Compensation
Section 35 of the Act provided for compensation to the original owners. Compensation was to be by government bonds against a valuation of the shares over a relevant period of 6 months up to the Labour Party's election on 28 February 1974. For companies listed on the London Stock Exchange, this was the average quoted price over the relevant period. For non-listed shares, the government would negotiate with a shareholders' representative to establish an hypothetical market valuation. If no agreement was reached, the shareholders had recourse to arbitration (ss.36-41). However, section 39 controversially included a provision to make deductions from this base value if a company had dissipated its assets by declaring dividends in anticipation of nationalisation, or by other means.
Read more about this topic: Aircraft And Shipbuilding Industries Act 1977
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