Postal Services Act 2011

Postal Services Act 2011

2011 CHAPTER 5

Commentary on Sections

Part 1: Restructuring of Royal Mail Group

Ownership of the Royal Mail

Section 2: Report on decision to dispose of shares in a Royal Mail company etc

31. This section places a duty on the Secretary of State to report to Parliament when a decision has been made to undertake a relevant disposal of shares or share rights in a Royal Mail company owned by the Crown. The Secretary of State also has a duty to report if he has decided that another person (e.g. Royal Mail Holdings plc or Royal Mail Group Limited) may undertake such a disposal.

32. The Secretary of State’s report must include: the kind of disposal that will be undertaken, e.g. whether it is subject to an auction or an Initial Public Offering; the timescale for the disposal process; and the objective intended to be achieved by the disposal.

33. The Secretary of State's report must also give information about the expected commercial relationship, after the proposed disposal, between the Royal Mail company in question and any Post Office company (as defined in section 6).

34. When shares are proposed to be put into the employee share scheme (as defined in section 3) for the first time, the Secretary of State's report must also give details of the scheme.

35. A relevant disposal is defined in subsection (5) as the issue or transfer of shares or share rights that reduces the proportion of a Royal Mail company owned by the Crown.

36. Subsection (6) defines a Royal Mail company as a company that provides a universal postal service and is or has been in the same group as:

a)

Royal Mail Holdings plc (“the original holding company”) or

b)

another company that is or has at any time been a Royal Mail company

37. The latter is intended to ensure that the definition covers any companies providing a universal postal service that may no longer be a subsidiary of Royal Mail Holdings plc when a relevant disposal is made.