Ownership of the Post Office
Section 4: Restrictions on issue and transfer of shares and share rights in a Post Office company etc
42.This section prohibits a sale of the Post Office by preventing a disposal of the Crown’s interest in a Post Office Company (as defined in section 6) save where the disposal is to a relevant mutual (as defined in section 7). Disposals of the Crown’s interest in a Post Office company to a relevant mutual may be made as a result of either a transfer of existing shares or share rights or an issue of new shares or share rights by a Post Office company.
43.Under subsection (2) the Secretary of State is given powers to make an order to direct a Post Office company to issue shares or share rights to a relevant mutual or to direct a company that owns shares or share rights in a Post Office company to transfer them to a relevant mutual. Such directions may only be given where the company the subject of the direction is wholly owned by the Crown.
44.Subsection (3) deals with issues and transfers of shares or share rights to a relevant mutual other than as a result of a direction by the Secretary of State. In these circumstances, the Secretary of State’s approval by order is required.
45.Subsection (4) provides that any order by the Secretary of State to direct or approve the disposal of the Crown's interest in a Post Office company to a relevant mutual is subject to the affirmative resolution procedure.
46.Subsection (5) ensures that once a relevant mutual has taken ownership of shares or share rights in a Post Office company, it may not transfer them, save where the transfer is to another relevant mutual, the Secretary of State or the Treasury (or a nominee of either of them), or a company wholly owned by the Crown.
47.Should an attempt be made to dispose of the Crown’s interest in a Post Office company in contravention of these restrictions (for example a sale to a company that is not wholly owned by the Crown or a relevant mutual), subsection (6) provides that this would have no effect.
48.Subsection (8) explains what is meant by a disposal of a person’s interest in a Post Office company. In relation to shares, it means an issue or transfer of shares the effect of which is to reduce the proportion of the Post Office company owned by the person. In relation to share rights, it means an issue or transfer of share rights to a person the effect of which would be, if the shares to which those share rights relate were transferred to the person, to reduce the proportion of a Post Office company owned by the person.
49.Section 14 contains provisions which define what is meant by ownership of a company in these circumstances.
Section 5: Report on a transfer of an interest in a Post Office company to a relevant mutual
50.Section 5 requires the Secretary of State, before making any order directing or approving the disposal of the Crown’s interest in a Post Office company to a relevant mutual, whether by the issue or transfer of shares or share rights, to lay a report before Parliament on the issue or transfer in question.
51.Subsection (3) sets out requirements as to the content of the report. A report must give details of the proposed issue or transfer, including the expected time-scale for the issue or transfer. It must also name the body to which shares or share rights are to be issued or transferred. Finally it must explain how that body satisfies the conditions for being a relevant mutual set out in section 7.
Section 6: Meaning of “Post Office company”
52.Subsection (1) defines a Post Office company as one which meets three criteria: the company must be engaged in the provision of post offices (as defined in section 15); the company must also be designated as a Post Office company by order made by the Secretary of State; finally, the company must also be (or have been) either a subsidiary of Royal Mail Holdings plc (referred to in the Act as “the original holding company”) or in the same group as a company that is or was designated as a Post Office company by order made by the Secretary of State. Only if all three criteria are satisfied will the company be a Post Office company for the purposes of the Act.
53.Subsection (2) places a limitation on the circumstances in which the Secretary of State can designate a company under subsection (1). This can only happen if the company is wholly owned by the Crown immediately before designation. Subsection (3) provides that a designation order under subsection (1) may not be amended or revoked.
54.Subsection (4) prevents the commencement of section 1 (removal of restrictions on ownership of Royal Mail Holdings plc etc) until the Secretary of State has designated Post Office Limited as a Post Office company. This provision therefore ensures that at all times the Crown’s ownership of Post Office Limited is subject either to the restrictions set out in sections 65 to 67 of the Postal Services Act 2000, or those in this legislation.
Section 7: Meaning of “relevant mutual”
55.Section 7 sets out the conditions which the Secretary of State must consider are (and will continue to be) met for a body to be a relevant mutual. Under the ownership restrictions in section 4, a relevant mutual is the only body permitted to own shares or share rights in a Post Office company other than the Crown (directly or indirectly).
56.The first condition, set out in subsection (2), is that the purpose (or main purpose) for which the body exists is to act for the public benefit by promoting the use by the public of services provided by a Post Office company or at its post offices.
57.The second condition, set out in subsection (3), is that the members of the body are persons who have an interest in the use by the public of services provided by a Post Office company or at its post offices. This would include employees of the Post Office company and other persons engaged in the provision of the Post Office company’s post offices (for example, subpostmasters). Other members of a relevant mutual could include the Crown, or potentially customers of a Post Office company. Persons who act on behalf of, or represent persons who have an interest in the use by the public of services provided by a Post Office company or at its post offices (for example trustees) are also permitted to be members of a relevant mutual.
58.The third condition, set out in subsection (4), is that the body has in place arrangements for the prevention of disposals of property or rights by the Post Office company that would be inconsistent with the purpose (or main purpose) for which the body exists.
