Small Business, Enterprise and Employment Bill (HC Bill 11)

Small Business, Enterprise and Employment BillPage 170

Offences for failing to comply with notices

13 (1) A person to whom a notice under section 790D or 790E is
addressed commits an offence if the person—

(a) fails to comply with the notice, or

(b) 5in purported compliance with the notice—

(i) makes a statement that the person knows to be false
in a material particular, or

(ii) recklessly makes a statement that is false in a
material particular.

(2) 10Where the person is a legal entity, an offence is also committed by
every officer of the entity who is in default.

(3) A person does not commit an offence under sub-paragraph (1)(a)
(or sub-paragraph (2) as it applies in relation to that sub-
paragraph) if the person proves that the requirement to give
15information was frivolous or vexatious.

(4) A person guilty of an offence under this paragraph is liable—

(a) on conviction on indictment, to imprisonment for a term
not exceeding two years or a fine (or both);

(b) on summary conviction—

(i) 20in England and Wales, to imprisonment for a term
not exceeding twelve months or to a fine (or both);

(ii) in Scotland, to imprisonment for a term not
exceeding twelve months or to a fine not exceeding
the statutory maximum (or both);

(iii) 25in Northern Ireland, to imprisonment for a term
not exceeding six months or to a fine not exceeding
the statutory maximum (or both).

Offences for failing to provide information

14 (1) A person commits an offence if the person—

(a) 30fails to comply with a duty under section 790G or 790H, or

(b) in purported compliance with such a duty—

(i) makes a statement that the person knows to be false
in a material particular, or

(ii) recklessly makes a statement that is false in a
35material particular.

(2) Where the person is a legal entity, an offence is also committed by
every officer of the entity who is in default.

(3) A person guilty of an offence under this paragraph is liable—

(a) on conviction on indictment, to imprisonment for a term
40not exceeding two years or a fine (or both);

(b) on summary conviction—

(i) in England and Wales, to imprisonment for a term
not exceeding twelve months or to a fine (or both);

(ii) in Scotland, to imprisonment for a term not
45exceeding twelve months or to a fine not exceeding
the statutory maximum (or both);

Small Business, Enterprise and Employment BillPage 171

(iii) in Northern Ireland, to imprisonment for a term
not exceeding six months or to a fine not exceeding
the statutory maximum (or both).

Part 2 5Related amendments

3 The Companies Act 2006 is amended as follows.

4 In section 9 (registration documents), in subsection (4), at the end of
paragraph (c) insert ;

(d) a statement of initial significant control (see section 12A).

5 10After section 12 insert—

12A Statement of initial significant control

(1) The statement of initial significant control required to be delivered to
the registrar must—

(a) state whether, on incorporation, there will be anyone who
15will count for the purposes of section 790M (register of
people with significant control over a company) as either a
registrable person or a relevant legal entity in relation to the
company,

(b) include the required particulars of anyone who will count as
20such, and

(c) include any other matters that on incorporation will be
required (or, in the absence of an election under section
790W, would be required) to be entered in the company’s
PSC register by virtue of section 790M.

(2) 25It is not necessary to include under subsection (1)(b) the date on
which someone becomes a registrable person or a relevant legal
entity in relation to the company.

(3) If the statement includes required particulars of an individual, it
must also contain a statement that those particulars are included
30with the knowledge of that individual.

(4) “Registrable person”, “relevant legal entity” and “required
particulars” have the meanings given in Part 21A (see sections 790C
and 790K).

6 In section 1068 (registrar’s requirements as to form, authentication and
35manner of delivery), in subsection (6A) (inserted by Schedule 5 to this Act),
after “central register)” insert “or Chapter 4 of Part 21A (option to keep PSC
information on central register)”.

7 In section 1087 (material not available for public inspection), in subsection
(1), after paragraph (ba) insert—

(bb) 40information to which sections 240 to 244 are applied by
section 790ZE(1) (residential addresses of people with
significant control over the company) or any corresponding
provision of regulations under section 1046 (overseas
companies);

Small Business, Enterprise and Employment BillPage 172

(bc) information that, by virtue of regulations under section
790ZF or any corresponding provision of regulations under
section 1046, the registrar must omit from the material on the
register that is available for inspection;.

8 5In section 1136 (regulations about where certain company records to be kept
available for inspection), in subsection (2), after the entry for section 743
insert—

  • section 790M (register of people with significant control over a
    company);

  • 10section 790Y (historic PSC register);.

9 In Schedule 8 (index of defined expressions), in the appropriate places
insert—

legal entity (in Part 21A) section 790C(7)”,
“PSC register section 790C(10)”,
“registrable person (in Part
21A)
15section 790C(5)”,
“relevant legal entity (in Part
21A)
section 790C(8)”,
“significant control (in Part
21A)
section 790C(2).
20

Section 73

SCHEDULE 4 Abolition of share warrants to bearer

Part 1 Arrangements for conversion and cancellation of existing share warrants

25Right of surrender during surrender period

1 (1) This paragraph applies in relation to a company which has issued a share
warrant which has not been surrendered for cancellation before the day on
which section 73 comes into force (the “commencement date”).

(2) During the period of 9 months beginning with the commencement date (the
30“surrender period”) the bearer of the share warrant has a right of surrender
in relation to the warrant.

(3) For the purposes of this Schedule, if the bearer of a share warrant has a right
of surrender in relation to the warrant, the bearer is entitled on surrendering
the warrant for cancellation—

(a) 35to have the bearer’s name entered as a member in the register of
members of the company concerned, or

(b) where an election is in force under section 128B of the Companies Act
2006 (option to keep membership information on central register) in

Small Business, Enterprise and Employment BillPage 173

respect of the company, to have the bearer’s name and other
particulars delivered to the registrar, and the document containing
that information registered by the registrar and the date recorded, as
if the information were information required to be delivered under
5section 128E of that Act.

(4) A company must, as soon as reasonably practicable and in any event before
the end of the period of 2 months beginning with the day on which a share
warrant is surrendered for cancellation pursuant to a right of surrender,
complete and have ready for delivery the certificates of the shares specified
10in the warrant.

(5) If a company fails to comply with sub-paragraph (4) an offence is committed
by every officer of the company who is in default.

2 (1) A company must, as soon as reasonably practicable and in any event before
the end of the period of 1 month beginning with the commencement date,
15give notice to the bearer of a share warrant issued by the company of—

(a) the bearer’s right of surrender,

(b) the consequences of not exercising that right before the end of the
period of 7 months beginning with the commencement date (see
paragraph 3),

(c) 20the fact that the right will cease to be exercisable at the end of the
surrender period, and

(d) the consequences of not exercising the right before the end of that
period (see in particular paragraphs 5, 6 and 9 to 12).

(2) If a company fails to comply with this paragraph an offence is committed by
25every officer of the company who is in default.

Consequences of failure to surrender during first 7 months of surrender period

3 (1) This paragraph applies in relation to a share warrant of a company which
has not been surrendered by the bearer for cancellation before the end of the
period of 7 months beginning with the commencement date.

(2) 30Any transfer of, or agreement to transfer, the share warrant made after the
end of that period is void.

(3) With effect from the end of that period, all rights which are attached to the
shares specified in the warrant are suspended (including any voting rights
and any right to receive a dividend or other distribution).

(4) 35The company must pay into a separate bank account that complies with sub-
paragraph (5) any dividend or other distribution which the bearer of the
share warrant would, but for the suspension, have been entitled to receive.

(5) A bank account complies with this sub-paragraph if the balance of the
account—

(a) 40bears interest at an appropriate rate, and

(b) can be withdrawn by such notice (if any) as is appropriate.

(6) If the share warrant is subsequently surrendered in accordance with this
Schedule—

(a) the suspension ceases to have effect on surrender, and

(b) 45the suspension period amount must be paid to the bearer by the
company.

Small Business, Enterprise and Employment BillPage 174

(7) The “suspension period amount”, in relation to a share warrant, is—

(a) the aggregate amount of any dividends or other distributions which
the bearer of the warrant would, but for the suspension, have been
entitled to receive, plus

(b) 5any interest accrued on that amount.

Second notice of right to surrender

4 (1) A company must, before the end of the period of 8 months beginning with
the commencement date, give further notice to the bearer of a share warrant
of the company of—

(a) 10the bearer’s right of surrender,

(b) the consequences of not having exercised the right of surrender
before the end of the period of 7 months beginning with the
commencement date (see paragraph 3), and

(c) the matters referred to in paragraph 2(1)(c) and (d).

(2) 15If a company fails to comply with this paragraph an offence is committed by
every officer of the company who is in default.

Expiry of right to surrender and applications for cancellation of outstanding share warrants

5 (1) This paragraph applies in relation to a company which has issued a share
warrant which has not been surrendered for cancellation before the end of
20the surrender period.

(2) The company must, as soon as reasonably practicable and in any event
before the end of the period of 3 months beginning with the day after the end
of the surrender period, apply to the court for an order (referred to in this
Schedule as a “cancellation order”) cancelling with effect from the date of the
25order—

(a) the share warrant, and

(b) the shares specified in it.

(3) The company must give notice to the bearer of the share warrant of the fact
that an application has been made under this paragraph before the end of
30the period of 14 days beginning with the day on which it is made; and the
notice must include a copy of the application.

(4) If a company fails to comply with sub-paragraph (2) or (3) an offence is
committed by every officer of the company who is in default.

(5) A company must, on making an application for a cancellation order,
35immediately give notice to the registrar.

(6) If a company fails to comply with sub-paragraph (5) an offence is committed
by—

(a) the company, and

(b) every officer of the company who is in default.

40Cancellation orders and suspended cancellation orders

6 (1) The court must make a cancellation order in respect of a share warrant if, on
an application under paragraph 5, it is satisfied that—

Small Business, Enterprise and Employment BillPage 175

(a) the company has given notice to the bearer of the share warrant as
required by paragraphs 2 and 4, or

(b) the bearer had actual notice by other means of the matters mentioned
in paragraph 2(1).

(2) 5If, on such an application, the court is not so satisfied, it must instead make
a suspended cancellation order in respect of the share warrant.

(3) A “suspended cancellation order” is an order—

(a) requiring the company to give notice to the bearer of the share
warrant containing the information set out in sub-paragraph (4)
10before the end of the period of 5 working days beginning with the
day the order is made,

(b) providing that the bearer of the share warrant has a right of
surrender during the period of 2 months beginning with the day the
order is made (referred to in this Schedule as “the grace period”), and

(c) 15if the share warrant is not so surrendered, cancelling it and the shares
specified in it with effect from the end of the grace period.

(4) A notice required to be given by a suspended cancellation order must—

(a) inform the bearer of the share warrant of the fact that the bearer has
a right of surrender during the grace period,

(b) 20inform the bearer of the consequences of not having exercised that
right before the end of the period of 7 months beginning with the
commencement date (see paragraph 3), and

(c) explain that the share warrant will be cancelled with effect from the
end of the grace period if it is not surrendered before then.

(5) 25Where a share warrant is cancelled by an order under this paragraph, the
company concerned must, as soon as reasonably practicable—

(a) enter the cancellation date in its register of members, or

(b) where an election is in force under section 128B of the Companies Act
2006 (option to keep membership information on central register) in
30respect of the company, deliver that information to the registrar as if
it were information required to be delivered under section 128E of
that Act.

(6) In this Schedule “the cancellation date”, in relation to a share warrant, means
the day its cancellation by a cancellation order or suspended cancellation
35order takes effect.

Registration of reduction of share capital

7 (1) This paragraph applies in relation to a company if a share warrant of the
company and the shares specified in it are cancelled by a cancellation order
or a suspended cancellation order.

(2) 40The company must, before the end of the period of 15 days beginning with
the cancellation date, deliver to the registrar—

(a) a copy of the order,

(b) in the case of a suspended cancellation order, a statement confirming
that the share warrant and the shares specified in it have been
45cancelled by the order with effect from the cancellation date, and

(c) a statement of capital.

Small Business, Enterprise and Employment BillPage 176

(3) The statement of capital must state with respect to the company’s share
capital as reduced by the cancellation of the share warrant and the shares
specified in it—

(a) the total number of shares of the company,

(b) 5the aggregate nominal value of those shares,

(c) the aggregate amount (if any) unpaid on those shares (whether on
account of their nominal value or by way of premium), and

(d) for each class of shares—

(i) such particulars of the rights attached to the shares as are
10prescribed by the Secretary of State under section 644(2)(c)(i)
of the Companies Act 2006,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class.

(4) If the company fails to comply with this paragraph an offence is committed
15by—

(a) the company, and

(b) every officer of the company who is in default.

(5) In the case of a public company, a statement of capital delivered under this
paragraph is to be treated as a document subject to the Directive disclosure
20requirements for the purposes of the Companies Act 2006 (see section 1078
of that Act).

Reduction of share capital below authorised minimum in case of public company

8 (1) This paragraph applies where the court makes a cancellation order or a
suspended cancellation order in relation to a public company and—

(a) 25in the case of a cancellation order, the order has the effect of bringing
the nominal value of its allotted share capital below the authorised
minimum, or

(b) in the case of a suspended cancellation order, the order may have
that effect from the end of the grace period.

(2) 30The registrar must not register the cancellation order or (as the case may be)
the suspended cancellation order if it has that effect from the end of the grace
period unless—

(a) the court so directs in the order concerned, or

(b) the company is first re-registered as a private company.

(3) 35The expedited procedure for re-registration provided by section 651 of the
Companies Act 2006 applies for the purposes of this paragraph as it applies
for the purposes of section 650 of that Act.

(4) Where the court makes an order under section 651 of that Act in connection
with a suspended cancellation order, the order under section 651 must be
40conditional on the suspended cancellation order having the effect
mentioned in sub-paragraph (1)(b) from the end of the grace period.

Payment into court in connection with cancellation

9 (1) Where a share warrant is cancelled by a cancellation order or suspended
cancellation order, the company concerned must, before the end of the
45period of 14 days beginning with the cancellation date, make a payment into
court of an amount equal to—

Small Business, Enterprise and Employment BillPage 177

(a) the aggregate nominal value of the shares specified in the warrant
and the whole of any premium paid on them, plus

(b) the suspension period amount.

(2) If a company fails to comply with sub-paragraph (1) an offence is committed
5by every officer of the company who is in default.

10 (1) A person who, at the end of the period of 7 months beginning with the
commencement date, was the bearer of a share warrant which has been
cancelled by a cancellation order or a suspended cancellation order may
apply to the court for the sum paid into court under paragraph 9(1) in
10respect of the shares specified in the warrant to be paid to that person.

(2) Such an application may only be made during the period—

(a) beginning with the day which is 6 months after the cancellation date,
and

(b) ending with the day which is 3 years after the cancellation date.

(3) 15The court may grant an application under sub-paragraph (1) only if it is
satisfied that there are exceptional circumstances justifying the failure of the
bearer of the share warrant to exercise the right of surrender—

(a) in the case of a warrant cancelled by a cancellation order, before the
end of the surrender period, or

(b) 20in the case of a warrant cancelled by a suspended cancellation order,
before the end of the grace period.

11 (1) This paragraph applies in relation to a company in respect of which a
cancellation order or suspended cancellation order has been made if any of
the following is appointed in relation to the company after the cancellation
25date—

(a) an administrator;

(b) an administrative receiver;

(c) a liquidator;

and that person is referred to in this paragraph as the “office-holder”.

(2) 30The office-holder may apply to the court for the sum paid into court under
paragraph 9(1)(a) to be paid to the office-holder by way of a contribution to
the company’s assets.

(3) Such an application may only be made during the period—

(a) beginning with the cancellation date, and

(b) 35ending with the day which is 3 years after that date.

12 (1) Anything left of a sum paid into court under paragraph 9(1) immediately after the
end of the period mentioned in paragraph 11(3) must be paid into the Consolidated
Fund.

(2) Sub-paragraph (1) does not apply to any amount in respect of which an
40application under paragraph 10(1) or 11(2) has been made but not yet
determined before the end of that period unless and until the application is
dismissed and either—

(a) the period for bringing an appeal against the dismissal has expired,
or

(b) 45in a case where an appeal is brought before the end of that period, the
appeal is dismissed, abandoned or otherwise ceases to have effect.

Small Business, Enterprise and Employment BillPage 178

Company with outstanding share warrants: prohibition on striking off

13 (1) An application under section 1003 of the Companies Act 2006 (application
for voluntary striking off) on behalf of a company must not be made at a time
when there is a share warrant issued by the company.

(2) 5It is an offence for a person to make an application in contravention of this
section.

(3) In proceedings for such an offence it is a defence for the accused to prove
that the accused did not know, and could not reasonably have known, of the
existence of the share warrant.

10Notices

14 (1) A notice required by virtue of any provision of this Schedule to be given to
the bearer of a share warrant must be—

(a) published in the Gazette,

(b) communicated to that person in the same way (if any) as the
15company concerned normally communicates with that person for
other purposes relating to the shares specified in the warrant, and

(c) made available in a prominent position on the company’s website (if
it has one) during the period mentioned in sub-paragraph (2) (and
see sub-paragraph (3)).

(2) 20That period is the period beginning with the day on which the notice is
published in the Gazette and ending with—

(a) in the case of a notice required by paragraph 2, the day on which a
notice required by paragraph 4 is made available on the company’s
website;

(b) 25in the case of a notice required by paragraph 4, the day on which a
notice required by paragraph 5(3) is made available on the
company’s website;

(c) in the case of a notice required by paragraph 5(3), the day on which
the court makes a cancellation order or (as the case may be)
30suspended cancellation order in respect of the share warrant;

(d) in the case of a notice required by virtue of paragraph 6(3)(a), the end
of the grace period.

(3) Nothing in this paragraph requires a notice to be made available on the
company’s website after the day on which the last of the share warrants
35issued by the company to be surrendered is surrendered.

(4) Sections 1144 to 1148 of the Companies Act 2006 (company communications
provisions) apply for the purposes of this Part of this Schedule as they apply
for the purposes of the Companies Acts.

Application of sections 1112 and 1113 of the Companies Act 2006

15 40Sections 1112 (general false statement offence) and 1113 (enforcement of
company’s filing obligations) of the Companies Act 2006 apply for the
purposes of this Part of this Schedule as they apply for the purposes of the
Companies Acts.

Small Business, Enterprise and Employment BillPage 179

Offences

16 For the purposes of any offence under this Part of this Schedule a shadow
director is treated as an officer of the company.

17 (1) A person guilty of an offence under paragraph 1(5) of this Schedule is liable
5on summary conviction to a fine not exceeding level 3 on the standard scale
and, for continued contravention, a daily default fine not exceeding one-
tenth of level 3 on the standard scale.

(2) A person guilty of an offence under any other provision of this Schedule is
liable—

(a) 10on conviction on indictment, to a fine;

(b) on summary conviction—

(i) in England and Wales, to a fine;

(ii) in Scotland or Northern Ireland, to a fine not exceeding the
statutory maximum.

18 15The following sections of the Companies Act 2006 apply for the purposes of
this Part of this Schedule as they apply for the purposes of the Companies
Acts—

(a) sections 1121 and 1122 (liability of officer in default);

(b) section 1125 (meaning of “daily default fine”);

(c) 20sections 1127 and 1128 (general provision about summary
proceedings).

Interpretation

19 (1) In this Part of this Schedule—

  • “cancellation date” has the meaning given by paragraph 6(6);

  • 25“cancellation order” has the meaning given by paragraph 5(2);

  • “commencement date” has the meaning given by paragraph 1(1);

  • “grace period” has the meaning given by paragraph 6(3)(b);

  • “surrender period” has the meaning given by paragraph 1(2);

  • “suspended cancellation order” has the meaning given by paragraph
    306(3);

  • “suspension period amount” has the meaning given by paragraph 3(7);

  • “right of surrender” has the meaning given by paragraph 1(3).

(2) Expressions defined for the purposes of the Companies Act 2006 have the
same meaning in this Part of this Schedule as in that Act.

35Part 2 Consequential amendments

20 The Companies Act 2006 is amended as follows.

21 In section 122 (share warrants)—

(a) for subsections (1) and (2) substitute—

(1) 40Until a share warrant issued by a company is surrendered the
following are deemed to be the particulars required to be
entered in the register of members in respect of the warrant—