SHARES: DISCLOSURE OF INTEREST (Hansard, 7 December 1988)

§ Lord Young of Graffham

The Government intend to make two major changes to the law on disclosure of interests in shares, which will be included in this Session's Companies Bill. The level at which interests in shares of companies have to be disclosed will be reduced from 5 per cent. to 3 per cent. The deadline for such disclosure will be shortened from five to two days.

I believe that the changes we propose to make will significantly improve market transparency, and will in particular give investors an early indication when a potential offeror purchases a large interest in a company. The Government's policy is to leave merger decisions to the market unless they raise overriding issues of public interest. It is, therefore, important that adequate information should be publicly available as a basis for the market's assessments and decisions. The changes will enable the market to make a fully informed assessment, especially during the vital period prior to the launching of a formal offer. The Government believe that relying on the operation of the market mechanism to assess the merits of takeovers is in the best interests of industry. It is no part of our policy to afford extra protection to the management of companies which are the subjects of takeover offers.

A further improvement to disclosure would be a change to certain Stock Exchange rules. These rules limit the ability of companies to restrict the rights of shares when inquiries into share ownership are frustrated. Our consultation has shown that there is significant support for a relaxation of the constraints in this respect that the Stock Exchange places upon listed companies. I am in sympathy with that view. I therefore welcome the fact that the Stock Exchange has agreed to consider changing its rules. The exchange has assured me that it will make an announcement as soon as it has completed its own consultations with interested parties.