This Amendment is, in effect, only a drafting Amendment. The purpose of the Clause is to give protection to companies incorporated in the United Kingdom and to their shareholders, officers and so on. There seems to be no clear reason why the same protection should not be given to bond holders, debenture holders and debenture stock holders. As the Amendment is merely for the purpose of completing the protection, I hope the Government will be able to accept it.
I beg to move, in page 68, line 41, to leave out "trading," and to insert "carrying on business."
This is only a drafting Amendment, A doubt was felt as to whether the words "trading in British India" would cover shipping companies concerned solely in running their ships from the United Kingdom to India. The words "carrying on business" will be fairer as applying to that class of traffic.
I beg to move, in page 68, line 41, after "India," to insert "restrictions."
While the provisions of the Clause would save United Kingdom companies in respect of "requirements or conditions" prescribed, it would not seem that they would be safeguarded against a restriction of their right to trade in common with Indian companies and to enter India for that purpose. There have been a good many Amendments accepted dealing with the position of companies trading in India. It is rather difficult to be certain how the companies now stand in respect of trading facilities, but I feel that it is necessary that we should have this protection against restrictions. The question of restrictions has been introduced into previous Clauses and I hope that the Government will accept this Amendment.
In spite of what my hon. Friend has said I suggest that this is not a good Amendment, and I will tell him why. Where you use wide words it is very undesirable to put in a word which has a narrower scope. "Requirements or conditions" are very wide words. It is very difficult to think of a wider word than "conditions," but when you add "requirements" to it, it is very difficult to see what would not probably be described as requirements or conditions. Restriction is only a particular example of requirement or condition, and as you have the widest words in the Clause it would be a great pity, from the drafting point of view, to put in words which are merely one illustration of the wide words which have already been used.
I beg to move, in page 68, line 44, after "company," to insert:
or the situation of its registered office, or the amount of its share or loan capital, or the currency in which such capital is expressed.
Again, I claim that this is only a drafting Amendment. The purpose of the Clause is to prevent any discrimination against companies incorporated in this country, and it is very important that every possible contingency should be foreseen. The Clause as drafted deals only with the place of incorporation of a company. If a company is incorporated in the United Kingdom, to satisfy the requirements of the Companies Act, it would have to have its capital expressed in sterling. It might be that Indian legislation would lay down certain disabilities upon any company which did not have its currency expressed in rupees. In that way there would be discrimination against companies incorporated in the United Kingdom, but in such a form as would in fact prevent any such company from taking advantage of this Clause.
My hon. Friend has restricted his argument to the last provision in his Amendment, which deals with currency. The Amendment as a whole proposes to exempt British companies from any legislation as to the amount of share or loan capital. There might be perfectly proper legislation with regard to insurance companies or banking companies, laying down certain requirements in that matter, and it would not be within the desire of the Committee that there should be any exemption so far as that is concerned. What the Clause does is to exempt British companies from any legislation dealing with either the place of incorporation of the company or, subject to paragraph (b), a requirement that their directors or a proportion of them shall be Indians. These are matters which it is intended to cover. We certainly take the view that to deal with the amount of a company's shareholding or loan capital and also the situation of its registered office would be going too far. The situation of its registered office might be a very important matter for the purpose of serving process for legal proceedings. The narrow point which my hon. Friend raised with regard to currency I will undertake to look into, because I think it would not be within our intentions that a mere question as to the currency in which the loan capital was expressed should be available as a means of discrimination. I cannot give any undertaking that that part of the Amendment will be accepted, but I will undertake that it will be looked into. With regard to the other matters raised in the Amendment, we think that they would be going too far and beyond the intention of the Clause.
I am much obliged to the learned Solicitor-General for, in effect, accepting what I regard as a very important part of the Amendment relating to currency. I can quite understand that there might be cases in which certain restrictions with regard to the amount of capital and the registered office would be fair and reasonable. I can equally imagine that it might be possible to use the power of laying down restrictions of that kind in a way which would be very definitely discriminatory. I can imagine, for example, that in order to assist smaller Indian companies restrictions might be imposed upon companies with larger capital, or benefits given to companies with smaller capital. While recognising what my hon. and learned Friend has said as to the wording of the Amendment not being satisfactory, I hope he will bear in mind, while avoiding the danger that my Amendment has run into, that there is substance in each one of the points raised.
Sir J. WARD LAW-MILNE:
I rather dislike the suggestion that there is something wrong in the wording of the Amendment and I would point out to the hon. and learned Gentleman the example which he himself has given of what might arise in relation to the words "amount of share or loan capital." He gave us as an illustration the case of insurance companies and banks. In the case of companies such as insurance companies and banks in this country certain conditions are laid down and there would be no objection to the same conditions in India but there is a point in regard to the amount of share or loan capital quite apart from the consideration of currency.
I beg to move, in page 69, line 12, at the end, to add:
(2) If and in so far as any total or partial exemption from taxation imposed on companies by or under any Federal or Provincial law depends on compliance with conditions as to any of the matters mentioned in paragraph (b) of Sub-section (1) of this Section, any company incorporated by or under the laws of the United Kingdom carrying on business in British India shall be deemed to satisfy those conditions and be entitled to the exemption accordingly, so long as the taxation imposed by or under the laws of the United Kingdom on companies incorporated by or under the laws of British India and carrying on business in the United Kingdom does not depend on compliance with conditions as to any of the matters so mentioned.
Clauses 112, 113 and 111 all deal with the question of discrimination against companies and Clause 112 has been amended so as to exempt the company itself from differential taxation. Clause 113 is intended to protect from discrimination the shareholders or directors or the personnel connected with the company. This Amendment proposes to add a new Sub-section which will carry that intention into full effect. The new Sub-section deals with discrimination by taxation. It is solely for that purpose and not to effect any new purpose that the Secretary of State has put down this Amendment. The new Sub-section fills up a gap which was observed when the Bill as originally drafted was reconsidered.
I wish to express my gratitude to the right hon. and gallant Gentleman for having moved this Amendment and especially for having made plain the intention that there should be no discrimination in the matter of taxation. I confine myself for the present to saying that I am advised that the wording here is not entirely satisfactory and that the words "exemption from taxation" are particularly open to objection. If there were two different kinds of tax one of which would not fall upon certain people while another which was higher did fall upon those people, it would be difficult to argue that in fact there was an "exemption" from taxation. However as the right hon. and learned Gentleman has made it plain that it is only a matter of drafting and that there is the intention to protect against any discrimination of that kind—and I hope it will also apply to the case of nonresidents—I wish to express my gratitude.