§ 159 After Clause 106, insert the following new clause:
§ Members' rights to damages.
§ '.—(1) In Part IV of the Companies Act 1985 (allotment of shares and debentures), before section 112 and after 999 the heading "Other matters arising out of allotment, &c", insert—
§ "Right to damages, &c. not affected.
§ 111A. A person is not debarred from obtaining damages or other compensation from a company by reason only of his holding or having held shares in the company, or any right to apply or subscribe for shares or to be included in the company's register in respect of shares.".
§ (2) In section 116 of the Companies act 1985 (extended operation of certain provisions applying to public companies) for "and 110 to 115" substitute ", 110, 111 and 112 to 115".'.
§ 6 P.m.
§ Lord Fraser of CarmyllieMy Lords, I beg to move that the House do agree with the Commons in their Amendment No. 159 which will have the effect of completing the reversal of the rule established in the 1880 case of Houldsworth v. City of Glasgow Bank to the effect that a person cannot recover damages from a company while he is still a member of it. This amendment discharges a commitment given at the Committee stage.
Your Lordships will already be aware that the victims of a misrepresentation can already recover from those responsible for it, who may include directors, intermediaries, or experts and any other person responsible for it. What is involved here is the removal of a barrier —the rule in Houldsworth —to allow a person to recover from the company while remaining a member of it. As it is the discharge of a commitment, I hope that the amendment can be welcomed.
Moved, That the House do agree with the Commons in the said amendment. —(Lord Fraser of Carmyllie.)
On Question, Motion agreed to.