Company Law Reform Bill [HL]

moved Amendment No. 464:"Page 309, line 28, at end insert ““, or" (   )   failed to comply with rules about documentation by virtue of section 635”” The noble Lord said: My Lords, I rise to move Amendment No. 464 and speak to Amendments Nos. 465, 468, 471, 472, 473 and 475, which concern Clauses 634 and 635. I must apologise to the House, as Amendment No. 469 somehow got tabled in error. I do not think it should be in this group at all, and we will not be seeking to move it. This takes us to a proposal that we believe still looks suspiciously like gold-plating of the EU takeovers directive. We have just discussed this in Grand Committee, and the noble and learned Lord the Attorney-General said:"““The starting point is Article 17 of the takeovers directive, which requires member states to put in place sanctions which are ‘effective, proportionate and dissuasive’. That is to ensure the rules of the directive are complied with””.—[Official Report, 28/3/06; col. GC 304.]" The directive therefore requires that a failure to comply with the rules about bid documentation must be subject to sanctions of the kind that satisfy Article 17. The Government have so far taken the approach that only a criminal offence will do, stating that they do not believe the panel will otherwise have sufficient power to take effective action, in directive terms, against any such failure. The sanctions attributed to the panel, which the Government believe are insufficient for this purpose, are these: public and private censure or reporting of conduct to another regulatory body, as well as action to issue directions to those responsible to put the matter right. This list has overlooked a further power the panel has under the Bill that I believe would adequately satisfy the requirements of Article 17: the power to order a person to pay compensation under Clause 636. In conjunction with the sanctions I have just listed, that seems to be ample penalty to provide an adequate deterrent as required by Article 17 of the directive. There is another reason why we on these Benches say this is not an appropriate area for a criminal offence. The proposed offence would be for failing to comply with offer document rules. Those rules are made by the Takeover Panel itself. As we discussed at length in Grand Committee, the panel is now to become a statutory body, with all the associated powers that come with that status. However, it will retain much of its independence. We will have a situation where an independent body, subject to very little formal parliamentary scrutiny, will be able, by altering its rules, to create new forms of criminal offences. We wonder whether that is a desirable outcome. For those noble Lords who were not present in Grand Committee, I am not arguing for greater control of the panel. As I said then, the panel has been a great success, and we do not wish to clip its wings with unnecessary bureaucracy. We would therefore argue strongly against limiting the independence of the panel simply to permit a criminal offence for failure to meet the rules about bid documentation in order to comply—or, in our view, to over-comply—with the EU takeovers directive. Surely, the simpler and correct approach is to allow the panel to deal with such a breach by means of the sanctions under the Bill, which more than adequately meet the requirements of Article 17? Since Grand Committee, we have carried out a little research into how other European states have implemented the directive. Our advisers tell us that in Ireland, for example, where they already have a statutory framework, when rules on offer document contents are breached it appears to be a civil liability. We are told that the same is true in Germany. If these states, which are subject to the same directive as this country, do not see the need to implement this as a criminal offence, there is no reason why the Government should feel so compelled. Therefore, in light of this new information, I beg to move Amendment No. 464, which I hope the Government will feel able to accept.