§
96 Clause 50, page 55, line 39, leave out from beginning to end of line 7 on page 56 and insert:
("(a) as regards its initial situation immediately following the date on which the payment out of capital is proposed to be made, that there will be no ground on which the company could then be found to be unable to pay its debts; and
(b) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company's business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to continue to carry on business as a going concern (and will accordingly be able to pay its debts as they fall due) throughout that year.").
§ Lord LyellMy Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 96. I should like to speak to Amendments Nos. 97 and 98 at the same time. The statutory declaration of solvency of the company by the directors outlined in subsection (3) is one of the cornerstones of the protection built into the provisions enabling shares to be purchased or redeemed out of capital. It is important to do everything possible to ensure that creditors' and members' interests are not prejudiced in those situations. The significance of the statutory declaration is indicated by the fact that any false declaration renders the directors liable to a criminal offence. With these considerations in mind, it is clearly im- 997 portant that there should be no doubt as to what is required in the declaration. One or two representative bodies had difficulty with the wording in the Bill as it left this House. The purpose of Amendment No. 96 is accordingly to clarify Section 50(3). I believe that it will be more easily understood than the original version, and I commend it to this House.
§ Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
Lord Bruce of DoningtonMy Lords, I have a question to ask on this. It occurs to me not as a result of any profound study but because I have to read through these things while the noble Lord speaks on them. At line 5 of Amendment No. 96 one sees the phrase, "there will be no ground". How can anybody say that there will be no ground? Anything might happen. A bomb might drop on them. Surely the noble Lord would be advised even at this late stage without prompting by me to insert the word "reasonable" before the word "ground", which puts it on a firm legal footing. As to the ridiculous "no ground," nobody can guarantee that there will be no ground.
§ Lord LyellMy Lords, if the noble Lord looks at the bottom of page 55 of the Bill, starting on line 34, he will find the words,
The directors of the company … have formed the opinion … that there will be no ground …I think the amendment is supposed to be tacked on. We are taking out line 39 onwards. I think it reasonable to suppose that we are discussing the directors' opinion that there is no ground. I think that that opinion could not foresee everything foreseen (or perhaps not foreseen) by the noble Lord, Lord Bruce. That would not cover bombs, et cetera!
Lord Bruce of DoningtonMy Lords, I am obliged and indebted for the noble Lord having drawn my attention to the earlier part of the clause. Would the noble Lord oblige me by defining somewhere in the Bill what he means by "going concern" in subsection (b) of the same amendment? I do not find "going concern" defined anywhere.
§ Lord LyellMy Lords, I suspect that, as always, the noble Lord doth tempt me. May I, on this occasion, see whether there is a clearer definition and perhaps write to him on this particular point?
§ Lord Davies of LeekMy Lords, it is obscure. I used to hear at an auction "Going, going, gone!" Does it mean that?
§ As an amendment to Commons Amendment No.96:
§ 96A Paragraph (b), line 4, after ("business") insert ("(which must be described in the declaration)").
Lord Bruce of DoningtonMy Lords, I beg formally to move Amendment No. 96A as an amendment to Commons Amendment No. 96.
§ Moved, That this House doth agree with the amendment to the amendment.
§ On Question, amendment to the amendment negatived.
§ On Question, Motion agreed to.