Clause 115
Company Law Reform Bill [Lords]
10:30 am
David Howarth (Shadow Minister (Energy), Trade & Industry; Cambridge, Liberal Democrat)
We return to the question that we debated at the end of last week—the balance between two issues, on which I think both sides of the Committee share the same outlook. On the one side, there is the principle that there should be transparency in share ownership and that people who own shares should be prepared to be contacted by other members of the company and perhaps by members of the public to debate and defend positions in the company. On the other side, there is the problem, which has arisen largely because of animal rights terrorism, of shareholders sometimes being intimidated and threatened with, or actually suffering, physical violence as a result of their shareholding.
We became slightly overheated, and the debate gave the impression that there was a fundamental difference between the parties, but I do not think that there is. The Government’s position is that the principle of absolute transparency must be compromised because of the problem of threats and the intimidation of shareholders. They have rightly introduced a proposal to deal with the problem and to balance the two issues that I mentioned. A company faced with a request for a list of its shareholders is to have the option of complying with that request or going to the court, in which case the court would determine whether the request was made for a proper purpose. The Government have included the additional protection that any person who passes information on for improper purposes commits a crime. Let it not be said, therefore, that their position does not compromise the principle of absolute transparency, because it does.
The question raised by the amendments is simply whether the Government have got the balance between the two things right. The hon. Member for Huntingdon (Mr. Djanogly) proposed a further, although not major shift in the direction of protecting shareholders. He would allow companies to protect their lists of shareholders when there is a threat to those shareholders and when the Secretary of State can be persuaded that that threat is sufficient to close the list.
The Liberal Democrat amendments offer slightly different approaches, but pursue basically the same direction of change. They would slightly shift the degree of protection in favour of shareholders and slightly close the opportunities available to people who want to intimidate shareholders. We offer two possibilities. The first, which is rather simple, is encapsulated in amendment No. 168 and consequential amendments Nos. 170 to 176. All the proposal would do is reverse the burden of proof. Under the Government’s proposal, the company can either comply with the request to hand over its list of shareholders or go to the court. Under our proposal, the slight change would mean that the company could refuse on the ground that the request is improper, and the applicant would have to go to the court. The other amendments are drafting amendments to ensure that the proposal works within the statute.
The reason why we propose the amendments is that there is a legal principle—I guess the court would follow it to interpret the clauses—that the person who asserts something has to prove it, unless the statute says that the burden of proof lies elsewhere. In the normal course of events, he who asserts must prove. The Government have established a system under which, at least initially, the company will have to prove that the purpose is improper. With repeat applications, the Government’s proposal reverses the burden of proof. When people repeatedly go to the court with requests, the Government propose that they are batted back without further argument. Our change is minor, as we propose to change the burden of proof for the first application, too.