When the Committee came to the end of its Business at 4 o'clock on Friday last, I had been speaking rather critically about the Government's new Amendment dealing with the question of nominee shareholders, I am sure the Committee is well aware of the fact that there is nothing illegal in my being on a share register, holding shares in the name of some undisclosed person. I first of all challenged that conception as being an honest and clean one for a public company. I feel that on the whole, the people who do hold shares as nominees are very likely to be doing it for some reason or motive which is not disclosed, and not disclosed for some purpose. I feel that we should tonight make the Government withdraw the new Subsection that has been moved.

This proposal provides that if 10 per cent. of the shareholders ask the Board of Trade to have an inquiry into a certain nominee shareholding, then the Board of Trade will carry that out unless it is satisfied that the inquiry is a vexatious one. Anybody who has had any experience of big companies knows perfectly well that to organise 10 per cent. of the shareholders of any company is a very difficult thing to do, and as I was saying on Friday—I rather used it as a guess; I am not quite sure whether my facts are right, but I have been told on very good authority—only about 5 per cent. of the shares of that famous firm, Carreras—Black Cat cigarettes and so on—are owned by the Baron family and the rest are owned by lots of other people. Nevertheless, I am also told—I give this in good faith—that that 5 per cent. shareholding in the hands of the one family, is sufficient to keep control of the policy of that company. The Board of Trade talks about 10 per cent. of the shareholding getting together. I, first of all, submit to the Minister that it is almost an impossibility to organise 10 per cent. of the shareholders in any big company. Therefore, the offer the Government are making to meet the position in this case is one that will not satisfy me, and I do not think it will satisfy any of my hon. Friends.

The Government were beaten in the Committee upstairs, not on this proposal but on the same general idea in relation to nominee shareholdings. A similar opinion exists today. I hope it is not a party matter. In the Standing Committee I think the Conservative Members voted for the Government not because the Government put forward any reason but presumably because they felt things might as well stay as they are. The allegation made by the President of the Board of Trade, and made also, I think, by the Lord Chancellor in another place and by my hon. Friend the Parliamentary Secretary to the Board of Trade, was that it was impossible to stop men who were determined to break the law in this respect because they would always get round it. We legislate a lot and we know that there are always people who are liable to try to break the law and who often succeed. Everybody has to make an Income Tax Return. In other words, he has to disclose to the Inland Revenue authorities every source of his income. We have had Income Tax law for about 100 years, and every year we find that the Chancellor comes along with proposals to close loopholes discovered in the course of earlier experience.

10.15 P.m.

I, therefore, argue that it is no excuse to say that this is too difficult and that there will be people clever enough, wrong minded enough, and anti-social enough to get round provisions relating to nominee shareholdings. That is not a good reason for not legislating. To my mind that is really quite unjustifiable. I said on Friday last that we do not like people murdering one another in this country, and we have a law that any person who is found guilty of murdering somebody else is hanged. Nevertheless, that does not stop murders being committed. The penalty is a pretty severe one, as severe as any I can think of at the moment, but it does not seem to be a big deterrent to a person who is out to murder somebody else. Then there is a law that, if you find something in the street, you can be found guilty of stealing by finding. That seems impossible to enforce but, nevertheless, it is the law. I am suggesting that here we have the register of the company, a copy of which is supplied to the Registrar of Companies each year, and every person who has his name on that share register must surely know whether he owns those shares beneficially or not.

I am certain that every hon. Member of this Committee knows perfectly well that either he owns the shares in his own name on the register or that he does not. He may be holding them as a trustee for somebody else; all the same, he has to disclose in whose interests he is holding those shares. I should impose a penalty of 10 years' imprisonment on any shareholder who did not disclose the names and interests of any beneficial holding for which he was a nominee. In fact I see no reason at all for having nominee shareholders. Suppose I want to find out who owns the shares in a certain company, am I to be told by the President of the Board of Trade or his officers that my request for an inquiry is a vexatious one? Have I to tell them why I want it?

This is a serious national problem and I think this Committee should take it seriously. We do not know now whether American capital dominates and controls our national industries. How on earth can any hon. Member opposite or on this side of the Committee explain to me whether, if you find on a share register as supplied to Somerset House, the Guaranty Trust Company of New York, for instance, holding a certain number of shares, they are holding them for American shareholders which is my guess, and are merely their nominees? Everybody in this Committee would be concerned if we found one day perhaps that our armaments industry was owned and controlled by foreign capital. We had some suspicions in the war before this one, and in the last one, about the control that I.G. Farben and other international companies had. Some really shady evidence came to light in the early part of this war and, after the previous war, I seem to remember an inquiry being set up by M. Briand which showed that a certain place in France, where there was production of iron ore, was used by the Germans and French in keeping the war going and was never bombed by the other country when the one was in occupation. That was discovered by a senatorial inquiry in France after the previous war, about 1931.

This is the kind of way in which foreign control of industries in this country can be hidden from everyone, from the Government, from other shareholders in the concern, from the workers in the concern, and from men and women who in the next war will lay down their lives because this kind of thing has been going on. There is a very much bigger risk than appears on the face of it. The Government's only answer is the difficulty of enforcing the law. I think the penalty should be 10 years' imprisonment. All these technical difficulties could be got over. I am not at all impressed, after reading last Friday's Debate, by the difficulties which the Government are trying to put up against abolishing nominee shareholders. I feel strongly about this. Here is a matter on which the Government should think again. They should realise that there is a good deal of feeling, especially on this side of the Committee, that they have come to a wrong decision in trying to leave things as they are. There was a very interesting article on the subject in the "New Statesman" by my hon. and gallant Friend the Member for North Portsmouth (Major Bruce) last Friday, which all hon. Members should read. I am sorry if hon. Members opposite have not read it; they should do so, as they will find it very interesting. I ask the Committee, particularly hon. Members on this side, to listen to the reasons given from the Front Bench why this thing cannot be done, and to see if they are satisfied. If not, I ask my hon. Friends to oppose the Government on this Amendment.

The hon. Member for Nuneaton (Mr. Bowles) is under the illusion that my right hon. and hon. Friends wish to preserve the impenetrable mysteries of some nominee shareholders. I can assure him that he is altogether wrong. There was a time when we really believed it was possible to fulfil the original recommendations of the Cohen Report, and were it not for the fact that it was proved to be impossible, we would very much have liked to pass an enforceable law to deal with the abuses of the nominee system. I dare say the hon. Member is right in saying that there are a number of foreigners who hold shares in British companies. Whether that is a bad thing or not is open to question. At the moment we do not seem to be bitterly resisting the importation of American capital into this country. If one is to pass a law, it must be a law which will enable the ordinary citizen to know where he is in relation to the five closely printed pages dealing with the question of nominees which appeared in the original Bill. I am not a lawyer. I do not know if the hon. Member, with his superior legal qualities, can really understand the meaning of those five printed pages, but I do not think that most Members of the Committee could possibly do so. We must remember that people would be subjected to very severe penalties, either by fine or imprisonment, for not fulfilling something beyond the capacity of anything other than a really well-fee'd Chancery "silk."

The hon. Member has given us his point of view on the practicability of carrying out the recommendation of the Cohen Report. We also have the advantage of the Lord Chancellor's opinion. It must be remembered that the Lord Chancellor started out originally with the intention of finding a form of words which could give practical effect to the recommendations of the Cohen Committee, but he confessed in another place that having put a wet towel round his head, and spent a great deal of time on the problem, he could find no solution. He said it was impossible to draft such a law. Lord Simonds, who is certainly one of the greatest commercial lawyers, agreed with the Lord Chancellor, and the President of the Board of Trade, who is no mean commercial lawyer, agreed with both. I do not think I am incorrect when I say that most of the eminent practising accountants and commercial lawyers support the President of the Board of Trade and the Lord Chancellor. In their view it is utterly impossible to produce an enforceable law which will fulfil the recommendations of the Cohen Committee.

I do not find that tip-top K.C's are necessarily the best draftsman of Clauses of Bills. It is a very specialised job, and I do not think that my right hon. and learned Friend the President of the Board of Trade pretends to be a draftsman, any more than does the Lord Chancellor or Lord Simonds.

I am not making any claim for the Lord Chancellor or for Lord Simonds as a draftsman and I would certainly not have the hardihood to make such a statement in respect of the President of the Board of Trade. I dare say that in their day, possibly, all these eminent lawyers have differed from the draftsmen of Measures passed in this House. I am now speaking of their reputation as commercial lawyers, and I am also touching on the coincidence that most of the accountancy profession, and lawyers who deal with commercial matters, and all reputable business men, equally agree with the President of the Board of Trade. Sometimes the President may feel that he is misunderstood by what are called business tycoons, but I can assure him that on this occasion, they are bound to be in melancholy agreement with his view that it is impossible to do what the hon. Member for Nuneaton wants us to do. So I say to the hon. Member, in no party spirit—as he rightly says there is no party matter here—perhaps he will forgive us for disagreeing with him on this occasion.

10.30 p.m.

Another practical point upon which I should like to touch is that, apart from the burden which the nominee Clauses which have been struck out of the original Bill, would have laid upon many of our innocent fellow citizens, who know nothing of company law, heavy burdens would also have been laid upon important sections of the community if the Government had not had such wise second thoughts. I ask the hon. Gentleman to consider the real responsibility, the impossible responsibility that would have rested upon thousands of trustees; who are gentleman who perform a most ungrateful task. Unlike lawyers and accoun- tants, they are not remunerated. There are many circumstances arising in which trustees might have put themselves in a position in which they might have received heavy punishment for quite unconscious breaches of the law, if the original Clauses had remained in the Bill.

There is another point I wish to put to the Committee. Today most businesses are understaffed. We are constantly being told by the Minister that it is impossible to get staff, that it is impossible to get typists, and that even Government Departments have to ration themselves in this matter. What would be the effect of the Bill on thousands of office staffs today? It has been said that it is possible to go to Bush House and place before the Registrar a list of shareholders. With that I quite agree, but there are thousands of companies, with lists of shareholders running into 10,000 or 20,000. I know of one company which has over 200,000 shareholders. Just think of the burden on the hard-working officials and staff of the Board of Trade who would have to discover whether one of these shareholders had broken the law.

I should like to see the onus placed on the shareholder and not on the secretary of the company. I was a trustee and I believe that I still am.

Is the hon. Gentleman suggesting that the Board of Trade officials should make no attempt to enforce the law? If we leave it to any citizen of the country to do what should be done, with Government Departments making no attempt to fulfil the law, what state shall we be in? The President of the Board of Trade has offered, I submit, the best practicable working solution to this problem. It is not perfect, but I am sure that he and his officials will really take these powers with the intention of working them, and on this occasion I ask the Committee to support the right hon. Gentleman. I can see no alternative and in my humble way I honestly believe these powers will be thoroughly effective in carrying out what I am sure are the wishes of the House.

Those hon. Members who were present at the Debate on Friday last will presume that I was not at one with the hon. Member for Nuneaton (Mr. Bowles). This is not the case. I join with him in that if this proposal could be implemented every hon. Member would want to see it in the Bill Unfortunately, Clause 69 was inserted during the Committee stage upstairs, when I was away ill. When this Bill goes on the Statute Book, the obligation will then be upon the Board of Trade to enforce it, and all the arguments in the Committee stage by the hon. Member did not deal with whether it would be possible to enforce this particular Clause. I should have liked to hear from my hon. Friend the Member for Nuneaton how he proposed to see that this should be effected.

All right. I went to Somerset House last week to inspect the names of shareholders in a company. There is no secret about it; it was the Equity Trust Company of New York. I am perfectly certain they are holding shares on behalf of somebody else. Under the procedure I should report to the Director of Public Prosecutions that these people have not disclosed the shares held as nominees and I should lay information.

No one is denying that the situation is complicated. Since the inception of the principle of limited liability as a workable basis for collaborative investment it has been established that industrial expansion must by its very nature, lead to a complex system of inter-financial relationships. These have grown up over many years and what my hon. Friends must realise is that it is not easy to sort them out, but it does not mean necessarily that where it is difficult to ascertain without investigation the actual beneficial owners of an undertaking that there is something shady in the administration of the affairs of that company.

I propose to give some further practical examples as to the inoperative nature of Clause 69. I will not take up time by dilating upon the difficulties of implementing it which were mentioned by the President of the Board of Trade on Friday. Take the example of a woman whose husband dies leaving her £1,000. She may wish to make an investment of that £1,000, and if I were asked to advise her I would refer her to a reputable investment trust to make that investment on her behalf. She may be quite incapable of deciding herself the best investment to make in her own interests. Another example is that of companies which run pension funds. Very often one finds that 5 per cent. is deducted from the wages of every worker, and the company adds a further 5 per cent. to the fund. Usually there are two trustees chosen from among the employers and two from the workers. The money is invested by the trustees in a number of companies. There may be 10,000 workers in this company's fund. The trustees may invest that sum of money in one hundred different companies. If hon. Members look at Clause 69 it will be seen that there is provision for inclusion in the register of members of the names and addresses of all persons who are beneficial owners in any or all of the shares set down in the name of the registered owner. That means that there would have to be a million insertions in the registers of these companies in which the trustees had invested in order to implement this Clause, as every worker would be a beneficial owner of part of the trustees. No one will suggest that this is a practical proposition.

On the question of superannuation, and the investment of companies' pension funds, no reputable firm invests in anything other than Government stock.

I am sorry, but I cannot accept that. Most reputable organisations, including Co-operative societies, make investments in ordinary commercial stocks.

May. I inform the hon. Member that there is no such thing as a Co-operative society which invests its superannuation fund in anything but Government stock.

I do not want to go into details——

You cannot.

I must say that I have investigated the position, and the hon. Member will find that I am quite right.

You are not.

I shall leave that point and deal with another. I believe the hon. Member will agree that many investments are made by banks as nominees. People have not always the time to arrange their own investments. It is quite a common thing for a person having money he wishes to invest to ring up a bank and to ask the manager to purchase shares. On his behalf the shares are purchased, through the bank's nominee company, and the customer's account is debited. There is nothing wrong with that at all. I am sure the hon. Member for Nuneaton (Mr. Bowles) will agree with that. Would he say that in every case of that kind it should be necessary for the bank to register who are the beneficent holders of the shares?

The customer could have the shares transferred to him direct.

I maintain that it is better to have no legislation at all than to have half-baked legislation—[Interruption.] I want to assure those of my hon. Friends who hold the view that beneficial ownership should be disclosed that I am with them 100 per cent. in their desire. But destructive criticism will get us nowhere. What we need is' a practical proposal as to how it can be effected, and that has not been forthcoming. In the absence of any such proposal, the Clause must be deleted from the Bill and we must rely upon the other safeguards which remain.

The hon. Member has made a good working class speech. I have never heard anything in my life like some of the arguments put forward tonight. We have a law against forgery. Every man in this House can write, but that does not mean that because people can write we have a policeman waiting to see why they are writing, that they do not commit forgery. If anyone commits forgery, if it is a cheque, the bank reports the matter to the police and the police take steps to bring the offender to court. A man who has his house burgled brings the matter to the attention of the police and the police go after the burglar. But what is suggested in some directions is tantamount to saying that you are going to make the police go round the whole country to see if there are any burglars.

The hon. Member says that it is an offence to have a nominee shareholder hiding real shareholders. Either it is an offence, or it is not an offence. If it is an offence, say it is an offence, and say that it is punishable by this, that or the other thing. It is not for the President of the Board of Trade to go examining all this evidence. But the hon. Member says that if someone connected with the company, or interested in it, makes an inquiry and is convinced that an offence has been committed, he will report it to the President of the Board of Trade. What the Members of this Committee have to face is the one question—is this something that is undesirable, is it an offence? All right; put in the Act that it is an offence and that anyone who commits it will be punished accordingly. Leave it to those who are interested in a particular business to watch out, and if they find anyone committing a particular offence, be it a bank, in connection with a forgery, or a man at whose house there has been a burglary, let it be reported to the Director of Public Prosecutions or the Board of Trade—[Interruption.] It is a responsible business from the Tory point of view but it is not a responsible business from the working man's point of view, and we will protect the workers.

I hope that we are going to discuss this matter calmly and certainly without prejudice. The question seems to me to be: what is the practical issue here? It is that if the system of nominees has resulted in dishonesty or malpractices, and you can find a remedy for it, then it is right that it should be done away with, or at all events, carefully restricted. If, on the other hand, it is of such a nature that you cannot effectively remedy what is said to be objectionable, and you are only going to inflict upon honest staffs an unjustifiable burden and give the companies staffs, especially under present difficulties, a prodigous amount of work, then I do not think the proposal of my hon. Friend the Member for Nuneaton (Mr. Bowles) should be adopted. I was very interested in what my hon. Friend (Mr. Bowles) said about the American company he was quoting. His complaint, as I understood it, was that you might have a body of American investors or financiers who come to this country to start or invest in a business. I want to ask him this question: does he disagree with Americans doing that, assuming there is no improper motive? Or does he object to American capital coming into this country at all to be invested in companies or otherwise? If he says there is anything wrong about such a procedure, will he tell us what it is? If the hon. Member had come to this House and made a disclosure that that particular American company he mentioned had been indulging in fraudulent practices or had wrongful, motives, or that there was a likelihood of a suspicion or objection arising against the company or its proceedings, that would be an entirely different matter. He has not done so.

rose——

Let me develop the point. Suppose there was some ground for suspicion or some reason to inquire into the position of that particular company. It seems to me that the Amendment which the President of the Board of Trade is submitting is the very machinery that is designed to cover and will cover that case precisely. All that would have to be done would be this. You would have to go to the Board of Trade and say: I have some reasonable ground for saying that there is, or I suspect on good grounds that there is, a state of affairs going on in connection with this particular company or their shareholdings which is not right and which should be investigated. Thereupon, the Board- of Trade has the fullest possible powers to, and indeed must, inquire into that matter. So that at all events, as far as that case goes, there is nothing to be gained by the disclosure of nominees. Assuming, however, a case where there is nothing wrong, then there is no reason why some trustee or some other person should not be holding the shares as a nominee without what is called the "beneficial owner" being disclosed.

If my hon. and learned Friend will allow me, my point is this: I am suspicious that the Scotch whisky distillers in this country are controlled by Americans. I have tried to find out the details but I have not been able to; but they are the people who have control, and if they can persuade the Government what is the price at which Scotch whisky, which is a staple export, can only be sold in the United States, then I want to know exactly what the American holding is.

My hon. Friend does not improve his case by that point at all; he is not adding anything of substance to it. All you have to do to ascertain if there are Americans concerned is to investigate the matter, and the Presi- dent of the Board of Trade has full power in this Amendment to do that. I say to my hon. Friend that this question of nominees does not carry his point any further at all. I always thought that the reason for wanting a disclosure of nominees was that the co-adventurer in a business concern should know who his associates in the business were, or who was controlling the company. It has been shown by the most expert and experienced evidence that that is just where you get defeated if you are in fact dealing with dishonest persons who do not intend to be revealed because of some wrongful motive. That is obviously not wanted in the case of the ordinary trustee who is perfectly honest and who is acting on behalf of some estate. There is no point in having the information there. The mere fact that the Board of Trade might get to know who the fortunate beneficiary is does not matter one iota. That is not the sort of thing that is wanted at all.

Will the hon. and learned Member allow me?

No, I will not. It has been found time and time again, that where one is dealing with these decent straightforward people one gets all the information that is wanted. The matters being complained of are really being exaggerated out of all proportion with the facts. Out of no more than 72,456 holdings only 6 per cent. were shown to be unidentified. And that does not mean even that that proportion consists entirely of persons with wrongful motives for not wanting disclosure. That is important in connection with this provision to abolish the nominee system. I repeat, the whole of the shareholding in this particular respect, with the exception of this 6 per cent., under the present arrangement, was completely identified. Therefore, in my submission this matter has been greatly exaggerated.

The only question is whether in this portion of about 6 per cent there are cases which ought to be dealt with by means of the proposed disclosure. It has been proved over and over again by eminent accountants and people greatly experienced in company work, that this is a thing which cannot be dealt with, because the people you want to track always find some means of evading the disclosure. If that is the case, what will be the result? There will only be a disclosure in the case of honest people. There are 180,000 companies in this country, and there are thousands upon thousands of shareholding people. Are we going to impose upon these people the useless task of making these disclosures, and upon the companies the prodigious task of dealing with the register under those changed circumstances? If that is proposed I would ask again, what benefit is obtained from it? There is merely going to be information about honest people which will be of no practical use whatever.

There is a further point which I should like to put to my right hon. and learned Friend the President of the Board of Trade. It looks as if it is suggested that the Amendment only enables an inquiry to be made if 10 per cent. of the shareholding or 200 of the shareholders ask for such an inquiry. The Board of Trade can agree to it then, provided it is not vexatious. I want to ask if that is so what has the proportion of capital or members to do with that? If it is vexatious, then the application ought not to be allowed, and if it is not vexatious, the question of the shareholders' strength supporting the application ought to have nothing to do with the matter at all. It seems to me if that is the rule, then as my hon. Friend the Member for Nuneaton pointed out in connection with the firm of Carreras, there might be a proportion of the shareholding which does not amount to 10 per cent., where although there may be very solid reasons for asking the Board of Trade to make an inquiry, they are prevented from so doing merely because they cannot muster the number of persons or shares required.

There is one final point. The hon. Member says he wants to know who are the beneficial owners of these shares—but would he give us a definition of "beneficial owners"? Does he mean that it must be, for instance, what the Bill of Sales Act calls the "true owner"—which he knows is the term used in the case of a bill of sale? What precisely does the term "beneficial owner" mean in this context? A mortgagee or trustee may be a "beneficial owner," and yet that would not satisfy my hon. Friend at all, because the very man that he wants to get at may use that very device in order to prevent the required information being given. He has given the House no explanation of this important point. As I have said, this is a matter which ought not to be looked at with prejudice. I can understand Members on this side having the feeling that there are certain dishonest directors who have taken advantage of "inside" knowledge. That may be so in certain cases, but there is very much more in this matter than that.

The hon. Member said a little while ago that he had one final point. Can he tell us how many subsections that final point has?

My submission, therefore, is that the enormous amount of work that this would involve is far beyond any advantage that could possibly be from it.

This Amendment puts many Members on this side in a rather unfortunate position. On its own merits, the first Amendment on the Paper is a perfectly good one which I myself am prepared to support. It does strengthen the powers of inspection in a way that many of us on both sides of the Committee agree with, therefore, there is little between us on that. But we are discussing with this Amendment the whole question of Clause 69. Here again I am bound to disappoint some of my Friends by saying immediately that I do not think that Clause 69 is either a basis for, or a satisfactory way of dealing with, the whole question of nominee shareholders.

If I had my way, I would prefer to see Clauses 57 to 62 of the original Bill retained—however unworkable they may have seemed. It is common ground on both sides of the Committee that if a satisfactory method could be devised which was enforceable in law whereby nominee shareholders could be required to disclose their interests, then there would be little difficulty in the matter. The issue which rests between us is the question of practicability. I want to demonstrate how far both sides of the Committee have got together. In the original Cohen Committee Report there were set out in the recommendations some fair definition of what, in fact, were beneficial ownerships. The right hon. and learned Gentleman the President of the Board of Trade, in the Debate on Friday, and to some extent in the Committee upstairs, gave several other instances which tended to vitiate the effect of the draft clauses as set out in the Cohen Report, and I have no doubt that the Lord Chancellor thought of some more. The Cohen Committee, in its report, gave a definition of beneficial ownership, and recommendations were set out in Clause 58 in the original Bill. Given a little ingenuity by the President of the Board of Trade and his legal advisers, I do not think it would have been impossible to provide a definition of what constituted a beneficial owner.

The difficulty lay entirely in the question of enforceability. So far, these principles have been agreed. It has been agreed on both sides that if you can define beneficial ownership, beneficial ownerships should be registered in the register of members by means of a separate subdivision. It is also agreed on both sides that such information, if the registration of it were practicable, would be reproduced in the Joint Stock Companies' Registries in London and Edinburgh. What did both sides agree when they decided that this course, at any rate was practicable? The first thing they decided was that this beneficial ownership, if it could be satisfactorily defined, should be available to the general public. But that does not mean—and no one in the Committee would imagine it—that everyone of the population of 49 millions in this country would immediately be swarming round the registers of the joint stock companies in London and Edinburgh.

In effect and practice, the information would be available to those pepole who want to inquire at the registries. That would include the shareholders and directors of the company and of other companies. It would possibly include the trade union leaders who want to find out the affairs of companies in which they are interested. They would include a certain number of other people who need information for purposes of research, and also the curious persons who might be described by the right hon. Gentleman the Member for Bournemouth (Mr. Bracken) as professional agitators. All this is on the assumption that the matter is capable of definition by the President of the Board of Trade, and his advisers, or any other legal adviser of the Government or right hon. Gentlemen opposite.

What have we agreed? We have agreed on a fundamental violation of the privacy of the individual because what we are saying is that where beneficial ownership does in fact occur, then these various interested parties shall be entitled to this information. I suggest we have probably gone the wrong way about it by too slavish an imitation of the recommendations of the Cohen Report. The right hon. Gentleman the Member for Bournemouth is quite correct when he says that the bulk of the legal profession and the bulk of the profession to which I belong have already agreed that the specific recommendations on the Cohen Report are impracticable.

Has it occurred to the President of the Board of Trade that there is another solution to this problem outside the recommendation of the Cohen Report? This is the solution I desire to present to the Committee for its consideration. It is quite clear that if this Committee were disposed to agree in principle to the scheme I outline, it may be possible to benefit that body of legal opinion and public opinion which is concerned. I should have thought it possible—and it would not have violated the sacred conception of privacy—if every registered holder of a share or shares were required on the rendering to him by an interested party of a request in a proper form, which could be drawn up by the President of the Board of Trade—to disclose to that individual whether he was a beneficial owner or not, and if he were not, then who the beneficial owner was in fact, and that the form itself should contain a definition as to what a beneficial owner consisted of; and a time limit should be given for the rendition of that information. The person requiring the information should pay a fee of, say 10s., to the person from whom he requires it, to avoid purely vexatious and frivolous applications.

This seems to me to be a way in which this can be done. After all, the people who get information are the people who want information. They are the very people who would normally look it up in the files at Somerset House. The sole question which arises, therefore, is whether or not it is possible to find a definition of "beneficial ownership." If it is not possible to develop a definition here in this Committee—I do not think this should defeat the ingenuity of the President of the Board of Trade—for it would be quite impossible otherwise for my right hon. and learned Friend to impose the provisions of Clause 46 of the Bill, because before he can enforce them he has to make up his mind departmentally what "beneficial ownership" consists of and the particular or undesirable things which he wishes to exclude. If he can do this, I say it is capable of being reduced to writing, and if it is capable of being reduced to writing it is capable of being printed on the back of a form in such a way that any person requiring the disclosure and the individual whose shares may be held beneficially or otherwise would both be satisfied—all parties would be satisfied.

rose——

Sir Thomas Moore.

I rose on a point of Order.

I have already called upon Sir Thomas Moore.

On a point of Order. I was in the process of performing a normal, customary act in this House of giving way to another hon. Member. Do I understand that I am now debarred from going further?

I must apologise to the hon. and gallant Member. I thought he had finished his speech. The hon. Member may continue.

Am I to understand from the hon. and gallant Member that if I am the registered owner of shares and one thousand people write to me to disclose beneficial ownership, that I would be legally bound to do so?

Provided the hon. Member had been paid ten shillings a time by each of the thousand, and if they did that, I think he would find the proceeds of sufficient dimension to compensate him for his trouble. I am putting forward this suggestion in no spirit of frivolity. It might be that in my rather quick rate of diction and probably the legal complexities of my remarks, I may not have carried all hon. Members with me. But the point is quite seriously made and I trust that each hon. Member will consider it as a means of elucidating the problem, because, I readily admit that Clause 69 is not a good Clause, and I would not like as an accountant to be held partly responsible for putting it on the Statute Book. The onus still lies on the Government to take every step to solve this nominee problem, and I do submit to those who sit on these Benches and the legal luminaries that they ought to examine the method I have outlined with a view to seeing whether or not it is possible to do anything about it in another place.

Now peace has been restored on the opposite side of the Committee, I hope the Committee will bear with me for a few minutes at so hot and late an hour while I refer to an incident which took place in Committee, and which was really the beginning of all this bother. At the same time, I will put forward an argument which I hope will destroy the dislike of certain members for nominee shareholding. Some days ago the hon. Member for South Cardiff (Mr. Callaghan) was good enough to give me the advice or warning that he was going to raise the subject in Committee of a company with which I am associated, and also in a slightly dramatic and slightly sensational way he referred to a mysterious lady. I was not on the Committee and his advice or warning was not very helpful. Further, he did not advise me why he was choosing "World's Press News"—although it is attracting attention for other reasons—and the companies with which I was associated, to make these analytical studies at Somerset House.

It really does not matter very much because there is nothing to be ashamed of, or anything to be concealed; but as certain newspapers have since taken up his remarks and made some unwise and unjustified comments on them, I feel that in ordinary justice to myself and my colleagues I should make these few words of explanation. It is just like a pebble thrown into a pond. It always makes ripples. Therefore the insinuations inferred by the hon. Gentleman may well leave doubts in the minds of Members which I think I should remove. I thought you were poised on the ball of your foot Mr. Deputy-Chairman, and I was wondering what Rule I had disregarded.

I am wondering how far what the hon. and gallant Gentle- man is saying has relation to the Amendment.

The Amendment describes how the nominee shareholder is to be done away with. The hon. Member for South Cardiff introduced this Amendment in Committee, which has now been reversed by the President of the Board of Trade. That is my point, and I will proceed to demonstrate that the basis on which the hon. Member for South Cardiff made his charges is without foundation. The company referred to, the "World's Press News," has 1,700-odd shares, one-fifth of which are held by the directors and four-fifths held by another company which the hon. Member mentioned in the course of this investigation—the Weymouth Press, brought into existence to publish certain journals irrespective of the "World's Press News." The Weymouth Press which was referred to and was the basis of this charge, is entirely owned by Hatchards Associated Industries with which this charge is now definitely associated. The hon. Member stated that certain people, including a mysterious lady held certain shares.

The hon. Member is now making a detailed account of the history of this affair; I understand he was arguing on the Amendment, and he should now come down to his argument.

I am trying to make it clear that the hon. Member for South Cardiff stated there was a mysterious lady who was a nominee shareholder who received an issue of £50,000 worth of shares which was decided at a board meeting in June. That is the basis of this charge. Who is this mysterious woman whose name no one could find out?

I have not heard about this mysterious lady. Will the hon. and gallant Member state what this has to do with the Amendment under discussion?

If the Committee will bear with me for one or two more sentences, I think I can clear up the mystery. It was decided at a board meeting of this company—it may be amusing for Members opposite, but the mysterious lady——

The mysterious lady is waiting for you outside.

I must remind the hon. and gallant Member that he may argue for or against the Amendment, but he may not give an elaborate history of what happened on an occasion of which we have no power to judge.

I do not think you have given me the opportunity to set out——

I rather think I have given the hon. and gallant Member too much opportunity.

Although this matter seems to have aroused vast hilarity on the other side of the Committee, it does affect the character I have tried to build up over many years past. The hon. Member charges me and those associated with me of being guilty of conduct which may appear gravely suspicious to the world outside. The mere fact that it was referred to by two national newspapers in rather derogatory terms, surely means that I have the right to defend myself against improper allegations. I was only going to say, and I want to finish my remarks on my original point, that when this issue was raised there were many applications for these shares, but the names of those taking them up were not readily available at the time.

I have been very lenient to the hon. and gallant Member, and I cannot understand whether he is supporting or opposing the Clause.

I am supporting the Government, but I am also pointing out that these particular shares were put into the name of a nominee until the names and addresses of the shareholders could be given. What other process could have been adopted? As soon as the names and addresses were known, they were published and the normal allocation took place. So much for nominee shareholders which the President of the Board of Trade said on Friday is an essential thing in any business. There is no dishonesty; there is no danger to the public at large; and I personally cannot see in what way that one transaction transgressed any rules of honesty, honour, or public behaviour. Although it has not been easy to make this explanation, I do hope that I have cleared the minds of those here as well as of people outside who might have formed a false impression of the transaction, and I think that in so doing I have given one more argument for retaining the nominee shareholder.

I hope the Committee will feel that it has now had ample time in which to discuss this matter and that we can come to an agreement. There appears to be apprehension as to what we are trying to do, but nobody has suggested, except the hon. Member for West Fyfe (Mr. Gallacher), that it should be a crime for shares to be held in the name of a nominee. In fact, such a procedure may well be a legal necessity and not a mere convenience.

I did not say that it was a crime to hold shares in this way, but I said it was a crime not to divulge to whom shares were allotted and for whom the shares were held. People who did that should be punished.

It is not a crime and never has been to hold shares and not disclose a name. In the vast majority of cases where the ownership is on the one hand and the beneficiary interest on the other, it is quite unnecessary to make any disclosure. It does not interest anybody to know who gets the benefit of dividends which are paid, but this device can be used for disreputable purposes and it is against this small number of cases that we desire to take whatever action is possible. My hon. Friend the Member for North Portsmouth (Major Bruce) has suggested that by a little more ingenuity we might have devised a Clause which, in effect, would get the person we desire to catch without undue labour to everybody else.

I can assure the hon. Member that ever since this Bill was first introduced into another place, indeed before that, we used all the ingenuity we possess, and my advisers have done the same, in order to find a method of doing that very thing; because I am as keen as he is that we should be able, in the necessary cases, to find out who the beneficial owner's are. He may note that in Clause 46 we do not introduce the words "beneficial owner." In fact we avoided them. We have power to investigate the ownership of a company for the purpose of determining the persons who are, or have been, interested in the failure, real or apparent, of the company. That includes no such awkward definition as "beneficial owner." It was because of the awkwardness of the definition that we had to use the wider form of words, and we believe that that definition, if faithfully carried through, is the right method. The Board of Trade can act itself, or this can be carried through if complaint is made to the Board of Trade. It was felt by some hon. Members that the Clause would not be as active as they would like to see it in this matter, and therefore I put on the Order Paper the Amendment we are now discussing, whereby, in the event of a reasonably small body of shareholders in any company desiring to get this investigation carried out, they could move that the Board of Trade should do so, and, providing that it was not obviously a vexatious movement, the Board of Trade would be compelled to investigate. The Board would have no option in these cases. That would seem to me to fill any possible gap there was. I suggest that in this Amendment we are doing the best we can in order to see that nominee shareholding is not used in future as a cloak for undesirable practices.

I beg to move, "That the Clause be read a Second time."

This Clause deals with the numbering of shares. It is designed to meet a point made by the right hon. Member for Bristol West (Mr. Stanley). He pointed out that in Section 62, Subsection 3, of the Companies Act, 1929, there is an obligation to number shares which, in certain circumstances it was envisaged imposed an unnecessary burden upon those responsible for the company's affairs. What we seek to do in this new Clause is to remove that obligation, with Subsection (2) simply introducing a consequential Amendment.

I beg to move: In page 4, line 25, leave out "their expense," and insert "the expense of the requisitionists."

This is a drafting Amendment to avoid an ambiguity.

Is there any precedent for the use of the word "requisitionists" in any Act of Parliament? It seems to be a very odd word. Am I too late to raise that point?

I beg to move: In page 5, line 26, at the end, to insert:

"The company shall also not be bound under this Section to circulate any statement if on the application either of the company or of any other person who claims to be aggrieved the Court is satisfied that the rights conferred by this section are being abused to secure publicity for defamatory matter. The Court may order the company's costs of the application to be paid in whole or part by the requisitionists notwithstanding that they are not parties to the application."

This is a manuscript Amendment in place of the one on the Order Paper. I have been very anxious to meet hon. and right hon. Gentlemen who have that Amendment on the Order Paper. I think there is a real point here as regards the possibility under the Clause of forcing the company to circulate a document which might be pornographic or certainly defamatory, and therefore highly undesirable. It seems that it would be desirable to have some way in which they can be relieved of this obligation.

I am bound to tell the right hon. and learned Gentleman that it is extremely late to put in a manuscript Amendment, but if it is matter more or less generally agreed, then I am willing to accept it.

I beg to move in page 5, line 26, after the words last inserted, to insert:

"Provided that if, after a copy of a requisition requiring notice of a resolution has been deposited at the registered office of the company, an annual general meeting is called for a date six weeks or less after the copy has been deposited, the copy though not deposited within the time required by this Subsection shall be deemed to have been properly deposited for the purposes thereof."

This Amendment is designed to avoid a situation which might arise in connection with the provision relating to the circulation of notices to members of a company by the device of calling the meeting less than six weeks after the requisition requiring notice of a resolution has been deposited. As the Clause stands, it might be possible to avoid the obligation of circulating the notice by calling the meeting within six weeks. This matter was raised during the Committee stage by the hon. Gentleman the Member for Hendon South (Sir H. Lucas-Tooth) and we feel there is a point in the argument that he advanced. This new proviso makes it impossible to avoid the obligation by that device.

I beg to move, in page 5, line 44, after "members," to insert:

"having the right to vote at the meeting."

I hope this Amendment will commend itself to hon. Members on all sides. As the Clause stands, members of a company not having the right to vote at that meeting may nevertheless be entitled to demand a poll. For example, preference shareholders might do this at a meeting at which only ordinary members were entitled to vote.

I beg to move, in page 8, line 3, after "company," to insert:

"as defined in Subsection (4) of Section fifty-four of this Act."

This is really a drafting Amendment which gives effect to an undertaking given by my hon. and learned Friend the Solicitor-General to hon. Members opposite with regard to the definition of an exempt company. Hon. Members opposite complained that Clause 54 (4) should be inserted wherever such a company is mentioned in the Bill.

The Parliamentary Secretary has referred to an undertaking with regard to the reference in the definition Clause to an exempt private company. He will recall that he gave a specific undertaking to look at that definition again and, if possible remodel it, because as the Bill now stands it would be impossible for anyone, without spending a great deal of time, to express an opinion on the question whether any particular private company was or was not exempt within the meaning of this Bill. Bearing in mind that Clause 54 (4) has to be taken into consideration with Clause 54 (2), and also the Third Schedule, I think the Solicitor-General and the Parliamentary Secretary repeatedly said during the Committee stage that they were not at all satisfied with the definition of an exempt private company and were seeking to modify it so that persons could determine whether or not a company fell within the exemption. Without that, grave difficulty is bound to be experienced by anyone who ploughs through exception after exception in the Third Schedule. I defy anyone skilled lawyer or not, to give an opinion which would be of much value as to whether any particular private company is exempt. I think that, before we add these words to this Clause, we should ask the Government for an explanation of why their undertaking to alter the definition of an exempt private company is not being carried out in this Amendment.

I am very sorry that the hon. and learned Member for Daventry (Mr. Manningham-Buller) should feel that we have not carried out our undertaking. The difficulty we felt and the imperfection we had in mind when we were making the statement, that we would look into the matter, was the expression in Clause 122 of the Bill in which is found what apparently is the definition of an exempt private company. What I thought the hon. and learned Member objected to was that definite expression of "an exempt private company" and the meaning assigned to it by the actual words in the Bill. The difficulty, I felt, was that one had to search through the Bill to try to find which Clause was concerned. We have removed that difficulty by saying which Clause it is. It is Clause 54, together with the Third Schedule, and I feel there should not be any difficulty in saying that they contain that part of the Bill which may be required if one wants to ascertain what are the qualifications which an exempted company should have. I feel, therefore, that I have not failed to carry out the undertaking which I gave, and which I had in mind when I considered this question.

I beg to move, in page 8, line 29, to leave out "petitioner's shares," and to insert:

shares of any members of the company."

This Amendment is to give effect to an undertaking given to the right hon. Gentleman the Member for Bournemouth (Mr. Bracken), and it gives the court power not only to deal with the petitioner's shares but also with the shares of all the members of the company, which is obviously a desirable thing.

I beg to move, in page 8, line 32, at the end, to insert:

"subject to the provisions of Sections fifty-five, fifty-six, fifty-seven, fifty-eight, fifty-nine and sixty of the principal Act."

This again, is an Amendment which was considered in Committee, and if I recollect aright, the hon. and learned Gentleman said that this was one which he would consider between the Committee stage and the Report stage. The Government have not put down any Amendment to deal with this point, and we tabled this Amendment to see what were the results of the Solicitor-General's recon- sideration of the points raised by us in Committee.

I beg to second the Amendment.

We did carefully reconsider the drafting of this particular Clause in order to make certain that all the powers which it was thought the court should have were, in fact, vested in them. When this matter was under discussion in Committee, the answer which I made to the Amendment was that, in our view, the powers were adequate, and that there were all the powers of discretion which were necessary. After all, the court had the power to make such order as it thought fit, and the view we took on reconsideration of the drafting was that inasmuch as that discretion was vested in the court, the court could make such decision as it was thought necessary. Therefore, the court appeared to have all the powers which were required to do justice to all the parties in a case where a petition came before the court by way of application. We thought it surplusage to put this into the Clause, and, indeed, we had some doubt about whether, if we did so, it might not be suggested that the powers of the court were limited in some respect.

I beg to move, in page 16, line 28, to leave out "money lent," and to insert:

"the purposes of a transaction entered into."

Subsection (3) provides that in determining whether one company is the subsidiary of another, there is to be disregarded the shares held by a bank as security for money lent. It was pointed out that those words were narrow, as shares may be pledged not only for money lent, but in connection with other commercial transactions, and, therefore, we propose that this Amendment, and similar consequential ones, as suggested by another place, should be included.

I beg to move, in page 16, line 36, to leave out from "which" to "right," in line 37, and to insert:

"neither as respects dividends nor as respects capital, carries any."

This is a drafting Amendment to clear up an obscurity to which attention was called in Committee.

I beg to move, in page 18, line 39, to leave out from the beginning, to. "practised," in line 40 and to insert:

"obtained adequate knowledge and experience in the course of his employment by a member of a body of accountants recognised for the purposes of the foregoing paragraph or as having before the passing of this Act."

This Amendment makes two alterations. It puts the date forward from July 18th, 1945, to the date of the passing of the Bill, so that if any accountant has been in the practice of accountancy before the middle of August, he will be able to continue in it. Secondly, it has been represented that persons may have been employed for years in the offices of practising accountants and have acquired a very good knowledge of accountancy for the purposes of audit in such cases as they are likely to be appointed for. The draft Public Accountants Bill, of which we have seen a copy, put forward by the accountancy bodies includes a similar provision. We think it reasonable in the circumstances that these two alterations should be made.

The right hon. and learned Gentleman has mentioned the draft Public Accountants Bill. What are the Government's intentions in relation to that Bill?

I beg to move, in page 19, line 1, leave out Subsection (2).

This will enable ex-Service men to practise as accountants provided they have done so before 1st January, 1947. As we have made an alteration of the date the necessity for this provision disappears.

In page 19, line 26, at end, insert:

"as defined in Subsection (4) of Section fifty-four of this Act."—[Sir S. Cripps.]

I beg to move, in page 20, line 40, at the end, to insert:

"Provided that copies of the representations need not be sent out, and the representations need not be read out at the meeting, if, on the application either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this Section are being abused to secure needless publicity for defamatory matter; and the court may order the company's costs on an application under this Section to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application."

I beg to move, in page 20, line 40, after the words last inserted, to insert:

"(6) Where notice is given of an intended resolution to appoint some person or persons instead of a retiring auditor, and by reason of the death, incapacity or disqualification of that person or of all those persons, as the case may be, the resolution cannot be proceeded with, the retiring auditor shall not be automatically reappointed by virtue of subsection (1) of this section."

This is designed to meet a point made during the Committee stage by the right hon. Gentleman the Member for West Bristol (Mr. Stanley). The point he made was that if notice had been given to appoint somebody else in the place of an existing auditor and that other person died, the retiring auditor ought not to be automatically re-appointed. Where a course of that sort had been taken and where it was desirable to get a report on the existing auditor, presumably that would be because of some personal objection or some lack of confidence in the auditor, and therefore it would not be desirable in such a case that the old auditor should not be automatically reappointed.

I am much obliged to the hon. and learned Gentleman.

I beg to move, in page 21, line 36, at the end, to insert:

"nor shall any company—

(a) have as secretary to the company a corporation the sole director of which is a sole director of the company: or

(b) have as sole director of the company or corporation the sole director of which is secretary to the company."

This Amendment is to meet a point made by the right hon. Member for Bournemouth (Mr. Bracken) in the Committee and is to meet quite exceptional cases. The Secretary must not be the same person as the director. There is a possibility of evasion when the sole director of a company is also secretary of that company.

I beg to move, in page 22, line 40, at the end, to insert:

"(5) In subsection (1) of the said section one hundred and forty-four the words 'or managers' shall cease to have effect."

Section 144 of that principal Act provides that every company shall keep at its office a register of directors and managers, with certain particulars. These particulars will now be extended by virtue of an Amendment to be moved later by the hon. and gallant Member for North Portsmouth (Major Bruce) so as to provide that (a) the date of birth of directors must be stated, and (b) there must also be stated any other directorships held. These are obviously not appropriate particulars as to managers, and the provision so far as the manager is concerned, has been a dead letter. The Clause is now being corrected.

I beg to move, in page 22, line 41, to leave out from beginning, to "and." in line 43, and to insert:

"The particulars required by subsection (1) of the said section one hundred and forty-four in the case of an individual who is a director within the meaning of that section—

(a) shall, in the case of a company subject to section thirty of this Act, include the date of his birth and shall, in the case of any company, include particulars of any other directorships held by him, except as mentioned in the following paragraph;

(b) need not in any case include—

(i) particulars of directorships held by him in companies of which the company is the wholly owned subsidiary, or which are the wholly owned subsidiaries either of the company or of another company of which the company is the wholly owned subsidiary; or

(ii) his nationality of origin, if his nationality is not his nationality of origin."

Perhaps it would be in order to point out that the subsequent Amendment is consequential. Section 144 of the principal Act requires that the register of directors shall contain certain particulars. Section 108 of the principal Act also requires certain particulars. The purpose of this Amendment is to extend the particulars required in the case of directors to incorporate the date of birth in respect of directors of companies covered by Clause 30 of the present Bill, and to make it compulsory in future for directors to disclose all directorships in other than wholly owned subsidiary companies, or companies which are subsidiaries of the holding company.

I beg to second the Amendment.

Both this and the following Amendment would assist the operation of the Clause, and I accordingly accept them.

This amendment seems to me to be quite unnecessary. I do not think it assists the Clause in any way. On the other hand, it is a very hot night and, after all, there is plenty of verbosity in this Bill. Therefore, we will not resist the Amendment, but we do not think it adds anything to this Bill.

I beg to move, in page 24, line 15, at the end to insert:

"and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.

(3) Where notice is given of an intended resolution to remove a director under this section and the director concerned makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so—

(a) in any notice of the resolution given to members of the company state the fact of the representations having been made; and

(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company)

and if a copy of the representations is not sent as aforesaid because received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting."

This Amendment is to meet the argument advanced by the right hon. Gentleman the Member for Bournemouth (Mr. Bracken) during the Committee stage. The effect of the Amendment is that where a special notice is given of a resolution to remove a director of a company, that director should have the right of requiring the company to circulate a statement of his own case with regard to the matter. This is similar to other provisions in other parts of the Bill. It simply gives him that right.

I am much obliged to the Solicitor-General.

I beg to move, in page 24, line 15, after the words last inserted, to insert:

"Provided that copies of the representations need not be sent out, and the representations need not be read out at the meeting, if, on the application either of the company or of any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the court may order the company's costs on an application under this section to be paid in whole or in part by the director, notwithstanding that he is not a party to the application"

This is another manuscript Amendment.

I think it would be ungracious of us not to express appreciation of the way in which the right hon. and learned Gentleman the President of the Board of Trade has met a point of substance we raised in Committee, and which we sought to deal with in much the same way by an Amendment that we put down. This is the last of three manuscript Amendments dealing with a particular point. I rise to express pleasure that the right hon. and learned Gentleman has seen fit to meet us. I think that with these three Amendments the Bill will be much more effective and better than before.

I beg to move, in page 24, line 32, to leave out "other than a private company," and to insert:

"which is subject to this section."

This Amendment and the following Amendment are designed to pave the way for an Amendment which is intended to meet the point made by my hon. Friend the Member for South Cardiff (Mr. Callaghan). The Amendment deals with Clause 30, which relates to the retiring age of directors. The point made during the Committee stage by the hon. Member for South Cardiff was that the Clause should apply to a subsidiary of a public company in the same way as it applies to a public company. At the moment private companies are excluded, and the proposal the hon. Member advanced was that if the private company was a subsidiary to the public company the Clause should nevertheless apply to it. He put down an Amendment to that effect and we have in these Amendments and in a subsequent Amendment to Clause 30—page 25, line 38—sought to deal with his Amendment from the drafting point of view.

I beg to move, in page 25, line 38, at the end to insert:

"(8) A company shall be subject to this section if it is not a private company or if, being a private company, it is the subsidiary of a body corporate incorporated in the United Kingdom which is neither a private company nor a company registered under the law relating to companies for the time being in force in Northern Ireland and having provisions in its constitution which would, if it had been registered in Great Britain, entitle it to lank as a private company; and for the purposes of any other section of this Act which refers to a company subject to this section a company shall be deemed to be subject to this section notwithstanding that all or any of the provisions thereof are excluded or modified by the company's articles."

This is the Amendment of which I have just spoken. It is the one which contains a full definition of a public company.

On a point of Order, Mr. Speaker. Do I understand that the Amendment in my name will not be called?

I did not select it.

Is there no opportunity of raising it?

There is no opportunity if I do not select it.

I beg to move, in page 25, line 39, to leave out Subsection (1), and to insert:

"(1) Any person who is appointed or to his knowledge proposed to be appointed director of a company subject to the last foregoing section at a time when he has attained any retiring age applicable to him as director either under this Act or under the company's articles shall give notice of his age to the company:

Provided that this subsection shall not apply in relation to a person's reappointment on the termination of a previous appointment as director of the company."

This Amendment is designed to meet a point made with regard to Clause 31, which is the Clause which places upon directors the obligation of notifying their age, when they have reached that retiring age, to companies of which they are directors. The argument was made in Committee that it was very difficult to tell from the Clause as it is at present worded exactly what he has to do. What he is required to do is to disclose his age to the company and it is not very clear how one is to comply with those words. What we seek to do in this Amendment is to incorporate or to attract the effect of Section 92, Subsection (1), and Section 370, Subsection (1), of the Companies Act, 1929.

The result will be that the directors will give notice in order to comply with the Clause by sending out notification to the registered offices of the company. That will leave directors in no doubt as to what they have Jo do.

I beg to move, in page 26, line 27 after "convicted," insert "on indictment."

This Amendment is designed to meet a contention which was advanced by a number of hon. Members in Committee. I was not at the time convinced of the justice of the arguments adduced, but on reconsideration I think there is more in the arguments than appeared at the time. What it does is this. Clause 73 provides that orders can be made preventing people from taking part in the management of a company. Subsection (1, a) lays down that an order of that sort can be made if a person is convicted of an offence in relation to the formation of a company. It was urged that that ought to be limited to convictions on indictment, as the provision was far too wide. We feel on further consideration that the reasons urged in support of that point of view ought to be given effect to. This Amendment would limit convictions which may give rise to such an order, to convictions made on indictment.

I beg to move, in page 27, line 8, to leave out Subsection (3) and to insert:

"(3) A person intending to apply for the making of an order under this section by the court having jurisdiction to wind up a company shall give not less than ten days notice of his intention to the person against whom the order is sought, and on the hearing of the application the last mentioned person may appear and himself give evidence or call witnesses

This Amendment deals with a not dissimilar point designed to give effect to a promise I made to reconsider a succeeding condition of this Clause. The Clause as it stands makes it possible for orders to be made against persons preventing them from taking part in the management of a company for certain periods, and if members would remind themselves of the concluding words of Subsection (5), they will see that the order can be made against a person defined as a person in accordance with the directions or instructions the directors of a company have been accustomed to accept. A person of that sort may not be a member of the company at all, and in those circumstances it is unsatisfactory that an order should be made against such a person when he may not even know that it is being applied against him, and in circumstances in which he can have no appeal against the Order. We have sought to provide that a person desiring to appeal for the making of an order must make the person against whom he seeks to bring the order a party to the proceedings. The result would be not only that such a person would know perfectly well that an order was being asked for, but under the Supreme Court of Judicature Act, 1925, the effect would be that he would have a right to appeal against the making of that order. This is perfectly fair and does safeguard the position of a person who in those circumstances finds himself not in a position to appeal against it.

I beg to move, in page 27, line 29, to leave out from the beginning, to the end of line 32.

I am very grateful to the Government for carrying out all the undertakings they gave us in Committee, and they have been so perfectly and sweetly reasonable that they can be forgiven for overlooking one of the promises made to us by the Solicitor-General on 1st July. The right hon. Member for West Bristol (Mr. Stanley) and I objected to the use of the word "officer." We thought it was a superfluous word and asked the Solicitor-General to define what was meant by it, and I think he shared our confusion at the introduction of this unnecessary word. He promised to look into it and, if necessary, later on to move an Amendment. I am not complaining that the Government have not done this, but I see no reason why they should not do it now and take out of the Bill one word which is superfluous. I "hope the right hon. Gentleman will be able to meet us in fulfilment of the promise which he made.

We have carefully considered this Amendment, and we feel that in some ways the Bill would be incomplete without the provision which it seeks to omit. As I explained during the Committee stage, these words were nominally to deal with the person who could appoint what I loosely described as "nominee directors" or people who would act at the beck and call of the person appointing them. This definition was in the Companies Act, 1929, and I feel that circumstances might well arise in which it would be eminently desirable, in the interests of clean business, that a person not a member of a company, or a director of it, but who had guided it through undesirable proceedings, should have, an order made against him. If the Amendment were made, it would truncate the Clause, and I hope that the right hon. Gentleman will not press it.

In view of the explanation just given, which clears up the point of terminology of which I have spoken, I beg to ask leave to withdraw the Amendment.

I beg to move, in page 31, line 5, at end, to insert:

"Provided that the register need not include shares in any body corporate which is the wholly-owned subsidiary of another body corporate, and for this purpose a body corporate shall be deemed to be the wholly-owned subsidiary of another if it has no members but that other and that other's wholly-owned subsidiaries and its or their nominees."

We have had representations from various bodies that it would cause a good deal of unnecessary work to include in the Register of Share Dealings, shares held ex hypothesi, that is, the only share held as a nomination share.

I beg to move, in page 31, line 14, to leave out from beginning, to "any," in line 15, and to insert:

"The nature and extent of a director's interest or right in or over."

This and the following Amendment really go together. In the Committee stage, the hon. Member for South Hendon (Sir H. Lucas-Tooth) said that the Clause as it stood covered only the case where a director was concerned only in a fiduciary capacity, and it was agreed that there were many cases where he might be concerned in that capacity and in other capacities also. As amended, the Clause will deal with the point raised.

I beg to move: In page 44, line 39, after "concerned," insert or any of them."

This is a drafting Amendment and is designed to make clear that there are consequences which can be applied if there is any obstruction. Some people might be, or profess to be, anxious to assist, whereas others might obstruct to the best of their ability.

I beg to move: In page 48, line 26, at the end, to insert:

"(4) In the case of a company keeping a dominion register—

(a) references in the last foregoing subsection to the particulars required by subsections (1) and (2) of the said section one hundred and eight shall be taken as not including any such particulars contained in the dominion register, in so far as copies of the entries containing those particulars are not received at the registered office of the company before the date when the return in question is made; and

(b) where an annual return is made between the date when any entries are made in the dominion register and the date when copies of those entries are received at the registered office of the company, the particulars contained in those entries, so far as relevant to an annual return, shall be included in the next or a subsequent annual return as may be appropriate having regard to the particulars included in that return with respect to the company's principal register."

This Amendment deals with a case of a company which keeps a dominion register. It is really consequential on Subsection 3 of Clause 53. In that Subsection a company, instead of filing a complete return of members every year, may file a complete return every third year and only a list of changes in the two intervening years. However, under Section 185 it might be that the particulars of the entries made in a dominion register could not be included in the first return made after the particulars are received in the company's registered office in London, as appears in Section (3). This Amendment is designed to meet the various situations covered by the Clause in a more satisfactory manner.

I beg to move in page 53, line 10, to leave out Subsections (5) and (6), and to insert:

"(5) Section ninety-four of the principal Act shall have effect as if in subsection (1) thereof (which restricts the right of a company to commence business or exercise borrowing powers in cases where the company has issued a prospectus inviting the public to subscribe for its shares) there were inserted after paragraph (b) thereof the following paragraph:—

'(bb) no money is or may become liable to be repaid to applicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for or obtain permission for the shares or debentures to be dealt in on any stock exchange and.'"

This Amendment is designed to meet a point made by the hon. Member for Hendon South (Sir H. Lucas-Tooth). Clause 60 provides that in certain events money subscribed for shares is to be repaid by a company; that is to say, if a company has not either applied for, or obtained, permission to deal in these shares. The hon. Gentleman pointed out that as the Clause stands it is, at any rate, just arguable that if, for example, a person who has sold his business to a company for shares seeks to sell those shares to the public, the company is not to start its business if the offer to the public of the shares brings about a situation in which the subscriber's money is to be returned. The Amendment puts it beyond doubt that the company is only restricted from commencing business or using its borrowing powers where it is made liable to refund moneys in connection with application for shares which it has offered and not, for example, in relation to the offer by the vendor of a business of shares obtained by sale of its business.

I beg to move, in page 63, line 43, to leave out from beginning, to end of line 4, page 64.

This Amendment goes with the Amendment in page 64, line 6, and it deals with the point that was made on the Committee stage to the effect that the expression "domestic purposes" really was too limited and, for example, might exclude the case where capital was being raised and it was convenient for the partners of a firm or directors of a private company to approach persons not known to them perhaps, but who were in the same line of business, and who might be interested in an offer of shares. What we have sought to do is slightly to widen the phrase, and we do so by providing that an offer shall not be treated as an offer to the public if it is calculated not to result in shares coming into the ownership of persons other than those to whom they are offered. We have sought to retain it somewhat in that way, and we feel that we have met the point that the previous definition was rather restricted.

I beg to move, in page 82, line 16, at the end, to insert:

"(4) For the purposes of the said sections two hundred and sixty-four and two hundred and ninety-eight any remuneration in respect of a period of holiday or of absence from work through sickness or other good cause shall be deemed to be wages in respect of services rendered to the company during that period.

(5) The debts which are to be paid in priority under the said section two hundred and sixty-four shall include all accrued holiday remuneration becoming payable to a clerk, servant, workman or labourer (or in the case of his death to any other person in his right) on the termination of his employment with the company before or by the effect of the winding up order or resolution; and in relation to any sums payable in priority by virtue of this subsection, subsection (3) of the said section two hundred and sixty-four and paragraphs (3) and (5) of the said section two hundred and ninety-eight shall apply as they apply in relation to wages.

(6) For the purposes of this section—

(a) the expression "accrued holiday remuneration" includes in relation to any person, all sums which, by virtue either of his contract of employment or of any enactment (including any order made or direction given under any Act), are payable on account of the remuneration which would in the ordinary course have become payable to him in respect of a period of holiday had his employment with the company continued until he became entitled to be allowed the holiday; and

(b) references to remuneration in respect of a period of holiday include any sums which, if they had been paid, would have been treated for the purposes of the National Insurance Act, 1946, or any enactment repealed by that Act as remuneration in respect of that period."

This Amendment is designed to meet a point made by two of my hon. Friends—the hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Harborough (Mr. Attewell) during the Committee stage. What they proposed and what we feel in a position to accept is that among the debts which should be given priority in the winding up of a company should be included money payable in respect of holidays, money in respect of absence from work and other similar cases, and also what is known as accrued holiday remuneration payable in statutory and contractual holiday schemes. The first part of the proposal is really only drafting in the sense that it should be said that where a person is absent from work and does not as a result render any service to his employer, the money payable to him under a contract during his illness is not money within the provisions of Section 264 of the Companies Act, 1929. The same can be said concerning money paid in respect of a holiday which he has already had. We are seeking to make clear in both those cases that in cases in which the employee is paid money for which he was not rendering a service, the money should be regarded as payable in respect of services within the meaning of Section 264 of the Act of 1929, so that that part of the Amendment is really drafting.

The second part, Subsection (5), is more than drafting. This brings into the scope of priority debts, accumulated holiday payments, that is, payments which fall to be made to an employee in respect of a holiday he is entitled to take under terms of various statutory holiday schemes such as under the Catering Wages Act, 1943, the Holidays With Pay Act, 1938, the Road Haulage (Wages) Act, 1938, and similar acts, and also in cases where, under the terms of his contract, there is a fund set aside to provide him with certain payments in respect of a period in which he is held to be on holiday. The Amendment is designed to meet those points and was supported generally by both sides of the Committee.

May I make the point that in the case of those holiday funds, the question of making them priority does not arise?

Various schemes are possible. We have sought to include those under which certain payment is due and is held for the employee when his employment terminates. There are certain funds set aside under terms of a trust and that type would not be included, because it is not practicable to include it as the employee has no claim to a specific portion of the fund. We are therefore limiting it to specific cases. We have brought in the ones which we think are practicable to bring in, and to leave out the others which we think it is not practicable to bring in.

But the point is this: whether it is under a statutory scheme or under "a trustee scheme, that particular money is set aside and is not part of the funds of the company.

In some cases it is and in some cases it is not. Where it is possible we have brought it in. Otherwise it has not been practicable to do so.

I think I am speaking for those who sit on these Benches when I say that we welcome the general principle of this Amendment, though its effect will not be quite so extensive as one might suppose. In the ordinary way, it will not give to the employees the same benefit as it will to the banks and other institutions, which can be prevailed upon to advance money to a company which is in difficulties in order to enable it to continue to pay its workmen and to meet those other sufficient awards to induce them to continue in the company's employment. In effect, we are considering the position of the creditors of a company in liquidation and we are inclined to look at the provisions of an Amendment of this sort somewhat narrowly, so as to see that it does not give anything in the nature of an unfair priority. There is one question which I should like to ask the Government. As I understand it, the first paragraph of the Amendment is only intended to deal with the case where there is due money for holidays which have actually been taken; that is to say, where money has already probably been earned, the period of holidays being regarded as a general period of service by a servant of the company.

When we come to the next part, the position is not quite so clear. As I understand it, where there are holidays due to a servant of a company, although he has not taken them, they may be said to be already due when they are provided under some statutory scheme. This paragraph is limited to statutory schemes, though it covers any case where an accommodation has been made between the employee and the company. I can imagine that an abuse of that kind could ensue. Where a company was in difficulties it would be possible for it to come to terms quickly with either some specially favoured employees or perhaps with all employees, so that they could get a somewhat longer period than they were otherwise accustomed to. In that way the company would be enabled to give special advantage to those which had been working for it as against the normal trade practice. I am a little apprehensive that this may be the effect. I am sure that the Government did not intend it that way, but, in any event, I should like to have an assurance that it will not be operated in that way.

I should like to thank the Solicitor-General for presenting this Amendment, which meets our views on this side of the House. Our knowledge of the need of such an Amendment was founded in one case on actual facts. As regards the difficulty which has been suggested by the hon. Member for South Hendon (Sir H. Lucas-Tooth), to me such a case seems an improbability, and I think we should wait until we have actual experience of one such case.

At this time of the morning very few words are required from me. but I should like to associate myself with my hon. and learned Friend the Member for Kettering (Mr. Mitchison). This is of importance today, because there are so many industries with holiday provision schemes. It is true that those schemes vary but in the main one can say that the year is split up into so many parts and the operative who is working is credited with one forty-eighth or one-fiftieth part of the year. In my own particular industry, which some hon. Members may knew has a record in this method of holiday payments there was a deduction made from the wage packets of the operatives Week by week. The manufacturer pays his employees and those payments go into a general holiday fund. Nevertheless, to the firms in bankruptcy the employees' portion has been regarded as wages to them. Consequently, the payments ranked with other profits and the employers' share was not paid out. I am, therefore, sure that this proposal will be a help to all concerned.

I think it is most unlikely that there would be any dispute in view of impending liquidation of companies in difficulties, or that companies would hurriedly set up claims with a view to providing for paying employees or to get preferential payments in respect of holiday payments. The likelihood of this being abused is, I think, next to nil.

I beg to move, in page 82, line 34, to leave out "(3)," and insert "(6)."

This Amendment is purely drafting. The one which follows is to accord to employees of a company, in cases where a receiver has been appointed under debenture security in charge of the company's property, the same rights as regards holiday remuneration as are accorded by the Amendment to page 82, line 16.

I beg to move, in page 101, line 4, at the end, to insert:

"(2) In paragraph (b) of subsection (1) of the said section three hundred and forty-four, the reference to such particulars as are by the principal Act required to be contained with respect to directors in the register of directors of a company shall be taken as including—

(a) in relation to name and nationality, the particulars but only the particulars, required by that Act, as amended by this Act;

(b) in relation to directorships, as including the particulars, but only the particulars required by that Act as originally enacted;

and as not including particulars of date of birth as required by this Act."

This Amendment, which deals with the position of foreign companies, is largely consequential on Amendments which were made to Section 144 of the Companies Act, 1929. What it does is to give directors of those companies the same concessions in regard to their previous names and nationalities as are given to directors of companies registered in Great Britain. It does not place upon them the obligation of stating their other directorships or their date of birth as obviously in the circumstances that would not be a matter of any interest or importance.

I beg to move, in page 101, line 18, to leave out "and (2)," and insert "to (6)."

This Amendment, which really goes with the next Amendment in page 101, line 21, is designed to bring the Bankruptcy Acts into conformity with the Companies Bill in certain respects. They give employees of firms, and individuals, the same rights of priority in respect of holiday pay and remuneration as are given to employees of companies on winding up. In that respect, the Amendment assimilates the provisions of the Bankruptcy Act, 1914, to the position of the Companies Act, 1929, as amended by this Bill.

I beg to move, in page 109, line 33, to leave out from the beginning, to the end of line 43, and to insert:

"and for the purposes of this paragraph the net amount at which any assets stand in the company's books at the date of the coming into force of this Schedule (after deduction of the amounts previously provided or written off for depreciation or diminution in value) shall, if the figures relating to the period before that date cannot be obtained without unreasonable expense or delay, be treated as if it were the amount of a valuation of those assets made at that date and, where any of those assets are sold, the said net amount less the amount of the sales shall be treated as if it were the amount of a valuation so made of the remaining assets."

This is very largely a drafting Amendment to the provisions of the First Schedule, which is the Schedule which sets out what a company has to include in its balance sheet and profit and loss account. It really effects a drafting Amendment to the provisions of paragraph 2, which sets out how the fixed assets of a company are to be valued for the purpose of its balance sheet. What it does is to say that where you have, in the case of an asset acquired before the date when the Schedule comes into force difficulty in ascertaining past facts regarding acquisition and sales made out of it, all you need do is bring in a net figure of amounts written for depreciation up to the date. It is designed to deal with cases in which you have a lot of tools or small items, and it is not feasible to trace purchases or sales, and to avoid otherwise unnecessary work.

I beg to move, in page 112, line 34, at the end, to insert:

"and the Stock Exchange value of any investments of which the market value is shown (whether separately or not) and is taken as being higher than their Stock Exchange value."

This Amendment deals with the valuation of a company's aggregate investments other than trade investments. Hon. Members will find that paragraph 7 of the First Schedule specifies how certain items, which are to be set out separately, are to be dealt with, and that certain things have to be done by way of note, or statement or report annexed. If hon. Members will look at paragraph 8, they will see how the aggregate market value of investments other than trade investments of companies is to be set out. The Amendment is designed to meet an argument by the hon. Member for Bury (Mr. W. Fletcher). Where a finance company held a considerable block of shares, if shares were unloaded on to the market suddenly, you would get a very different value from the quoted Stock Exchange prices of the shares, and it would be misleading to put in the quoted prices. Therefore, what we say is that in any case where the market value is shown as being higher than the Stock Exchange value, and the directors of the company wish to include trading investments at a value higher than the Stock Exchange value, the Stock Exchange value has to be shown separately, set out in a note or statement annexed.

I beg to move, in page 114, line 28, at the end, to insert:

"otherwise than by way of security only for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money."

The object of this Amendment is to exclude from the requirements of Subparagraph (1) (iii), shares and debentures by way of security only in the ordinary course of business. The exception made is in line with that in Clause 82.

I beg to move, in page 115, line 33, after "subsidiaries," to insert:

"except that they may in a proper case be so treated where—

(a) the company is itself the subsidiary of another body corporate; and

(b) the shares were acquired from that body corporate or a subsidiary of it."

This again is an Amendment to the First Schedule and deals with the case of a holding company with a subsidiary company. Paragraph 5 deals with the case of profit and loss of a subsidiary company being brought into the accounts. What the Amendment seeks to do is this. If one looks at paragraph 5, it will be seen that it provides that one should not take pre-acquisition profits of a subsidiary company as revenue in the accounts of the holding company: that is to say, profits which the subsidiary company makes before it is acquired. Obviously, when they come into possession, when the subsidiary company has been acquired, they should not be treated by the holding company as part of the revenue, but should be treated as capital, because they would have increased the price which had been paid by the holding company to acquire the subsidiary company. That should not necessarily apply in the case of the acquisition of a company from outside the group. A company which is not outside the group, but was acquired does not necessarily come Within the same group What the Amendment does is this: It says that in such a case, where the directors think proper, the pre-acquisition profits of the subsidiary may be treated as the revenue of the holding company, but it is wholly within the discretion of the directors.

Do I understand from the Solicitor-General that it lies with the opinion of the directors whether it is a proper case or not?

In the opinion of those charged with that particular duty and the management of the company's affairs. It will only be done in the proper case. The emphasis is on that.

I beg to move, in page 120, line 28, to leave out "money lent," and insert:

"the purposes of a transaction entered into."

This is little more than a drafting Amendment. This point has been dealt with elsewhere in the Bill and has been put down at the instance of the banks.

I never thought that in the year 1947 I should be hearing the party opposite obeying the demands of the banks. It is only 12 years since they were holding a point of view about the bankers' ramp, and here again we see how they are falling into the clutches of the tyrant.

I may point out to the right hon. Gentleman that since the Bank of England has been nationalised, the banks now have an aura of respectability.

I beg to move, in page 121, line 17, to leave out "otherwise than," and to insert:

"other than—

(i) a body corporate established for charitable purposes only and having no right to exercise or control the exercise of any part of the voting power at any general meeting of the company;

(ii) a body corporate which is a trustee of the said trusts and has such an interest only."

This Amendment carries out an undertaking given to the hon. Member for Northwich (Mr. J. Foster). Its effect is that a company will not lose its status as an exempt private company if some of its shares or debentures are held by a body corporate established for charitable purposes only.

I beg to move, in page 121, line 50, at the end, to insert:

I beg to move, "That the Bill be now read the Third time."

I do not propose to detain the House any time, but I must first notify the House that the King's Assent has been given to Clause 100 making certain provisions with regard to property vested in the Crown.

I think this Bill shows the results of the endeavours of many people on many sides of the House to direct and forge the best implement we can to regulate company practice and procedure in this country and to bring them up to date. By these provisions we have brought about a closer relationship between ownership and control in the companies and remedied many of the faults in Company Law which have made themselves apparent over the years since the last Act was passed and we have laid a firmer and better foundation for the good reputation which British companies have in many parts of the world.

Were it not a sultry morning, one could take up a great deal of time in this agreeable task of congratulating ourselves on passing such a good Bill. I must say that if this Government would only concentrate on measures such as this, the work of His Majesty's loyal Opposition would indeed be a pleasure. I feel that we should congratulate the right hon. and learned Gentleman on the part he has played in bringing in this Bill. His two Parliamentary assistants who have borne the burden and the heat of the day, more especially the Solicitor-General, are also to be congratulated; and the officers, without whom we would not now be giving a Third Reading to this Bill, are entitled to very great credit. Before I sit down, I would say that Lord Justice Cohen and his Committee have rendered a very great service to the country.