§ Mr. Leeasked the Chancellor of the Exchequer (1) what criteria he applies to the exemption of so-called multi-national companies from United Kingdom dividend restraint;
(2) if he will reconsider the lifting of the dividend restraint from Lonhro in the light of the recent history of that group and, in particular, in the light of the findings of the Heyman Slimmings Report in 1976, especially with regard to directors' expenses.
§ Mr. Denzil DaviesCompanies which, though incorporated in the United Kingdom, have their operations almost exclusively overseas are put in particular difficulties by the dividend control in their relationships with overseas Governments and local shareholders since the dividend control, which is primarily part of counter-inflation policy in the United Kingdom, has little relevance in their circumstances. The criteria for exemption are set out in the Treasury announcements of 20th October 1975 and 28th April 1977. Companies which are officially accepted as resident abroad for taxation and exchange control purposes will be exempted. Companies which have 90 per cent. or more of their assets situated overseas and where 90 per cent. or more of their earnings derive from 181W overseas operations will also normally be regarded as meeting the intentions of the announcement of 20th October 1975. However, all applications are considered on their merits.
The report of the Department of Trade inspectors on Lonhro is not relevant to the decision to exempt the company under the dividend control provisions.