Company Law Reform Bill [HL]

moved Amendment No. 419A:"Before Clause 552, insert the following new clause—" ““OFFERS TO SHAREHOLDERS TO BE ON PRE-EMPTIVE BASIS (1)   Subject to the provisions of this section and the seven sections next following, a company proposing to allot equity securities (as defined in section (Interpretation of sections) (Offers to shareholders to be on pre-emptive basis) to (Saving for company’s pre-emption procedure operative before 1982))— (a)   shall not allot any of them on any terms to a person unless it has made an offer to each person who holds relevant shares or relevant employee shares to allot to him on the same or more favourable terms a proportion of those securities which is as nearly as practicable equal to the proportion in nominal value held by him of the aggregate of relevant shares and relevant employee shares, and (b)   shall not allot any of those securities to a person unless the period during which any such offer may be accepted has expired or the company has received notice of the acceptance or refusal of every offer so made. (2)   Subsection (3) below applies to any provision of a company’s memorandum or articles which requires the company, when proposing to allot equity securities consisting of relevant shares of any particular class, not to allot those securities on any terms unless it has complied with the condition that it makes such an offer as is described in subsection (1) to each person who holds relevant shares or relevant employee shares of that class. (3)   If in accordance with a provision to which this subsection applies— (a)   a company makes an offer to allot securities to such a holder, and (b)   he or anyone in whose favour he has renounced his right to their allotment accepts the offer, subsection (1) does not apply to the allotment of those securities, and the company may allot them accordingly; but this is without prejudice to the application of subsection (1) in any other case. (4)   Subsection (1) does not apply to a particular allotment of equity securities if these are, or are to be, wholly or partly paid up otherwise than in cash; and securities which a company has offered to allot to a holder of relevant shares or relevant employee shares may be allotted to him, or anyone in whose favour he has renounced his right to their allotment, without contravening subsection (1)(b). (5)   Subsection (1) does not apply to the allotment of securities which would, apart from a renunciation or assignment of the right to their allotment, be held under an employee’s share scheme. (6)   Where a company holds relevant shares as treasury shares— (a)   for the purposes of subsections (1) and (2), the company is not a ““person who holds relevant shares””; and (b)   for the purposes of subsection (1), the shares held as treasury shares do not form part of ““the aggregate of relevant shares and relevant employee shares””.”” The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 419B to 419G inclusive. These insert new clauses before Clause 552 in Part 18 of the Bill, which is concerned with the allotment of shares. At the same time, I shall speak to Amendments Nos. 439A to 439E, which are concerned with Part 19 share capital, particularly Clauses 590, 591, 592 and 593, all of which are concerned with the transfer of securities. The amendments comprise two shots at one issue—we come back to the issue of consolidation, which we have discussed and battled over from the moment that the Bill was launched. We remain of the view, as stated at Second Reading, that the Bill should be as far as possible a comprehensive consolidation of company law, and that it defies belief that despite all the hard work that has gone into it from the Bill team, officials in the Minister’s department, we would still be left with three other Companies Acts when this one leaves your Lordships’ House. The first set of amendments to Part 18 aim to clarify the law regarding pre-emption and allotment. Our practitioner advisers have told us that this is an area that is frequently consulted and to have it spread out over the Bill and the other Companies Acts is an unhelpful and undesirable position. The second set, which concerns Part 20, is intended to ensure that the provisions relating to the transfer of securities are in one place; in particular, Section 207 of the Companies Act 1989, which inexplicably has been split between that Act and this Bill as currently drafted. We tabled these amendments in Committee and we were disappointed by the Minister’s reply. I dare say that he is not going to accept the amendments tonight, but I hope that he will be able to give us some better news about the prospects and about the Government’s plans to achieve further consolidation, either next week or through the passage in another place. Since it is the opening of the cricket season, I regard the amendment as a slow full toss bowled on the leg stump, which I hope he will dispatch immediately to the boundary. In that spirit I beg to move.