Company Shares: Beneficial Ownership (Hansard, 17 February 1986)

§ Lord Williams of Elvel
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, powers already exist in the Companies Act 1985 for the Secretary of State to investigate the ownership of any public or private company where it appears to him that there is good reason to do so. Public companies may also require disclosure of the beneficial ownership of their shares.

§ Lord Williams of Elvel
My Lords, I thank the noble Lord for his reply. Will he not agree that the powers in the Companies Act which he has just cited are rather blockbuster powers, and that a mechanism is required to discover the real ownership of shares such as may determine, for instance, the outcome of the Westland case, or where holdings may be built up in strategic industries by and through nominee names?

§ Lord Lucas of Chilworth
My Lords, I cannot agree with the noble Lord, Lord Williams, in the first part of his supplementary question. In response to the second part, we believe that the provisions of the Companies Act are quite sufficient to establish those facts where necessary.

Lord Bruce of Donington
My Lords, will the noble Lord inform the House whether, in view of the fact that he has indicated that the Government themselves have powers to investigate the beneficial ownership of shares, any member of the Government knew prior to the last meeting of Westland who were the real shareholders behind the six beneficial ownerships described, owning between them at that time some 20 per cent. of the Westland share capital?

§ Lord Lucas of Chilworth
My Lords, the noble Lord, Lord Bruce of Donington, has asked me the very wide question, "Did any member of the Government know?" I do not know, my Lords. I have not discussed with all members of the Government, so I would not know. However, certainly the information given by the Stock Exchange on 11th February provided the principal disclosed shareholdings in Westland, and at the extraordinary meeting of shareholders on 12th February Sir John Cuckney announced that there were holdings by nominees.

Lord Bruce of Donington
My Lords, is the noble Lord aware that that answer is thoroughly unsatisfactory? Is he further aware that there is a very widespread view, which I share, that the Government did in fact know the identity of those who were beneficially interested in the shares to which I refer?

§ Lord Marsh
My Lords, will the Minister not agree that if a significant shareholding in Westland had been held by the staff of Westland—whose judgment has been consistently superior to that of many other people involved in this particular saga—this fiasco might have been avoided? In the light of this experience will he not further agree that, in the case of another defence contractor shortly to be privatised (and I declare an interest), every encouragement should be given to the employees of Vickers Shipbuilding who want the opportunity to invest their own money in the company for which they work and who will therefore presumably take a commercial view, a view which was frequently absent from some of the strictures in the last saga?

§ Lord Lucas of Chilworth
My Lords, I am grateful to the noble Lord, Lord Marsh, for posing that question. As the House will know, it is part of the Government's policy to enlarge the shareholding, and particularly worker participation, in all private companies. It is also encouraged in nationalised companies where they are returned to the private sector, and is to be welcomed.

§ Lord Hatch of Lusby
My Lords, will the noble Lord recall that last week, in answering a similar question to that put by my noble friend Lord Bruce of Donington this afternoon, his noble friend said that I had misunderstood his statement and that the Government did not have powers to reveal the 408 shareholdings in the case of Westland? Will the noble Lord also agree that his noble friend told me and the House that Sir John Cuckney would make a statement before the vital meeting last week? Sir John Cuckney did not make a statement revealing who the six shareholders were. Is the Minister now saying that the Government could have discovered who those shareholders were but did not do so before the crucial meeting at which the decision was taken?

§ Lord Lucas of Chilworth
My Lords, I do not believe that my noble friend misled the noble Lord. On 11th February, Sir John Cuckney issued a notice under Section 212 of the Companies Act 1985, which is to require an investigation by a company of interests in shares. The noble Lord will know that that Act provides for there to be a period of response of five days. At the same time Sir John Cuckney said that he would make that knowledge public when it was available to him. The company having taken that action, there was no point in the Government taking similar action.

§ Lord Jenkins of Putney
My Lords, is the noble Lord not aware that there are many people, including some of those sitting behind him, who would regard it as entirely unsatisfactory for an important decision relating to the Government's defence policy to be determined by who can acquire the shares in a company at a particular time? In view of this, will he not agree that this raises the question whether it is appropriate for companies holding a strategic position in our defence industry to be privately owned?

§ Lord Lucas of Chilworth
My Lords, I think that the question of defence interests is a little wide of the Question on the Order Paper, which concerns beneficial ownership. I think that my noble friend the Minister of State at the Ministry of Defence answered that aspect quite adequately last week.

§ Lord Diamond
My Lords, is the noble Lord aware that the question of the defence of this country is very much in the minds of many of us on all sides of the House? Does the noble Lord recollect that quite recently in their search for cash the Government proceeded to sell to the private sector large sections of the defence-contracting industry, and defended it on the grounds that the Government could protect the national interest in relation to the possible transfer of shares to foreigners? Is the noble Lord now satisfied—and I am sure that this is the question which is in the minds of very many of us—that the powers which the Government have work fast enough to prevent industries which are vital to the defence of this country passing into foreign hands, or partly so, before he is aware of it?

§ Lord Lucas of Chilworth
My Lords, at all times the Government have consideration of the defence of the nation very much in the forefront of their mind. When giving consideration to matters of shares, we believe that the provisions of the Companies Act, the Fair Trading Act and the Industry Act are sufficient in this regard.

§ Lord De Freyne
My Lords, basically I speak for myself, but will my noble friend not agree that those who work in that particular company have always gone for something in which they believe? If they believe in it, they believe in this country, and I hope we all go along with that.

§ Lord Lucas of Chilworth
Yes, my Lords, I think I agree with my noble friend's thinking in this matter, that the workpeople in all our companies are interested in their own companies and their own companies' massive contribution to the well-being of the economy of this country, of which they are members.

The Earl of Halsbury
My Lords, is not the sudden conversion of the noble Lord, Lord Jenkins of Putney, to an interest in the defence of this country a case of finding Saul among the prophets, and ought we not to welcome it accordingly?

§ Lord Lucas of Chilworth
My Lords, the matter of the noble Lord's conversion is, I think, more of a matter for him than for me.

§ Lord Jenkins of Putney
My Lords, as my name has been mentioned, will the noble Lord permit me to say that I have been interested in the defence of this country ever since the last war?