Company Law Reform Bill [HL]

This is a probing amendment. We are not seeking to remove the whole of the clause from the Bill as many of its provisions are necessary and important. But I think that the Committee would benefit from an explanation about some of its provisions. In my defence, when we went through the clause with some experienced corporate lawyers they, too, were somewhat unclear about how it worked. Nevertheless, I am sure that the Minister, backed by the infinite wisdom of his officials, will easily shed light on our darkness. The clause’s title appears to us to be unusual. ““Authorised dealer in securities”” was a title given to those firms which, before the Financial Services Act 1986 received their authorisation direct from the DTI under the Prevention of Fraud (Investments) Act 1958. I have looked through the Financial Services and Markets Act 2000, but have not found clarity about an up-to-date definition of ““authorised dealer in securities””. It would be helpful if the Minister told us a little about how that has been brought up to date in modern legislation. On the clause itself, while I understand that there can be a need for a subsidiary to hold shares in its parent company, as allowed in subsections (2)(a) and (b), the prohibition introduced by subsection (2)(c) seems difficult to understand. In this connection, the provisions of subsections (3)(a) and (c) are particularly perplexing. With regard to subsection (3)(c), for example, does the clause prohibit a company such as the investment management division of a quoted investment bank from investing its clients’ money in the shares of the parent? My reading of this suggests that that is the case. If so, why should this be? Subsection (3)(c) refers to a business that consists in insurance business. Despite the definition in subsection (4)(d), that wording seems unusual. It may be that there are so many double negatives in the clause that I have failed to gather properly its sense and meaning. But the advice we have had does not seem to make the clause any less opaque. I hope that the Minister will be able to shed some light on the way the clause operates, as it has baffled me and a good many lawyers to whom we have spoken.