§ 1 Clause 4, page 3, line 33, leave out "issued" and insert "allotted".
§ Lord LYELLMy Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 1. I hope that it will be for the convenience of the House if I couple with Amendment No. 1 a series of similar amendments, which are mainly drafting amendments. I understand that, through the usual channels, a list of the group of amendments to which I shall be speaking has been circulated. With Amendment No. 1, I wish at the same time to deal with Amendments Nos. 7, 16, 22, 27, 28, 29, 30, 35, 56, 136, 142, 153, 240, 316, and 317. I hope that that long list will mean something to your Lordships; but all these amendments are concerned with the meaning of the word "allotment".
Amendment No. 240 is the central amendment, and this provides a definition of the word "allotment". This definition is that shares shall be taken to be allotted when a person acquires the unconditional right to be included in the company's register of members in respect of those shares. The new definition is of practical significance because it does not interfere with commercial practice in the way that we fear the Bill might do if it were left unamended. The amendment also clarifies the meaning of "payment up in cash", and, secondly, of "allotment for cash". These definitions are generalised for the purposes of all the Companies Act. My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 1.
§ Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
§ Lord ELWYN-JONESMy Lords, before we move to a detailed consideration of the matters we are to discuss at this stage, with the leave of the House, I should like to make some general observations with regard to them. I should like to begin by congratulating the Government on their Pauline conversion, on the road to another place, to most of the proposals which we on this side of the House put to noble Lords opposite when the Bill first came before the House and was discussed on Second Reading, and thereafter, during the subsequent stages of the Bill in your Lordships' House.
979 The Bill initially introduced into the House by the Government dealt—and, indeed, that was its whole essence—with the task of implementing the EEC Second Directive. The rest of the Bill, in so far as it purported to be a Bill to reform the company law, was indeed a puny thing; and it was distinguished only by its total failure to deal with crucially important matters which the previous Administration included in their Companies Bill. That had been discussed in another place at many meetings during the Committee stage, and, indeed, the point was reached at which those proposals were substantially agreed; but they were rejected here, at the intitial stage of the consideration of this Bill. The particular matters I wish to refer to are the provisions relating, first, to the duty of directors to have regard to the interests of their employees, and, secondly, of course, to insider dealing. Failure to deal with those matters in the course of this Companies Bill's passage through Parliament would indeed have been little short of scandalous. We urged the Government to deal with them in this House, from which this Bill was originating; and, indeed, we endeavoured to include them in the Bill. If I may say so, I warned the Government that if they did not take that course they would run into serious trouble when the Bill came to another place.
Unhappily—and I do not blame the noble Viscount, Lord Trenchard, for this, because clearly his hands were tied—the proposals of the Opposition were rejected in this House; and, if I may say so, I think the noble Viscount, Lord Trenchard, has been badly and sorely tried by the way the matter has proceeded through Parliament. He was not allowed to make any concessions, but in another place the mighty there made them all—or most of them, at any rate. It is too bad. He has our sympathy, and we admire his forbearance in being able to continue with the odious task which falls upon him. But there it is; and, for what it may be worth, we congratulate the Government on accepting the principal proposals of the Opposition in this matter.
However, what happened in another place, and what is perhaps to some extent happening now, is, I submit, a supreme example of how not to legislate, particularly in a field of such importance and such 980 technicality as company law, which, after all, represents the legal framework for most of our commercial and industrial institutions. The history of the matter in another place, briefly, is that the Bill had a Committee stage which lasted from 6th November to 11th December, and a mass of amendments was then introduced. Then, lo and behold!, at the Report stage a further mass of amendments was introduced, and we now have a veritable volume, a large volume—66 pages of it, almost as big as the Bill itself, which were added by way of amendments at the Report stage in another place. But that is not enough. Today, the noble Viscount has put down quite a number of additional amendments to the amendments to the amendments. The thing is going full circle many times.
We on this side of the House submit that this is not a sensible way to legislate, and it will be a matter more of luck than of judgment whether, at the end of the day, the Bill will be in good shape and of proper and appropriate content. However, we will do our best to assist in this situation. I regret that I will be unable to wait until the end of the proceedings, as I have another public engagement, but my noble friends and the noble Lord the Liberal spokesman will no doubt be making their contributions as well, to see whether we can make order out of what is still somewhat chaotic. As to the immediate amendments moved and spoken to, they appear to have a technical and blameless character, and I myself do not object to them, but it may well be that others behind me, and indeed in front of me, may wish to intervene.
§ 4.28 p.m.
§ Lord LLOYD of KILGERRANMy Lords, with the leave of the House may I, too, make a few preliminary observations which I am sure will save some time, in that it may not be necessary at all for me to rise in my place to make any speeches on the first 100 or so amendments with which we have to deal. I should like to thank the noble Viscount, Lord Trenchard, for sending me in advance a list of the groupings of the hundreds of amendments with which your Lordships will have to deal. I should also like to extend to him and to his industrious officers my thanks and sympathy for the tremendous amount of work which has 981 been thrust upon them since the Bill left your Lordships' House for the other place several months ago.
There were two observations, at least, which I read and understood among the 1,200 or so columns which I have examined during the last weekend or so. One was made by the honourable Member for one of the Swansea constituencies, Mr. Anderson, when he was speaking in the course of the passage of the Bill through the House, which passed like a snowball racing downhill, picking up masses of new and complex clauses, even after the Committee stage. He said, quite truly, that your Lordships would not recognise this Bill when it came back to your Lordships' House. Another distinguished Member said that this was the best Bill for job-creation that he had come across, only it was job-creation for hundreds of lawyers.
I suppose that, like the noble and learned Lord, Lord Elwyn-Jones, I should congratulate the Government on changing their mind. We welcome their last-minute conversion to making at least some attempt to prevent future scandals in insider dealings, which have been the subject of so many investigations and inspectors' reports in the last decade. But from the standpoint of encouragement of enterprise, particularly of small companies, this is an appallingly unsatisfactory Bill. As I have said, long and complex clauses will, of course, lead to the creation of jobs for hundreds of lawyers. Large firms, with their large staffs, will be able to spend a great deal of time on unravelling the complexities of this Bill rather than on doing something more productive. I say seriously and sincerely that this Bill is a grave disappointment. It fails to provide proper corporate guidance to the smaller firms which are desperately in need of reforms in company law. The way in which unnecessary duties are being (and have been for so long) imposed upon the small businesses is still grossly unfair and discouraging to private enterprise.
Like the noble and learned Lord, Lord Elwyn-Jones, I welcome Clause 1 and the other clauses to which the noble Lord, Lord Lyell, has spoken. It seems to me that there is little difficulty about them. The amendments seem mainly to try to clarify the word "allot" and generally to 982 ensure that, as far as possible, a company should not be allowed to commit itself without conditions for the issue of its shares.
§ Lord MONSONMy Lords, following what we have heard from the Liberal and Labour Benches, may I, too, make a point before moving on to the detailed consideration of the Commons amendments? When the noble Viscount, Lord Trenchard introduced this Bill on 25th June last year he said (at column 1238) as the noble and learned Lord, Lord Elwyn-Jones, pointed out, that this Bill deals with the implementation of the EEC Second Directive on company law and certain closely related matters. Then he went on to say, twice, that a second Companies Bill would be brought forward in 1980. This can be verified from columns 1238 and 1239 of the Official Report.
On the strength of that, many noble Lords abstained (as I did) from tabling amendments and new clauses to do with other aspects of company law in the expectation that there would be another occasion to do so during this Session. Now we have this Bill returned from the other place with entirely new Parts IV and V, plus four new clauses. Could the noble Viscount give us an assurance that there will be another opportunity during this Session to debate this and, indeed, will there be another Companies Bill introduced this Session?
§ Viscount TRENCHARDMy Lords, I expected that there could be the question of whether any egg might stick on my face in relation to this Bill. I accept the manifest goodwill in the noble and learned Lord's commiserations but I do not accept the commiserations. I do not think that I need them. We said clearly that the question of the duties of directors and the whole question of inside dealings were enormously important subjects. We also said that we had a big legislative programme with some vitally important (as we see it) measures in other areas, and also that at that stage we had a timescale to meet for the Second Directive. We further said that it was important to get these major questions as right as we possibly could and to get the degree of balance into the duties of directors and into the control of inside dealings which would 983 result in a major step forward rather than do some good and some harm.
As it became clear after the Bill had left this House, the programme changed—and I think that noble Lords will accept that all legislative programmes change a little with time—and there was even a risk of not getting the second Bill in the Session. We then had the choice between trying to get this important Bill extended and to cover the areas concerned and of having perhaps to wait much longer. So we do not apologise for taking the decision that we would, after all, accept the advice given to us by noble and learned Lords on the other side; but for perhaps the rather different and fuller reason that the balance of evidence in this area now lay in extending the present Bill.
Yes, my Lords, there will be a further Companies Bill; there is an EEC Fourth Directive. Having got a little more cautious as I become a little less green as a Minister at this Dispatch Box, I will not give an absolute guarantee as to exactly when it will come forward; but there is clearly still a chance of it coming forward in the next Session. There will be another Bill: but we believed that as the situation had changed, as I described, it became important to get major progress in these important areas in this Bill. As far as consultation is concerned, I believe that in some areas of the Bill draft clauses were made available to those organisations concerned as early as October. As far as this House is concerned, it has the benefit of the fairly long discussions and debates in the other place—even taking account of the minority, although an important minority, of amendments that were added at Report stage in another place.
So, my Lords, I do not think that we should apologise and, certainly, I do not stand here feeling that my colleagues have treated me unfairly in any way. I believe that their first decision was right and that their second decision was right; and I hope very much that we will have the tolerance of your Lordships' House in getting as much forward progress in this important area as we can at this stage, nevertheless still bearing in mind that this subject of company law and Companies Bills is an endless one and that there will he a further opportunity to come.
§ Lord ELWYN-JONESMy Lords, we on this side of the House will note a commitment without a promise that there will be a further Companies Bill, and we will await with patience its ultimate appearance.
§ On Question, Motion agreed to.