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Clause 3

Volume 978: debated on Monday 11 February 1980

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Amendment proposed: No. 9, in page 3, line 11, leave out 'On' and insert 'As a consequence of'.—[ Mr. Michael Marshall.]

With this we may take Government amendment No. 10.

We should not rush through these amendments at breakneck speed. The Minister should give us a brief account of amendment No. 10, which allows the Secretary of State to give directions on the allotment terms. Why are they necessary? I understand that the Secretary of State already has powers regarding the issue of shares.

Amendment No. 9 would insert the words "As a consequence of" instead of "On", so that the phrase would read:

"As a consequence of the vesting in the successor company".

It is simply a straightforward clarification. I assume it has no further implications.

Amendment No. 10 states that shares shall be issued

"at such time or times and on such terms (as to allotment) as the Secretary of State may direct".

What will the Secretary of State have regard to in issuing shares? Will that provision allow him to direct that some proportion of the shares may go to employees of the company? Are there other reasons, or is it merely a tidying up amendment?

The hon. Member for Keighley (Mr. Cryer), with his prescient approach to these matters, has jumped ahead of me slightly. I had not come to amendment No. 10, but it may be convenient if I speak to both amendments, as they go together.

On 18 December, in Committee, in columns 482–483 of the Official Report, I explained that shares will initially be allotted to the Secretary of State on one or more renounceable letters of allotment. The Secretary of State will then renounce those which he intends to offer for sale in favour of the issuing house. The issuing house will in turn issue its ownrenounceable letters of allotment to successful applicants for shares, and during the renunciation period the holder of such a letter who wishes to sell his rights may renounce the letter in favour of someone else. At the end of the period, the shares will be issued, that is, entered on the register of holders.

The hon. Gentleman asks how these allotments will relate to that process. The amendments deal with a number of aspects of the process and they are in that sense technical, since we debated the principle of renounceable letters of allotment earlier.

The two amendments together provide that the allotment or issue of shares as a consequence of vesting is to take place at such time or times as the Secretary of State may direct. This ensures that the Government have flexibility to follow the renounceable letter of allotment procedure which I have outlined.

The existing subsection (1) alone could be narrowly interpreted. The words on the vesting "might be understood as requiring a single issue on the appointed day itself. The new words "As a consequence of" vesting ensure that the Secretary of State will have no continuing power under clause 3 to direct the successor company except in relation to the initial flotation.

Second, on amendment No. 10, the new subsection (1A) provides that the terms of the allotment are to be
"as the Secretary of State may direct".
The terms of the issue are already dealt with in the existing subsection (2).

Finally, in the clause as amended, subsections (1) and (1A) together will make absolutely clear that the Secretary of State can direct the successor company to allot shares to him.

I hope that the hon. Gentleman will agree that these technical amendments clarify the effect of the clause. I commend them to him and to the House.

Amendment agreed to.

Amendment made: No. 10, in page 3, line 19, at end insert—

'(1A) Shares required to be issued in pursuance of this section shall be issued or allotted at such time or times and on such terms (as to allotment) as the Secretary of State may direct.'.—[Mr. Michael Marshall.]