§ Lord PLOWDENMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they agree with the conclusions of the Report of the European Communities Committee on Company Law: Scissions (43rd Report, H.L. 206) that there is inadequate justification for the draft directive on scissions, that the Council of Ministers should consult both the European Parliament and the Economic and Social Committee before proceeding on the matter, and that the Government should press within the Council for amendment.
§ The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)My Lords, Her Majesty's Government welcome the committee's conclusions on the European Communities draft directive on divisions of public limited liability companies, and agree that the need for Community action on this subject has not been satisfactorily established. Her Majesty's Government would have seen advantage in an up-to-date opinion on this matter from the European Parliament and the Economic and Social Committee. Her Majesty's Government will continue to present these views within the Council. We have taken careful note of the options which the Select Committee on European Communities suggested were open to the Government, and we envisage putting forward an amendment on the lines which the committee proposed.
§ Lord PLOWDENMy Lords, while thanking the noble Viscount for that reply, may I ask whether he can say whether the Government are satisfied with the 1414 apparently haphazard way in which the different proposals in the Community's company law programme are brought forward, and, if not, what action he proposes they should take?
§ Viscount TRENCHARDMy Lords, my right honourable friend the Secretary of State for Trade is in correspondence with the commissioners concerned on whether a better degree of priorities and order and method can be drawn up in relation to dealing with harmonisation of company law questions. At this stage, since those discussions are continuing, I prefer not to elaborate further.
§ Lord DERWENTMy Lords, may I apologise for my ignorance, but can my noble friend tell me what "scissions" are?
§ Viscount TRENCHARDMy Lords, I can assure my noble friend that, in spite of having been in industry for a long time, I had no idea either. In fact, a scission is the ceasing to exist of a limited liability company; instead of the original company, which ceases to exist, one, two or more new companies spring up and the liabilities and assets of the original company are split between these companies. The original company goes out of existence without going into liquidation. I have tried to get my staff to trace an instance of this process having occurred in the United Kingdom, and I have been unable to unearth a scission.
§ Lord DERWENTMy Lords, may I thank the noble Viscount, and I shall read that answer with the greatest care.
§ Lord ROBERTHALLMy Lords, in view of the tremendous amount of time and effort involved, not only of the Members of your Lordships' House but of civil servants and all the bodies which give evidence to us, may I ask whether the Government think that that time and effort which is being put in on the whole company law programme is justified?
§ Viscount TRENCHARDMy Lords, I think the Government have been in support of important measures on company law and on company law harmonisation where these affect the objects of the EEC. But, as I have already indicated, we are critical, as indeed the European Communities 1415 Committee over which the noble Lord, Lord Plowden, presides have been, of the apparently somewhat indiscriminate way in which some proposals for harmonisation of law are followed apparently for the sake of harmonisation itself. One has to add that we have to make sure that we have understood the views of other members of the Community to whom these things may be more important than they are to us; and in regard to a proposal such as this, which may not affect us to any great degree, we must not put ourselves in the position of stopping harmonisation which may help other states.
§ Lord HARMAR-NICHOLLSMy Lords, is my noble friend aware that his Answer to this Question provides one of the rare occasions on which the Government have said that they would welcome the help of the European Parliament in trying to arrive at some answer to this question? Is there any channel from the Government to their representatives in the European Parliament to let them know officially that that is the home Government's wish, in order to arrive at proper harmonisation on matters such as this?
§ Viscount TRENCHARDMy Lords, I think my noble friend spends a lot of his time ensuring that such channels are kept perpetually open.
Lord BRUCE of DONINGTONMy Lords, is the noble Viscount aware that we on this side of the House would very much endorse the observations that fell from the lips of the noble Lord, Lord Harmar-Nicholls, on this matter. We, in particular, welcome the noble Viscount's reference to the need for consulting the Economic and Social Committee. Will the noble Viscount agree that this particular body is all too frequently ignored by the Council of Ministers, and, I am bound to add, also by the Commission? This is a typical matter which would merit their detailed attention.
§ Viscount TRENCHARDMy Lords, I think I must quickly explain that both these bodies, the European Parliament and the Economic and Social Committee, were consulted when a proposal on scissions was included in the third directive. There is an argument thus to 1416 say that they have already been consulted. It is the Government's view that consultation on this now expanded and separate draft directive should go back to those two bodies.
§ Lord ELWYN-JONESMy Lords, would the Minister say what consultations take place with British lawyers in the formulation of these ideas, many of which are good, but many deplorable?
§ Viscount TRENCHARDMy Lords, I shall write to the noble and learned Lord on the specific question of the channels of communication. However, I am sure that they are well and truly open and that we do consult the legal profession in all periods leading up to consultation with the EEC on these matters.
§ Lord BROWNLOWMy Lords, much as I have appreciated everything that the noble Viscount has so far said on behalf of the Government, I should like him to say a little more, not on the subject of this directive on scissions, but on the subject of the procedure followed in this case, and its implications for scrutiny both within the European Community and Westminster. I should like to ask the noble Viscount whether he is content with advice which says that, when a phrase—a clause—is taken out of a draft directive and then expanded into a separate directive, there really is no need to consult the European Parliament and the Economic and Social Committee or to publish the expanded text in the Official Journal, thus by-passing the usual procedures for scrutiny in Westminster? If, as I imagine, the Government do not approve of this, will they take steps to prevent its recurrence in future? Was it inadvertence or through failure to accept the procedures that this strange procedure was followed?
§ Viscount TRENCHARDMy Lords, I have already covered the question of whether the procedure has been correctly followed and I think that it is a mute point under the instruments of the EEC. We are pressing the point that, as it is a mute point, renewed consultations should take place. I shall be delighted to answer the noble Lord's detailed questions by letter or in another way.
§ The LORD PRESIDENT of the COUNCIL (Lord Soames)My Lords, 1417 in view of the fact that we have for some time been discussing something which, according to my noble friend Lord Trenchard, does not in fact exist, perhaps it would be better if we moved on.