Corporate Insolvency and Governance Bill (HC Bill 128)

notice, to be provided by the company with a copy of the statement
free of charge.

(5) If a company makes default in complying with any requirement of
this section, an offence is committed by—

(a) 5the company, and

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

This is subject to subsection (7).

(6) For this purpose the following are treated as officers of the
company—

(a) 10a liquidator or administrator of the company, and

(b) a trustee of a deed for securing the issue of debentures of the
company.

(7) A person is not guilty of an offence under this section if the person
shows that the default was due to the refusal of a director or trustee
15for debenture holders to supply the necessary particulars of the
director’s or (as the case may be) the trustee’s interests.

(8) A person guilty of an offence under this section is liable—

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

(b) on summary conviction in England and Wales, to a fine;

(c) 20on summary conviction in Scotland or Northern Ireland, to a
fine not exceeding the statutory maximum.

901E Duty of directors and trustees to provide information

(1) It is the duty of—

(a) any director of the company, and

(b) 25any trustee for its debenture holders,

to give notice to the company of such matters relating to that director
or trustee as may be necessary for the purposes of section 901D
(explanatory statement to be circulated or made available).

(2) Any person who makes default in complying with this section
30commits an offence.

(3) A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.

Court sanction for compromise or arrangement

901F Court sanction for compromise or arrangement

(1) 35If a number representing 75% in value of the creditors or class of
creditors or members or class of members (as the case may be),
present and voting either in person or by proxy at the meeting
summoned under section 901C, agree a compromise or arrangement,
the court may, on an application under this section, sanction the
40compromise or arrangement.

(2) Subsection (1) is subject to—

(a) section 901G (sanction for compromise or arrangement
where one or more classes dissent),

(b) section 901H (moratorium debts, etc), and

(c) section 901I (aircraft-related interests).

(3) An application under this section may be made by—

(a) the company,

(b) any creditor or member of the company,

(c) 5if the company is being wound up, the liquidator, or

(d) if the company is in administration, the administrator.

(4) Where the court makes an order under this section in relation to a
company that is in administration or is being wound up, the court
may by the order—

(a) 10provide for the appointment of the administrator or
liquidator to cease to have effect;

(b) stay or sist all proceedings in the administration or the
winding up;

(c) impose any requirements with respect to the conduct of the
15administration or the winding up which the court thinks
appropriate for facilitating the compromise or arrangement.

(5) A compromise or arrangement sanctioned by the court is binding—

(a) on all creditors or the class of creditors or on the members or
class of members (as the case may be), and

(b) 20on the company or, in the case of a company in the course of
being wound up, the liquidator and contributories of the
company.

(6) The court’s order has no effect until a copy of it has been—

(a) in the case of an overseas company that is not required to
25register particulars under section 1046, published in the
Gazette, or

(b) in any other case, delivered to the registrar.

901G Sanction for compromise or arrangement where one or more classes
dissent

(1) 30This section applies if the compromise or arrangement is not agreed
by a number representing at least 75% in value of a class of creditors
or (as the case may be) of members of the company (“the dissenting
class”), present and voting either in person or by proxy at the
meeting summoned under section 901C.

(2) 35If conditions A and B are met, the fact that the dissenting class has
not agreed the compromise or arrangement does not prevent the
court from sanctioning it under section 901F.

(3) Condition A is that the court is satisfied that, if the compromise or
arrangement were to be sanctioned under section 901F, none of the
40members of the dissenting class would be any worse off than they
would be in the event of the relevant alternative (see subsection (4)).

(4) For the purposes of this section “the relevant alternative” is whatever
the court considers would be most likely to occur in relation to the
company if the compromise or arrangement were not sanctioned
45under section 901F.

(5) Condition B is that the compromise or arrangement has been agreed
by a number representing 75% in value of a class of creditors or (as

the case may be) of members, present and voting either in person or
by proxy at the meeting summoned under section 901C, who would
receive a payment, or have a genuine economic interest in the
company, in the event of the relevant alternative.

(6) 5The Secretary of State may by regulations amend this section for the
purpose of—

(a) adding to the conditions that must be met for the purposes of
this section;

(b) removing or varying any of those conditions.

(7) 10Regulations under subsection (6) are subject to affirmative resolution
procedure.

Special cases

901H Moratorium debts, etc

(1) This section applies where—

(a) 15an application under section 901C(1) in respect of a
compromise or arrangement is made before the end of the
period of 12 weeks beginning with the day after the end of
any moratorium for the company under Part A1 of the
Insolvency Act 1986 or Part 1A of the Insolvency (Northern
20Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)S.I. 1989/2405 (N.I. 19)), and

(b) the creditors with whom the compromise or arrangement is
proposed include any relevant creditors (see subsection (2)).

(2) In this section “relevant creditor” means—

(a) a creditor in respect of a moratorium debt, or

(b) 25a creditor in respect of a pre-moratorium debt for which the
company has not had a payment holiday during the
moratorium (within the meaning of section A18 of the
Insolvency Act 1986 or Article 13D of the Insolvency
(Northern Ireland) Order 1989).

(3) 30The relevant creditors may not participate in the meeting summoned
under section 901C.

(4) For the purposes of section 901D (statement to be circulated or made
available)—

(a) the requirement in section 901D(1)(a) is to be read as a
35requirement to send each relevant creditor a statement
complying with section 901D;

(b) any reference to creditors entitled to attend the meeting
summoned under section 901C includes a reference to
relevant creditors.

(5) 40The court may not sanction the compromise or arrangement under
section 901F if it includes provision in respect of any relevant
creditor who has not agreed to it.

(6) In this section—

• “moratorium debt” means anything that is a moratorium debt
  45for the purposes of Part A1 of the Insolvency Act 1986 (see
  section A51 of that Act) or Part 1A of the Insolvency

  Corporate Insolvency and Governance BillPage 183

  (Northern Ireland) Order 1989 (see Article 13HC of that
  Order);

• “pre-moratorium debt” means anything that is a pre-
  moratorium debt for the purposes of Part A1 of that Act (see
  5section A51 of that Act) or Part 1A of that Order (see Article
  13HC of that Order).

901I Aircraft-related interests

(1) This section applies where—

(a) an application under section 901C(1) is made in respect of a
10compromise or arrangement, and

(b) the creditors with whom the compromise or arrangement is
proposed include creditors with aircraft-related interests
(“relevant creditors”).

(2) The relevant creditors may not participate in the meeting summoned
15under section 901C.

(3) For the purposes of section 901D (statement to be circulated or made
available)—

(a) the requirement in section 901D(1)(a) is to be read as a
requirement to send each relevant creditor a statement
20complying with section 901D;

(b) any reference to creditors entitled to attend the meeting
summoned under section 901C includes a reference to
relevant creditors.

(4) The court may not sanction the compromise or arrangement under
25section 901F if it includes provision in respect of any relevant
creditor who has not agreed to it.

(5) In this section “aircraft-related interest” means a registered interest
within the meaning of the International Interests in Aircraft
Equipment (Cape Town Convention) Regulations 2015 (S.I. 2015/
30912).

Reconstructions and amalgamations

901J Powers of court to facilitate reconstruction or amalgamation

(1) This section applies where application is made to the court under
section 901F to sanction a compromise or arrangement and it is
35shown that—

(a) the compromise or arrangement is proposed in connection
with a scheme for the reconstruction of any company or
companies, or the amalgamation of any two or more
companies, and

(b) 40under the scheme the whole or any part of the undertaking or
the property of any company concerned in the scheme (a
“transferor company”) is to be transferred to another
company (“the transferee company”).

(2) The court may, either by the order sanctioning the compromise or
45arrangement or by a subsequent order, make provision for all or any
of the following matters—

(a) the transfer to the transferee company of the whole or any
part of the undertaking and of the property or liabilities of
any transferor company;

(b) the allotting or appropriation by the transferee company of
5any shares, debentures, policies or other like interests in that
company which under the compromise or arrangement are to
be allotted or appropriated by that company to or for any
person;

(c) the continuation by or against the transferee company of any
10legal proceedings pending by or against any transferor
company;

(d) the dissolution, without winding up, of any transferor
company;

(e) the provision to be made for any persons who, within such
15time and in such manner as the court directs, dissent from the
compromise or arrangement;

(f) such incidental, consequential and supplemental matters as
are necessary to secure that the reconstruction or
amalgamation is fully and effectively carried out.

(3) 20If an order under this section provides for the transfer of property or
liabilities—

(a) the property is by virtue of the order transferred to, and vests
in, the transferee company, and

(b) the liabilities are, by virtue of the order, transferred to and
25become liabilities of that company.

(4) The property (if the order so directs) vests freed from any charge that
is by virtue of the compromise or arrangement to cease to have effect.

(5) In this section—

• “property” includes property, rights and powers of every
  30description; and

• “liabilities” includes duties.

(6) Every company in relation to which an order is made under this
section must cause a copy of the order to be delivered to the registrar
within seven days after its making.

(7) 35If default is made in complying with subsection (6) an offence is
committed by—

(a) the company, and

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

(8) A person guilty of an offence under subsection (7) is liable on
40summary 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.

Obligations of company with respect to articles etc

901K Obligations of company with respect to articles etc

(1) 45This section applies—

(a) to any order under section 901F (order sanctioning
compromise or arrangement), and

(b) to any order under section 901J (order facilitating
reconstruction or amalgamation) that alters the company’s
5constitution.

(2) If—

(a) the order amends—

(i) the company’s articles, or

(ii) any resolution or agreement to which Chapter 3 of
10Part 3 applies (resolution or agreement affecting a
company’s constitution), and

(b) a copy of the order is required to be delivered to the registrar
by the company under section 901F(6)(b) or section 901J(6),

the copy of the order delivered to the registrar must be accompanied
15by a copy of the company’s articles, or the resolution or agreement in
question, as amended.

(3) Every copy of the company’s articles issued by the company after the
order is made must be accompanied by a copy of the order, unless
the effect of the order has been incorporated into the articles by
20amendment.

(4) In this section—

(a) references to the effect of the order include the effect of the
compromise or arrangement to which the order relates, and

(b) in the case of a company not having articles, references to its
25articles are to be read as references to the instrument
constituting the company or defining its constitution.

(5) If a company makes default in complying with this section an offence
is committed by—

(a) the company, and

(b) 30every officer of the company who is in default.

(6) A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.

Power to amend Act

901L Power to amend Act

(1) 35The Secretary of State may by regulations make any amendment of
this Act which the Secretary of State considers necessary or
expedient for the purposes of, in consequence of, or for giving full
effect to this Part.

(2) Regulations under this section are subject to affirmative resolution
40procedure.”

Part 2 Consequential amendments

Finance Act 1986

2 The Finance Act 1986 is amended as follows.

3 5In section 80D (repurchases and stock lending: replacement stock on
insolvency), in subsection (9)(f), after “Part 26” insert “or 26A”.

4 In section 89AB (stamp duty reserve tax: exception for repurchases and stock
lending in case of insolvency), in subsection (9)(f), after “Part 26” insert “or
26A”.

10Insolvency Act 1986

5 The Insolvency Act 1986 is amended as follows.

6 (1) In Part 4 (winding up of companies registered under the Companies Acts),
Chapter 8 (provisions of general application in winding up) is amended as
follows.

(2) 15In section 176ZB (application of proceeds of office-holder claims), in
subsection (4)(b), after “Part 26” insert “or 26A”.

(3) In section 176A (share of assets for unsecured creditors), in subsection (4)(b),
after “Part 26” insert “or 26A”.

7 (1) Schedule B1 (administration) is amended as follows.

(2) 20In paragraph 49 (administrator’s proposals), in sub-paragraph (3)(b), after
“Part 26” insert “or 26A”.

(3) In paragraph 73 (protection for priority creditor), in sub-paragraph (2)(c),
after “Part 26” insert “or 26A”.

(4) In paragraph 74 (challenge to administrator’s conduct of company), in sub-
25paragraph (6)(b), after “Part 26” insert “or 26A”.

Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)S.I. 1989/2405 (N.I. 19))

8 The Insolvency (Northern Ireland) Order 1989 is amended as follows.

9 In Article 150A (share of assets for unsecured creditors), in paragraph (4)(b),
after “Part 26” insert “or 26A”.

10 (1) 30Schedule B1 (administration) is amended as follows.

(2) In paragraph 50 (administrator’s proposals), in sub-paragraph (3)(b), after
“Part 26” insert “or 26A”.

(3) In paragraph 74 (protection for secured or preferential creditor), in sub-
paragraph (2)(c), after “Part 26” insert “or 26A”.

(4) 35In paragraph 75 (challenge to administrator’s conduct of company), in sub-
paragraph (6)(b), after “Part 26” insert “or 26A”.

Water Industry Act 1991

11 In section 23 of the Water Industry Act 1991 (meaning and effect of special
administration order), in subsection (2D)(b), after “Part 26” insert “or 26A”.

Taxation of Chargeable Gains Act 1992

12 5The Taxation of Chargeable Gains Act 1992 is amended as follows.

13 In section 263CA (stock lending: insolvency etc of borrower), in subsection
(9)(f), after “Part 26” insert “or 26A”.

14 In Schedule 5AA (meaning of “scheme of reconstruction” for purposes of
section 136), in paragraph 5(a)(i), after “Part 26” insert “or 26A”.

10Value Added Tax Act 1994

15 In section 26AA of the Value Added Tax Act 1994 (disapplication of
disallowance under section 26A in insolvency), in subsection (8), after
paragraph (k) insert—

“(ka) a compromise or arrangement sanctioned by the court and
15delivered to the registrar or (as the case may be) published in
the Gazette in accordance with section 901F of the Companies
Act 2006 is in place in relation to that person,”.

Housing Act 1996

16 (1) In Part 2 of Schedule 1 to the Housing Act 1996 (registered social landlords:
20constitution, change of rules, amalgamation and dissolution), paragraph 13
(arrangement, reconstruction, etc of company) is amended as follows.

(2) After sub-paragraph (3) insert—

“(3A) If a court makes an order under section 901F of the Companies Act
2006 (sanction of compromise or arrangement with creditors or
25members) in relation to the company, the company must notify
the Welsh Ministers of the order.

(3B) If a court makes an order under section 901J of the Companies Act
2006 (powers of court to facilitate reconstruction or
amalgamation) in relation to the company, the company must
30notify the Welsh Ministers of the order.”

(3) In sub-paragraph (8), after “sub-paragraph (3)” insert “, (3B)”.

Financial Services and Markets Act 2000

17 The Financial Services and Markets Act 2000 is amended as follows.

18 In section 105 (insurance business transfer schemes), in subsection (5), for
35“Part 26 of that Act” substitute “Part 26 or 26A of that Act, as the case may
be”.

19 In Schedule 17A (further provision in relation to exercise of Part 18 functions
by Bank of England), in paragraph 24(1) (insolvency), before paragraph (a)

insert—

“(za) section 355A (powers to participate in proceedings under
Part 26A of the Companies Act 2006);”.

20 (1) Part 24 (insolvency) is amended as follows.

(2) 5After section 355 insert—

““Arrangements and reconstructions: companies in financial difficulty

355A Powers of FCA and PRA to participate in proceedings

(1) This section applies where Part 26A of the Companies Act 2006 (“the
2006 Act”) (arrangements and reconstructions: companies in
10financial difficulty) applies in relation to a company which—

(a) is, or has been, an authorised person or recognised
investment exchange;

(b) is, or has been, any of the following—

(i) an electronic money institution;

(ii) 15an authorised payment institution;

(iii) a small payment institution;

(iv) a registered account information service provider;

(c) is, or has been, an appointed representative; or

(d) is carrying on, or has carried on, a regulated activity in
20contravention of the general prohibition.

(2) A relevant applicant must give notice to the appropriate regulator
of—

(a) any application which the relevant applicant intends to make
under section 901C(1) of the 2006 Act, and

(b) 25any application which the relevant applicant believes a
creditor or member of the company has made, or intends to
make, under section 901C(1) of that Act in relation to the
company.

(3) A relevant applicant may not make an application under section
30901C(1) of the 2006 Act in relation to a company that is a PRA-
regulated person without the consent of the PRA.

(4) In this section “relevant applicant”, in relation to a company,
means—

(a) the company;

(b) 35if the company is being wound up, the liquidator;

(c) if the company is in administration, the administrator.

(5) The appropriate regulator is entitled to be heard at any hearing of an
application made under section 901C or 901F of the 2006 Act in
relation to the company.

(6) 40Any notice or other document required to be sent to a creditor of the
company must also be sent to the appropriate regulator.

(7) A person appointed for the purpose by the appropriate regulator is
entitled—

(a) to attend any meeting of creditors of the company
summoned under section 901C of the 2006 Act;

(b) to make representations as to any matter for decision at such
a meeting.

(8) 5In this section—

• “the appropriate regulator” means—

  (a)

  where the company is a PRA-regulated person, each
  of the FCA and the PRA, except that the reference in
  subsection (7) to a person appointed by the
  10appropriate regulator is to be read as a reference to a
  person appointed by either the FCA or the PRA;

  (b)

  in any other case, the FCA;

• “authorised payment institution”, “small payment institution”
  and “registered account information service provider” have
  15the same meaning as in the Payment Services Regulations
  2017 (S.I. 2017/752S.I. 2017/752) (see regulation 2 of those Regulations);

• “electronic money institution” has the same meaning as in the
  Electronic Money Regulations 2011 (S.I. 2011/99S.I. 2011/99) (see
  regulation 2 of those Regulations).”

(3) 20In section 362 (powers of FCA and PRA to participate in administration
proceedings)—

(a) in subsection (6)—

(i) after “arrangement” insert “in relation to which Part 26 of the
Companies Act 2006 applies”, and

(ii) 25for “the Companies Act 2006” substitute “that Act”;

(b) after that subsection insert—

“(6A) If, during the course of the administration of a company, a
compromise or arrangement in relation to which Part 26A of
the Companies Act 2006 applies is proposed between the
30company and its creditors, or any class of them, the
appropriate regulator may apply to the court under section
901C or 901F of that Act.”

(4) In section 365 (powers of FCA and PRA to participate in voluntary winding
up proceedings)—

(a) 35in subsection (7)—

(i) after “arrangement” insert “in relation to which Part 26 of the
Companies Act 2006 applies”, and

(ii) for “the Companies Act 2006” substitute “that Act”;

(b) after that subsection insert—

“(7A) 40If, during the course of the winding up of the company, a
compromise or arrangement in relation to which Part 26A of
the Companies Act 2006 applies is proposed between the
company and its creditors, or any class of them, the
appropriate regulator may apply to the court under section
45901C or 901F of that Act.”

(5) In section 371 (powers of FCA and PRA to participate in proceedings for
winding up by court)—

(a) in subsection (5)—