HL Deb 27 October 1981 vol 424 cc1055-6

215 Schedule 3, page 125, line 23, at end insert ("and the following subsection shall be added at the end of that section— (" "(13) In relation to any offer to allot any securities required by subsection (1) above or by any provision to which subsection (3) above applies references in this section (however expressed) to the holder of shares of any description shall be read as including references to any person who held shares of that description on any day within the period of twenty-eight days ending with the day immediately preceding the date of the offer."").

216 Schedule 3, page 125, line 30, leave out paragraph 38 and insert— ("38.—(1) In section 24 (valuation of non-cash consideration before allotment), for the words from the beginning of subsection (2) to "that class" there shall be substituted the words "(2) Subject to subsection (2A) below, subsection (1) above shall not apply to the allotment of shares by a company in connection with— (a) an arrangement providing for the allotment of shares in that company on terms that the whole or part of the consideration for the shares allotted is to be provided by the transfer to that company or the cancellation of all or some of the shares, or of all or some of the shares of a particular class, in another company (with or without the issue to that company of shares, or of shares of any particular class, in that other company);".

(2) The following subsection shall be inserted after subsection (2) of that section— (2A) Subsection (2)(a) above does not exclude the application of subsection (1) above to the allotment of shares by a company in connection with any such arrangement as is there mentioned unless it is open to all the holders of the shares in the other company in question or, where the arrangement applies only to shares of a particular class, to all the holders of shares in that other company of that class, to take part in the arrangement. In determining whether that is the case, shares held by or by a nominee of the company proposing to allot the shares in connection with the arrangement, or by a nominee of a company which is that company's holding company or subsidiary or a company which is a subsidiary of its holding company, shall be disregarded.

(3) In subsection (3) of that section—

  1. (a) for the words from the beginning to "those purposes" there shall be substituted the words "For the purposes of subsection (2)(b) above"; and
  2. (b) after the word "shares", in the last place where it occurs, there shall be inserted the words "or other securities".

(4) The following subsection shall be inserted after subsection (11) of that section— (11A) It is hereby declared for the avoidance of doubt that subsection (1) above does not apply by reference to the application of an amount for the time being standing to the credit of any of a company's reserve accounts or to the credit of its profit and loss account in paying up (to any extent) any shares allotted to members of the company or any premiums on any shares so allotted; and in relation to any such allotment references in this section to the consideration for the allotment do not include any such amount so applied.".

(5) In subsection (12) the following paragraph shall be inserted before paragraph (a)— (aa) In this section 'arrangement' means any agreement, scheme or arrangement (including an arrangement sanctioned in accordance with section 206 or 287 of the 1048 Act)."".

Lord Lyell

My Lords, these amendments provide a relaxation from the requirements in Section 24 of the 1980 Act for an independent valuation of a consideration which is not in cash which is to be used in a takeover or merger for schemes of arrangement which are defined in the Bill for the purposes of merger of companies, as well as for mergers in which securities other than shares are involved. The amendments also make clear that the valuation requirement does not apply when a company use capital reserves to pay up what they call bonus shares. I beg to move.

Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)

On Question, Motion agreed to.