison, L.
Auckland, L. Falkland, V. Mowbray & Stourton, L.
Blackford, L. Ferrers, E. Moynihan, L.
Boston, L. Ferrier, L. Napier and Ettrick, L.
Brentford, V. Forster of Harraby, L. Nugent of Guildford, L.
Brooke of Cumnor, L. Fortescue, E. Ogmore, L.
Brooke of Ystradfellte, Bs. Fraser of North Cape, L. St. Aldwyn, E. [Teller.]
Buckton, L. Greenway, L. St. Helens, L.
Caccia, L. Gridley, L. St. Oswald, L.
Carrington, L. Hawke, L. Salter, L.
Clifford of Chudleigh, L. Hereford, V. Sandys, L.
Cohen, L. Horsbrugh, Bs. Shannon, E.
Conesford, L. Howard of Glossop. t Slim, V.
Crathorne, L. Howe, E. Somers, L.
Daventry, V. Iddesleigh, E. Strange of Knokin, Bs.
Denham, L. [Teller.] Ilford, L. Tenby, V.
Derwent, L. Inchyra, L. Thurlow, L.
Devonshire, D. Inglewood, L. Vivian, L.
Dilhorne, V. Jessel, L. Wade, L.
Drumalbyn, L. Kilmarnock, L. Willingdon, M.
Dudley, L. Kirkwood, L. Wolverton, L.
Limerick, E. Ypres, E.
NOT-CONTENTS
Addison, V. Hilton of Upton, L. St. Davids. V.
Archibald, L. Latham, L. Shackleton, L.
Bowles, L. Leatherland, L. Shepherd, L.
Brockway, L. Lindgren, L. Silkin, L.
Brown, L. Longford, E. (L. Privy Seal) Snow, L.
Champion, L. Maelor, L. Sorensen. L. [Teller.]
Collison, L. Mitchison, L. Summerskill, Bs.
Crook, L. Pargiter, L. Taylor, L.
Faringdon, L. Phillips, Bs. Taylor of Mansfield, L.
Gardiner, L. (L. Chancellor.) Piercy, L. [Teller.] Wells-Pestell, L.
Hall. V. Rhodes, L. Williamson, L.
Henderson, L. Ritchie-Calder, L. Wootton of Abinger, Bs.

persons from managing companies) shall be amended by the insertion, after sub-paragraph (ii) of paragraph (b), of the following subparagraphs:—

The noble Baroness said: My Lords, I rise to move Amendment No. 56 which stands in my name and that of the noble Lord, Lord Drumalbyn. This refers again to something in the Jenkins Report, which we have been discussing at some length to-day, but it also refers to the discussion we had in Committee when my noble friend Lord Peddie moved a somewhat similar Amendment, and also the noble Lord, Lord Drumalbyn. All these Amendments have been put together in one Amendment. It is a composite Amendment and it covers recommendations contained in paragraph 85(b) of the Jenkins Committee Report, page 29. We hope it will clear up some of the confusion to which the discussion on Committee stage led, since we had two Amendments down.

We are concerned with the list of individuals who involve themselves in short-term private companies and operate with financially fraudulent intentions. This list is maintained by the Consumer Council. There is no sign that such activities are decreasing. We have knowledge in the Council of pending liquidations long before they come about, but we have been unable to take steps to protect or warn the public.

During the Committee stage the noble and learned Lord on the Woolsack pointed out that the objection to the Amendments was that any increase in the subject matter of the Bill might lead the Government to decide not to proceed with the Bill and therefore this would be detrimental. We discussed that matter at great length just now and I will not go over the ground again. But this particular Amendment is not one which is contentious. My noble friend and colleague on the Council, the noble Lord, Lord Peddie, is supporting it, and we do not approach this matter in any Party political spirit at all. We are simply concerned to try to improve the Bill in the interests of the people in whom we are particularly interested—that is, the general public and those who are taken in and suffer from the fraudulent activities of dishonest people.

I hope that in the course of the discussion I may get some encouragement from the Government and some indication that they realise that this is a matter of great significance to the public, and some assurance that if they are not prepared to accept this Amendment to-day they could, without lengthening the Bill, without complicating things in another place as the noble and learned Lord has asked us not to do, add something which would deal with this very distressing fradulent behaviour which we all know goes on. Only recently the newspapers have been full of actions by directors which have led to great distress and unhappiness and cheating of the public, and this is what we all want to avoid. I know that members of the Government feel just as strongly as we on this side do. I hope the Government will see their way to incorporate this clause in the Bill. I beg to move.

Amendment moved—

After Clause 37, insert the said new clause.—(Baroness Elliot of Harwood.)

LORD DRUMALBYN

My Lords, I should like to support my noble friend in this Amendment. This again, of course, is a recommendation of Jenkins, as she has indicated. It provides that the court may disqualify a person from being a director, or being in any way concerned or taking part in the management of a company, for up to five years without the leave of the court if it finds in the course of winding up a company that he has been convicted. Noble Lords can see the three points mentioned here. This was a recommendation of the Jenkins Committee, in paragraph 85(b), that the powers of the court to disqualify should be extended to cover such persons.

I am not certain that this clause goes quite so far as it might, but at any rate it is a step in the right direction. If the noble Lord felt it would be better to alter the new clause slightly in order to provide that the two points mentioned here—that is, conviction on indictment of an offence involving fraud or dishonesty and the following case—should be coupled for the disqualification, quite apart from winding-up proceedings, I think we would assent to that; and we would further assent to an extension of the disqualification up to a period of five years, to run from the termination of the sentence of imprisonment, if such were imposed.

The point of this Amendment is that it brings this part of the legislation into line with what is being done in Part II to a large extent, where in Clause 48 the Board of Trade are given powers to disqualify from taking part in the conduct of a business someone who is not a fit and proper person in the sphere of insurance. It seems to me it is difficult for the Government to resist doing the same in the wider sphere, and if they can see their way to do this it plainly is advisable to take this step at this time, because by so doing they will be preventing a good deal of fraud and dishonesty, and preventing a good many people from being defrauded in the course of the next two or three years before the next Companies Bill comes along. In my view, there is an irresistible case for doing something here, and I hope the noble Lord will agree. I think it would be wise to move one or two new clauses into the Bill; simply because it would avoid that kind of complication to which I referred on the last Amendment. If it were plain that the Lords had not been debarred from moving new clauses into the Bill, I think that the passage of the Bill in another place would be much quicker than it would otherwise be.

LORD PEDDIE

I rise to support the noble Baroness and the noble Lord opposite in this Amendment. The Amendment itself is the sum of the Amendments which the noble Lord, Lord Drumalbyn, and I put forward on the Committee stage and is, I think, something of an improvement. I need not repeat the arguments that I used on a previous occasion. To some extent, they have already been repeated by the noble Lord and the noble Baroness opposite. But I certainly hope that the Government will receive this Amendment sympathetically. I was able on the last occasion to give some indication of the experience of the Consumer Council who had evidence of a long procession of exceedingly doubtful characters, clearly operating with short-term companies, to the detriment of the general public, though it appeared that little could be done about it. To my mind at least, this Amendment does not go outside the scope of the Bill. I appreciate the Government's difficulties in this regard, but this Amendment gives adequate protection to the consumer. In the light of the arguments put forward, supported by considerable experience, particularly by the Consumer Council, I sincerely hope that the Front Bench will give sympathetic consideration to this Amendment.

LORD COHEN

My Lords, I want to say only one thing. I am in favour of the principle of the Amendment, but I should be interested to hear a word from the noble and learned Lord on the Woolsack on paragraph (b), which refers to a man who has shown himself, when acting as a director of any company or when otherwise concerned in their management, to have acted in an improper, reckless or incompetent manner … It seems to me that that may be a difficult thing for the court to decide. However, no doubt the wording can be improved upon. But I am a little worried as to the generality of those words.

5.3 p.m.

THE LORD CHANCELLOR

I would respectfully agree with the noble and learned Lord, Lord Cohen, as to the width of the clause. But the Government's objection is really one of principle, which I can deal with very shortly; namely, that this matter is outside the scope of the Bill. In view of one or two things which were recently said by Members of your Lordships' House, may I make it quite clear that there is no constitutional question here? There is, of course, no question that your Lordships' House have an absolute right to make any Amendment to any Bill, as your Lordships like. In another place, Members are at least limited to the Title to the Bill; but in your Lordships' House the Title can always be altered, and there is almost no Amendment which this House is not entitled to make in a Bill, if it wishes to do so. References to the scope of the Bill are simply references to a decision by the Government to have a limited Bill, rather than an unlimited one.

This is the first year of the life of this Government. So far, only about nine months have gone by. Considering the size of the promises in their Election Manifesto, they could hardly have been blamed if they had said, "We have said that we are in favour of law reform. In various respects, we are going to carry out law reform, in this, our first year, in small Bills. But in respect of Company Law reform, which Conservative Governments did not touch for 13 years, we really cannot do that in the first year. "The Government decided to introduce a Bill for the reform of Company Law, but have explained from the start that legislative time does not allow for a full Bill.

In the Jenkins Committee Report there are something like 325 separate recommendations. One section—and in the Government's view much the most important—comprises all those recommendations which relate to disclosure. Accordingly, it was to that section, plus another forty clauses dealing with insurance companies (for reasons with which your Lordships are all familiar), that the Government felt bound to limit the Bill. Of course there are separate Parts of the Bill. The Jenkins Report contains a separate chapter dealing with business and company names—business names, company names, change of company's name, disclosure of names of company directors; and there are 16 different recommendations. The Amendment which your Lordships have already made as to names is one out of the large number to which the Government had no real objection, except that it was outside what I have defined as the scope of the Bill.

Here also the Jenkins Committee have made a number of recommendations, dealing with fraud and incompetence on the part of directors. This is just one of them. There is also a recommendation, in paragraph 503(a), that the power of the court under Section 270 to order the public examination of the directors of insolvent companies should be extended. It may well be that this is a good proposal. There is a recommendation, in paragraph 503(b), that directors be made responsible for the debts of a company which has carried on business recklessly. That also may be an admirable recommendation. There is a recommendation, in paragraph 503(c), that penalties for fraudulent trading provided by Section 322 can be applied whether the facts are discovered in a winding-up or not. There is also a recommendation, in paragraph 503(d), that Section 333 should provide a summary procedure to deal with actionable negligence by directors. All these recommendations in relation to directors may be admirable recom mendations, but they are outside the scope of the Bill. It is for that reason that, regretfully, the Government are unable to accept this Amendment, even if it were not in its terms too wide.

If I may go on to express my own personal and additional regret, as your Lordships know I am particularly interested in law reform, and interested, as I believe many Members of your Lordship's House are, in getting more Bills started in your Lordships' House. My right honourable friend the President of the Board of Trade is about the only Minister so far who has felt prepared to trust his Bill to your Lordships' House in the first place. I suppose it is not unnatural that Ministers should want to introduce their own Bills before their own colleagues in their own House, where they have a majority; and I should greatly regret it if your Lordships, as you appear to be going to do, were to treat this Bill in a way which will make it much less likely that any of my colleagues will wish to start their Bills in your Lordships' House. In view of all those considerations I hope that the noble Baroness will think it right to withdraw this Amendment.

5.18 p.m.

VISCOUNT DILHORNE

My Lords, I am glad that the noble and learned Lord the Lord Chancellor has made it quite clear what he meant by the use of the expression" scope of the Bill". In another place that has a certain technical connotation, and when Is poke about the last Amendment not being outside the scope of the Bill I was dealing with it from that point of view. I think it is also true to say that this particular Amendment is not in any technical sense outside the scope of the Bill. It would not require any amendment of the Long Title. Of course, in another place, as indeed in this House, the Long Title can, if need be, be amended.

The Lord Chancellor has made a powerful plea that we should not add greatly to the content of the Bill. The Government wished to introduce a limited Bill, and anything that is not within the limits which the Government thought fit to prescribe is, in that sense, as the noble and learned Lord has made quite clear, outside the scope of the Bill in the sense in which he has used the term. The reason which the noble and learned Lord the Lord Chancellor has advanced is that of pressure on Parliamentary time. On a Bill of this kind, I fully realise, and indeed sympathise with, the desire of a Government that it should not become too controversial and so have its passage delayed. But I should have thought it was only if highly controversial Amendments were introduced into the Bill that there was any real risk of more legislative time being consumed in getting it through another place.

The noble and learned Lord the Lord Chancellor has pointed out that some of the Amendments pick up only particular recommendations of the Jenkins Committee Report. So be it: but if those recommendations are recommendations which meet with approval from both sides of this House, then is there really much objection to their inclusion in the Bill? If after careful consideration the Amendments meet with approval from both sides of this House, I should have thought that it would be extremely unlikely—of course anything may happen, as one knows, in another place—that they would be the subject of acute controversy in another place and would delay the passage of the Bill for one moment. They would possibly pass without any discussion at all. Therefore, while I sympathise with what the noble and learned Lord the Lord Chancellor has said as indicating the view of the Government on this matter, I hope that neither he nor the noble Lord, Lord Brown, who has fought so valiantly to maintain the Bill in its present form, will resist too strenuously Amendments which are not likely to be controversial in another place, and so not likely to lead to the consumption of more time in the passage of the Bill.

Having said that, I hope that my noble friend who moved the Amendment, and the noble Lord opposite who supported her, will not press it, because, as my noble and learned friend Lord Cohen has said, I think the wording of subsection (5) is so wide as to be almost ineffective and needs a good deal of reconsideration. With those words in that Amendment, even if it were not for what the noble and learned Lord the Lord Chancellor has said, I myself would not find it possible to vote for it.

LORD MITCHISON

My Lords, I rise only for two purposes. The first is to correct with very great respect the recollection of my noble and learned friend, in that a Bill for the preservation of commons was introduced in this place by another Minister. The second purpose is to say a word or two, I hope in a completely non-contentious spirit this time, about what seems to me to be a rather interesting and, I think, constitutional question, the scope of legislation.

On the technical point, I have always understood, when considering this in another place, that there were two separate matters. One was what could be comprehended within the words of the Long Title; and the second was the scope of the Bill which was occasionally, though not often in the nature of the case, applied to ruled-out Amendments which were within the actual wording. The actual wording in this Long Title happens to be very wide. When one comes to the scope of a Bill the question is: whose business is it to decide how much of the cherry is to be bitten off, or, if you like, in how many bites the cherry is to be taken?

I think it is fair to say that when the Jenkins Report appeared, and for some time afterwards, there was a good deal of criticism of it on the lines that it did not go quite far enough. I do not want to embark upon that question now, but I noticed that criticism in the Press at the time, as did other people. There was some pressure on the Government of the day to carry out the Jenkins Report. I charge my memory, but I think that it has been said that they did not accept it as by any means the last word, and that they wanted to see whether it needed supplementing at any point. It is true that the Jenkins Committee made a very large number of recommendations, and I remember pressure being put on the Conservative Government of the day in connection with the Trustee Bill when it was in the other place. We tried to get them to carry out certain things on the lines of the Jenkins recommendations, and I think the answer we were given was that they were not quite acceptable as a whole. I always understood this to mean that, while in some respects they might think the Jenkins Report went too far, in other respects they thought it did not go far enough.

But can the matter really be stated like that? If one is presented with a Report on a complex matter such as this, a matter which is subject to a certain amount of reasoned criticism, is it not the responsibility of the Government of the day in promoting legislation to take it in stages, if it is necessary to do so, in order to get a proper revision of the subject as a whole? To take the Amendment which we are now considering, it may well be that it is acceptable to everybody, not necessarily in the present form, but in principle, or in some other form. That may be the case, but if these bits and pieces are to be accepted as we go through the Bill, each of them said to be comparatively minor, each said to carry general consent, are we not taking the risk thereby of making a mess of the task which will have to be faced ultimately? I refer to the task of revising Company Law as a whole, not only in the light of the Jenkins Report, but in the light of criticisms made of it and of developments which have occurred since it was passed.

My feeling about this is that it is a great pity to have to tailor the scope of what you are doing—the size of the job, the bite of the cherry, whatever you like to call it—by the political accident of what is or what is not sought to be put in during the course of proceedings here or, for that matter, in another place. I believe that the ultimate responsibility must rest with the Government of the day, whatever its colour, of deciding in what stages it takes a broad subject and, when it is dealing with a Bill directed to one aspect of it, whether it should or should not include incidental things even though they are by common consent. What I am really saying is that it is never sufficient that we should be broadly agreed on a piece of a Bill as it is. We must also be agreed on its taking its proper place in the framework of legislation such as we are bound to have when we are dealing with subjects in this modern, changing world.

BARONESS ELLIOT OF HARWOOD

My Lords, I beg leave to withdraw the Amendment.

Amenment, by leave, withdrawn.

Clause 42 [Commencement of, and exercise of powers to make regulations under, certain provisions of Part 1]:

VISCOUNT ECCLES

My Lords, this Amendment lays on the Board of Trade the duty to appoint the day on which the system of no-par-value shares shall come into operation. I beg to move.

Amendment moved—

Page 42, line 7, at end insert— (" ( ) section (Shares of no par value) of this Act and Schedule (Amendments of the Companies Acts 1948 consequential on the introduction of Shares of No Par Value) thereto shall come into operation on such day as the Board of Trade may by order appoint.")—(Viscount Eccles.)

On Question, Amendment agreed to.

Clause 48 [Provisions for preventing unfit persons from being associated with insurance companies]:

LORD DRUMALBYN moved, after "an incorporated company if", to insert "after due consideration". The noble Lord said: My Lords, on the Committee stage we had considerable discussion, to which both sides of the House contributed, arising out of a feeling of disquiet that there was no kind of appeal for any persons whom the Board of Trade considered not to be fit and proper persons to conduct, or to be involved in, insurance. The purpose of this Amendment is to give a form of appeal to the Board of Trade itself. This, I think, implements to a large extent the suggestion made by the noble Lord, Lord Mitchison. If the noble Lord will look at what he said, he will see that he was advocating the same kind of appeal as applies in town and country planning and certain aspects of that sort.

What is proposed in my next Amendment, No. 59, is that the Board of Trade should afford the officer or other person in question an opportunity of making representations to them, either in person or in writing, as he may elect. The other point—and this was not raised in the Committee Stage—is that when the Board of Trade refuses an authorisation to a company to carry on some form of insurance business, the company will not know why that refusal has been made unless the Board of Trade tells them.

Two points seem to arise here. In the normal way, one would expect the Board of Trade to give a reason for not giving an authorisation, especially if it was related to some shortcoming that is I laid down, as to capital and so forth. So at the end of the day the company would be almost certain to know by a process of deduction that, if they were not told the reason, it was because somebody in their ranks was not a fit and proper person. The company will want to get its authorisation and, therefore, it seems to follow that it should be told how it can put its house in order, and of whom it must get rid if it is to get its authorisation. I find it difficult to see how this can be avoided.

The other matter to which I should just like to draw attention is this. The point of the first, and paving, Amendment is to give an appeal able cause of action, if the Board of Trade does not give "due consideration". In other words, the only circumstances in which an appeal will lie to a court is when somebody is told that he is not a fit and proper person, and is not given an opportunity of making representations. Therefore, this Amendment is purely to ensure that the Board of Trade does give an opportunity of making representations. In that way, it will be entirely in the hands of the person who is said to be not a fit and proper person, as to whether he avails himself of the opportunity for an appeal on the ground that he has not been given a hearing.

If the person is not given a hearing, he may prefer to "lump" it, and not to raise the matter publicly, but it seems inconceivable that the Board of Trade would not give the person in question an opportunity of making representations, and I think I am right in saying that this is commonly done. But I think that it is very hard on a company, if it is refused an authorisation on the ground that it has within its ranks an officer or a director who is not a fit and proper person, and when it complies in every other respect and does not even know that it has such a person within its ranks, that it should not be told how to put its house in order. I recognise the difficulties here, but this is a matter which plainly exercised the House at an earlier stage, and the reason why I have put down this Amendment is to allow it to be explored further. I beg to move.

Amendment moved— Page 45, line 34, after ("if") insert ("after due consideration").—(Lord Drumalbyn.)

LORD MITCHISON

My Lords, I am not going to make a speech. In order to avoid any misunderstanding, I should like the noble Lord to confirm, if he will, that my suggestion about people being heard was not in connection with this matter at all, but arose on an Amendment from the Opposition to provide for an appeal to the court in a case where I thought that an appeal was inappropriate. That is right is it not?

LORD DRUMALBYN

Yes, my Lords, I quite agree. But I understood that in the course of his observations the noble Lord laid stress on the need for a person to be heard in a case of this kind.

LORD MITCHISON

In the case to which I was referring.

THE LORD CHANCELLOR

My Lords, this is an Amendment that is within the scope of the Bill: it is very much a matter of opinion, and certainly not unimportant. We shall all agree, I think—certainly, all lawyers will agree—that if a man is to be penalised in some way or other he ought to be told what is alleged against him, and he ought to be given an opportunity of answering it. The Bill as drafted does not do this. The effect of the Bill is that a man can be refused a licence to start a new insurance business without being given any reason, and without having a legal right to make representations. It is one of those difficult cases where we have to balance the interests of the individual and the interests of the community.

The difficulty lies in the fact that the Amendments require the Board to identify the person considered unfit and to state their reasons for refusing the authorisation. Obviously, this would mean that the Board could not act on confidential information, since they could not disclose it in stating their reasons to the applicant. The Board might thus be obliged to authorise companies to undertake insurance business, even though they suspected that the business would be conducted dishonestly or recklessly. To reveal to the person considered unfit the confidential information on which the decision was based—quite apart from being a breach of confidence—could rarely be done without risking charges of defamation, either against the Board or against the source of the information, and would obviously prejudice the future supply of confidential information.

LORD DRUMALBYN

My Lords, may I ask the noble and learned Lord a question? He has pointed to a possible weakness in my Amendment arising out of one possible way of interpreting the words "the reason for their refusal". But what I meant by these words, "the reason for their refusal" was simply that the Board might take the view that a company had an unfit and "improper" person, if I may put it in that way, in their ranks, as opposed to the reason that the capital was insufficient, or whatever the reason for the refusal was. I did not say, and I did not intend to imply, that the Board should have to give a reason why they thought that a man was an "improper" person. That is a different matter.

THE LORD CHANCELLOR

My Lords, with great respect, I thought that the individual was much more important than the company. I do not know whether the Amendment was intended to provide that the Board of Trade should go to the company and, behind the person's back, tell the company, "This is your employee whom we have got something against", without the individual's ever knowing it. I see that the noble Lord agrees that of course the individual has to know. That being so, surely the individual ought to be told, if he is to make representations, what it is that the Board of Trade have against him.

The difficulty, of course, is that, where the Board's information is confidential information received from the City, if they have to do this they will never again get any confidential information from the City. One has to weigh up the importance of the two things: refusing to authorise insurance business where it would not be advisable to do so, and the protection of the insuring public.

It is not only the insured public. After all, in one recent case there were, I think, 240,000 policy holders, and this may mean people losing their homes. But in the case of those who are insured in respect of third party risks, there are also the third parties to be considered. We all know of cases in the courts involving terrible injuries which may take two or three years to come on. The plaintiff succeeds, and then he finds that, not only has the defendant no money, but that his insurance company has no money either.

One has the difficult task, therefore, of balancing as best one can how far the interests of the public as a whole ought to be given precedence over the interests of the individual. This was, I think, fully recognised in Committee by the noble Lord, Lord Erroll of Hale, when he said: The practical difficulty, whatever course is pursued, is that the Board of Trade's sources of information in this delicate field must be kept confidential. It might be difficult for them to go into open court and reveal what they know, since not only might it be highly embarrassing in itself, but it might mean that a source of information of particular reliability would dry up in future".—[OFFICIAL REPORT: 12/12/66, col. 2108]. It is very difficult.

In those circumstances, what the Government have done is to draw a distinction between Clause 46, which determines whether or not somebody should be allowed to start a new insurance business, and Clause 50, which provides that the Board of Trade may revoke an authority in the case where the business has already started. In the second case, notwithstanding the difficulties, they have expressly provided for a legal right to make representations, and for an obligation on the part of the Board of Trade to give reasons. The difference between the two is, I think, very like the difference which faced the Conservative Government of 1939, when they were considering this problem under the Prevention of Fraud (Investments) Act. In that Act they had four things to consider: first of all, that the Board might declare anybody to be an exempted dealer for the purposes of the Act; secondly, that the Board might authorise particular unit trust schemes as authorised schemes; thirdly, that the Board, where it had made somebody an exempted dealer, might revoke that; and fourthly, that where they had made a particular unit trust scheme an authorised scheme, they might revoke that.

Considering the position of the individual and the position of the public in relation to these four things, Parliament then took the view that two of them were in one class and two were in another. They took the view that where a man is already an exempted dealer and he is dealing, and where there is already a unit trust scheme which has been authorised (and, I think one might fairly say, in this particular case, where somebody has been authorised to start an insurance business, and has started it), then to close them down is really to deprive them of a right of property; whereas, on the other hand, merely to refuse them the licence to start is entirely different. That was the view taken by Parliament in the Prevention of Fraud (Investments) Act, in which, as I say, they drew a distinction between allowing somebody to start something and closing it down once it had started, and in which they provided that reasons must be given and representations could be made, not in the starting cases but in what I have called the closing down cases.

It has seemed to the Government that that is right, and that is why no right of representation is provided for in Clause 46, which is in many ways like any other case where you either give somebody a licence or you do not, and where it is discretionary. In spite of all the difficulties of confidential information, when it comes to Clause 50, which provides that the Board may revoke the authority, there is the specific provision that they must give their reasons and allow the representations to be made. It is for those reasons that the Government feel that they must resist this Amendment, and I hope that, having heard that explanation, and in view of the precedent set by a Conservative Government, the noble Lord will withdraw the Amendment.

There is one additional point. There is now a marked safeguard for the individual which did not exist at the time of the Prevention of Fraud (Investments) Act, which is that in, I think, a fortnight's time there is to be introduced into this House (it has already passed through the other House) the Parliamentary Commissioner Bill. This case is exactly one in which, within the terms of that Bill, the Parliamentary Commissioner will be able to walk into the Board of Trade and look at any minutes or other documents, and cross-examine civil servants, to find out exactly what has happened—and that will have the great advantage that it will be done in private. There is, therefore, that additional safeguard, which I would also ask the noble Lord to take into account.

VISCOUNT DILHORNE

My Lords, I am sure the whole House is grateful to the noble and learned Lord the Lord Chancellor for the explanation he has given for not including in Clause 48 any right of representation by the individual. Some of the arguments advanced by the noble and learned Lord are indeed powerful; but, at the same time, I hope that he will give an undertaking to give further consideration to this problem, because I think it may be possible to find a better solution to it than that which is now contained in the Bill.

My Lords, I follow the difficulties with regard to confidential information. The noble and learned Lord the Lord Chancellor used a powerful argument. I also see the strength of the argument that this power to refuse authorisation must be contained in the Bill. I challenge neither of those propositions. But, my Lords, I do not think the case put forward by my noble friend is really met by reference to the Parliamentary Commissioner. It may be that the Board of Trade, acting perfectly bona fide, will be in receipt of confidential information about some individual and, acting on that information, refuse to give an authorisation to a company which in all other respects is a very respectable company, with respectable persons in it. The fact that authorisation is refused is bound to leak out, and so it seems possible that in many cases the effect of what the Board of Trade does, on information which they have received confidentially, and which they have believed, will be to cast something in the nature of a slur upon the reputation of all those concerned with that company.

But suppose the information which the Board have received in confidence is wrong, and that they act upon that perfectly sincerely, no one being in a position to blame them. The Parliamentary Commissioner will be able to find out on what information they have acted, but the person in respect of whom they have acted will not know; the company in respect of which they have acted will not know; and there will be no one who will ever, so far as I can see at the present moment, have an opportunity of satisfying the Board of Trade that the information on which they have acted is erroneous and should not be relied upon. It seems to me that a considerable injustice might result.

I hope that my noble friend will not press this Amendment, because I do not think it really meets the case—and it certainly does not meet the points which the noble and learned Lord the Lord Chancellor has advanced. At the same time, I am not now in a position to put forward a suggestion which might meet these difficulties. I should be grateful, therefore, if the noble and learned Lord the Lord Chancellor or the noble Lord. Lord Brown, would say that, between now and, perhaps, this Bill getting to another place, some further thought will be given to this problem. Perhaps they could see whether means can be devised which will safeguard this position and perhaps prevent the Board of Trade being misled by inaccurate but highly confidential information, and so, unwittingly and unintentionally, doing considerable injustice to an individual and, it may be, to many respectable people who do not know of that individual's record or do not know what suggestions there are against him but who are also affected by the same kind of impression arising from the refusal of the authorisation.

THE LORD CHANCELLOR

My Lords, the noble and learned Viscount has asked me to reply on this one point. Certainly the Government are always prepared to consider anything fresh; but I must make it plain that I cannot hold out much hope. Our belief is that the earlier Government were right. True, the reason why a man is not made an authorised, exempted dealer might be because the Board of Trade regarded with suspicion one of his leading employees. Exactly the same thing applied to that case; and the Government are not at present satisfied that the Conservative Government were wrong.

LORD DRUMALBYN

My Lords, I, too, am grateful to the noble and learned Lord for having gone so fully into this question. Perhaps I may be allowed to say that the purpose of my Amendment was not in any way to provide for the disclosure of confidential information. The purpose of the first part was to enable the Board of Trade to say to a person: "We do not consider you a fit and proper person to be associated with this kind of business. Have you anything to say?" The person may come along and say: "Here is my record. It is absolutely clean and above board."

The Board of Trade may then say: "Was your previous name not X? Were you not convicted of fraud in 1957?" There is no need to say from where they get their information; this is what they are told. Perhaps the man can answer satisfactorily; if he does not, he is not a fit and proper person. There is no reason why this conversation should go beyond the man and the Board of Trade.

The second part of the Amendment deals with the position arrived at once the Board of Trade have decided that he is not a fit and proper person, when they decide not to give the authorisation. Before this stage it has been under consideration. Once they decide that he is not a fit and proper person they will notify the company that they are not giving the authorisation, and they will say it is because they do not consider that so-and-so is a fit and proper person. They need give no further reason than that. Then the company can take what action it likes. This was the purpose of the Amendment. Whether I carried it out in words or not I do not know; but it seems to me a not unreasonable suggestion. I would certainly defer to such weight of opinion from the noble Lord, the Lord Chancellor, and his predecessor, and I would not dream of pressing the Amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 51 [Power of Board of Trade to revoke authorisation for purposes of Section 44 on company's ceasing to carry on business]:

TILE LORD CHANCELLOR

My Lords, I beg to move the Amendment standing in the name of my noble friend, Lord Brown. This is merely a drafting point. The beginning of Clause 46 says: The Board of Trade shall not issue under the last foregoing section an authorisation … So the verb associated with "authorisation" is "to issue". In line 15 it says: "nor shall they so issue an authorisation. …" On page 45, in the penultimate line, it says: "so issue an authorisation.…"; and in Clause 49, at the top, it says: "Where the Board of Trade issue…"When we come to this particular clause, the word is changed to "granted". It says: "the authorisation is granted". So, for the sake of conformity, the Amendment proposed will change "granted" to "issued". I beg to move.

Amendment moved— Page 49, line 25, leave out ("granted") and insert ("issued")—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 53 [Substitution of new provisions for those of section 9 (audit of accounts) of the principal Act]:

THE LORD CHANCELLOR

My Lords, I beg to move the Amendment standing in the name of my noble friend Lord Brown. My noble friend Lord Mitchison on the Committee stage said that the words "such person" in the Bill as it stands were too vague. Accordingly, the Amendment is designed to deal with that point. The prescribed description will require auditors to be qualified as in Section 161 of the Companies Act. This is therefore, in substance, merely an improved piece of drafting. I beg to move.

Amendment moved— Page 50, leave out line 45 and insert ("in the prescribed manner by a person of the prescribed description,")—(The Lord Chancellor.)

LORD MITCHISON

My Lords, I ought to say "Thank you" and confess that I do not even remember the one good deed which I seem to have committed in the past year or so.

On Question, Amendment agreed to.

Clause 58 [Additional copy of accounts, &c., to be deposited by industrial or provident society]:

THE LORD CHANCELLOR

My Lords, I beg to move this Amendment standing in the name of my noble friend, Lord Brown. If I may, I will refer also to the Amendments proposed under Clause 81, since they refer to the same point, the first Amendment being consequential to the second. The second, under Clause 81, extends the definition of "registered society" to include societies registered under Northern Ireland legislation corresponding with the Industrial and Provident Societies Act 1965 so that they also are eligible to carry on insurance business in Great Britain by virtue of Clause 44 (1) (a). It would, however, serve no useful purpose for such societies to deposit with the Registrar in Great Britain additional copies of the accounts required under the Insurance Act, and they are accordingly excluded by this Amendment, under Clause 58, from this requirement. I beg to move.

Amendment moved— Page 52, line 30, after ("society") insert ("(other than one registered in Northern Ireland)").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 60 [Provision for securing that a company's solvency is maintained]:

LORD AIREDALE

My Lords, this is a drafting Amendment in so far as it seeks to insert into the clause the expression "its assets". I was much encouraged with Amendment No. 13, moved yesterday by the Minister, which inserted this very expression in Clause 4. As for leaving out the expression "assets of its" to which very great exception was taken in Committee by the noble Lord, Lord Drumalbyn, I should imagine that this would be in conformity with the Government's expressed intention so far as possible to write the Statutes in language that ordinary people understand and use. I beg to move.

Amendment moved— Page 54, line 14, leave out ("assets of its") and insert ("its assets").—(Lord Airedale.)

LORD BROWN

My Lords, I am told that it is as correct grammatically as "friends of his". Nevertheless, I agree that it does lack euphony. The trouble is that the Amendment changes the meaning. "Its assets" means all of its assets. The context requires that the value specified should be less than that of the whole of the assets, in most cases. As the meaning would be changed by the adoption of this Amendment I regret that I have to say that the Government cannot accept it. However, I join with the noble Lord in his objection to the euphony of the clause. I will attempt to get a more euphonious wording put in at a later stage.

LORD AIREDALE

My Lords, I am obliged to the Minister. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 64 [Provision for security of information]:

LORD BROWN

My Lords, this Amendment is concerned with security of information. The existing text of the clause does not achieve the intention of distinguishing two mutually exclusive classes, those who do and those who do not carry on industrial insurance business. The Amendment rectifies this situation. I beg to move.

Amendment moved— Page 58, line 43, leave out ("carrying on business other than") and insert ("not carrying on").—(Lord Brown.)

On Question, Amendment agreed to.

Clause 67 [Penalisation of furnishing false information]:

LORD BROWN

My Lords, this is purely a drafting Amendment which sets out more clearly the documents in question and I beg to move.

Amendment moved—

Page 60, line 10, leave out from ("in") to ("any") in line 15 and insert—

  1. (" (i) any account, balance-sheet, abstract or statement whereof copies are, by section 8 of the principal Act, required to be deposited with the Board of Trade;
  2. (ii) any statement, agreement, deed or report whereof a certified copy is, by section 12 of that Act, required to be so deposited; or
  3. (iii) any statement or declaration which is, by the last-mentioned section, required to be so deposited;").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, this again is a drafting Amendment. I beg to move.

Amendment moved—

Page 60, line 19, leave out ("and liable") and insert— (" (2) A person guilty of an offence under this section shall be liable—").—(Lord Brown.)

On Question, Amendment agreed to.

Clause 71 [Criminal liability of directors, &c.]:

LORD BROWN

My Lords, I beg to move this Amendment, which is another drafting Amendment.

Amendment moved— Page 62, line 28, leave out ("company") and insert ("body").—(Lord Brown.)

On Question, Amendment agreed to.

Clause 81 [Interpretation of Part II]:

LORD BROWN

My Lords, this is another purely drafting Amendment. I beg to move.

Amendment moved— Page 65, line 7, after ("1965") insert ("or any corresponding enactment in force in Northern Ireland").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, the additional phrase set out in this Amendment is necessary to avoid any ambiguity from the occasional use of the word "officer" in other than its principal context in this Bill—that of a company or body corporate. It appears, for example, in Clause 62(2) and (3) with reference to officers of the Board of Trade, and it is to make clear that the clause refers to officers of companies or bodies corporate that this Amendment is introduced. I beg to move.

Amendment moved— Page 65, line 9, after ("includes") insert ("except where the context otherwise requires)").—(Lord Brown.)

On Question, Amendment agreed to.

Clause 85 [Fresh exemption from Moneylenders Acts 1900 to 1927 of persons carrying on business of banking]:

5.52 p.m.

LORD DRUMALBYN moved, in subsection (1), to insert as a new paragraph: ( ) not include a person whose main business is to lend money on marine mortgages. The noble Lord said: My Lords, the purpose of this Amendment is to exclude persons whose main business is to lend money on marine mortgages from the definition of "moneylenders" given in Clause 85(1). Companies which advance money on marine mortgages are not moneylenders in the accepted sense, but with to-day's high interest rates they have from time to time to charge what look like high rates of interest. I am told that this is quite inevitable if they are to continue their business.

The largest body which lends money in this way is the Ship Mortgage Corporation. I am told that the Corporation promoted a Private Bill to regularise their own position, but that it did not cover the smaller competitors. This, I understand, was Chapter 28 of 1962. The proposed Amendment will not open the door to wholesale evasion of the Moneylenders Acts, or indeed to any evasion, because to secure this exemption a company must have the advancing of money on marine mortgages as its chief activity, and there can be only a handful of companies in this position. So long as high interest rates last, they are in considerable jeopardy, and as they perform a useful national function in financing ship construction they deserve some protection. I hope, therefore, that the noble Lord will be able to agree and to give these small people protection. I quite understand that there may be other claims from other groups, but this seems a small and not undeserving group, and I hope that the Minister will see his way to accede to this Amendment. I beg to move.

Amendment moved—

Page 66, line 40, at end insert the said paragraph.—(Lord Drumalbyn.)

LORD MITCHISON

My Lords, I hope that the Government do not propose to accept this Amendment without some definition of what constitutes a marine mortgage. I do not think it is a well-known term of art by any means. It may be well known to people who practise some particular form of business, but I think it is liable to misunderstanding. I looked at this Amendment and said to myself, "What on earth does this mean?" We are now told that marine mortgages cover advances made in respect of ships in course of construction. I thought it must be some curious form of bottomry bond on a ship on a voyage. Bottomry is rather dead nowadays, even in this House, and I was not at all clear whether it covered cargo. I do not know what the Government are going to say, but I hope that these people, if they are individuals, return their profession or occupation in the Census as that of marine mortgagee. It is rather a nice term, and I should like to know what it means.

LORD BROWN

My Lords, it is possible that this Amendment has been moved under a misunderstanding. Perhaps I can help to clear up the matter if I put a question to the noble Lord, Lord Drumalbyn. If a person who lends money on marine mortgages is a body corporate, that person can apply to the Board of Trade for exemption under Section 6 of the Moneylenders Act 1900. My question is: is the noble Lord aware of this, because it seems rather unlikely that he is introducing this Amendment in the interests of unincorporated marine mortgagees, which would be a rather small class of persons. Perhaps the noble Lord would be prepared to answer that question, and if there is a misunderstanding, he might wish to withdraw the Amendment. I have not completed what I have to say. I will sit down in order to get an answer, but I should like to be able to speak again when the noble Lord has answered the question.

LORD DRUMALBYN

My Lords, without prejudice to what the noble Lord, Lord Brown, may say afterwards, may I say that I was not aware of what he has said? Nevertheless, I hope that what he has to say will give me satisfaction.

LORD BROWN

My Lords, if the noble Lord, Lord Drumalbyn, was not aware of the point that I mentioned, he may see fit to withdraw the Amendment, because the unincorporated marine mortgagee may not exist. If he does exist, he is probably a very small man, and it may be that he is doing a bit of marine mortgage business and other business as well. If he is doing other business as well, the automatic grant of a licence because he is doing marine mortgage would leave us in a situation in which we should have no control over his other money lending activities. It seems to the Government that this may be a highly undesirable situation to bring about and they are bothered about it. We have not had much time to study this Amendment. We are prepared to do so, but the matter bristles with difficulties. As the noble Lord, Lord Mitchison, has pointed out, we need a little more definition. I hope that in the light of the fact that if the person is an incorporated body he can already obtain the exemption if he applies to the Board of Trade, the noble Lord will see fit to withdraw the Amendment.

LORD DRUMALBYN

My Lords, I am sure that the noble Lord does not expect me to be an expert in this matter. Perhaps this is one of the matters that I might discuss with him when we meet. There is always the possibility of dealing with it on Third Reading, should that appear necessary. Perhaps the drafting is loose, and this also could be put right on Third Reading. I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

6.0 p.m.

LORD MACPHERSON OF DRUMOCHTER moved, after Clause 87, to insert the following new clause:

Amendment of Registration of Business Names Act 1916

". The Registration of Business Names Act 1916. shall be amended as follows:—

(1) In section 1, at end insert the following new paragraph: 'e) Every association of firms, individuals or companies, which individually are either companies within the meaning of the Companies Act 1948, or fall within the provisions of this section, whether or not such association is carrying on a business for profit;'

(2) In section 14, at end insert the following new subsection: '(3) The Board of Trade may prohibit the registration under this Act and the use of any name by any association of firms, individuals or companies to which this Act applies, if in the opinion of the Board the registration or use of such name is undesirable'.

The noble Lord said: My Lords, I withdrew my previous Amendment at Committee stage because the Government kindly agreed to reconsider my point. My present Amendment is the same, but incorporates a small drafting Amendment of the noble and learned Lord the Lord Chancellor. As I covered my Amendment in some detail at Committee stage, I intend only to outline briefly the two proposed subsections, which are basically to protect the name, "Chambers of Commerce".

The first new subsection would give the Board of Trade, where necessary, powers to deal with unincorporated chambers under Section 1 of the Registration of Business Names Act 1916, and would cover the omissions in the Act as it stands at present by making a provision for the registration of associations of individuals who would have to register on their own account if they adopted a business name.

My second new subsection would give the Board of Trade the right, through the Registrar of Business Names, to refuse to register a name of an association of firms on the same grounds of undesirability as the Registrar of Companies is empowered to refuse to register the name of a company. The Company Law Committee recognised this problem, and my Amendment implements paragraph 444 of the Jenkins Report. It would do no more than give the Board of Trade the same power in respect of unincorporated business associations, including chambers of commerce, as it already has and uses in respect of incorporated associations.

At the Committee stage of this Bill, I was told by the noble and learned Lord the Lord Chancellor that another Bill was being considered but, so far as I can gather from my more experienced friends in your Lordships' House, this could be some years away and dependent upon the amount of work the Government decide to deal with. I have had a discussion with the noble Lord, Lord Brown, and he has fairly and frankly explained the Government's position regarding this Bill. I gathered at that time that he was in agreement in principle with the Amendment, but for the reasons we heard yesterday he was concerned that, if my Amendment were allowed to stand, the Government would have difficulty in resisting a spate of Amendments in another place, which in turn would delay the Bill's passage through Parliament. This is an argument with which I do not altogether agree. The speeches we have heard on this Bill have to a degree given me second thoughts.

The noble Lord, Lord Brown, has intimated that he can give me a satisfactory assurance that the Government will be introducing a second Companies Bill in the life of this Parliament, and that they will include my Amendment in the new Bill. Nevertheless, I hope that the noble Lord will reconsider his attitude and will permit the inclusion of my small, but so important, Amendment in this Bill, and thereby show Government support for those associations dedicated to the promotion of our export trade.

As the Prime Minister is to-day on the Continent doing his best to secure Britain's entry into the Common Market, I consider that this is a matter which should be dealt with now and not delayed for some years. The Common Market countries have a different conception of a chamber of commerce movement from ours in this country, and the sole purpose of my Amendment is to bring British chambers of commerce more into line with their European neighbours, and to prevent unscrupulous people from taking advantage of the present position. I beg to move.

Amendment moved—

After Clause 87, insert the said new clause.—(Lord Macpherson of Drumochter.)

LORD BROWN

My Lords, the noble Lord has made it clear that the purpose of the new clause is merely to prevent the indiscriminate use of the name "Chamber of Commerce" by unincorporated associations. In the previous Committee debate, it was argued that overseas interests were misled about the status of some bodies calling themselves chambers of commerce, and that there should be a means of distinguishing between chambers of commerce and organisations, consisting mainly of retailers, which should be called "Chambers of Trade". It was also argued that it was important for the export trade because of the responsibility that chambers of commerce had in documentation for exports, particularly for the issue of certificates of origin.

I think it is important that the rather vague remarks I made on that occasion about the degree of control over the issue of certificates of origin and other documents should be made crystal clear to the House now. By the International Convention of 1923, relating to the Simplification of Customs Formalities, to which this country is a party, only authorised bodies can issue certificates of origin valid for international purposes. The authorisation of such bodies is already tightly controlled to ensure that they are of the required repute and status. If any body which was not authorised, whether calling itself a chamber of commerce or not, issued a certificate of origin, it would not be valid. There are some chambers of commerce properly so called which have not become authorised and, therefore, cannot issue valid certificates of origin. The position has been carefully considered, but it does not seem that extending the Board of Trade's power under the Registration of Business Names Act would be relevant so far as certificates of origin and the export trade are concerned.

The other leg of the argument is concerned with the status of chambers of commerce overseas. If some of these bodies use the name, although they are not entitled to do so because they are not of adequate status, and are included in the band, this may lower the status of other British chambers of commerce overseas. I do not want to deny the point, but I do not think that this should be taken too seriously at the moment. There is not a large number of these bodies. I think that it is the potentialities of the situation that may be worrying the noble Lord, and I believe these to be under control.

Statements have already been made about the intention of the Government to introduce a second Companies Bill in the life of this Parliament. I can add to that that the Government will undertake to consider very seriously the inclusion in that second Bill of provisions to meet the arguments advanced by the noble Lord. I think he is aware that I cannot give him a firm commitment. I cannot say definitely that if the second Bill comes this will be included, but I will go so far as I can without openly saying it. I hope that, in the light of that assurance, the noble Lord will see fit to withdraw his Amendment.

LORD MACPHERSON OF DRUMOCHTER

My Lords, may I thank the noble Lord. I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Schedule 1 [Amendments of Schedule 8 to the Companies Act 1948]:

LORD BROWN

My Lords, with the permission of the House, I will speak to Amendment No. 73 and at the same time to Nos. 74 to 77 and Nos. 88 to 92. These are all purely drafting Amendments. Paragraph 5 of Schedule 1 inserts a new paragraph, 5A, in Schedule 8 to the principal Act. The new paragraph requires a company to give information in its accounts about those of its unquoted investments that are not shown at a valuation. These investments will be in bodies corporate which may or may not be companies within the Companies Act meaning of that term. The Amendments substitute bodies corporate, or its equivalent, for companies in the places in the paragraph where that, rather than companies, is the correct term to use. I beg to move.

Amendment moved— Page 70, line 33, leave out ("companies") and insert. ("bodies corporate").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 70, line 44, leave out ("companies") and insert ("bodies").—(Lord Brown.)

On Question Amendment agreed to.

LORD BROWN

My Lords, I beg to move Amendment No. 75.

Amendment moved— Page 71, line 3, leave out ("companies'") and insert ("bodies' ").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 71, line 7, leave out ("companies") and insert ("bodies").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move Amendment 77.

Amendment moved— Page 71, line 12, leave out ("companies") and insert ("bodies").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, this Amendment, No. 78,relates to fears which were expressed in Committee that the words used in Schedule 8 to the1948 Act, as amended by this Bill, would require a company to charge all of its tax, including tax arising from capital gains, to revenue. The noble Lord, Lord Drumalbyn, moved Amendments designed to ensure that the charges to be shown or to be deducted were charges properly charged to revenue, and I explained that the provisions as drafted did not have the effect the noble Lord feared: that they would leave companies free to omit from the charge to revenue such tax arising from capital gains as they considered appropriate. Nevertheless, I agreed that the wording of the provisions should be examined, and I undertook to have that done.

This and the next Amendment make the first provision read that there shall be shown in a company profit and loss account the amount of the charge to revenue for United Kingdom corporation tax … and the amount of the charge for taxation imposed outside the United Kingdom of profits, income and (so far as charged to revenue) capital gains. This makes it clear that what tax arising from capital gains is or is not charged to revenue lies within the discretion of directors. With that degree of discretion in the Bill, and it having been made clear beyond a peradventure that this is the intention, I hope that this Amendment will be accepted.

Amendment moved— Page 74, line 1, after ("charge") insert ("to revenue").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 74, line 7, after (" and") insert (" (so far as charged to revenue)").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, this Amendment gives effect to the undertaking given on Committee stage that the requirement of companies to publish the amount of the rents paid would be deleted. I think that at this late stage this is probably all the explanation that is required for the purpose of this Amendment. I beg to move.

Amendment moved— Page 74, line 16 leave out from the beginning to (" sums") in line 17.—(Lord Brown.)

LORD DRUMALBYN

My Lords, may I say that we regard this Amendment as important to a good many people, and a good deal of importance has been attached to it, particularly by retailers. I am grateful to the noble Lord for having met us on this point.

On Question, Amendment agreed to.

6.17 p.m.

LORD DRUMALBYN moved to add to paragraph 15: ( ) This paragraph shall not apply to a company if no shares or debentures of the company or of a body corporate of which it is the subsidiary have been quoted on a recognised stock exchange or offered (whether in Great Britain or elsewhere) to the public for subscription or purchase.

The noble Lord said: My Lords, this is an Amendment on which the noble Lord apparently has not felt able to meet us. The purpose of the Amendment is to exempt companies and bodies corporate of which they are subsidiaries, where their shares or debentures have not been quoted on a recognised Stock Exchange, and where they have not offered shares to the public for subscription or purchase, from having to disclose their turnover for the financial year in their accounts by way of a note, if not otherwise shown. Again, this is one of the recommendations of the Jenkins Committee. There are many smaller companies which live in perpetual fear that the disclosure of their turnover may make them a target for a take-over bid.

The reason why the Jenkins Committee excluded them was because they did not think that this was information which was of particular interest to creditors, and creditors would not base their estimate of the creditworthiness of a company on a note as to turnover in their accounts; but they felt that it would leave them open to take-over bids or, indeed, to a degree of disclosure which might be embarrassing. The sort of situation these small companies have in mind is where the company has, say, only one store in a town, and disclosure of its turnover will show exactly what goes on in that store, whereas it may be in competition with a chain of shops, or with a company which has two or three stores, so that the actual turnover of any one of those stores is not revealed.

This seems to be a reasonable case. Again, I quite understand the opposite argument: that where you have big companies, it may be relevant to know what their turnover is. This can be disclosed in other ways should the Government want to know it, and it is no reason why it should be made available to all and sundry. The turnover would be disclosed, in all probability, in the directors' report, although I am not certain whether it has to be. The point is that it would not have to be disclosed in the accounts. I hope that the noble Lord will feel able to concede this point now. We have already gone some way towards a concession, or at any rate we have persuaded the House to accept the Amendment which would exclude the breakdown of turnover, and therefore it seems not unreasonable that the total figure of turnover should also be excluded. I beg to move.

Amendment moved—

Page 75, line 7, at end insert the said subparagraph.—(Lord Drumalbyn.)

6.20 p.m.

LORD BROWN

My Lords, I am sorry, but I do not think the Government will be able to accept this Amendment. In the first case, of course, it will deprive the public of details of turnover of a number of large companies. There are so many of these large companies which are still unquoted. The noble Lord suggested that it would not be of interest to creditors. I think he quoted the Report on this matter. I am surprised that the Report should say so. I am not going to challenge his quotation, but I reserve the right to suggest that it is of importance to creditors to know the turnover of the companies with which they are dealing. I should think it is one of the most important criteria by which they can judge whether the credit they are extending is justified or not.

The noble Lord suggested that if figures of turnover are available to the public, a small firm may become a target for a take-over bid. This question puzzles me. Take-over bids of small, privately-owned shops, or something like that, can be resisted with great ease if they are in the ownership of a man and his wife or a small family; there is no difficulty about it at all. The take-over bid may be a matter which is greatly welcomed. They might like to capitalise the business, get the money out and hand over to someone else. It is not a tragedy or menace to their own liberty; they can make up their own minds.

The people menaced by take-over bids are directors of companies which are not within their own financial control but are owned by others, when they want to remain running the business for the shareholders and fear that if a take-over bid comes about the family or a small group of shareholders will accept the bid and they might lose their jobs. However, I do not think that that is a justified attitude on the part of people who are managing a business. I therefore believe that the entire argument about the danger of exposing turnover and consequential approaches by people who wish to buy the business does not hold water.

The other arguments in favour of retention of the clause as it stands are concerned with the growing need for economic information about businesses of this country. We really have to be concerned about this in the future. We have a need for much more information about the nature of our economy. This really is important, and I do not think we should hesitate at this stage, and take the step of saying that these non-public companies should not have to disclose this information. I do not think the case for secrecy has been made out. The last point in support of that is that it is far more commonplace in countries such as the United States for people to talk about their business, its details and its turnover. I am not certain whether they are forced to publish their turnover or not, but in most businesses it is well known by competitors, and even by members of the public nearby. It might have an extremely good effect on many of our small businesses if one chap knew that the chap down the road, with the Fame frontage and staff, was turning over two or three times as much as he was.

It would be a great stimulus to the better use of facilities, labour and everything else if people knew how others were doing. Knowledge of how well others are doing seems to me to be a good basis for competition. On that argument alone, I think it would be worth while retaining the provision as it stands. I hope the noble Lord is listening carefully, because I think these are really important arguments, and I hope he will see fit to withdraw his Amendment.

LORD DRUMALBYN

My Lords, I am grateful to the noble Lord for the explanation he has given of the Government's attitude on this matter. My own point of view is that, unless a clear reason can be given for the disclosure of this information, this is a matter which ought not to be disclosed or need not be disclosed. I should say, rather, that there ought not to be a requirement that it should be disclosed in the case of the classes of companies about which we are talking. I recognise that there are the peaks, so to speak, but they are relatively rare. I do not know what the proportion is. Perhaps the noble Lord could tell me the proportion of the companies with a large turnover on which he bases his case. But I should think they represent a very small proportion of the total number of companies which we are talking about.

The next argument of the noble Lord is on this question of information. The noble Lord says we want to know a great deal more about it. The one thing that has been puzzling me throughout is how he envisages all this information is to be collated. Is there any intention on the part of the Government to collate all this information? Are they going to build up statistics on turnover through the accounts lodged with the Registrar? If not, do the universities and so on write in for copies of all the reports from all the companies in the country? I should like the noble Lord to justify the argument he has been putting up, that this information will be of great value in building up knowledge of our economy.

I can quite see that it may in some cases provide a very valuable comparison if this is done, although I should have thought that this kind of information in general terms is probably fairly well known: people will know who is prospering and who is not. I can see that argument, but what I do not see is this general argument that all this will lead to a great burst of information about the economy of our country, or how it is going to be achieved. If the noble Lord can answer those two points I have raised in particular I shall be very grateful.

There clearly is not any widespread support in the House for this particular Amendment, and in those circumstances I do not feel that it would be right to press it, but I think, all the same, that the House would like to have some substantiation of the points I have raised. I concede the advantages of comparison as between retailers. I am not so certain that this will always work particularly fairly. As I have said, in the case of the single unit the turnover of that unit has to be disclosed, whereas the turnover does not have to be disclosed by multiple units in competition with it, and to that extent the single unit is at a disadvantage. I think that has to be recognised. We are creating a considerable amount of disadvantages, and I have yet to be convinced that there are comparable advantages, and I hope the noble Lord will indicate what they are.

LORD BROWN

My Lords, with the consent of the House, because I am speaking a second time on this Amendment, I will as briefly as I possibly can try to give a picture of this. I think it is within the memory of the House that on the last Budget Day the Chancellor of the Exchequer gave certain figures about the numbers of people coming into employment for the first time. If I remember rightly, of the one million who had come into employment over the previous five years, 140,000 had gone into manufacturing industry, and the balance into the distributive and service trades. I mention this fact to suggest that distribution of employment between various types of business in the country is becoming a matter of very great consequence to our economy. We are no longer, happily, in the state we were in in the 'thirties in regard to employing our people. We have over-employment, though not at this precise moment of time, I admit, and we are concerned with the efficiency with which we employ people, because this relates to the basis of our standard of living in the future.

If we are going to know more about this, if we are going to enable our universities or statisticians from the Board of Trade or elsewhere in the Government society to get hold of the facts which will lead us to better policies, we must have an availability of information of the turnover of small businesses, the type of information which is crucial to studies of this sort. I cannot answer the noble Lord's question whether the Government are going to collate all these facts. I do not think they will. They are available for the sort of research that I think will be of great importance to our economy as time moves forward into the future. I should not like to miss the opportunity in this Bill of making this information available.

LORD DRUMALBYN

My Lords, is the noble Lord aware that the legislation, the name of which I do not recall at the moment, provides that the details of the information given must not be revealed if they will reveal the turnover or any particular information about an individual firm? The purpose of this legislation is to achieve the statistics as a whole, and they are all given confidentially. The whole basis of the Act is confidential information. Is the noble Lord seriously telling the House that the source of information for Government statistics is the accounts deposited with the Registrar? Is he going to collate the information from them? We have not been told this so far.

LORD MITCHISON

My Lords, may I ask two questions which arise from these very fascinating discussions? They are quite simple. Have the Board of Trade a computer and has the Conservative Central Office a computer? Does either of them ever use them?

LORD BROWN

My Lords, I think, with respect, there is some misunderstanding here. These figures will be available at Companies House and they are available not only to the public but to Her Majesty's Government, or to universities, and so on. I do not understand the noble Lord's concern. What have I to assure him about? If the figures are at Companies House they are universally available to society, subject to payment of the right sums or to visits. I do not see what the anxiety is about.

LORD DRUMALBYN

My Lords, I am merely asking whether it is the practice now for the Government to collate information from accounts deposited with the Registrar. If it is the practice now, if statistics are compiled from those returns now, well, that is sufficient answer; but if they are not, as I believe they are not, compiled from that source, are they going to be so compiled in the future? That is my question.

LORD BROWN

My Lords, I shall need notice of the question whether the statistics which we use are to any extent compiled from the records at Companies House. I am sorry I do not know the answer, but I will get it. As to whether these records are going to be used in the future, I should think there is no question at all that they will be used in due course of time. I do not know of any specific Government plans to use them now. The point is that if one provides them in these returns, they are available for use and will be valuable, and I have no doubt they will be used.

VISCOUNT ECCLES

My Lords, there are two interests here. If one is a big company one says, "Of course we want to have all this information on the turnover of the little companies, because it will help us to rationalise them"—I am using the kindest word I can think of. If I were a small company I should not want to give that information, because there is no doubt that it is going to be more useful to the big people than it is to the small. I personally am on the side of trying to make the structure of British economy efficient. If I had to weigh up one against the other, I should say we had better have this information and we had better hope it is wisely and skilfully used for the purpose of building a more efficient structure in our economy. But do not let us pretend that this is not going to be very inconvenient for many small people. It is. This is one of those very, very difficult things to weigh up. I think my noble friend would be well advised to let the other place have a "go" at it.

LORD MITCHISON

My Lords, may I have the leave of the House to repeat my question? I gave up any hope of ever discovering what happens in the Conservative Central Office. I should like to know the extent to which the Board of Trade uses these computers for dealing with information of this kind. If my noble friend cannot give the answer now, would he be kind enough to let me have a letter about it?

LORD BROWN

Yes, my Lords.

On Question, Amendment negatived.

6.37 p.m.

LORD DRUMALBYN moved to add to paragraph 15: ( ) This paragraph shall not require the disclosure of turnover attributable to business carried on outside the United Kingdom, or transacted with persons outside the United Kingdom, if its disclosure would in the opinion of the directors be harmful to the interests of the company and the Board of Trade consent to the information's not being disclosed.

The noble Lord said: My Lords, this was a point about which the noble Lord made" favourable noises", if I may put it that way, at an earlier stage. I think he said on Committee stage that if the Amendment that I then moved had been limited to business transacted outside the country, he might have taken a different view. I do not think he committed himself too far. The purpose of the Amendment is clear on the face of it. It is that so far as turnover is concerned the paragraph will not require the disclosure of turnover attributable to business carried on outside the United Kingdom, or transacted with persons outside the United Kingdom, if this disclosure would, in the opinion of the directors, be harmful to the interests of the company and the Board of Trade consent to the information's not being disclosed.

I do not for one moment suppose there will be a great many cases of this kind, but where there are cases it may be that there might be significant damage to the company, and to the country, if the information were disclosed. The Amendment is to safeguard this position. Even if there were only one case, it would still be worth putting the Amendment in to safeguard the position. I beg to move.

Amendment moved—

Page 75, line 7, at end insert the said subparagraph.(Lord Drumalbyn.)

LORD BROWN

My Lords, I take it that the noble Lord, in moving this Amendment, aims to make certain that a dispensation obtained by a holding company with the consent of the Board of Trade is not restricted by the wording of Section 15(2) of Schedule I, which calls for disclosure of the turnover of the company. If this is so, it is unnecessary, so I am advised. If any doubt remains, may I draw the noble Lord's attention to the fact that a company can also claim exemption in given circumstances from disclosure of turnover of a subsidiary under Section 150(2)(b)(ii) of the principal Act. That states that group accounts need not deal with a subsidiary of a company if the company directors are of the opinion that the result would be harmful to the business of the company or any of its subsidiaries, subject to Board of Trade consent.

I think, having examined this matter closely, the noble Lord, if he looks into it, will find it is not necessary to have this Amendment to establish the point he seeks to establish. I hope, in the light of this considered advice I am giving, which I have drawn from other sources, he will not press the Amendment.

LORD DRUMALBYN

My Lords, indeed not, if the noble Lord is satisfied that this is not necessary. I think we are at one on the purpose of this Amendment, and therefore I have pleasure in withdrawing it.

Amendment, by leave, withdrawn.

LORD BROWN moved, in paragraph 17, in sub-paragraph (1)(a) of the proposed new paragraph 14A of Schedule 8 to the Companies Act 1948, after "income and" to insert "(so far as charged to revenue)". The noble Lord said: My Lords, paragraph 13A of Schedule 8 of the principal Act, as amended by the Bill, contains the basic provision that a company shall show in its accounts the value of its turnover. Paragraphs 15(7) and 16(3) and 20A elaborate on this basic requirement when the company is a member of a group. Paragraph 15(7) requires a holding company, if it does not draw up its profit and loss account in the form of a consolidated profit and loss account for the group, to show the proportions in which its turnover is divided between business done with its subsidiaries and business done with persons outside the group.

Paragraph 16(3) requires a subsidiary company to show the proportions in which its turnover is divided between business done with its holding company and fellow subsidiaries and business done with persons outside the group. Paragraph 20A requires a holding company which prepares consolidated accounts, if it is itself a subsidiary company or if it has omitted some of its subsidiaries from the consolidation, to show the proportion in which the turnover of the companies within the consolidation is divided between, on the one hand, business done with companies in the larger group of which the reporting company is a member and with companies in its own group but outside the consolidation, and, on the other hand, business done with persons outside the two groups. With some qualifications, the three paragraphs can be regarded as requiring a company to show the division of its turnover between internal turnover and external turnover. I have given this rather formal description because I want to get the reasons for the Amendment on the Record.

The examination of this subject by the Government has led us to the conclusion that while there might be marginal value in requiring turnover to be split, in fact the trouble that companies will be put to in dividing their turnover in this way is not justified. Therefore the Amendments are designed to remove altogether the requirement to split turnover as between turnover done with fellow subsidiaries and other parts of the company and turnover done with, so to speak, the outside world. I beg to move.

Amendment moved— Page 75, line 31, at end insert (" (so far as charged to revenue)").—(Lord Brown.)

LORD DRUMALBYN

My Lords, the noble Lord has now got this matter on the Record, and we should certainly like to look at the Record. I am bound to say that I found it exceedingly difficult to follow what he said—in fact, I wonder whether once again he was not moving the right Amendment. However, I hope that he has done so. If we may have that assurance, we shall certainly raise no objection to this Amendment.

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move Amendment No. 84.

Amendment moved—

Page 76, line 1, leave out paragraph 19.—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move No. 85.

Amendment moved—

Page 76, line 9, leave out paragraph 20 and insert— (" 20. At the end of paragraph 16(1), there shall he added the words' and the aggregate amount of assets consisting of shares in fellow subsidiaries.' ").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved—

Page 76, line 34, leave out paragraph 23.—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 79, leave out lines 6 to 9.—(Lord Brown.)

On Question, Amendment agreed to.

Schedule 2 [Form of Schedule 8 to the Companies Act, 1948, as amended by this Act]:

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 81, line 36, leave out ("companies") and insert ("bodies corporate").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 81, line 46, leave out ("companies") and insert ("bodies").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 81, line 49, leave out ("companies'") and insert ("bodies'").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 82, line 3, leave out ("companies") and insert ("bodies").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 82, line 6, leave out ("companies") and insert ("bodies").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 86, line 6, after ("charge") insert ("to revenue").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 86, line 12, after ("and") insert (" (so far as charged to revenue)").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 86, line 29, leave out from the beginning to ("sums") in line 30.—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move Amendment No. 98.

Amendment moved— Page 88, line 4, after ("and") insert (" (so far as charged to revenue)").—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 90, leave out lines 13 to 18.—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move the new paragraph 16.

Amendment moved—

Page 90, leave out lines 19 to 36 and insert— (" 16.—(1) The balance sheet of a company which is a subsidiary of another body corporate, whether or not it is itself a holding company, shall show the aggregate amount of its indebtedness to all bodies corporate of which it is a subsidiary or a fellow subsidiary and the aggregate amount of indebtedness of all such bodies corporate to it, distinguishing in each case between indebtedness in respect of debentures and otherwise, and the aggregate amount of assets consisting of shares in fellow subsidiaries. (2) For the purposes of this paragraph a company shall be deemed to be a fellow subsidiary of another body corporate if both are subsidiaries of the same body corporate but neither is the other's.")—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 91, leave out lines 8 to 40.—(Lord Brown.)

On Question, Amendment agreed to.

LORD BROWN

My Lords, I beg to move.

Amendment moved— Page 95, leave out lines 4 to 6.—(Lord Brown.)

On Question, Amendment agreed to.

VISCOUNT ECCLES moved, after Schedule 2, to insert the following new Schedule:

"Amendments of the Companies Act 1948 Consequential on the Introduction of Shares of no Par Value

1. In paragraph (a) of subsection (4) of section 2, in place of the words after 'state' to the end of the paragraph there shall be inserted—

  1. '(i) in the case of a company the shares in which are to have a nominal or par value, the amount of the share capital with which the company proposes to be registered and the division thereof into shares of a fixed amount; and
  2. (ii) in the case of a company the shares in which are to be without nominal or par value, the number of shares which the company is to be authorized to issue;'

2. In subsection (3) of section 47, at the end there shall be added the words 'or, in the case of a share without nominal or par value, five per cent. of the total consideration to be paid for the share'.

3. In paragraph (a) of subsection (1) of section 52, after the words 'the number and' there shall be inserted the words 'in the case of shares having a nominal or par value'.

4. In subsection (1) of section 56, after the words 'Where a company issues shares' there shall be inserted the words 'having a nominal or par value'.

5. In subsection (1) of section 57, after the words 'to issue at a discount shares' there shall be inserted the words 'having a nominal or par value'.

6. Section 58 shall apply in relation to the redemption of preference shares which are without nominal or par value—

  1. (i) with the substitution for paragraphs (c) and (d) of the proviso to subsection (1) of the following paragraphs—
  2. (ii) as if for the reference in subsection (3) to the amount of the company's authorized share capital there were substituted a reference to the number of shares which the company is authorized to issue;
    3. 508
  3. (iii) as if in subsection (4) for the words 'to issue shares up to the nominal amount of the shares redeemed' there were substituted the words 'to issue shares for a total consideration the amount or value of which does not exceed the total amount or value of the consideration payable on the issue of the shares redeemed'.

7. In paragraph (a) of subsection (1) of section 61, after the words of such amount' there shall be inserted the words in the case of shares having a nominal or par value'; and paragraphs (b), (c) and (d) of that subsection shall not apply in the case of a company the shares of which are without nominal or par value.

8. In subsection (1) of section 63 the reference to the registered capital of the company shall be construed, in relation to a company the shares of which are without nominal or par value, as a reference to the number of shares which the company is authorized to issue.

9.—(1) The principal Act shall have effect in relation to a company the shares of which are without nominal or par value subject to the modifications hereafter in this paragraph set out.

(2) References to a fraction of the paid-up capital or issued share capital of a company shall be construed in relation to a company the shares of which are without nominal or par value as references to a fraction of the total number of shares comprised in that capital.

(3) References in whatever terms to a fraction in value of the shares or any class of shares of a company, or of any part of the shares or any class of shares of a company, shall be construed as references to the same fraction in number of those shares.

(4) References in whatever terms to the number, description and amount of any shares or to the number and amount of any shares shall be construed in relation to shares without nominal or par value as if the references to the amount of the shares were omitted.

(5) References in whatever terms to the amount of the share capital, or nominal or issued share capital, of a company, or any part thereof, shall be construed as references to the number of shares which are comprised in that capital or that part thereof, as the case may be; and references to the amount of any such capital which is partly paid up shall be construed as references to the number of shares comprised in that capital which are partly paid up, the amount paid up on each share and the amount unpaid.

(6) The proviso to subsection (2) of section 141 shall have effect as it has effect in the case of a company not having a share capital.

(7) Subsection (1) of section 154 shall have effect as if for sub-paragraph (ii) of paragraph (a) there were substituted— '(ii) holds shares in its equity share capital which together represent more than half of the total voting rights of all members of the company at a meeting of the company at which all the members are present.'

(8) In section 64, paragraph (a) shall not apply.

(9) In the Eighth Schedule, for sub-paragraph (c) of paragraph 2 there shall be substituted the following sub-paragraph— '(c) the amount of the stated capital account'.

The noble Viscount said: My Lords, this new Schedule makes amendments of the Companies Act 1948, consequential on the introduction of the provision regarding shares of no par value. As this is the last Amendment, perhaps I may, in moving it, thank the noble Lord, Lord Brown, for the gallant way in which he has stood up to this long Bill. I think he has earned our gratitude. I know what it is like to have to deal with a Bill when one is suddenly plunged into office, and I am sure that we all sympathise with him. I beg to move.

Amendment moved—

After Schedule 2, insert the said new Schedule.—(Viscount Eccles.)

On Question, Amendment agreed to.