UK Parliament / Open data

Growth and Infrastructure Bill

Proceeding contribution from Ian Murray (Labour) in the House of Commons on Monday, 5 November 2012. It occurred during Debate on bills on Growth and Infrastructure Bill.

I am running out of time, so I shall canter on, if I may.

There are so many unanswered questions that I should probably be here until midnight if I dealt with them in detail, but let me give a little of the flavour of what people have been saying to me. I hope that the Minister of State has had his pencil sharpened so that he can take all this down.

First, the value of shares that employees receive in return for relinquishing their rights is wholly inadequate. It may also be difficult in some instances for employees to value the shares accurately, or indeed to realise fair value in the event of sale. Those problems are all the more pronounced given the absence of provision for independent legal and financial advice for employees.

Secondly, the administrative costs of valuing and issuing or allotting small numbers of new shares to a great many employees may be prohibitively high for business. If there is no market, companies may have to purchase the shares back, which will impose a huge financial burden on them.

Thirdly, most of the businesses involved will not be listed. Who will value the shares, what voting rights will be attached to them, how can they be redeemed or transferred when they have no real market value, and who will deal with any disputes that arise?

Fourthly, at a time when an employee wishes to sell, on redundancy or otherwise, the company is likely to be performing poorly, which is why staff are being laid off.

That means that the shares will be worth less, or indeed worthless. What happens if a business issues more shares to itself to dilute staff holdings prior to any redundancy? What about dilution in the event of further investment in the company?

Type
Proceeding contribution
Reference
552 cc688-9 
Session
2012-13
Chamber / Committee
House of Commons chamber
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