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Companies Bill [HL]

My Lords, I have two amendments in this group, Amendments Nos. 105A and 106A, and it may be helpful if I address them. The general topic of the rights of indirect investors has concerned us greatly, as the Minister explained. The position of ISAs and the increasing pressure for private shareholders to hold their shares through nominees because of the short settlement dates means that private shareholders have increasingly become disfranchised. APCIMS, the trade association for private clients, now suggests that 80 per cent of private client share dealing is done through nominees. That sort of disfranchisement is not good for the investor or the company, and it is probably not good for the country as a whole. We are very grateful to the Government for having listened to those concerns and for having come up with a proposal that is agreeable to all the parties involved. Clearly, it was an important development. The amendments are in essence a tidying-up issue, because it is clear from the Bill that the clauses on information rights—Amendments Nos. 99 to 104—apply to traded companies only. We understand that at meetings of the stakeholder group that the Minister referred to, it was assumed that Amendments Nos. 105 and 106 were also being discussed with reference to the listed company environment. We are quite happy with the thrust of Amendment No. 105, as it would allow nominees to split their holding, for example, in a rights issue, when there was a choice between cash and shares to reflect the wishes of their underlying clients. We also support Amendment No. 106, as it would allow the indirect investor to get together with others to force the company to do the four things listed in subsection (1)(a) to (d) of the new clause introduced by Amendment No. 106 though three of those are relevant only to public or quoted companies anyway. However, the way that the Bill is drafted makes Amendments Nos. 105 and 106 appear to apply to all companies. We are not arguing that this is necessarily wrong, but we would like a reassurance from the Government that their application to private companies has been thought through. For example, we wonder how Amendment No. 105 would work alongside the pre-emption clauses that private companies often have in their articles. The pre-emption clause may well state that where a member wants to sell his shares, the shares have to be offered to other members in proportion to their holdings, but that each member has to take either all or none of the shares offered to him. We wonder, as an example, whether Amendment No. 105 could be used by a member to take only a proportion of the shares offered, and whether that might have unintended consequences. Some clarification and reassurance from the Minister would be most helpful.