Commentary on Sections 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.