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Companies Bill [HL]

My Lords, within this group I have two amendments, Amendments Nos. 984A and 984B, to disagree with Amendment No. 984 and insert different wording. Amendment No. 984B is not quite as draconian as it appears, because the latter half of the amendment is the same. It just has these words at the beginning, "““and provided that this subsection shall be without prejudice to the rights of any person which have accrued prior to this section being brought into force””." As I understand it, the Government’s intention in subsection (2) is to confer the benefit of the new statutory compensation regime only on persons who, first, have acquired securities and, secondly, who have suffered loss as a result of relying on a publication containing an untrue or misleading statement or omission made knowingly or recklessly. Subsection (5) eliminates whatever common law other rights shareholders or any other persons may have, save as provided in subsection (7). As a result, subsection (5) will eliminate the rights of a much wider category of persons than will be protected by the new compensation regime in subsection (2). While that may be acceptable looking forward from the date the regime takes effect, it would not be appropriate for it to operate retrospectively so as to eliminate accrued rights of shareholders and other persons. The effect of the amendment is to preserve those accrued rights, including those of existing shareholders whose rights will be eliminated by the new regime. Although it is a principle of statutory construction that a statute should be presumed not to apply retrospectively unless the contrary intention appears, it is preferable to make the position clear in the statute in order to avoid any uncertainty. The new liability clauses were originally in symmetry, but following an amendment introduced by Margaret Hodge in Committee in the other place on 6 July, that symmetry was lost. The upshot of this appears to be to confer compensation rights on non-shareholders who acquire shares on the basis of untrue and misleading transparency disclosures and at the same time take away whatever rights existing shareholders may have in respect of such untrue misleading statements. We argue that this is surely a counter-intuitive outcome. In any case, the Government should ensure that the common law rights of existing shareholders, which will be eliminated by the new regime, should be within the remit of the forthcoming review of the liability compensation regime by Professor Paul Davies to which the Minister referred.