COMMONS AMENDMENT (Hansard, 27 October 1981)

HL Deb 27 October 1981 vol 424 cc950-81 950

§ 56 Clause 42, page 46, leave out lines 15 to 30 and insert: ("(1) Subject to the following provisions of this section and sections (Relaxation of section 42 restrictions for private companies) and (Provisions supplementary to section (Relaxation of section 42 restrictions for private companies)) of this Act, where a person is acquiring or is proposing to acquire any shares in a company it shall not by lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place.

§ (1A) Subject to the following provisions of this section and sections (Relaxation of section 42 restrictions for private companies) and (Provisions supplementary to section (Relaxation of section 42 restrictions for private 951 companies)) of this Act, where a person has acquired any shares in a company and any liability has been incurred (by that or any other person) for the purpose of that acquisition it shall not be lawful for the company or any of its subsidiaries to give any financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.

§ (2) Subsection (1) above shall not prohibit a company from giving any financial assistance for the purpose of any acquisition of shares in the company or its holding company if—

(a) the company's principal purpose in giving that assistance is not to give it for the purpose of any such acquisition or the giving of the assistance for that purpose is but an incidental part of some larger purpose of the company; and
(b) the assistance is given in good faith in the interests of the company.

§ (2A) Subsection (1A) above shall not prohibit a company from giving any financial assistance if—

(a) the company's principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of any shares in the company or its holding company or the reduction or discharge of any such liability is but an incidental part of some larger purpose of the company; and
(b) the assistance is given in good faith in the interests of the company.

§ (2B) Subsections (1) and (1A) above shall not prohibit—

(a) any distribution of a company's assets by way of dividend lawfully made or any distribution made in the course of the winding up of the company;
(b) the allotment of any bonus shares;
(c) anything done in pursuance of an order of the court made under section 206 of the 1948 Act (compromises any arrangements with creditors and members);
(d) anything done under an arrangement made between a company and its creditors which is binding on the creditors by virtue of section 306 of the 1948 Act;
(e) anything done under an arrangement made in pursuance of section 287 of the 1948 Act (power of liquidator to accept shares, etc. as consideration for sale of property of company;
(f) any reduction of capital confirmed by order of the court under section 68 of the 1948 Act;
(g) a redemption or purchase of any shares made in accordance with sections 43 to 45, (contingent purchase contracts) 46 (Assignment or release of company's right to purchase own shares), (Payments apart from purchase price to be made out of distributable profits), 47 to 54, (Supplementary provisions relating to Part III of 1980 Act), (Power to alter certain provisions with respect to redemption or purchase by a company of its own shares) and 56 of this Act.").

§ 57 Clause 42, page 46, line 31, leave out ("Subsection (1)") and insert ("Subsections (1) and (1A)").

§ 58 Clause 42, page 46, line 36, after 'scheme' insert ("within the meaning of section 87(1) of the 1980 Act)").

§ 59 Clause 42, page 46, line 38, leave out ("by the trustees of the scheme").

§ 60 Clause 42, page 47, line 2, leave out ("company's net assets") and insert ("company has net assets which").

§ 61 Clause 42, page 47, line 2, leave out lines 6 to 24 and insert— ("(5) In this section "financial assistance" means—

(a) financial assistance given by way of gift;
(b) financial assistance given by way of guarantee, security or indemnity, other than an indemnity in respect of the indemnifier's own neglect or default, or by way of release or waiver;
(c) financial assistance given by way of a loan or any other agreement under which any of the obligations of the person giving the assistance are to be fulfilled at a time when in accordance with the agreement any obligation of any other party to the agreement remains unfulfilled or by way of the novation of or the assignment of any rights arising under any loan or such other agreement; or
(d) any other financial assistance given by a company the net assets of which are thereby reduced to a 952 material extent or which has not net assets.

§ In this subsection "net assets" has the same meaning as it has for the purpose of the 1980 Act.

§ (5A) Any reference in this section to a person incurring any liability shall be read as including a reference to his changing his financial position by making any agreement or arrangement (whether enforceable or unenforceable and whether made on his own account or with any other person) or by any other means.

§ (5B) Any reference in this section to a company giving financial assistance for the purpose of reducing or discharging any liability incurred by any person for the purpose of the acquisition of any shares shall be read as including a reference to the company giving financial assistance for the purpose of wholly or partly restoring his financial position to what it was before the acquisition took place.

§ (5C) For the purposes of subsection (4) above—

(a) "net assets", in relation to the giving of financial assistance by any company, means the amount by which the aggregate amount of the company's assets exceeds the aggregate amount of its liabilities taking the amount of both assets and liabilities to be as stated in the company's accounting records immediately before the financial assistance is given; and
(b) "liabilities" includes any amount retained as reasonably necessary for the purpose of providing for any liability or loss which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.").

§ Lord Mackay of Clashfern
My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 56, and I should like to speak also to Amendments Nos. 57 to 61. We are now in the area to which the noble Lord, Lord Wedderburn, referred in the course of his remarks in the earlier debate. These amendments make important changes to Clause 42 of the Bill. Clause 42 was introduced to replace Section 54 of the 1948 Act, which prohibits financial assistance by a company for the purchase of or subscription for its shares or those of its holding company, if it has a holding company. Some of your Lordships will remember that we had a good deal of debate on this at earlier stages of the Bill in this House.
I should like to express on behalf of the Government gratitude for the very considerable help that the Government derived from these discussions. I think that, even during the time the matter was being discussed in this House at the various stages, the tide flowed backwards and forwards a bit, and the climax of the flowing came when the noble Lord, Lord Wedderburn, and my noble friend Lord Selkirk and others joined together in promoting an amendment.
During the initial stages of this Bill, the department was consulting with bodies such as the Law Society and the Committee of London Clearing Banks on the implications of certain recent decisions which were considered to require an undesirably restrictive application of Section 54 to commercial transactions which had not previously been considered to fall within the scope of the prohibition. My noble friend Lord Selkirk—I am sorry he is unable through illness to be here today—informed the House that the section had become known as the "bankers' bogey"—that is, the trap-for-the-innocent side of the matter, to use Lord Wedderburn's phrase.
Clause 42 was tabled by the Government at Report stage, and it is fair to say that neither then nor at Third Reading did it meet with the unanimous approval 953 of this House. At the end of Third Reading, with some gentle encouragement from my noble friend Lord Selkirk, I undertook that the Government would propose an amendment to this clause in another place. I think I can safely say that that undertaking has been thoroughly fulfilled. The amendments before the House are of considerable significance. They derive from a very intensive process of consultation that has taken place throughout the period since the Bill left this House. I understand that, in the view of those most closely concerned with these matters in the commercial world, the amendments represent a considerable improvement in the provisions, and indeed have their full support. Amendments Nos. 56 to 61 must be read in conjunction with Amendments Nos. 62 and 63, which provide special provisions for private companies, but first I propose to deal with the amendments to Clause 42.
The most important Commons amendment is clearly the first, Amendment No. 56. This has two distinct elements. First, subsections (1), (1A), (2) and (2A) reformulate the basic provision and the general defence that are in subsections (1) and (2) of Clause 42 in the Bill. Secondly, a new subsection (3) contains a list of transactions which are to be exempt from the prohibition in all circumstances. Your Lordships may remember that at an earlier stage, the noble Lord, Lord Wedderburn, was rather in favour of the list and then later was rather against it, while we have fluctuated in our view about this and have eventually decided that it is wise to propose the list.
The essential change in subsection (1), the restatement of the prohibition, is that the reference to financial assistance given in connection with acquisition has been dropped. The expression "in connection with" could be interpreted as referring only to financial assistance given after an acquisition, but it has also given rise to great uncertainty of interpretation and has been a major element in the extension of the field of the prohibition because of the very wide range of transactions which can be said to be "connected" with a particular acquisition of shares. It is argued, for example, that where, by virtue solely of the terms of the holding company's standing financial arrangements with its bankers, a new subsidiary charges its assets as security for group borrowings, then that subsidiary is, in fact, providing prohibited assistance, because although there may be no causal link between the assistance and the acquisition, there is a connection since, without the acquisition, the assistance would not have been given.
The new provisions accordingly now distinguish explicitly between financial assistance given before or at the same time as an acquisition, and financial assistance given after the event. This is the primary reason why we want to make this division: to try to get over the difficulty which, in practice, has been found to arise from this reason. Financial assistance given directly or indirectly for the purpose of an acquisition before or at the same time as the acquisition is prohibited in the new subsection (1). Financial assistance given after the acquisition to relieve any persons of a liability incurred for the purpose of the acquisition is prohibited by subsection (1A). The effect of a return to "in connection with" would be a reintroduction of uncertainty on an unacceptable scale. Accordingly I 954 could not commend to the House proposals to that end about which you will no doubt hear in a moment.
The phrase "for the purpose of reducing or discharging the liability so incurred" is designed to isolate the mischief as actions which have a direct link with the financial commitments undertaken to achieve the acquisition, and I am pleased to note from Amendment No. 56A that noble Lords opposite see virtue in it. So far as Amendments 56B and D are concerned, the wording in the Commons amendments seem to us to be clearer and more direct, and these are particularly important attributes on a clause such as this normal wording as experience has suggested.
As the offence has now been divided into two, so the defence has been divided in subsections (2) and (2A) to apply respectviely to financial assistance before or at the same time as acquisition, and such assistance after acquisition. The condition in Clause 42(2)(c) that the assistance is given in good faith in the interests of the company is retained in both subsections. But, not least in the light of the critical comments made in this House at Third Reading, references to a power conferred by an instrument or resolution which were clearly regarded as obscure have been deleted. The subsections continue to found the defence on the company's purpose in giving assistance. However, I hope that noble Lords will feel that the concentration on "principal purpose" rather than "purpose or principal purpose" and the latter part of subsection (2)(a) and (2A)(a) make it considerably clearer what test a company must pass if it is not to provide prohibited assistance. We believe that these provisions in particular will help to remove recent uncertainties.
Before turning to subsection (3), I should like to refer briefly to Amendments 56G to L, which contain three different elements. Amendments Nos. 56G and 56I would delete what we see as essentially clarificatory phrases which those whom we have consulted have found particularly helpful in defining the scope of the defences. Amendments Nos. 56H and 56L seek to deal with the civil consequences where a third party (I assume a third party, although the drafting would appear to encompass the company itself also) seeks to take advantage of the defences in subsections (2) and (2A). I am not wholly clear what is seen to be the difference in practice between the clause as amended by Amendment No. 56 and with the addition of provisions along the lines of Nos. 56H and 56L. The fact is that anyone seeking to rely on the defences would, if tested, have to demonstrate that he reasonably believed that they were substantiated.
Regarding Amendments Nos. 56J and 56K, I am afraid that we found these difficult, and it may be that the noble Lord will explain them more fully later. In so far as they extend the onus of proof on a third party, we believe that they may go unreasonably far, because it seems unreasonable to expect a third party to inquire beyond the company's purpose in providing assistance to establish the purpose of the assistance itself.
Amendments Nos. 56A and 56F effectively seek to return to a more conventional formulation of the offence and to restrict the defences. There appears to be a basic difference of view on this, and we do not consider that those amendments strike the right balance between appropriate restriction of a mischief 955 and reasonable commercial flexibility. It is clear from our consultations on this matter that they unacceptably inhibit entirely worthy group financial arrangements. I appreciate what has been said already. It is very difficult to get the line right in this case and to have reasonable freedom for perfectly legitimate financial transactions and those which are not reasonable.

Lord Bruce of Donington
My Lords, before the noble and learned Lord the Lord Advocate finishes making his points, I wonder whether he will inform the House if the proposals set out in Amendment No. 56 and also in Amendment No. 61 to which he has been speaking, were discussed in draft amendment terms with the Consultative Committee of Accountancy Bodies, or was there agreement with them as to the more general principles which will be followed? This is very important because I do not wish the CCAB to be saddled with the complete responsibility of approving every jot and tittle incorporated in both amendments.

§ Lord Mackay of Clashfern
My Lords, I believe it would be right for me to say in general terms that the Government have tried to consult on these technical matters as widely and as fully as possible. Nevertheless, having so consulted the responsibility for the amendments is that of the Government. Even if we had consulted on the absolute final detail of the amendment, I would still say that the Government had that responsibility. I am seeking to inquire in what detail this was put to the CCAB, but it would be quite unfair for me to do more than to say that we benefited very much from their help and we understood that, at least in general terms, the CCAB were in agreement with it. So far as the other bodies which we consulted are concerned, I would feel very much the same thing.
The recent uncertainty about the scope of Section 54 has extended to the application of the prohibition to forms of payment, which have been widely considered not to be covered. The new subsection (2B) is intended to put beyond doubt that certain transactions which are expressly provided for in company law and which may result in payments which are used to purchase the shares of the company can never fall within the scope of the prohibition. The approach embodied in this subsection was, as I said, debated on Third Reading when I expressed considerable reservations about exempting completely transactions such as dividends. On reflection, however, we now recognise that our earlier resistance to what might loosely be called the "list approach" did not pay sufficient regard to the possible overlap of different protective provisions in company law.
Even in the case of dividends, which are dealt with in (3)(a), which Amendment No. 56M seeks to delete, Parliament has legislated since the introduction of the original prohibition in Section 54 to regulate the distribution of a company's assets in Part III of the Companies Act 1980, with the interests of creditors particularly in mind. The reference to "dividend lawfully paid" in the proposed amendment ensures not only the protection of creditors by applying the provisions of Part III of the 1980 Act, but also ensures 956 that any funds distributed are paid as a dividend in compliance with the provisions of a company's articles, which will normally safeguard the interests of any minority shareholders by ensuring equality of treatment between holders of the same class of shares.
It is worth noting that the Jenkins Committee stated that it should be made clear that Section 54 did not prohibit dividends, and it is fair to say that it has been widely considered that Section 54 did not in fact prohibit dividends. Similarly, the other specific exemptions provided in subsection (2B) cover transactions which company law regulates in order to protect those legitimately interested in the disposal or deployment of a company's assets.
So far as the Opposition amendments are concerned, we disagree with the policy behind Amendments Nos. 56N and 56P as detracting from the clean exclusion of the transactions set out in subsection (2B). We believe that this is a very important part of the clarity of the proposal. Moreover, Amendment No. 56P appears to embody a somewhat strange concept of a lawful transaction, perhaps a dividend, that is not in good faith and in the interests of the company. So far as Amendment No. 56Q is concerned, we do not see that it adds anything.
Dealing briefly with the remaining Commons amendments to Clause 42, Amendment No. 57 is consequential on Amendment No. 56. Amendment No. 58 inserts a definition of "employee share scheme" which was previously in subsection (7) which a later amendment deletes. Amendment No. 59 deletes the requirement that funds made available by a company in accordance with an employee's share scheme for the acquisition of shares must be provided to trustees. Such a change has been urged on the Government by a number of commentators, particularly in the context of our provisions to enable companies to purchase their own shares. The requirement that employee share schemes must have trustees—which has been the effect of the existing provision so far as company law is concerned—seems to have been as much for administrative convenience as to safeguard the beneficiaries. Amendment No. 60 is a drafting amendment.
Amendment No. 61, finally, contains a number of important definitional provisions to support the earlier subsections. The definition of "financial assistance" previously in subsection (5)(i) has been refined and revised in the new subsections 5(a), (b) and (c) in the light of extensive consultations. The reference to "net assets" previously in (5)(a)(ii) and now in 5(d) has been amended to cover the case of a company without net assets but unlike other references to net assets in the clauses which I shall deal with later, is a test by reference to actual asset values.
Subsections (5A) and (5B) clarify the scope of references respectively to incurring a liability for the purpose of an acquisition—which arises on subsection (1A)— and reducing or discharging such a liability, which arises on subsections (1A) and (2A). The amendments make clear that in deciding the question of whether financial assistance has been given after an acquisition it is necessary to look at the overall financial position of any person involved: the use of the word "liability" is not confined to the normal strict legal meaning.
957 Finally, subsection (5C) provides that, for the purposes of subsection (4) only—that is subsection (4) as in the Bill—the question of whether net assets are reduced is to be determined by reference to book values, rather than, under Clause 42 as it stands, actual values. Subsection (4), which has not been significantly amended, restricts any assistance given by a public company under the exemptions in subsection (3) for general lending which is part of the ordinary course of business, for provision of funds in accordance with an employee share scheme and for lending to employees, to such assistance as does not reduce net assets or which is provided from distributable profits. In applying the standard of book values the amendment reflects the policy of the EC Second Directive on Company Law and responds to comment to the department that in that context a reference to actual values was unduly harsh. It is considered that this is justified in the case of the limited types of payment permitted under subsection (4).
My Lords, I hope that my explanation of the reasoning behind the Government amendments and of our reservations about the amendments to the amendments which are being proposed, may enable your Lordships to understand our approach to this matter and will commend the amendments to your Lordships. I beg to move.

§ Moved, That this House cloth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern,)

§ 6.9 p.m.

§ As an amendment to Amendment No. 56:

§ 56A Leave out subsections (1) and (1A) and insert— ("Subject to the following provisions of this section and of any other provision of this Act, it shall not be lawful for a company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of or in connection with the acquisition or proposed acquisition of its shares, whether that assistance is given before or at the time of the acquisition or after the acquisition either by reducing or discharging any liability or otherwise".).

§ Lord Wedderburn of Charlton
I am sure your Lordships are grateful to the noble and learned Lord the Lord Advocate for his explanation and for giving us a greater understanding of Amendment No. 56—although I myself could not follow the speed with which he went through our amendments to the amendment because he chose not to do so either in alphabetical order or indeed in the clusters which were my clusters. I shall do my best to move Amendment No. 56A and, conveniently, in view of what the noble and learned Lord Advocate has said, I will take with it, if your Lordships agree, Amendments Nos. 56C and 56E.
It is necessary to match the noble and learned Lord Advocate's introduction with a few words on what these amendments are all about, and then it will not be necessary to make points on individual amendments.
The noble and learned Lord in our previous debates—as today—has adverted briefly to the fact that ever since 1929 Parliament has regarded it as grossly improper for a company to provide financial assistance for the purchase of its own shares. The question has been: Where should the limit be laid? It has been 958 accepted as an abuse both in our statutes of 1929 and 1948, and by the second European Economic Community directive in Article 23. It is widespread knowledge that it is improper. Indeed, in report after report of the Department of Trade inspectors, although it has been made a crime in the past, it very frequently appears at the centre of the spider's web of this or that malpractice.
Therefore, those who counsel that the barrier of Section 54 should be removed must be listened to very carefully and with caution because financial assistance for the purchase of the company's shares is at the centre of a very large number of malpractices. It is also true—and this is where I join the noble Earl, Lord Selkirk—that the section as it has stood since 1948 was a quite unnecessary harassment for what we chose to call the innocent. They were usually bankers—but not always—or people who advanced money in some form to the company not knowing that it would be in any way used for this purpose.
Therefore, we jointly criticised the Government on 30th April because the clause did not protect the innocent sufficiently and did not deter the guilty sufficiently. The Government went away and, as the noble and learned Lord has told us, had consultations. May I say a word about consultations? I am not being critical of the Government, their advisers or anyone else in the way that they go about things. In this particular matter, as perhaps on so many company law matters, unless one is careful one is always consulting with the innocent. No man in the City is going to say: "I break Section 54 every day". He is going to be a person who wants to avoid breaking the law. So he will want the widest gateways for the innocent.
With whom did the Government consult? Did they consult with the guilty or those with who were interested mainly in the apprehension of the guilty? Did they consult with the TUC? There is great interest there in this matter. Did they consult with those who prosecute? If so, what did those who prosecute say? It may be they did not and it is not usually done perhaps. But it should be done. I read the clause put to the other place in Committee on 30th June. I thought it was too relaxed, even more for the innocent. There was nothing to catch the guilty. In the other place on Report, just one week ago, the Government not only opened all the gateways to the innocent and guilty together, they totally changed their philosophy. As this involves the noble and learned Lord speaking today and speaking on 30th April I must make my point stick. I will, if I may, quote in a moment what he said then and what he says now. The philosophy of the Government has totally changed not between those two dates but between 30th June and 20th October. The 20th October clause which we have before us now is a totally new concept to open the gates. I believe that it could be said that this clause, by laying down an ineffective prohibition and widening the gates to such enormous exemptions does not effectively comply with the directive. I do not believe that it complies with Article 23 because it is completely ineffective.
It is the purpose of these amendments, of which this is the first, to test out the different points. In that respect a central point on which this first amendment 959 challenges the clause is its omission of the words "in connection with" and its insistence that there shall be no offence unless the assistance is given for the purpose of the acquisition of shares. The two phrases are of course different. May I dub them in this way: the purpose phrase denotes a subjective test.
The connection phrase dubs an objective test; that is, as the noble and learned Lord has said, anything which is connected may include anything which has a casual link. Financial assistance given out of the company's assets which has a causal link with the purchase of shares. I do not apologise for spending a little time on this first amendment because it goes to the root of the clause, and taking it with the other two amendments, Amendments Nos. 56C and 56E, I hope your Lordships will agree that we can make progress on all three amendments together.
The noble and learned Lord said that "assistance in connection with the acquisition of shares" includes everything where there is a causal link. He said that they want to keep it to a causal link. My first comment is that leaving in the phrase, "assistance for the purpose of acquisition of shares", does not include every kind of causal link. The word, "purpose", does not include every result. You can do something which has a result; you may even know it. But it is not for the purpose of doing it unless there is some intention. Therefore, we find that of the three areas which can be covered—namely, anything in connection with or anything which has the result or anything which is intended—the Government only intend to include the third.
Whose intention is it? Whose purpose is it? We are looking at the purpose of the company to begin with. The purpose of the company will rest on the evidence that has to be obtained primarily from the boardroom. We canvassed these areas on 30th April. With great respect, I am rather disappointed that the noble and learned Lord did not deal with the very obvious arguments against Amendment No. 56 which were put on Third Reading in this House in respect of another clause but which equally apply here in what he said. He said nothing about them at all. Is it not the case that evidence of purpose in the company's case will rest very largely on what comes out of the boardroom? Is it not the case that two rogue elephant directors among five could ensure that it was very hard for the prosecution to prove that the company's purpose was that which it has to prove if it has to prove an offence is committed?
I am aware that the purpose of directors individually apprehended as in default of this clause would rest upon the ordinary rules of evidence. Even there I say that it is not enough for the protection of the money of the shareholders and creditors. Also I wish to add employees. To be frank, I am a little fed up of hearing company law discussed entirely in terms of shareholders and creditors. Also the workers are involved and the community. Everybody has an interest in not seeing the company's assets squandered on purchase of its own shares as part of a malpractice. I stress this because of the Government's own exemptions in the subsections we are coming to such as in (2)(a) and (2)(b). Assume them to be in the Bill, and the Government have their way, which I suppose 960 a rational human being this evening would predict they may—why not have a wide offence? Why narrow the area of liability if there are plenty of gateways for the guilty?
The Government will be suspected of a peculiarly devious intention if, having enacted very wide gateways for the innocent bankers (which may well be necessary) they go on to enact a very wide exemption for the guilty whom we would all say in debate we wanted to catch. They will not be caught by subsection (1)—certainly not in 10 per cent. of the cases where even now they might be caught. It is difficult enough under Clause 54 even now no matter what is said about its all-embracing character. How many prosecutions actually take place? That is another question about the enforcement of company law.
I said I would make stick the proposition that the noble and learned Lord had changed his mind. I will only say this: Today he was all in favour of the Jenkins Committee approach to this matter, and when we come to dividends we shall see this again. But on 30th April he said about payments such as dividends—and I quote from col. 1298— Such payments were thought by the Jenkins Committee normally to be innocent—and I emphasise 'normally'—based on their view that the dangers arising from a company giving financial assistance were for minority shareholders and creditors only. However, the Government believe that this view is mistaken, and that to allow such a payment would undermine very much of the function of the Section 54 prohibition and the matter at which the new clause is aimed". In that and the rest of his speech, I am sure he would accept that he did not adopt the Jenkins approach. Indeed, the Government explicitly on that occasion did not adopt it, I think correctly. We all change our minds. The noble and learned Lord referred to my change of mind. I do not think it was during, the passage of this Bill. Unless I am wrong on the record, I think it was that I once favoured a list and said on Third Reading that I had changed my mind.
To change one's mind, especially on a minor matter, is one thing; but it is another thing to change one's mind on the whole philosophy of the approach to financial assistance for the purchase of a company's shares—a matter which has been there since 1929 as a central problem of company law—and to do that in two amendments and not to explain why, or to give the general conceptual framework, but just to treat the matter as a matter of consultation with the people who want to get through the net, and who I do agree should get through the net, and not to tell us who should be caught—that is what I want to know from the Government. Who do they expect to be caught? Which of the inspectors' reports would reveal a case where this clause would create a crime, as Section 54 does now? I want to know, and I think the country has a right to know; and that is why I have spoken at some length on this and why I spoke as I did on the amendment. I think some noble Lords thought it was wrong to mention particular clauses, but the case on the amendment rested on facts of this sort that we have never had explained to us—absolutely central matters of this kind on the amendment.
The final point comes back to the words "in connection with". If you say that you must not give financial assistance, directly or indirectly, for the purpose of or in connection with the acquisition or proposed 961 acquisition of shares, first, you may be talking about assistance afterwards. I agree that has been dealt with by the Government. It is a minor point and they are dealing with it in the way they suggested, in broad terms.
Secondly, it is said that it is too uncertain, but I say that the test of purpose is uncertain. Elsewhere in this clause the Government talk about the "principal purpose". Is that what they mean in subsection (1), or do they mean a minor purpose or an incidental purpose? They must know perfectly well that they are legislating litigation. The noble and learned Lord has held more briefs in his hand than I have eaten hot dinners, and he knows very well that this subsection will give rise either to nothing or to excessive litigation, and the prosecution are likely to lose. What does the word "purpose" mean, when later on they say "principal purpose"? What is a court going to make of that?
I could go on to criticise other minor points, but I do not claim to have had either the time, the energy or indeed the native ability, as I have had to go slowly through these matters, as a simple soul might try to go through a difficult, hard forest. But I would say that some parts of Amendment No. 56A are more likely to deter and catch the guilty than anything in the Commons Amendment No. 56, in subsection (1). I put to the Government: Do they not accept that to be so? I beg to move.

§ Moved, That the amendment to the amendment be agreed to.—(Lord Wedderburn of Charlton.)

§ 6.25 p.m.

Lord Bruce of Donington
My Lords, if I may, I should like just to supplement the observations made by my noble friend Lord Wedderburn of Charlton. I refer in particular to subsection (1A) of Amendment No. 56 and also to subsections (2) and (2A) of Amendment No. 56. There, as my noble friend has pointed out, the words "principal purpose" have been stated. "The company's principal purpose" is referred to. Who is to determine what the company's principal purpose is? A company is a corporate entity. It has no mind; its actions take place either through the issue of documents bearing the signatures of authorised people, such as cheques, or in the case of a company's corporate action there is a resolution of its directors or of its annual general meeting. How is anybody going to determine what a company's principal purpose was? If, for example, a company at a meeting of its directors were to put into its minute book, and subsequently pass, a minute saying that, "the principal purpose of the transaction is as follows", that at the moment would appear, in the absence of evidence in rebuttal, to be conclusive evidence of what the company's principal purpose was. How else is a company's principal purpose going to be assessed?—except, as my noble friend has already pointed out, in the undoubted litigation that will arise from clauses containing ambiguities of this kind.
I invite the noble and learned Lord to contemplate actions in interpretation of these clauses that may and are more likely to arise. How does one assess what is the company's principal purpose? Can it be assessed on the basis of a collection of a whole series of facts 962 from which irresistible implications or irresistible conclusions can be reached? How near is the balance to be struck—or is a board or a company resolution going to be conclusive evidence of purpose?
I hope the noble and learned Lord will be in a position to answer that; and since, at the same time as he discussed Amendment No. 56 he also discussed No. 61, may I ask him whether the Government can do a little better than describing financial assistance as "financial assistance"? This is hardly a cogent way of framing a definition clause. What about financial assistance given by way of credit, for example? Is that "financial assistance" or is it not? These two amendments, which have been spoken on very cogently by my noble friend Lord Wedderburn, are only two of the ambiguities that arise. Can the noble and learned Lord be of any further assistance on these matters when he replies to the points raised by my noble friend on the amendment he has submitted?

§ 6.30 p.m.

§ Lord Lloyd of Kilgerran
My Lords, may I first thank the noble and learned Lord for the explanation he has given about the amendments to Clause 42. I must say I have considerable sympathy for the theme that has been developed so ably by the noble Lord, Lord Wedderburn. The question is whether the amendment now under these amendments to Clause 42 is too wide. My professional experience, if I may refer to a personal matter, is entirely in the field of intellectual property, involving patents, trademarks, know-how and copyright.
I have had some anxiety about Amendment No. 61, where there is a definition of "financial assistance". The noble Lord, Lord Bruce of Donington, asked whether this covers assistance by means of credit. It is quite possible in this age, which is so often called the age of science and technology, for there to be a large number of patents and trademarks available to a company. Is it possible, therefore, for a person to obtain assistance for the purpose of purchasing a share by some transaction involving the intellectual property which the company may own?
It seems to me prima facie—and I have not had the opportunity of studying this matter very carefully—that there may be a loophole there, in relation to the definition of "financial assistance" in the new amendments which the Government have now put forward. I apologise for at this late hour raising questions involving esoteric matters of patents and trademarks. But, if it were possible, I should be grateful for an answer, and no doubt there is a simple answer, because the noble and learned Lord has had more time to study these proposals than I have.

§ Lord Seebohm
My Lords, speaking as a banker, I naturally welcome Clause 42, as amended, very much indeed, and the death of Section 54 of the 1948 Companies Act is something for which we have all looked for very many years. What worries me about Amendment No. 56A is in connection with the financing of management buy-outs, which is now becoming extremely important.
I think that people will have seen in the press the announcement that arrangements are being made by 963 the National Freight Corporation, which is a £50 million transaction and is very important indeed. I am speaking rather hypothetically, because I do not know the details at all, but it seems to me that in a case like that, where the management are having a buy-out, they also want to get as large a proportion as they can of workers in the business buying shares. It seems to me very important that they should do so. A lot of those workers will not have the cash on the nail to put down and will have to borrow money, and the obvious party to lend them that money will be the company. If Amendment No. 56A is adopted, will it make this more difficult or impossible or what would be the result? If it makes it more difficult or impossible, then I think that No. 56A is a very undesirable amendment.

§ 6.32 p.m.

§ Lord Mackay of Clashfern
My Lords, the noble Lord, Lord Wedderburn, asked whom we had consulted. Our main external consultations were with the Law Society, the representatives of the banks and Finance for Industry, who have considerable experience of management buy-outs of the type to which the noble Lord, Lord Seebohm, referred. I am sure that the noble Lord, Lord Wedderburn, will have in mind that the Department of Trade has its own prosecution branch, and, of course, the Companies Inspectorate were also closely involved in these matters.
The noble Lord said that I had changed my mind, and I quite accept that I have changed my mind. Indeed, I anticipated that he would say that, which is why I said what I did earlier on. But this is a very difficult and important field, and I think that it is very justifiable to change one's mind in looking for a solution to a problem which, as the noble Lord, Lord Seebohm, has said, has been with us for a long time. The primary answer which I give to the noble Lord, Lord Wedderburn, in connection with his Amendment No. 56A is that the difference between us is that he wants, in effect, to put in "in connection with", whereas I want to keep in "the purpose".
As I see it, what our Amendment No. 56 does is to focus on what is regarded as the mischief. The mischief is that a company should give financial assistance directly or indirectly for the purpose of the acquisition of its own shares. It is that that requires to be restricted, and it is for that reason that we have used these words. We certainly consider that our clause as it stands, as amended by the Commons, carries out the requirements of the directive.
Of course, I accept that in any particular case one has to establish the purpose, and that is the present position, because Section 54 has never been an absolute offence. It is an offence which requires the establishment of what some people call mens rea—the kind of mind which intends to commit an offence. Therefore, there is nothing new in its being an offence which relates to the purpose of the transaction—

Lord Bruce of Donington
My Lords, I am grateful to the noble and learned Lord for giving way. Would he also bear in mind that Section 54 of the original Act uses not only the word "purpose" but also "or in connection with", which is the very phrase that has been used by my noble friend?

964

§ Lord Mackay of Clashfern
Yes, my Lords. I am, of course, well aware of that and that is the principal improvement on this aspect that we want to make; that instead of, as it were, drawing a bow at a venture, the old Section 54 identified in part what the mischief was, and that was when it was talking about purpose. When it came to "in connection with", it was really hitting at something which might or might not be bad, according to what its purpose was. That is the real difficulty. While "in connection with" is a phrase that does not perhaps depend so much on the individual's mind, it is capable of very wide application, and that has been one of the difficulties of Section 54 in recent cases.
A point has been made by both the noble Lord, Lord Wedderburn, and the noble Lord, Lord Bruce, about the company's principal purpose. The obvious intention of that part of subsection (2) is to give the company the opportunity of a way out of the primary liability, if it can show that its principal purpose is not. to give assistance for the purpose of any acquisition. That is the point. The question of what is the company's principal purpose is a matter of fact to be decided upon the evidence. I cannot see any other way in which anything of that kind could be done. It is a question of assessing, in all the circumstances, what is the principal purpose that the company has in mind. The noble Lord is, I am sure, familiar with the Belmont case, where the judge had to do just that. So, in order to apply any kind of law in this area, one has to apply one's mind to the facts and see whether they show to a reasonable tribunal that the principal purpose was as the company claimed it to be.
The noble Lord, Lord Wedderburn, asked me whether, if our clause applied, any cases in the inspectors' reports would have escaped. I must say that I cannot be certain that there is any case reported in the reports which would not have been caught if this clause had been in operation but which would have been caught under the old Section 54.
I come to the last point, I think, which is on the question of financial assistance. The noble Lord, Lord Bruce, said that it is not much help to say that "financial assistance" means financial assistance. If that were all that was said, I might have to agree with him, but it does not say that. Amendment No. 61 says: In this section "financial assistance" means (a) financial assistance given by way of gift; (b) financial assistance given by way of guarantee et cetera. In other words, it indicates the various methods by which financial assistance may be given, in order to indicate the scope of the phrase. It is not just a question of handing over cash. It is a question of financial assistance which may be given in the variety of ways which are reasonably exhaustively described in paragraphs (a) to (d).
I should like to end with the question put to me by the noble Lord, Lord Lloyd of Kilgerran, regarding intellectual property. Certainly financial assistance could be given by way of intellectual property. For example, supposing that, in order to assist me to buy shares, a company which held rights in an important patent gave the right in the patent to me as a gift in order that I might then derive money from it for the purpose of buying shares in the company, that would 965 clearly be caught by subsection (5)(a). The particular nature of the property which is used to give the financial assistance does not determine the matter for the purpose of the clause.
In these circumstances, I would suggest to your Lordships that the clause as it is is preferable to the amendment proposed by the noble Lord and I would ask your Lordships not to accept it.

§ 6.41 p.m.

§ Lord Wedderburn of Charlton
My Lords, I am grateful for the suggestions which have been made concerning this amendment. I can think of ways in which to improve it but I have not heard anything which suggests to me that the Government's subsection (1) of Clause 56 is better than I thought it was. It seems to me to be rather worse.
The debate has reaffirmed yet again how so many misconceptions cover this area. The latest fashion is to say, "We must get rid of Section 54 in order to assist management buy-outs". I agree that management buy-outs may be a very important phenomenon that one wants to assist. One does not want the statute to stand in the way. But it is dealt with perfectly simply and clearly in the exemptions of the Government's own clause. It does not need the omission of the words "in connection with"; that is, to assist management buy-outs you do not effectively have to abolish the offence of using the company's assets to acquire its shares, which is what, in practice, this clause does. You have to have exemptions which clearly allow for ordinary banking activity to be carried on. So no doubt today we must look at exemptions from the offence to see whether they include room for management buy-outs.
I suggest that these exemptions quite clearly do. In other words, the debate about the exemptions is once again being muddled up with the debate about the basic prohibition. I did not complain that the noble and learned Lord had changed his mind. I explained that I have changed my mind. I complained that whereas I was right to change mine he was wrong to change his because he has not explained up to now why he has changed his mind. I knew that the noble and learned Lord would do for us what no other Government spokesman has done. Throughout the debates I have read on this matter no other Government spokesman has said what a lawyer should say to start with: What is the mischief to be prohibited? Although I do not have his precise words, I understood the noble and learned Lord to say that the mischief to be avoided is that the company's assets must not be used for the intentional purpose of acquiring its shares. With respect, that shows why the Government have got it wrong, because that is not the only mischief to be avoided.
Although in certain respects I regard the Jenkins Report of 1962 on Company Law Amendment as rather diabolical, nevertheless I shall sup with the devil on this one. I have been looking at the Jenkins Report. I cannot make the point stick without reading paragraphs 172 to 186 of the Jenkins Report but I am sure that noble Lords would not wish me to do so. If, however, one reads paragraphs 172 to 186 one finds 966 that even Jenkins—perhaps the most relaxed document on this matter in the last few decades—does not confine the mischief to be avoided only to cases of intentional application of assets for the purchase of shares. It is a little difficult, I agree, to define the area which Jenkins wanted to have covered because the report went on to procedural matters requiring a special resolution—into the area which the Government wish to apply to private companies.
I do not know of anybody who has defined the mischief so narrowly as it has been defined in this Chamber tonight. Surely in 1981 somebody is interested, apart from my noble friend Lord Bruce of Donington and I, in stopping malpractice. The Government give the impression that they do not care a fig. Surely they care whether or not there are practices where the application of the assets of the company would result in the acquisition of shares being assisted and should have been foreseen but was not. This was not the purpose of the relevant people but they really should have foreseen it because, as directors, they owe a duty to all the people who depend upon that enterprise, be they creditors, shareholders or workers, that the assets of that enterprise should be looked after with due care. Should not they be caught by this clause? Should they just be able to say, "It was not the company's purpose, nor ours: therefore that is an end of the matter?" Should they not be forced to prove that they come within an exception?
The debate tonight has shown that this is a most deplorable clause. The noble and learned Lord and I could swap many evenings discussing the finer points which I know he has not revealed and which I shall not reveal in the discussion tonight. But surely this cannot be the correct form for a Companies Act of 1981. I am utterly astonished that the noble and learned Lord has not even hinted that he has any reservations. I know that he may not be able to do that here, but one day, when he has changed his mind again, perhaps we shall see whether he really has.
All I can do is to say that I shall not withdraw this amendment. No doubt we shall not go through all the palaver of dealing with it by the ultimate deterrent. However, the amendment will not be withdrawn and I hope that it will stay on the record as an indictment of this particular part of this Companies Bill.

§ On Question, Amendment No. 56A, as an amendment to Commons Amendment No. 56, negatived.

§ As an amendment to Commons Amendment No. 56:

§ 56B Subsection (1), line 8, leave out ("for the purpose of") and insert ("with a view to")

§ Lord Wedderburn of Charlton
My Lords, I can move this amendment much more quickly. It relates to exactly the same matter. I merely want to ask the Government a question. Accepting now that their subsection (1) of Clause 56 is based upon the notion of purpose, this amendment would replace "purpose" with "view to". This amendment would insert the words, that no financial assistance should be given with a view to the acquisition of the company's shares". The reason that the amendment is moved is to test this one point. In Article 23 of the second directive, in the English version at least, the words 967 used are that the "funds"—I do not suggest we should adopt the word "funds"—of the company should not be donated, which sounds like a bad translation, with a view to the acquisition of shares. Is it the Government's understanding that in either the English or any other version the purpose, which in English is "donation of assets with a view to the acquisition of shares", is the same as the English purpose? If the translation is correct in the sense that it is official—and I understand that the English text is an official version of the directive—then one looks at the Oxford English Dictionary and finds that the two are not quite the same. They relate to the fine tuning point that came up in the debate between the noble and learned Lord and myself on the previous amendment. If one looks at the Oxford English Dictionary, to do something "for the purpose of" (in any meaning you care to look at under the various headings) is always with the intentional object of attaining something. If, however, one looks at the word "view" and the words "with a view to" in the Oxford English Dictionary, one finds that they include both the object of attaining something and doing something with regard to something else, which sounds more like a causality without the full intent, which is always included in "purpose". Therefore the question is: Do the Government regard the two phrases as the same, and do they feel that this is justified?
In any case, why not use the words in the directive?— because of course the matter of the directive is very important so far as cost is concerned for those who depend on this. First, the courts will want to look at the directive to interpret the Act—and the Government have no doubt thought about that; so will the courts put any peculiar meaning on "purpose" in view of the different wording in the directive, such that the layman or even the legal adviser might not think of and, secondly, will the courts have the Act challenged as not according with the directive? I cannot believe that the Government have not thought of that. But the question needs to be put, and I move this amendment to the amendment with the purpose and with a view to ascertaining the Government's views. I beg to move.

§ Moved, That Amendment No. 56B, as an amendment to Amendment No 56, be agreed to.—(Lord Wedderburn of Charlton.)

§ Lord Mackay of Clashfern
My Lords, so far as we are concerned, the view—and I am sorry to use that word—that we have taken is that "for the purpose of" and "with a view to" in this context have very little difference between them. The noble Lord, referring to the dictionary, gave more than one meaning for the phrase "with a view to", but I think that the second one which he gave, "with regard to", would hardly fit the context of this phrase, and the first one is indistinguishable from the meaning "for the purpose of", which he also gave, so I think perhaps his researches confirm the result from which I said we started. As has been said, "for the purpose of" is the phrase in the existing Section 54, and up to date that does not appear to have given rise to any particular difficulty. Accordingly, for those reasons, we would wish to adhere to the phrase "for the purpose of".

968

§ Lord Wedderburn of Charlton
My Lords, I am a little disappointed in the noble and learned Lord because he has not stated on behalf of the Government that the Government feel confident that the clause accords with the directive. What he said was that there was a difference but very little difference, and if there is very little difference then what the Government are enacting is not in accordance with the directive. The Government are obliged to enact the directive. I am not making some silly point because the noble and learned Lord knows as well as I do that cases go up to the Judicial Committee of this House on points of this sort and there might be a reference to the European Court which would all be a quite unnecessary cost to people involved in commercial affairs.
This is a commercial point. It is not in any way like the previous points that I was putting to him of a fundamental kind: it is a straightforward point of approaching the directive and avoiding the pitfalls which all the wretched references to the European Court entail. I was disappointed that the noble and learned Lord did not make it clear that the Government were confident on this. If the Government are confident, I am happy, but in any case I beg leave to withdraw the amendment.

§ Amendment to the amendment, by leave, withdrawn.

§ [Amendments Nos. 56C, 56D and 56E to the amendment not moved.]

§ 6.52 p.m.

§ As an amendment to Commons Amendment No. 56:

§ 56F Leave out subsections (2) and (2A)

§ Lord Wedderburn of Charlton
My Lords, this amendment is to delete all the exemptions in subsections (2) and (2A). That was the first reaction of myself and, I believe, of some of my noble friends to our sight of this clause when it appeared just a week ago. Since then, one has had further thoughts, and, with your Lordships' permission, I should like with this amendment to speak also to Amendment No. 56G, which effectively gets rid of the second half of subsection (2)(a) and the equivalent, which I believe to be Amendment No. 561, which is on Clause 56(2A).
The first point on these amendments relates to the point that my noble friend Lord Bruce raised earlier, but which really must be probed yet again. The exemptions require—if we now assume that there is such a thing as an offence—that the assistance which the company has given (if I may take them in reverse order to that in which they appear in the clause) must be given in good faith in the interests of the company.
There is a subjective test of bona fides to consider the right interests—it is sometimes called a subjective test with an objective flaw. The directors, who are usually the people at issue, must consider the interests of the shareholders and now, because of the 1980 Act, they must also consider the interests of the employees and according to the latest case, more probably the interests of the creditors (which seems rather sensible). They must act in good faith in those interests on a long-term view.
Secondly—and this goes back to paragraph (a)—the purpose in giving the assistance must not be for the purpose of such acquisition of shares. That is easy, so long as one can prove the purpose. Here 969 of course the difficulty of catching the crook transmutes itself into the ease with which the innocent survive, because of course as my noble friend and I suggested before, the company's purpose will be broadly stated in the evidence as that which the directors want it to be stated as; it will be difficult to go behind the evidence that comes out, both of the boardroom and of what the directors have done elsewhere, because of course, as the noble and learned Lord, Lord Denning, when he was Master of the Rolls in 1957 pointed out in the well-known case of Bolton Engineering Company v. Graham, the directors' mind and will is the mind and will of the company, as opposed to the servants and agents, who are merely hands to hold the tools, and, as in that case, the mind and will may be exercised on an informal occasion and not only in the boardroom. Nevertheless, it is what the directors are doing that will be the first evidence of the company's purpose. To go behind it and find out what was really the purpose of some of them, which may well be a hidden purpose, or what was the purpose of some other managers with whom one or two of them were in league, is very difficult indeed if one wants to catch them. But it is very easy if you want the purpose to be what you want it to be. So, heads they do not lose and tails they do not lose. They are either not guilty of the offence or they can prove the exemption, and that was the reason for striking at the whole subsection in fear that the noble and learned Lord would allow himself to be attached to the horrendous proposition that the Government's subsection (1) in Amendment No. 56 should be retained.
But in case we have to live with that and if, therefore, as a sort of consequence, we have to live with the first half, as it were, of the exemption, I have taken the other amendments with it in the hope that I am being helpful, because the other amendments relate to what I might call the second half of the first paragraph, and here we read that so long as the assistance is given in good faith in the interests of the company it is not within the prohibited area if: the giving of the assistance for that purpose is but an incidental part of some larger purpose of the company". I have discussed this matter, as indeed many other matters in these amendments, in the last four days, often late at night—and I even thought one professor of accounting was going to assault me as a member of the legislature for having such a Bill. I have not found anyone who is confident about what is meant by something which is an incidental part of a larger purpose. It does not take a lawyer to know that it is common sense for the court to use a very simple rule. If they find words in a section which say one thing, they expect those words to mean that thing, and then if later on they find slightly different words they expect the legislature to have meant something different. The judges will say, "Parliament intended…"—and that is the noble and learned Lord and me—whereas they may not have intended anything of the sort. However, they ought to look at it, and just such a case arises here.
The paragraph begins by mentioning the principal purpose and then it mentions a larger purpose. So what is envisaged is not something which is an incidental part of a principal purpose; it is something which is an incidental part of a purpose which is larger but 970 not necessarily principal. How large does a purpose have to be to be larger? How do you measure the purpose of assisting the acquisition of shares against the purpose of doing something else to which it is incidental? I suppose it is arguable that the incidental part could be principal. Indeed, I know one of my colleagues who argues—he is a very good lawyer and he thinks I am quite wrong on this; I am not going to tell the noble and learned Lord what I think it means in case I have a case on it—but he thinks it means the incidental part could be principal. So I am obliged to put that to the noble and learned Lord. I think it is wrong, but he thinks it is right. He says larger need not be principal; therefore, incidental can be principal so long as the other purpose is larger in some way, larger, for example, by way of financial considerations. Is that what the Government have in mind? If not, what on earth does "larger" mean?
It really will not do to say, "Oh, well, everybody knows it is incidental to a larger purpose", for this reason; that is, that we do not normally cure crimes simply because they are incidental to some unspecified larger purpose. Indeed, it is not even said that it has got to be a lawful purpose, and in subsection (2B) we talk about "dividends lawfully paid" or words to that effect, "distributions lawfully made ". But supposing it is lawful, are the Government saying to burglars, "We have got good news and bad news: the bad news is that burglary is still a crime, but the good news is that it will cease to be a crime if it is an incidental part of a larger purpose". It would be a very silly thing to put on the statute book. With respect, I think this subsection makes a mockery of the whole business. It is one of the foundations of my proposition to the Government that they are abolishing this offence. It is not just that they are giving wide exemptions; if they enact this they are abolishing the offence.
I want to know, and many people want to know, what is meant first by the whole purpose test. Is it as easy to get through the exemption as we think? I do not object to that for banks and people like that, but I do for others. If you do not get through that way, just how easy is it to establish a larger purpose, in a courtroom where a judge has to make up his mind on a conflict of views what is meant by "larger" purpose, and where a man's legality and perhaps his freedom—because he might be put in prison for this—will depend on these words. It seems to me astonishing that a responsible legislature could enact a crime of this kind where imprisonment is a possibility at the end of the road. I think the Government must give better explanations than they have of this subsection. I beg to move.

§ Moved, That Amendment No. 56F, as an amendment to Commons Amendment No. 56, be agreed to. —(Lord Wedderburn of Charlton.)

§ Lord Mackay of Clashfern
My Lords, we are certainly not contemplating legislating on burglary in the sense that the noble Lord has suggested. What we have endeavoured to do is to legislate against what we believe to be the mischief, that is to say the giving of financial assistance for the purpose of the acquisition of a company's own shares. The defences in subsection (2) are intended to be cumulative; that is to 971 say both (2)(a) and (2)(b) have both to be satisfied. It has to be given in good faith in the interests of the company, and I should have thought it reasonably clear that (a) requires that the company establish some purpose other than the giving of assistance as the main purpose or larger purpose of the transaction. If the purpose of giving assistance proves only to be incidental, then it is not caught, because it is not part of the mischief to catch purposes of that kind which are merely incidental; it must be more than a mere incidental purpose to constitute the mischief we complain of. I suggest that it would by no means preclude investigation that, for example, the directors sought to minute that (a) was their purpose if the circumstances clearly showed that (b) was their purpose. That is a difficulty which prosecutions have daily to surmount and I believe they manage to surmount it without undue difficulty. I would suggest to your Lordships that the words in the defences should remain.

§ Lord Wedderburn of Charlton
My Lords, if I may put two small points, I am not convinced by the noble and learned Lord. On his first point, of course it has to be established that the defendants have acted in good faith in the interests of the company, but as my noble friend Lord Bruce and I have tried to point out, these matters are easily established by defendants when they depend on the subjectivity of the matter, but are very difficult for the prosecution. It is no good the noble and learned Lord saying that, of course, we face the problem of the burden of evidence and the prosecution having to prove something every day, the question is what are the hurdles which the legislature puts up against the prosecution succeeding, and this hurdle is too low. The noble and learned Lord did not address himself to that at all.
Secondly, of course, it is correct that they must act in good faith in the interests of the company. But that is not enough. We are at one on that, but I still do not know after having heard the noble and learned Lord what the Government have in mind, except the obvious case where just by some accident it occurs that some assistance is given and it is a very small matter. But in a serious situation where it is doubtful, where is the line? I do not think anyone would be able to advise a client clearly on this matter. It is a great pity the Government chose not to spend a longer time on this. This is a perfect example of something the Government could take away and bring back and put through both Houses by Christmas, but they are not interested in doing so. I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ Lord Denham
My Lords, I think this would probably be a suitable moment to adjourn for dinner. If your Lordships agree, I beg to move that further consideration of Commons amendments be now adjourned till eight o'clock.

§ Moved accordingly, and, on Question, Motion agreed to.

§ [The Sitting was suspended from 7.7 p.m. until 8 p.m.]

§ [Amendment No. 56G not moved.]

972

§ As an amendment to Amendment No. 56:

§ 56H Subsection (2), at end insert ("but no person shall be entitled to rely upon this subsection by way of defence to civil liability under this section unless he proves that he neither had nor should have had reasonable cause to believe that the financial assistance fell outside the provisions of paragraphs (a) and (b) of this subsection")

§ Lord Wedderburn of Charlton
My Lords, I move Amendment No. 56H for a very simple purpose: First, to see whether we are right in assuming that the Government also assume that civil liability will arise if there is a breach of this section, just as it arises at present as an action in tort for a breach of a statute. The recent decision of the House of Lords Judicial Committee in the case of Lonrho Ltd. v. Shell suggests that. on the construction of any section, a civil action will lie in tort. That has been confirmed by the Belmont cases on Section 54. We hope that it is still true. If it is true we think that a defence to a civil action should only arise in the circumstances proposed in Amendment No. 56H. I beg to move.

§ Moved, That Amendment No. 56H, as an amendment to Commons Amendment No. 56, be agreed to.—(Lord Wedderburn of Charlton.)

§ Lord Mackay of Clashfern
My Lords, I am not at all clear what is the purpose of this amendment. So far as I can understand the situation, if the provisions of paragraphs (a) and (b) are established, then there would be no offence. Therefore. I must say that I am not quite clear what this does in the way of addition to that situation.

§ Lord Wedderburn of Charlton
My Lords, I am very disappointed by the noble and learned Lord's response. It should surely be clear from our amendment that it is a proviso to the subsection which says that the subsection would not apply by way of defence to civil liability unless the defendant had—and let us take the simple case—"reasonable cause to believe" that it fell outside the paragraphs, which is not within the terms of the clause as it stands. He must have "reasonable cause to believe" it. That puts an objective element into it. I am disappointed that the noble and learned Lord has not taken the occasion to confirm that civil liability will still remain after this Bill, as it has remained for many, many years in English law in relation to this offence. I shall not withdraw the amendment.

§ On Question, amendment to the amendment negatived.

§ [Amendments Nos. 561, 56J and 56K to Commons Amendment No. 56 not moved.]

§ As an amendment to Amendment No. 56:

§ 56L Subsection (2A) at end insert— ("Provided that no person shall be entitled to rely upon this subsection by way of defence to civil liability under this section unless he proves that he neither had nor should have had reasonable cause to believe that the financial assistance fell outside the provisions of paragraphs (a) and (b) of this subsection.").

§ Lord Wedderburn of Charlton
My Lords, I beg to move Amendment No. 56L. I shall again put on record the fact that this amendment would add to the gateway out of liability the need for the malefactor to 973 prove not only what is there at the moment under subsection (2A), but also the requirements of this amendment to the amendment as printed. It would add a further factor whereby the defendant would not escape quite so easily, that is, almost always, as the Government would have it. I beg to move.

§ Moved, That Amendment No. 56L, as an amendment to Commons Amendment No. 56, be agreed to. —(Lord Wedderburn of Charlton.)

§ Lord Mackay of Clashfern
My Lords, my position as regards this amendment is somewhat the same as on Amendment No. 56H. If the facts are established as bringing the case within the defence, then there is no crime and no civil liability, as I see it, and therefore I do not see the purpose of this amendment either. Therefore, I would not be able to advise your Lordships to support it.

§ Lord Lloyd of Kilgerran
My Lords, before the noble and learned Lord sits down, may I ask him whether there is not one difficulty about dealing with Clause 42, dealing with the malefactor; namely, that you are dealing with a criminal prosecution and therefore the necessity for proof is so much higher than in a civil matter? Would not a proviso like that put forward in Amendment No. 56L help in relation to dealing with the malefactor by explaining the position a little further? I fully realise that I am not a criminal lawyer and have not had much experience in criminal matters. However, it seems to me that there is a pretty wide exemption given by the Government amendments to this clause and, therefore, if you are dealing with criminal proceedings you want, in the course of the text of the Act or the Bill, to be more explicit in providing provisos which make it more difficult for the malefactor to get away with it.

§ Lord Mackay of Clashfern
My Lords, the noble Lord addresses his question to me. As I understand it, Amendment No. 56L is dealing not so much with the criminal prosecution as with the consequences for civil liability of a breach of this section. As I understand it, the noble Lord, Lord Wedderburn, wishes to add to what a person has to prove in negativing the civil liability, not only what we have in our subsection (2), but also what he has in the amendment. That is my understanding. What I do not understand is why he needs this. If in fact subsection (2) is made out, then the basic offence would not arise on the facts. Therefore, I do not see the point of this, but there may be more to it than that.

§ Lord Wedderburn of Charlton
Not very much, my Lords. I am gratified that the noble and learned Lord has confirmed in what he said that civil liability will remain. He had not done that previously. Secondly—and it really is very simple—if someone applies the company's assets for the purpose set out in subsection (1), he is a criminal; but he is not a criminal if he shows that he has done it in good faith as an incidental part of a larger purpose. I say, albeit that in those circumstances he is not a criminal, he ought still to be liable to a civil action unless he shows that he had no reasonable ground for thinking that 974 anything else was the case. That is quite different. It is not simply the same formula all over again, but as the noble and learned Lord is still unpersuaded even as to the meaning of the amendment, I think that the best thing I can do is to beg leave to withdraw it.

§ Amendment to the amendment, by leave, withdrawn.

§ As an amendment to Amendment No. 56:

§ 56M Subsection (2B), leave out paragraph (a).

§ 8.8 p.m.

§ Lord Wedderburn of Charlton
My Lords, I beg to move Amendment No. 56M as an amendment to Amendment No. 56. This is a substantial matter. We have now come to the point regarding the offence of using the company's assets to finance a purchase of its shares, diminuative though that area of liability is; in view of the exemptions in subsection (2) and (2A), such little tiny area of offence as is remaining is given further protections. Those are set out in subsection (2B). The first of those is the exception which has been proposed by many people over the years as a total and blanket exception to the offence of assisting the purchase of shares.
Looking at paragraph (a) it says: any distribution of a company's assets by way of dividend lawfully made or any distribution made in the course of the winding-up"— I am not concerned with the winding-up; this amendment is concerned with the dividend lawfully made. We say that this is too wide. It is true that I once thought that this might be possible. It is true that the Jenkins Report proposed that dividends be exempt from the offence. I think it is the case that the discussion after the Jenkins Report in 1962 has not shown in this respect that the Jenkins argument was the stronger. Indeed, the noble and learned Lord the Lord Advocate on 30th April, at col. 1298 of the Official Report, said: Permitting otherwise lawful dividends and that is what this paragraph does— would, for example, allow a 'predator' to borrow sufficient funds to acquire control of a cash-rich company, in the knowledge that he could then declare a lawful, substantial dividend from the assets of the company and repay funds borrowed from this dividend. This might well be an extremely undesirable commercial activity and we think that the prohibition should be able to catch it in such circumstances. The Jenkins Committee concluded that if the acquirer had to rely on the assets of the company to achieve acquisition, it was likely that the interests of minority shareholders and creditors would, at least, have been put to unacceptable risk, or that the company would have been made to part with assets for illusory consideration. But the objections to such activities go wider than this. Breaches of Section 54 have been significant features of many cases of asset stripping or share puffing, revealed in a series of companies inspectors' reports which have been produced over the years". That is not just an opinion of the noble and learned Lord; those are facts, and he is right. It is astonishing that his right honourable friend, on 30th June in Committee in another place, put forward at column 300, in a passage which I shall not read but will summarise, a totally opposite point of view, except that he does not deal with the facts. He simply put forward the view that dividends should always be 975 allowed to be paid so long as they fit the concept of lawful dividend. He does not deal with the point that the noble and learned Lord so rightly stressed: that this is the basis of many sorts of abuse and in report after report you find that this sort of thing is at the centre of the spider's web.
We have gone through changes of mind tonight, but this is not a change of mind. It is simply ignoring the facts. The noble and learned Lord faced them, but his right honourable friend and the Government would not, and the Government are putting forward a clause that will not face the facts. That is the first point.
If paragraph (a) of subsection (2B) is passed, that is the end of the offence because, with all the other things that have gone before—with the diminution of the offence and the widening of the gateways—if you cannot get through any of those, you pay it out of the dividend. Of course, the noble and learned Lord will say, "but only out of lawful dividend; that is, only out of profits, and in accordance with the articles of the company, of course," and so on. If he is suggesting that this does not add a further area of possible malpractice, I can only say that the Government are living in a wonderland that even Alice did not inhabit. Obviously, this would supplement the procedures whereby a company's assets could be used by those who are among the guilty and not the innocent. It is a particularly bad example of the Government moving to a defective philosophy on the matter.
Without elaborating the point, surely there is an ambiguity about the word "lawfully". It is normally suggested by Government spokesmen—as it was by the noble and learned Lord this afternoon in our earlier debate—that it just means in accordance with Part III of the 1980 Act and in accordance with the company's constitution. Does it not also mean bona fide, in the interests of the company? Is there no purpose test? Let us suppose that a dividend is lawfully paid in accordance with Part III of the Companies Act 1980 and in accordance with the articles, but that the ulterior motive is something else. Is that included or is it not? Normally one would have thought that the fiduciary obligation of the directors would apply. It has never been mentioned by Government spokesmen in debates so far. Let the noble and learned Lord mention it if that is part of the problem. In that case perhaps it would have been better to elaborate it a little more in the text. This is a paragraph that had better go. I am aware that the Government will not make it go, but we want to put on record the fact that we should not legislate like this.

§ Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)

§ Lord Mackay of Clashfern
My Lords, I sought to cover this in explanation of our amendment and in anticipation of the noble Lord's Amendment No. 56M. As a result of our discussion and consultation. the situation is that it seems to us that the protections which are implied in the word "lawfully" are sufficient to make it proper that the proceeds of such a dividend should be applied in accordance with the wishes of the person whose dividend it is. Once the company is 976 entitled to hand it out to an individual to use as he wishes, it seems perhaps to go a little far—as one views the matter now—not to allow that to be an exemption from any influence that might otherwise arise that it was under Clause 42. It is better to go for clarity in this area than to leave the matter vague, and those are some of the reasons why we now think that subsection (2B) (a) should be allowed to stand.

§ Lord Wedderburn of Charlton
My Lords, I beg to move.

§ On Question, amendment to the amendment negatived.

§ As an amendment to Commons Amendment No. 56:

§ 56N Subsection (2B), line 3, leave out ("lawfully made") and insert ("made lawfully and otherwise than for the principal purpose of financial assistance rendered unlawful by those subsections").

§ Lord Wedderburn of Charlton
My Lords, I beg formally to move Amendment No. 56N.

§ Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)

§ On Question, amendment to the amendment negatived.

§ [Amendment No. 56P, as an amendment to Commons Amendment No. 56, not moved.]

§ As an amendment to Amendment No. 56:

§ 56Q Subsection (2B) at end insert— ("Provided that in each case the transaction effected or the thing done was effected or done in good faith in the interests of the company.").

§ 8.15 p.m.

§ Lord Wedderburn of Charlton
My Lords, it seems reasonable to suggest that this might have been put in, or at least to ask why it was omitted. Subsection (2B) lists a large number of transactions or things done which are total exceptions from the offence of a company financing the assistance of the acquisition of its own shares, if there is still such an offence. There are paragraphs (a) to (g). It is quite true that all of them, except paragraphs (a) and (b), have some relationship to what the court will allow the company to do.
However, this amendment to the amendment would attach to the end of the list of paragraphs the general proviso that: the transaction effected or the thing done was effected or done in good faith in the interests of the company". There is a doubt about whether that is so. Indeed, if I may point out to the noble and learned Lord (because we seem to have difficulty in communicating about the meaning of these amendments, so I must dwell upon this sufficiently to show him that there is meaning in the amendment), paragraph (a) speaks about "dividends lawfully made". Paragraph (b) talks about "the allotment of any bonus shares". It is perfectly possible to allot bonus shares and by a technicality to infringe some very minor proviso either of the Act or of the articles. Because the word "lawfully" is not there but is in paragraph (a) it is obviously possible to argue that some minor technicality or, indeed, perhaps something slightly more is allowed by paragraph (b).
977 That may sound an unreasonable interpretation to the noble and learned Lord, but both he and I very well know that unless unreasonable interpretations are stamped on at the root of this House they can grow into great tryffids by the time they get to the appelate courts. The fact that "lawfully" is in paragraph (a) and not in paragraph (b) leads me to think that a proviso of this kind could do nothing but good.
There are two points to be made. First, the priviso is surely reasonable and, secondly, is not the wording of paragraphs (a) and (b) rather odd? Why is not "lawfully" in paragraph (b)? If it is not in paragraph (b), would not the proviso help to cure the lapse? Given longer time I think that we could have invented better amendments to the amendment, but we did not have much time. I beg to move.

§ Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)

§ Lord Mackay of Clashfern
My Lords, we see this as a superfluous amendment. We should have thought that this condition was implied. As regards the distinction between paragraphs (a) and (b), and the word "lawfully" in paragraph (a), I think it falls to be emphasised that the distribution must be by way of dividend lawfully made. Distribution might, in fact, happen where it was not lawful. As regards the allotment of any bonus shares, that is an act which requires lawfulness for it to exist at all, so in that respect the two are different. I certainly think that this amendment should not be made, and I would so invite your Lordships to agree.

Lord Bruce of Donington
My Lords, I am very disappointed in the reaction of the noble and learned Lord to the amendment moved by my noble friend. It seems to me that the insertion of almost the identical words in subsection (2A)(b): the assistance is given in good faith in the interests of the company", could equally be put in—as, indeed, the amendment proposes—at the end of subsection (2B): Provided that in each case the transaction effected or the thing done was effected or done in good faith in the interests of the company". The noble and learned Lord says that that is superfluous. I wonder what grounds he has for assuming that that is superfluous. It can only be superfluous where the contents—the precise phrasing of subsection (2B)(a), (b), (c), (d), (e), (f) and (g)—are framed in such precise terms as admit of no possible doubt. I think that the noble and learned Lord would be the first to agree that at any rate some of those particular paragraphs (a), (b), (c), (d), (e), ( f ) and (g) are not phrased in completely precise terms. What therefore is the objection to the sweeping-up subsection that has been proposed by my noble friend, which is on all fours with that in (2A)(b)? There can be no objections.
I am beginning to come to the conclusion that our further discussion of these various amendments is starting to serve little purpose. The noble and learned Lord has already made up his mind in point of fact 978 that all the amendments brought from another place are going to go through. He has already made up his mind that there will be no amendments accepted from this side of the House, no matter how reasonable or how necessary they may be. Add to that particular consideration the fact that we ourselves, in the circumstances I described in the Motion earlier this afternoon, have but little time to study these matters in great detail with a view to forming precise amendments of our own after due consideration of, after pondering over at some length and, if necessary, by reference to other works, the various purports of the amendments that have been laid before us, and it seems to me that further participation by the Opposition in the remaining process of this Bill is beginning to become superfluous, because not the remotest attention is going to be paid to it anyway. In the event, the ultimate result is assured by the simple machinery of the Whip.
I regret to say this because, to use the words "good faith", I am quite persuaded that noble Lords opposite are themselves acting in good faith in defending the position that their departmental brief has laid before them. I am quite sure that they are the other victims, not necessarily the conspirators or the participants, of the kind of circumstances to which I referred in the Motion that I moved in your Lordships' House earlier this afternoon. We have therefore the choice of pretending to go through each particular amendment when it is proposed by the noble and learned Lord that we should accept the Commons amendment, going through the dismal ritual, the mere charade, of pretending to discuss it on an informed basis without even the remote possibility of producing an intellectual shift or a reasoned response to argument as distinct from producing a mere repetition of what is already on the brief.
We on this side of the House do not propose further to participate in this charade. We shall therefore on this side of the House allow, as indeed the Rules of the House allow, the Government to propose their amendments and to explain them. To that, we shall give no response except formally to agree. If the noble and learned Lord and the Government consider that to be a victory for democratic legislation properly discussed, with this House performing its functions as a revising Chamber, they are welcome to that view. For our part, we do not propose to participate in this charade any longer.
We shall remain in our Benches at our seats in conformity with the tradition in order that we can obey the formal requirements that are made of us, and in order that we may see the matter through to the bitter end, but we claim no responsibility for this. In fact, we disclaim all responsibility for it. We consider that it has been forced on this House at an unreasonable time with an unreasonable time lag, and we ourselves will have nothing of it. We also express at this time the fact that none of the professional organisations which have been taken into consultation as regards these various clauses can have attributed to themselves any responsibility for the proposals, because they have not had the opportunity of examining the clauses in their final form. They have not had an opportunity of commenting on the ambiguities, the tortuousness, contained within them; the double-think that is comprised in so many of them; the leaks with 979 which they are riddled. In those circumstances, the Government are welcome to their amendments.

§ 8.26 p.m.

§ Lord Lloyd of Kilgerran
My Lords, I have listened carefully to what the noble Lord, Lord Bruce of Donington, has said and I wonder whether he is going to propose therefore, or whether he is suggesting, that all the rest of the amendments should be moved en bloc in order to save time, to let us all out of here much earlier than we expected? I should have liked in some cases to ask certain questions of the noble and learned Lord, because he is always helpful, as he was in his reply to me on instructions, in relation to intellectual property. It was very helpful to me in view of the example he gave on the question that I asked, which was only one aspect of a very intricate position that arises in intellectual property.
I should have liked to ask the noble and learned Lord why, on Amendment No. 56Q, he says it is superfluous. I cannot understand why he should say that, for the following reasons. I am sorry if I am taking up the time of your Lordships on this matter, but if he looks at subsection (2A)(b), there is a paragraph saying that if, the assistance is given in good faith in the interests of the company", that gives an exemption. Then when you look at (2B) you have in (a) the word "lawfully", and the word "lawfully" does not appear anywhere else in the rest of the subsections. Therefore, I should have thought that, in order to clarify the situation, particularly when there are criminal proceedings involved, there should be an amendment something like No. 56Q—not perhaps the exact words—saying that, where a chap acts in good faith in the interests of the company, then it is all right. But why it should be superfluous in the circumstances of Amendment No. 56, I do not follow.
Nevertheless, if the intention of the noble Lord, Lord Bruce of Donington and the Opposition Labour Party is that the rest of the amendments can be taken en bloc, I should be very satisfied with that, because I fully realise the position of the noble and learned Lord the Lord Advocate, and there is nothing we can do to make any change in the law at the present time. I am pretty certain of that. In those circumstances I feel I should not like to waste the time of all my colleagues who are supporting me on this occasion.

Lord Bruce of Donington
My Lords, I have hesitated to make the point more forcefully because I should not wish, by suggesting that the remainder of the proceedings could be accomplished en bloc, to deprive any Member of this House in any party either on the Benches opposite or on the Liberal Benches of an opportunity to debate individual points. But it seems to me, from the considerations I have already given, which I do not propose to amplify but which the noble and learned Lord knows very well, that the purposes of the Government (which were so adequately described by the noble Lord, Lord Boyd-Carpenter, with whom I agree) are putting the House in a position where it is acting as a rubber stamp, and it might be accomplished more conveniently, more expeditiously, more efficiently, more painlessly, by moving the remainder of the 980 amendments en bloc.

§ Lord Lloyd of Kilgerran
My Lords, may I say with leave that I do not want to be misunderstood? I do not want to say anything in the course of any of the other amendments, and I shall certainly accept the suggestion of the noble Lord, Lord Bruce of Donington, that in the circumstances we can deal with all of the rest of the amendments en bloc.

§ Lord Mackay of Clashfern
My Lords, first of all with leave may I seek to answer the question which has been put to me on this amendment? I sought to answer it earlier, but I shall try to answer it again. The difference from subsection (2A), in which, under (b), the phrase appears in regard to assistance having been given in good faith in the interests of the company, is that the first branch of that subsection is a general one about the company's principal purpose and so on, which we have already discussed to some extent.
So far as subsection (2B) is concerned, it is a list of specific actions on the part of the company, and in the case of distribution, emphasis is put on the need for the distribution to be lawful, because you could have an unlawful distribution. As for the allotment of bonus shares, I certainly think that an allotment, in order to be a valid allotment, would require to satisfy that criterion. And when one goes from (c) onwards, most of the matters in question are in respect of orders of the court or of action taken under statutory authority, and in all of those I should have thought this was plainly implied, and for that reason I say that Amendment No. 56Q is superfluous. Indeed, if it were made it would suggest, for example, that it would be open to the court to make an order under Section 206 of the 1948 Act otherwise than in accordance with the best interests of the company, and I am sure the noble Lord, Lord Wedderburn, would be the last to suggest that the court could competently make an order under Section 206 in those circumstances.
As for the more general matters raised by the noble Lord, Lord Bruce, I understand the issue has already been discussed. I would propose to follow the course I indicated at the outset, in moving Amendment No. 1, that I would give an explanation of the principal substantive amendments, and any noble Lord who felt inclined to ask questions would be welcome to do so and I would do my best to answer them. Accordingly, I do not propose, at least at the present juncture, to move all the rest of the amendments en bloc.

§ Lord Wedderburn of Charlton
My Lords, as I am still speaking to Amendment No. 56Q after that diversion, I would say two things to the noble and learned Lord, one nice and one nasty. To be nice first, it is always nice to tempt the noble and learned Lord out into real discussion, and he has just entered into some of that. It is difficult today to do that. The problem with the noble and learned Lord—this is still part of the nice remarks I am making—is that he is not here for the purpose of running the amendments through with a steamroller; he is here in connection with the operation of running the amendments through with a steamroller, and he had better realise that the one is as guilty as the other.
On the nasty side, I agree with my noble friend that it is a charade, and that is absolutely clear. I do not 981 complain about the Government not accepting anything; nor do I complain that there are Whips able to defeat us every time. After all, that is everyday life in this House, until its legislative functions go, and everything that has been done tonight will, as my noble friend suggested, push that argument further. It is not that to which one objects; it is the failure to engage in real discussion. I had noted the point, "They will say it is superfluous"; but I crossed that out because if one looks at the provision which we are discussing, there is clearly an argument that is not superfluous. The noble and learned Lord knows that as well as I do—both sides can be briefed—but when he replies he does not say, "You could say it is superfluous, but on the other side you could say it is not", as he would normally say if briefed; no, he simply says, "It is superfluous", and then he must be tempted by the noble Lord, Lord Lloyd, into having a discussion.
In view of the way things have gone, I think one is right to say that the measure might as well be pushed through as quickly as possible. The only small amendment I would make, if my noble friends would bear with me, is that, if the procedures of the House allow, I would ask leave in some manner to move all my amendments formally en bloc so they may be printed in Hansard. There will be no real discussion of them, but at least that would show that Parliament had tabled before it some amendments on the matter. If that involves one of us being here to call out a set of numbers until whatever hour, I suppose that is the only way it can be done. On the other hand, if there is any other procedure, it might be more sensible to do it that way because it is clear that these amendments will not be debated. We are not withdrawing Amendment No. 56Q.

§ On Question, amendment to the amendment negatived.

§ On Question, Motion agreed to.