Company Law Reform Bill [HL]

moved Amendment No. A5A:"Page 250, line 16, at end insert—" ““(   )   The presumption set out in subsection (2) shall not be made where a person makes an offer of a company’s securities to the public in breach of an undertaking given, or a contractual obligation owed, to that company and the company takes all reasonable steps to enforce such undertaking or obligation.”” The noble Lord said: I want to stay with this clause because I wish to probe the Government’s thinking on an issue that has been raised with us by Allen and Overy, a well-known City law firm. Subsection (1)(b) purports, among other things, to deal with circumstances where a company agrees to allot one party—possibly an investment bank—shares which that party may then offer to the public. This ensures that the prohibition on a private company offering shares to the public cannot be easily circumvented. However, the presumption contained in subsection (2)(b) could apply where such a party then, possibly in breach of contract, offers those securities to the public. The result would be that the company, having acted properly in normal circumstances, would have to rebut the presumption—that is, the company would, in a way, be ““guilty until proved innocent””. This is not fair or correct. Our amendment, therefore, would disapply the presumption in subsection (2)(b) from circumstances such as those, so that a company would not have to exonerate itself where it has done no wrong. I beg to move.