We move on to part 24, which deals with takeovers. I congratulate my hon. Friend the Member for Putney on her first foray on the Front Bench. I think that we will hear a lot more of her from the Front Bench in due course; she was remarkably competent and polished.
Part 24 was the subject of significant debate in the other place. In Lords Grand Committee, Lord Goldsmith spent some time explaining the reasons for the statutory codification of the takeover panel’s rule-making power. Lord Hodgson and Lady Noakes gave the provisions no little attention, and many amendments were considered.
Therefore, I do not propose a total rerun of the Lords debates, although I recognise at the outset that City lawyers and many others still have concerns that the act of codification will lead to more court cases and precedents and that aspects of the European directives still remain unclear. We wish to cover some areas, albeit in a more directed and limited way than in the other place.
The explanatory notes confirm that the Bill will not affect the availability of judicial review by the courts. In the 1987 Datafin case, the Court of Appeal concluded that the courts could limit themselves only to reviewing the panel’s decision-making process after the bid has been concluded. Does the Minister consider that the Bill’s provisions will lead to further restriction of the grounds for judicial review?
Also, there was a discrepancy between the timing of the Bill and the need for the provisions, which resulted in the provisions being introduced by statutory instrument. Can the Minister confirm that no implementation problems that we should consider have arisen since the order?
I note that the substantial acquisitions rules have now been abolished by the panel. That seems to have been generally well received. Will the Minister confirm that that is so?
Clause 642 confers regulatory functions laid down in the remainder of part 24, deals with the Panel on Takeovers and Mergers, and is a key part of the proposed package to implement the European directive on takeover bids that requires the Government, among other things, to designate a body competent to supervise takeovers.
Since 1968, takeover regulation in the UK has been overseen by the panel administering the rules contained in the non-statutory City code on takeovers and mergers. The Bill will place the regulatory activity panel within a statutory framework for the first time. The Government recognise the considerable strengths of the existing system of takeover regulations which is overseen by the panel, including its flexibility, speed and certainty in decision making, the independence of the regulatory autonomy of the panel, and the professional expertise of business and City participants that the panel is able to harness in undertaking its regulatory functions.
A key objective of the Government in implementing the takeover directive has been to preserve those strengths. The City has welcomed that. The regulatory functions conferred on the panel under part 24 are designed to cover broadly those matters for which the panel has historically had regulatory responsibility, including takeovers of companies whose shares are traded on a regulated market, as required by the takeovers directive. It goes wider, too, and includes takeovers of other public and former public companies and certain other types of corporate restructuring transactions, such as mergers. That approach will preserve the single regime for non-directive-related takeovers that receive support from the City.
Consistent with the implementation objective maintaining the regulatory independence of the panel, the clause does not deal in substance with the panel’s constitution and internal arrangements. The panel will be able, as it does now, to delegate functions to committees, members of staff and so forth. The panel will remain an unincorporated body as constituted from time to time and, as such, will have rights and obligations under common law that are supplemented by specific provisions in the Bill.
We are not aware of any problems arising since the implementation of the interim regime in May 2006. Will there be more judicial reviews? The Bill is not supposed to change, limit or alter the position regarding judicial reviews, and substantial acquisition rules have been abolished.
Will the Minister deal with my point about the Datafin case of 1987, in which the Court of Appeal concluded that the courts could limit themselves only to reviewing the panel’s decision-making process after the bid had been finished? Does she consider that the provisions of the Bill will lead to a further restriction of the grounds for judicial review?