Clause 593

Company Law Reform Bill [Lords] – in a Public Bill Committee at 12:45 pm on 20th July 2006.

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Register of debenture holders

Question proposed, That the clause stand part of the Bill.

Photo of John Bercow John Bercow Conservative, Buckingham

With this it will be convenient to take clauses 594 to 599 stand part and Government new clauses 242 to 258.

Photo of Vera Baird Vera Baird Parliamentary Under-Secretary, Department for Constitutional Affairs

Clause 593 and clauses 594 to 599 are included with no change whatsoever in new clauses 242 to 258. I propose that clause 593 should therefore not stand part of the Bill, and new clauses 242 to 258 should. They fall into two groups, those that simply restate provisions that would have been left in the 1985 Act and those that replace clauses in the Bill. New clauses 242 to 244, 246 and 254 to 258 are simply restatements, new clause 245 replaces clause 583 in so far as it applies to the allotment of debentures, new clauses 247 to 253 replace clauses 593 to 599 and new clauses 247 to 251 are substantially different from the current law but provide similar protection for a register of debenture holders to that which the Bill provides for a register of members. I hope that my fluent persuasion has persuaded everybody that that is the course that we should take.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

We move briefly to part 20, which concerns debentures. They are obviously instruments that create rights of holders in respect of the company, often constituted by deed polls and other instruments. I have a couple of questions on the clauses and I reserve our rights to further reflect on the new clauses over the summer recess.

In the existing clauses, which are in large part repeated in the new provisions, clause 595 provides a right of challenge by the company in the event that there is a request for inspection or a copy of a register of debenture holders. In many ways, it reflects clause 116, which concerns the rights of inspection of a share register and the ability of the company to challenge on that. Obviously, the clause mirrors in part the regime that governs the share register, but clause 119 provides a provision on share registers whereby the company must provide a copy and must inform on the most recent date to which the register has been made up to. I note that there are certain differences between the registers, but I seek clarification on why such a provision does not appear to be included in the clauses and in the new clauses.

Clause 599 entitles the holders of debentures on request to be provided with a copy of any trust deed for securing the debentures. The term “debenture” in law unfortunately has a number of different definitions. The reference to “securing” prompts a slight conundrum in that regard, as a debenture can denote almost a loan note or some kind of loan stock that a company has constituted to the holder thereof, or a type of security—in other words, a charge over the company’s assets. Although I did not table an amendment to the new clauses, I ask the Minister to consider the phrase “securing the debentures” in clause 599, given the possible double meaning, and consider whether the phrase “regulating or otherwise  constituting the terms and condition of the debentures” might offer further clarity when we come back to the more detailed examination of the provisions on Report.

Photo of Vera Baird Vera Baird Parliamentary Under-Secretary, Department for Constitutional Affairs

I certainly accept the second point and, yes, we shall reflect on that. On the first point, I may have to write to the hon. Gentleman. [Interruption.] Or I may not.

Photo of Vera Baird Vera Baird Parliamentary Under-Secretary, Department for Constitutional Affairs

I shall look at it the other way up. The provision to which the hon. Member for Hornchurch (James Brokenshire) refers is no longer in existence. The date on which someone becomes a member is much more important. Does that help? If it does not I shall write with a fuller explanation.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I am grateful for the Minister’s initial response. I appreciate that there is sensitivity about the time when someone becomes a member. There could also be sensitivity about the time when someone becomes a debenture holder, and the question was therefore whether consideration could be given to reflecting clause 119 in the debenture holder regime. Nevertheless, I am comforted by the Minister’s comments.

Question put and negatived.

Clause 593 disagreed to.

Clauses 594 to 599 disagreed to.