Company Law Reform Bill [HL]

Where the presumption in subsection (2) applies, it will be for the company to prove on the balance of probabilities that the allotment or agreement to allot shares or debentures was not made with a view to their being offered to the public. The amendment sets out circumstances in which the presumption is not to apply. But it should already be the case that when a company is able to show the matters set out in the amendment, that should suffice to rebut the presumption in any event, provided the contractual obligations or undertakings were genuine. The presumption may also be rebutted in other circumstances not covered by the amendment—for example, when the company shows that at the time the allotment or agreement to allot was made there was a mutual intention that the subscriber would hold on to the shares for at least six months. Another example might be where the company shows that on the allotment it was provided that the whole of the consideration was to have been received by the company. This shows that it is not necessary for the company to impose contractual obligations on the recipients of its shares in order to overcome the presumption. But of course the existence and enforcement of such contractual obligations or undertakings against the offer of its shares to the public will make it much easier to rebut the presumption. Indeed, the amendment might make it harder for the company to rebut the presumption in those cases falling within the circumstances covered by the amendment, but not quite satisfying all the requirements it imposes—for example, where the company is unable to show that it took all reasonable steps to enforce the undertaking or obligation. I hope that that covers the probing that the noble Lord was seeking to achieve and that he will feel able to withdraw the amendment.