Company Law Reform Bill [HL]

moved Amendment No. 476:"Page 317, line 24, leave out ““in value of all the voting shares”” and insert ““of the capital carrying voting rights””" The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendment No. 477. We return to a point on which, when we discussed it in Grand Committee, I received a slightly baffling response from the noble and learned Lord. The amendments that we proposed then, and indeed the amendments we propose now, replace what is currently in the Bill with the wording in the directive. The reason behind the change is the uncertainty of the words ““in value””. When we pressed for an explanation of the meaning, the noble and learned Lord the Attorney-General replied:"““Regarding the specific question of the words ‘in value’ in the clause, we think it is clear what they mean: they refer to the nominal value of shares, so to achieve the breakthrough threshold the bidder must reach 75 per cent of the nominal value of the company’s voting shares””.—[Official Report, 28/3/2006; col. GC318.]" I could not understand that answer then. I said then, and I repeat now, that nominal value bears no relationship to market value. If adopted as the standard for this clause, it could provide a skewed result owing to the different nominal value attaching to different classes of shares. We could find that a very few people holding high nominal value shares with a low market value could effectively control the company, despite the other shareholders owning a far greater amount in market value simply because the nominal value allocated to their shares was low. I am sure that that cannot be right. It would mean that different voting weights would be attached to shares, which though having the same rights would have different nominal values. I hope that the noble and learned Lord has thought again on this question. I always give way on matters such as Foss v. Harbottle, but this is a practitioner City matter and I am sure that this cannot be the right way to approach it. Maybe we are at odds over nominal and real market values. I beg to move.