Clause 98
Company Law Reform Bill [Lords]
2:15 pm
Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)
These probing amendments are designed to test the relevance and adequacy of the clause, which is clearly a pressure-valve clause. The situation envisaged would typically be related to a bid for a public company. The acquirer will normally wish to acquire at least 75 per cent. of the shares of the target, because at that level of ownership a resolution can be passed to make the target a private company. That in turn is important, because only private companies can use their own assets to give bank security for the purchase of their own shares. In other words, the purchaser uses the assets of the target to finance the transaction.
The clause—I appreciate that the provision is in the 1985 Act—provides holders of at least 5 per cent. of the company with the right to apply to the court to have the resolution to re-register capital. Does the Minister think that the clause is still necessary? Can she provide us with details of how often it has been invoked and whether any assessment has been made of its effectiveness? Is 5 per cent. still considered the right number of shareholders who need to complain? I have suggested 10 per cent. on a probing basis, but maybe the figure could be less than 5 per cent. We would be interested to hear her views.