The noble Baroness has called a debate on the purpose of Clauses 72 and 73. It may be helpful if I set out the purpose of these clauses as seen by the Government. They relate to share transfer orders and instruments and property transfer instruments; that is to say, the stabilisation powers. They enable further provision to be made as regards the enforcement of obligations imposed by such instruments and orders, and as regards disputes.
The starting point is that such orders and instruments make changes or impose obligations by operation of law. For example, a share transfer order transfers ownership of shares by operation of law. That is to say, the effect of the order—without more—is to divest the original shareholder of ownership and confer ownership on the transferee. No enforcement mechanism is needed in such circumstances as the order itself has achieved this effect. A former shareholder might attempt to vote his original shares, but any such action would be devoid of consequence as he is no longer the valid owner of the shares. However, the debates on the Bill—and, indeed, the experience of previous resolutions—have shown that this is a highly complicated field where it may be necessary to address a series of complex rights and liabilities in order to make resolutions effective. Given the importance of legal certainty in this area—many noble Lords, including the noble Baroness, have emphasised this point—we consider it prudent to be able to make specific provision about enforcement and disputes.
Clause 72 concerns enforcement. As I have previously stated, it is essential for the achievement of the special resolution regime objectives that the provisions in the orders and instruments take effect with certainty. In certain circumstances, it may be necessary to impose obligations on persons in relation to transfers, which require specific actions to be taken. In such circumstances it may be desirable, and aid certainty, to spell out the specific means by which such obligations are to be enforced. An example of an area where it may be necessary to impose specific obligations can be given in the context of share transfer powers. As I have said before, a share transfer takes effect simply as a result of the order or instrument itself. But shares may be held in a variety of different ways. For example, normally a shareholder of a certificated share must be registered in the register of members of a company in order to exercise the powers of a shareholder, or bearer shares may be held, which enable ownership of the shares to be transferred by physical delivery. In each case the transfer of ownership of such shares by the exercise of share transfer powers would be effective without imposing further obligations. This is the effect of Clause 21. But it may be desirable to impose such obligations to promote legal certainty. So an obligation could be imposed on the registrar to enter the transferee on the register of members, or on the holders of bearer shares to surrender them. If such requirements were not enforceable and relevant persons, such as the registrar, were not to undertake these actions, this would lead to confusion and potentially a lack of confidence in any transfers and the effectiveness of the implementation of the stabilisation procedures.
These obligations therefore aim to ensure that the formal requirements which normally relate to the transfer of shares and which must necessarily be dispensed with to make the transfer immediately effective are updated as soon as is practicable. This clause enables provision to be made about how such obligations are to be enforced, so the procedure is clear. I should note that provision may not include the creation of a criminal offence or the imposition of a penalty, but may confer jurisdiction on a court or tribunal. The Government believe that civil remedies rather than criminal offences better suit the nature of these obligations.
On Clause 73, it is desirable to have a mechanism to have appeals or disputes mechanisms for each of the powers that the Treasury or the Bank of England has under the stabilisation powers. Clause 73 sets out that the share transfer orders, share transfer instruments and property transfer instruments can include provision for disputes to be determined. These provisions can confer jurisdiction on a court or tribunal or specified persons; for example, an appeal panel.
It should be noted that whenever an exercise of stabilisation powers involves a determination of civil rights and obligations—protected by Article 6 of the European Convention on Human Rights—disputes must be determined in a way that respects the protections of Article 6, which provides for procedural fairness. These provisions therefore put our compliance with Article 6 on the strongest footing, and I believe that they have been welcomed by the markets and by commentators.
The noble Baroness asked why there is only the negative procedure. I believe that the parliamentary procedure for these regulations is common. They have been considered by the Delegated Powers and Regulatory Reform Committee to be appropriate.
In summary, both these clauses are workmanlike provisions, and I believe that they are essential to the efficacy and fairness of the powers. I therefore ask the noble Baroness to allow these clauses to stand part of the Bill.