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Company Law Reform Bill [HL]

I need to explain why the Government are taking the view that it is necessary to create a new offence in relation to bid documentation. 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. The Government produced a consultative document on implementation of the takeovers directive and have had subsequent discussions on the issue of sanctions. In the light of these discussions, it was decided to underpin the implementation of the directive by proceeding with the current new offence. Strictly speaking, there are two new offences—one in relation to the contents of the offer document and the other concerning the contents of the response document of the target company. The duties as to how draw up and make public offer and response documents are contained in Articles 6 and 9.5 of the takeovers directive. That says what needs to be set out in the documents. As well as matters relating to the terms of the bid, the directive requires other information concerning issues such as the strategic plans of the offer for the business and their likely repercussion on employment and the locations of the companies’ places of business, and so on. The panel already has substantive rules relating to the contents of offer and response documents. The panel proposes a small number of changes to those to bring them entirely into line with the requirements of the directive. What the noble Lord says is that we should just leave it to the panel to enforce the rules about bid documentation. No doubt, if the offer response document was clearly unfit for purpose, the panel could issue directions to those responsible to put the matter right. But the panel does not propose under its rule-making power to extend its sanctions beyond those already available to it. In summary, those amount to public and private censure or reporting of conduct to another regulatory body to take action, as well as action to issue directions to those responsible to put the matter right, if it is seen at that earlier moment. The problem is that the true facts may come to light at a later stage, when it is too late for the panel actually to issue directions in the way that I have identified—and, as I have said, the panel does not propose to extend its sanctions beyond those that it has. Our concern is that the range of sanctions that the panel has available for those purposes does not satisfy the requirements of the directive, which I read out and quoted at the beginning of my response. We therefore thought that we had to—as it is our responsibility as a government of a member state—introduce a carefully targeted offence aimed specifically at those who fail to comply with the bid documentation rules. Following consultation, that is something that we regard as an important part of the implementation package. The panel will have its existing rules and those that it chooses to make. We have not wanted to require the panel, as the amendment could, to go beyond the rules and sanctions that it presently wants to have, but to meet the directive we need to satisfy Article 17 in the way that I have indicated. That is why the offence is there, so I cannot accept the amendments to remove those offences.