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Commonwealth Development Corporation Act 1999

Miscellaneous

Section 18: Crown share-holding

51.This section entrenches the Government involvement in CDC so that certain changes to the position can only take place with Parliamentary approval. Government involvement will have two main aspects. First, it is intended that the Government should hold at least 25% of the issued ordinary share capital of CDC. Second, the Government’s special share, to consist of one special rights redeemable preference share of £1 in the capital of CDC, gives the Secretary of State certain rights under the articles of association of CDC in relation to the Government’s role in the intended public/private partnership. For example, the articles of association will not allow the investment policy of CDC to be altered without the consent of the special shareholder. Section 18 will prevent the Secretary of State from reducing his shareholding below 25%, losing his special share, or varying any rights under the articles in relation to it, without Parliamentary approval.

52.Subsection (1) places a duty on the Secretary of State to ensure that the government holds (within the meaning of section 24) at least 25% of CDC’s issued ordinary share capital and also ensures that the Government will continue to hold any special share (described in section 18(2)) in CDC.

53.If the Secretary of State wishes either to reduce the Crown shareholding in CDC below 25% or, for example, to require CDC to redeem the special share under the articles of association of CDC, he will have to seek Parliament’s approval to do so (by making an order under section 18(5)): see paragraph 56 below.

54.Subsection (3) prevents the Secretary of State from consenting to any alteration of CDC’s articles of association which requires his consent as special shareholder unless a statement of the intended consent has been laid before and approved by resolution of Parliament. This means that the Secretary of State would not be able to consent, without Parliamentary approval, to a change in the articles of association so that, for example, he gave up his right of veto as regards any alteration to the investment policy of CDC. The Secretary of State’s duty under section 18(1) will continue notwithstanding any change to the articles under this subsection.

55.Subsection (4) makes it clear that the title of a third party relating to shares in CDC, would not be affected if, for example, the Crown’s shareholding inadvertently fell below 25% as a result of a sale, for instance, to that third party.

56.Subsection (5) gives the Secretary of State powers to amend or repeal the section. The Secretary of State could return to Parliament therefore for approval to a restructuring of CDC or, for example, in relation to a change of policy as regards the extent of Government involvement in CDC so that, for instance, he was absolved from the duty to ensure that the Government maintained a 25% share-holding in the company.

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