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Companies Bill [HL]

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 97 to 104. I am pleased to be able to return to the House with a new package of clauses in Part 9 of the Bill that enables indirect investors both to enjoy information rights and, via the registered member, to exercise voting and other governance rights. As I made clear when we debated this part previously, the Government are firmly committed to promoting a long-term investment culture through the wide participation of shareholders and the responsible exercise of share ownership rights. That is one of the key themes consistent throughout the Companies Bill. It is right that everyone who invests in shares, whether directly in a company or through a nominee broker, should be able to enjoy and exercise much the same rights. If indirect investors—that is those holding shares through a nominee—wish to exercise shareholder governance rights, they should be able to do so. Our key concern has been that broader enfranchisement must be achieved in a way that is proportionate, offers flexibility and avoids imposing undue burdens on any parties involved, whether on issuers, investors or intermediaries. That is why we resisted the amendments tabled by the noble Lord, Lord Hodgson, in Committee and on Report. As many business representatives will have told him, the amendments were burdensome, unworkable and created great uncertainties. However, we recognise that noble Lords reflected a view that we should go further in enfranchising indirect investors. I am pleased therefore that following a series of intense discussions in late spring and early summer with key interested parties, involving those both behind and against the original amendments, we were able to find consensus on a workable solution to strengthen the position of indirect investors in the Bill without imposing disproportionate burdens on business. For the benefit of those who have not followed the debate on this part in the other place, let me just explain briefly how the new provisions will operate. Broadly, the new clauses provide that indirect investors can be nominated to receive company mailings. It is up to the registered member, typically a broker, to decide whether to nominate. The registered member will be able to appoint indirect investors as proxies under the provisions of Part 13 to exercise voting rights. Clauses at the end of the new Part 9 make it easier for registered members to exercise rights in different ways to reflect underlying holdings and allow indirect investors to participate in, for example, requests for resolutions at the AGM. We think this is a balanced and fair package, which should lead to much greater involvement for the large proportion of small investors who hold shares through ISAs, PEPs or nominees. In short, the new Part 9 provisions are good news both for small investors and for quoted companies. Moved, That the House do agree with the Commons in their Amendments Nos. 97 to 104.—(Lord Sainsbury of Turville.)