Rolls-Royce Ltd. (Hansard, 31 January 1972)

§ Mr. Corfield

I have written today to the Chairman of the Derby Group Rolls-Royce Shareholders Action Association to inform him that the Government have reluctantly concluded that no special treatment can be afforded to the holders of Rolls-Royce Ltd. workers' shares. I will, with permission, circulate a copy of this letter in the OFFICIAL REPORT.

Following is the letter: Following the appointment of a Receiver for Rolls-Royce Ltd., I said in debates and in discussion with you, representatives of your Association and Members of Parliament, that I was anxious for a number of reasons to consider whether any special treatment could be afforded to the holders of workers' shares in the company. The basis of the workers' shares scheme established in 1955 was that Rolls-Royce employees were entitled to purchase from Trustees a limited number of workers' shares (depending upon the employee's length of service) at par. These shares were on the same footing as the Rolls-Royce ordinary shares as regards dividends, scrip issues, voting rights, and participation in ordinary share "rights" issues. Because of the way in which the scheme was constituted the workers' shareholders had become "locked-in" and could not dispose of their shares, even at a loss, for some three months before the appointment of the Receiver. It therefore seemed to me that there was a case for considering whether these shares could properly be distinguished from ordinary shares (many of which are also held by small investors) and afforded special treatment. As I told you and your colleagues when we met last week, the Government have consulted the Receiver and the Board of Rolls-Royce (1971) Ltd. and have considered very carefully and thoroughly ways in which this might be achieved. As I explained, in examining the possibilities the Government have also had to bear in mind that despite the disadvantages of being "locked-in" the workers' shareholders had had some countervailing advantages compared with the ordinary shareholders. In particular they had benefited in terms of effective dividend by being able to buy workers' shares at par when—as was the case for many years—the market price of the ordinary shares was very substantially higher. Against this background, it has I fear proved impossible to devise any scheme whereby workers' shares could be directly compensated without unfairness to other shareholders and creditors of the company. The Government have therefore tried to find some other scheme or arrangement which would help the workers' shareholders. A number of possibilities have been considered, but as I explained, we have found none that would be both practicable and equitable. I am afraid the further proposal that you put to me at our recent meeting has also run up against quite insuperable difficulties. I am very sorry that it has not proved possible to reach a solution favourable to the workers' shareholders; and I hope that you will accept that no effort has been spared in trying to solve the problem fairly. As I told you, I have asked my Department to consider closely whether the difficulties revealed in this case make necessary any amendment of Company Law; and I understand that the Inspectors appointed under Section 165 of the Companies Act, 1948, to investigate the affairs 10W of Rolls-Royce Ltd. will include the workers' shares scheme and its management in their inquiry. I am sending a copy of this letter to those Members of Parliament who have accompanied you in your discussions with me. J. H. Piggs, Esq., Chairman, Derby Group of Rolls-Royce Shareholders Action Association, 26, Campbell Street, Derby. F. V. Corfield.