ee PSAITCA PS/Pusc (Trade) Secretery 8/Seeretary (areae) P SELOSURR OW LD GY NOMT: RROD WHERE SHARES ARE TRS CROLN We Hgbthe Zarver of Yarver and Co., doliciters, who ects for the ‘uecn in her private cupeeity, has ap: roacl is wench sbout the isolicctions for the Crow of our uncer the fortheonins Compani Il, to provide With the rivht (provided it is exercised recsonably end Mot Vexetiously) to nev Wo are the beneficial, as opposed #0 the nominel, overs of their shares. Ur soprer wes not only ¢oncerneé thet informetion about cheres heia for the Ousen, ané trensections in thea, could bec public know— ledge (since it uculd eppear on the compsmy's ami thus tue subject of possible controversy. any disclosure of beneficial ownership of shares by the Crown, even if restricted to the uirectore of the ¢ a as potentially embarrassing, becsuse of the risk of leas. Ferrer has accepted an invitation to go into ith us, but has said that he will not be able to do so Tor a few days, until he has tsken instructions from his principalse It seems sensible to aweit this necting before puttin; for- ward proposels for handling the problem; but the secretary of State's office may care to know that it exiuts, in case they should get 2 dircct approach from the Pelece. I do not thik, however, that there will necescerily be an ecsy solution. & specific and limited exemption for the Crown would not help, since the only brneficicl interests wach ule not lieve to be disclosed would be those of the Crown. Lut there are other possibilitics which we will cxplore on 2 provisional basis with Ilr ¥errer, although 1 ain not sure that it will be possible to satisfy hin without redueil undesirable extent the power we intcna to give companies to require the disclosure of beneficial interests generelly. the meeting with ir Sarrer. Armstrong at 40 bour Drukker le discussed th answer 43 that wes tobe able to: vackle the 80 zy answer. gotistuctory answer. It was agreed ti ing sith Yazrer & CO wae nee Sey rs Word with anedetin rae, aa Mr Re < mecbingoalvdngatmnostaye Pk ee t the sa this after, heed much nore Boon infornati 8 8 Dean TAAL TS I have spoken to ir arrer. As I hed recalled Gather, 1 think, his clients - are quite as cone Gver the Pisk of disclosure to directors of a company es fo shareholders and the general public. He justifies ‘this not only because of the risk of inadvertent oP. tnafserect leaking to other people but more be sically because disclosure to any person would be enbarrassing- He had come to winder whether we could not give a Crow tions ‘hen I said that this would surely reveal fhe facts when a company asked for benesicial ownership ind exemption was claimed, he enquired about Government - Departments being concerned too. I said We Were not isposed to exemyt Government holdings, then suggested as a possibility that the Secretary of State order provide for particular holdings to be = beneficially owned by the nominees. I sugges was p more blatant form of the device I had discussed with hin, wiuich he and others hed not liked, of vesting the holdings sd interim in the beneficial ownership of the nominee, and a form that would also be transparent. He toox fright somewhat, emphasized thet the probles taken very seriously and suggested ~ soneuhat tenta! into this quandary end rustper 8@ that was objectionable, In the end he said that he must now seck instruction. 1 would got tis as goon as posible, although it tac a> larly difficult time until next Wednesday (sic). I said we yould also consider further yhwaihad hoped! to finda for them but could not at present see any way other notification in advance to, say, the directors so tha rguest for a stetutory declaration would not be made. will get in touch when he has instructions. I think ve bust now do what you suggested we should cyentually do = warn Ministers. It may well be tiat we shall get 4 come- back through them. Perhaps we ought to consider putting the verious cltornatives 0 them, including putting the onus of justifying a request on the company, n on anyone refusing to comply to persuade ine court that i would be unjustified. If we do adopt this lust Oe eae so well have a (eg, sbsense oF | 2 to write in eri iS Y in the nominee's shares or time since the He gee eae to guide the court or - deplorably - put the on to the Department. Sie ays © M DRURKER eens cP 038 S645 Ext 5 ae ey R 9 NOVERSER 45730 $ elec‘ $604 ~ “a eas fl CONFIDENDIAL DEPARTMENT OF TRADE AND INDUSTRY 1 VICTORIA STREET LONDON SWiH 0ET ‘TEL 01-222 7877 The Minister for Trade © Consumer Affairs The Rt Hon James Pri The shonde Pee Meny bai ve GoReecal sident of the Privy Council Off: ee ha vena — % oni on SW1 (3 December 1973 ew pe When we discussed the Companies Bill at Legislation Com Tuesday (L(73)e9th item 15 ‘one of the problems of which the o& were left unresolved was that raised by the effect of Clause (power of a company to require to know who held the peneficial interest in its shares) on the personal estate of the Queen; 1 under took to consider this matter further, and to let you kaow ny conclusions. mittee OD getails With the help of the Bank of England, my Department nave evolved the ons which will appear in the Bill, The Soonotery on , exercisable in consultation with the Govet— nor of the Bank of England, to exempt from a requirement to disclose peneficial interest in shares the users of any approved nominee com. i pany whom he considers in all the cireunstances should be so exenptees provided that, among any other relevant considerations, give an undertaxing that they will not, while enjoying the exenption, use their interests to influence the affairs of individual companies in” which they have such interests save as shareholders in general neet) ing. The Governor jas in mind that there is a class of investor potential d¥ivestor in United Kingdom secur: tites whom we have evi interest in encoureging, put who might be deterred from hoicing Uk investments if their identity and hence their interests could reads be uncovered. Such a-class could be generally defined to coven, | Heads of State, Governments, ntral monetary authorities, inves boards and international bodics formed by Governments. The inte: would therefore we that the Bank of England woul thonselves or Es eh following soluti State will have a power s ne:CONFIDENTIAL ; s +0 My Department have discussed this solution with the Legal advise’? ves an the Queen; while they cannot of course at this stage commit themrrectly ; to using the suggested new facility, they accept that it jee Eas cot reasonable solution to the problem which they face, and ‘tha’ cessary not ask us to do more. I am therefore arranging that the ne! provisions should appear in the Bill. her ee to the 0 I am sending copies of this letter to the Prime Minister, nd to members of the Pagiaiation Committee, to Margaret Thatcher @ Sir John Hunt. k , ; GEOFFREY HOWE er ea