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Company Law Reform Bill [HL]

moved Amendment No. A148:"Page 303, line 15, at end insert—" ““(2)   Subsection (3) applies where rules made by virtue of subsection (1) confer power on the Panel to impose a sanction of a kind not provided for by the City Code on Takeovers and Mergers as it had effect immediately before the passing of this Act. (3)   The Panel must prepare a statement (a ““policy statement””) of its policy with respect to— (a)   the imposition of the sanction in question, and (b)   where the sanction is in the nature of a financial penalty, the amount of the penalty that may be imposed. An element of the policy must be that, in making a decision about any such matter, the Panel has regard to the factors mentioned in subsection (4). (4)   The factors are— (a)   the seriousness of the breach or failure in question in relation to the nature of the rule or direction contravened; (b)   the extent to which the breach or failure was deliberate or reckless; (c)   whether the person on whom the sanction is to be imposed is an individual. (5)   The Panel may at any time revise a policy statement. (6)   The Panel must prepare a draft of any proposed policy statement (or revised policy statement) and consult such persons about the draft as the Panel considers appropriate. (7)   The Panel must publish, in whatever way it considers appropriate, any policy statement (or revised policy statement) that it prepares. (8)   In exercising, or deciding whether to exercise, its power to impose a sanction within subsection (2) in the case of any particular breach or failure, the Panel must have regard to any relevant policy statement published and in force at the time when the breach or failure occurred.”” The noble and learned Lord said: This is the opportunity for me to turn to the second recommendation of the Delegated Powers and Regulatory Reform Committee. That concerned the proposed power in Clause 627 for the panel to include sanctions within its rules. Paragraph 15 of the committee’s report stated:"““We recommend that the bill should include some restraint on the penalties for which rules of the Panel may provide under clause 627, whether they be specific limits or procedural constraints (such as those in sections 92 to 94 and 124 to 127 of the Financial Services and Markets Act 2000 in relation to Part 6 rules and to market abuse)””." The Government accept that recommendation and propose to deal with it by means of the amendment. That will impose procedural constraints based on the Financial Services and Markets Act model, as the committee suggested, with certain adaptations. I shall explain: the FSMA model contains two such constraints. First, it includes specific procedural requirements for the imposition of a sanction in individual cases. Those include the service of a warning notice on the person on whom it is intended to impose the sanction and the right for that person to have the matter referred to a tribunal. It is not proposed that such procedural matters be included in relation to panel sanctions. The Bill seeks to allow the existing quasi-judicial processes of the panel to continue. That includes hearings by the panel and the right of appeal to an appeal body—currently the Appeal Committee but, in future, the Takeover Appeal Board. Judicial review procedure remains available when the panel has acted unreasonably or outside its powers. The Bill does no more than lay down minimum provisions, such as to require clear separation of rule-making and judicial functions of the panel, in relation to the panel’s decision-making processes. It would be a fundamental departure from that to lay down rules of procedure in the Bill in relation to sanctions. Secondly, there will be a requirement that the regulatory authority publish a policy statement after suitable consultation with regard to the imposition and amount of monetary penalties. We intend that a parallel requirement be imposed on the panel, but in respect of all types of sanction not provided for by the Takeover Code immediately before the Bill is passed. The panel would be required to produce a policy statement in relation to proposed new types of sanction. The panel’s current sanctions regime extends to private reprimand, public censure, reporting the offender’s conduct to another regulatory authority, and taking action for the purposes of the requirements of the Financial Services Authority and certain professional bodies which oblige their members, in certain circumstances, not to act for the offender in a transaction to which the code applies—so-called cold-shouldering. The panel may also remove ““exempt market-maker”” status following breaches of the code. We are requiring the production of a policy statement in respect of any new proposed sanction. That represents a proportionate and balanced response to the concerns raised by the Delegated Powers and Regulatory Reform Committee. I beg to move. On Question, amendment agreed to. Clause 627, as amended, agreed to. Clause 628 [Failure to comply with rules about bid documentation]: