§ Mr. K. Lewisasked the President of the Board of Trade whether he has been consulted by the National Film Finance Corporation regarding changes in its shareholding in British Lion Films Ltd.; and what arrangements now exist between the Corporation and the Minority Shareholders in that company.
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§ Mr. ErrollFollowing the receivership of the old British Lion Company, British Lion Films Ltd. was formed in 1955 with a capital of £600,000 provided by the National Film Finance Corporation. After consultations which they have recently had with my right hon. Friend, the Corporation and the minority shareholders have agreed, subject to the consent of the court, to carry out a scheme of capital reduction and reorganisation. This will result in the Corporation's receiving cash and realisable securities to an approximate total value of £591,000. The Corporation and the present minority shareholders will then, on an equal basis, each hold half of the capital and of the shareholders' votes. Alterations will be made to the Articles of Association of the company in order to ensure that no significant change in the ownership or management of British Lion or Shepperton Studios Limited can take place without the Corporation's concurrence.
Arrangements between the Corporation and the five minority shareholders, who are also directors of the Company, rest on an Agreement of November, 1961. This stabilised the relationship between the Corporation and the present management and secured the exclusive services of the latter until early 1964. At that time failing any other agreed arrangements, a series of purchase options will apply providing for the acquisition by one party from the other of its interest in the company at an independent valuation, the price being the fair value of the shares on the basis of a sale as between a willing buyer and a willing seller of the entire issued share capital of the company on the open market. This valuation would disregard any right the company might have to set off for tax purposes against future profits losses made by it and its predecessor in business. The Corporation would have the first option to buy. If this option is not exercised, the present management would be entitled either to acquire the Corporation's interest or to require it to acquire theirs; in either case the Company's right to set off losses against profits for tax purposes would be extinguished.