Company Law Reform Bill [Lords]
Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)
Not that I am aware of. Again, this is one of those clauses with a long history. It dates back to the Trevor v. Whitworth case in the 19th century, in which the House of Lords held that a company could not purchase its own shares as that would result in a reduction in capital. That principle has long been enshrined in company law. We are dealing with section 143 of the 1985 Act. This clause is one of a group of clauses that reinforce that rule. The prohibition is not total because if it were it would make it impossible for companies to do a number of things that are perfectly unobjectionable, such as holding shares in their parent companies as trustees or in the course of a securities dealing business, as permitted by the second EC company law directive. I am not aware of any other issues that have been raised with me.