HC Deb 16 December 1977 vol 941 cc501-5W
Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether the transfer of the balance of any consideration other than cash promised in payment for shares should have to be made within a shorter time limit than five years, as requested in paragraph 29 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law."

Mr. Clinton Davis

Most comments were in support of the full five-year period, but a minority suggested a shorter period.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on his Department's proposed definition of purchase of shares or debentures from the public contained in paragraph 17 of its explanatory and consultative note "Implementation of the Second EEC directive on Company Law".

Mr. Clinton Davis

The general view was that these proposals raised difficulties of principle and practice. Alternative proposals for the conversion of public companies to private companies are being formulated.

Mr. Tim Smith

asked the Secretary of State for Trade what comments he has received on his Department's view, contained in paragraph 15 of its explanatory and consultative note "Implementation of the Second EEC Directive on Company Law", that the statutory requirements of Sections 109, 130 and 181 of the Companies Act 1948, in so far as they relate to the formation ab initio of a public company, serve no useful purpose and might be repealed or simplified..

Mr. Clinton Davis

There was wide support for the proposal to repeal or simplify these provisions.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether it is considered necessary to provide a three-year period for compliance with the minimum levels of subscribed capital of public companies which are already incorporated, as requested in paragraph 16 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

Most of those who commented on this issue proposed a reduction of the period to 15 months, though there was also support for maintaining the full three-year period.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether it would be desirable to provide that at any time within the 15-month period but before the Registrar had issued a revised certificate following an application by the company it should be lawful for the company to use its existing name and the new name interchangeably, as requested in paragraph 19(c) of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

There was general support for providing as much flexibility, as possible, but some doubts were expressed about the proposal in paragraph 19 (c) on the grounds that companies, which subsequently failed to meet the requirements of a public company, would meanwhile have been using the designation of a public company. This objection does not apply to the proposal in paragraph 19(d), where the interchangeability of designations is available only after the change of status is approved.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on the recommendation made in the Jenkins Committee's Report on Company Law that no further companies limited by guarantee and having a share capital should be registered, as requested in paragraph 24 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

There was wide support for this recommendation.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether it should be necessary to provide any specific exemption for stock exchange acquisitions under Article 11.3 from the requirements concerning acquisition of assets by the company from initial subscribers, as requested in paragraph 41 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

A majority of those who commented did not think that it would be necessary to provide a specific exemption for stock exchange acquisitions.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether it is desirable to lay down in statute the rule that a company may not subscribe for its own shares, as requested in paragraph 50 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

There was general agreement that it is desirable for the statute law to lay down this rule.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether it is desirable to lay down that where a person subscribes for shares knowingly on behalf of a company, these shares should be forfeited, as requested in paragraph 50 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

Most comments on this paragraphsupported forfeiture.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether the proposal to prohibit new equitable liens and mortgages over a company's own shares is desirable and on whether, if introduced, such a provision should apply either to banks and other companies whose ordinary business includes the lending of money or to private companies, as requested in paragraph 58 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

There was wide support for prohibiting new equitable liens and charges, other than those for unpaid calls, but with an exemption for banks and other companies whose ordinary business included the lending of money. Opinions were almost equally divided on whether private companies should also be exempted.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether, if Clause 55 of the Companies Bill 1973 were to be enacted in order to comply with Article 25 of the directive, authorisations to issue authorised capital should not remain valid for some longer period, but not more than five years, than is specified in subsection (3), as requested in paragraph 60 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

Most comments were in support of the full five-year period, but there was also support for a shorter period.

Mr. Tim Smith

asked the Secretary of State for Trade what views he has received on whether the minimum period allowed to shareholders to exercise their pre-emptive rights should be more than 14 days from the time that the offer is posted to them, as requested in paragraph 71 of his Department's explanatory and consultative note "Implementation of the Second EEC Directive on Company Law".

Mr. Clinton Davis

The general view is that the 14-day period is too short, and that 21 or 28 days would be more appropriate.