Corporate Insolvency and Governance Bill (HC Bill 128)

(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—

“(5A) 5If, during the course of the winding up of a 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
10901C or 901F of that Act.”

Limited Liability Partnerships Act 2000

21 In section 17 of the Limited Liability Partnerships Act 2000, in subsection
(5)(b) (procedure for regulations applying provisions of Companies Act
2006)—

(a) 15in the entry for Part 26 of the Companies Act 2006, after
“reconstructions” insert “: general”;

(b) after that entry insert—

• ““Part 26A (arrangements and reconstructions:
  companies in financial difficulty);”.

20Enterprise Act 2002

22 In section 255 of the Enterprise Act 2002 (application of law about company
arrangement or administration to non-company), in subsection (2), omit the
“and” before paragraph (c) and after that paragraph insert “, and

(d) Part 26A of that Act (compromise or arrangement with
25creditors where company in financial difficulty).”

Income Tax (Earnings and Pensions) Act 2003

23 The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.

24 (1) Schedule 3 (SAYE option schemes) is amended as follows.

(2) In Part 6 (requirements etc relating to share options), in paragraph 37
30(exercise of options: company events)—

(a) in sub-paragraph (1), after “(4)” insert “, (4ZA)”;

(b) after sub-paragraph (4) insert—

“(4ZA) The relevant date for the purposes of this sub-paragraph is
the date when the court sanctions under section 901F of the
35Companies Act 2006 (court sanction for compromise or
arrangement) a compromise or arrangement applicable to
or affecting—

(a) all the ordinary share capital of the company or all
the shares of the same class as the shares to which
40the option relates, or

(b) all the shares, or all the shares of that same class,
which are held by a class of shareholders identified
otherwise than by reference to their employment or
directorships or their participation in a Schedule 3
45SAYE option scheme.”;

(c) in sub-paragraph (6C)(b), after “sub-paragraph (4)” insert “or
(4ZA)”;

(d) in sub-paragraph (6E)(a), after “(4)” insert “, (4ZA)”;

(e) in sub-paragraph (6F)(a)(i) and (b)(i), after “(4)” insert “, (4ZA)”.

(3) 5In Part 7 (exchange of share options), in paragraph 38 (exchange of options
on company reorganisation), in sub-paragraph (2)(b), after “section 899”
insert “or 901F”.

25 (1) Schedule 4 (CSOP schemes) is amended as follows.

(2) In Part 5 (requirements etc relating to share options), in paragraph 25A
10(exercise of options: company events)—

(a) in sub-paragraph (1), after “(6)” insert “, (6ZA)”;

(b) after sub-paragraph (6) insert—

“(6ZA) The relevant date for the purposes of this sub-paragraph is
the date when the court sanctions under section 901F of the
15Companies Act 2006 (court sanction for compromise or
arrangement) a compromise or arrangement applicable to
or affecting—

(a) all the ordinary share capital of the company or all
the shares of the same class as the shares to which
20the option relates, or

(b) all the shares, or all the shares of that same class,
which are held by a class of shareholders identified
otherwise than by reference to their employment or
directorships or their participation in a Schedule 4
25CSOP scheme.”;

(c) in sub-paragraph (7C)(b), after “sub-paragraph (6)” insert “or
(6ZA)”;

(d) in sub-paragraph (7E)(a), after “(6)” insert “, (6ZA)”;

(e) in sub-paragraph (7F)(a)(i) and (b)(i), after “(6)” insert “, (6ZA)”.

(3) 30In Part 6 (exchange of share options), in paragraph 26 (exchange of options
on company reorganisation), in sub-paragraph (2)(b), after “section 899”
insert “or 901F”.

26 In Schedule 5 (enterprise management incentives), in paragraph 39
(company reorganisations), in sub-paragraph (2)(b), after “section 899”
35insert “or 901F”.

Energy Act 2004

27 In Part 2 of Schedule 20 to the Energy Act 2004 (conduct of energy
administration: modifications of Schedule B1 to the Insolvency Act 1986), in
paragraph 16(2), after “section 899” insert “or 901F”.

40Income Tax (Trading and Other Income) Act 2005

28 In Part 2 of the Income Tax (Trading and Other Income) Act 2005 (trading
income), in section 259 (meaning of “statutory insolvency arrangement”), in
paragraph (b), after “Part 26” insert “or 26A”.

Insolvency (Northern Ireland) Order 2005 (S.I. 2005/1455 (N.I. 10)S.I. 2005/1455 (N.I. 10))

29 In Article 10 of the Insolvency (Northern Ireland) Order 2005 (application of
law about company arrangement or administration to non-company), in
paragraph (3), omit the “and” before sub-paragraph (c) and after that sub-
5paragraph insert “, and

(d) Part 26A of that Act (compromise or arrangement with
creditors where company in financial difficulty).”

Companies Act 2006

30 The Companies Act 2006 is amended as follows.

31 10In section 32(1) (constitutional documents to be provided to members), after
paragraph (d) insert—

“(da) a copy of any court order under section 901F (order
sanctioning compromise or arrangement for company in
financial difficulty) or section 901J (order facilitating
15reconstruction or amalgamation);”.

32 In section 93 (recent allotment of shares for non-cash consideration), in
subsection (7)(b)(i), after “Part 26” insert “or 26A”.

33 (1) Part 17 (a company’s share capital) is amended as follows.

(2) In section 549 (exercise by directors of powers to allot shares etc), after
20subsection (3) insert—

“(3A) Subsection (1) does not apply to anything done for the purposes of a
compromise or arrangement sanctioned in accordance with Part 26A
(arrangements and reconstructions: companies in financial
difficulty).”

(3) 25In Chapter 3 (allotment of equity securities: existing shareholders’ right of
pre-emption)—

(a) in section 561 (existing shareholders’ right of pre-emption), in
subsection (5)(a), for “566” substitute “566A”;

(b) after section 566 insert—

“566A 30 Exception to pre-emption right: companies in financial
difficulty

Section 561(1) (existing shareholders’ right of pre-emption)
does not apply to an allotment of equity securities that is
carried out as part of a compromise or arrangement
35sanctioned in accordance with Part 26A (arrangements and
reconstructions: companies in financial difficulty).”

(4) In section 594 (exception to valuation requirement: arrangement with
another company), in subsection (6)(a)(i), after “Part 26” insert “or 26A”.

(5) In section 616(1) (interpretation of Chapter 7), in paragraph (a) of the
40definition of “arrangement”, after “Part 26” insert “or 26A”.

(6) In section 617 (alteration of share capital of limited company), in subsection
(5)(e)(i), after “Part 26” insert “or 26A”.

(7) In section 632 (variation of class rights: saving for court’s powers under
other provisions)—

(a) in the entry for Part 26, after “reconstructions” insert “: general”;

(b) after that entry (but before the “or”) insert—

• 5““Part 26A (arrangements and reconstructions:
  companies in financial difficulty),”.

(8) In section 641 (circumstances in which a company may reduce its share
capital)—

(a) in subsection (2C), in the definition of “scheme”, after “Part 26” insert
10“or 26A”;

(b) in subsection (7), for the words from “the phrase” to “Part 26””
substitute “the phrases “sanctioned by the court under Part 26” and
“sanctioned by the court under Part 26A””.

(9) In section 649 (registration of order and statement of capital), in subsection
15(3)—

(a) in paragraph (a), after “reconstructions” insert “: general”;

(b) after that paragraph insert—

“(aa) in the case of a reduction of share capital that forms
part of a compromise or arrangement sanctioned by
20the court under Part 26A (arrangements and
reconstructions: companies in financial difficulty)—

(i) in the case of any company other than one to
which sub-paragraph (ii) applies, on delivery
of the order and statement of capital to the
25registrar;

(ii) in the case of an overseas company that is not
required to register particulars under section
1046, on publication of the order and
statement of capital in the Gazette;

(iii) 30in either case, if the court so orders, on the
registration of the order and statement of
capital;”;

(c) in paragraph (b), for “any other case” substitute “any case not falling
within paragraph (a) or (aa)”.

34 35In section 681 (unconditional exceptions to prohibition against financial
assistance), in subsection (2)(e), after “Part 26” insert “or 26A”.

35 (1) Part 26 (arrangements and reconstructions) is amended as follows.

(2) The heading becomes “Arrangements and reconstructions: general”.

(3) In section 896, at the end insert—

“(4) 40This section is subject to sections 899A and 899B (special cases).”

(4) In section 899 (court sanction for compromise or arrangement)—

(a) after subsection (1) insert—

“(1A) Subsection (1) is subject to—

(a) section 899A (moratorium debts, etc), and

(b) 45section 899B (aircraft-related interests).”;

(b) omit subsection (5).

(5) After section 899 insert—

““Special cases

899A Moratorium debts, etc

(1) This section applies where—

(a) 5an application under section 896 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 Ireland)
10Order 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) 15a 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) 20The relevant creditors may not participate in the meeting summoned
under section 896.

(4) For the purposes of section 897 (statement to be circulated or made
available)—

(a) the requirement in section 897(1)(a) is to be read as a
25requirement to send each relevant creditor a statement
complying with section 897;

(b) any reference to creditors entitled to attend the meeting
summoned under section 896 includes a reference to relevant
creditors.

(5) 30The court may not sanction the compromise or arrangement under
section 899 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
  35for the purposes of Part A1 of the Insolvency Act 1986 (see
  section A51 of that Act) or Part 1A of the Insolvency
  (Northern Ireland) Order 1989 (see Article 13HC of that
  Order);

• “pre-moratorium debt” means anything that is a pre-
  40moratorium debt for the purposes of Part A1 of that Act (see
  section A51 of that Act) or Part 1A of that Order (see Article
  13HC of that Order).

899B Aircraft-related interests

(1) This section applies where—

(a) 45an application under section 896 is made in respect of a
compromise 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
5under section 896.

(3) For the purposes of section 897 (statement to be circulated or made
available)—

(a) the requirement in section 897(1)(a) is to be read as a
requirement to send each relevant creditor a statement
10complying with section 897;

(b) any reference to creditors entitled to attend the meeting
summoned under section 896 includes a reference to relevant
creditors.

(4) The court may not sanction the compromise or arrangement under
15section 899 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/
20912).”

36 (1) Part 27 (mergers and divisions of public companies) is amended as follows.

(2) In section 903 (relationship of Part 27 to Part 26)—

(a) in the heading, for “Part 26” substitute “Parts 26 and 26A”;

(b) in subsection (1), for “Part 26 (arrangements and reconstructions)”
25substitute “Part 26 (arrangements and reconstructions: general) or
Part 26A (arrangements and reconstructions: companies in financial
difficulty)”;

(c) in subsections (2) and (3), for “Part 26” substitute “Parts 26 and 26A”.

(3) In section 907 (approval of members of merging companies), in subsection
30(2), after “917” insert “, 917A”.

(4) In section 908 (directors’ explanatory report (merger))—

(a) in subsection (2), for paragraph (a) (but not the “and” following it)
substitute—

“(a) the required statement explaining the effect of the
35compromise or arrangement,”;

(b) after that subsection insert—

“(2A) In subsection (2) “the required statement explaining the effect
of the compromise or arrangement” means—

(a) in a case where a meeting is summoned under section
40896 in relation to the compromise or arrangement, the
statement required by section 897;

(b) in a case where a meeting is summoned under section
901C in relation to the compromise or arrangement,
the statement required by section 901D.”

(5) 45In section 912 (approval of articles of new transferee company (merger))—

(a) the wording of the section becomes subsection (1) of that section;

(b) at the end of that subsection insert—

““This is subject to subsection (2).”;

(c) after that subsection insert—

“(2) In the case of a compromise or arrangement to be sanctioned
5under Part 26A, it is not necessary for the articles of the
transferee company (or a draft of them) to be approved by
ordinary resolution of the company in respect of which the
compromise or arrangement is proposed.”

(6) In section 915 (circumstances in which certain particulars and reports not
10required (merger))—

(a) in subsection (3), for “Section 897” substitute “In a case where a
meeting has been summoned under section 896 in relation to the
compromise or arrangement, section 897”;

(b) after that subsection insert—

“(3A) 15In a case where a meeting has been summoned under section
901C in relation to the compromise or arrangement, section
901D (explanatory statement to be circulated or made
available) does not apply.”

(7) In section 915A (other circumstances in which reports and inspection not
20required (merger)), in subsection (5), after “section 900(2)” insert “or, as the
case may be, section 901J(2)”.

(8) Before section 918 (but after the heading “Other exceptions”) insert—

“917A Other circumstances in which meeting of members of transferor
company not required (merger)

25In the case of a compromise or arrangement to be sanctioned under
Part 26A, it is not necessary for the scheme to be approved by the
members of the company in respect of which the compromise or
arrangement is proposed.”

(9) In section 918A (agreement to dispense with reports etc (merger))—

(a) 30in subsection (2), for “the application to the court under section 896”
substitute “the relevant application”;

(b) after that subsection insert—

“(3) In subsection (2) “the relevant application” means—

(a) in the case of a compromise or arrangement to be
35sanctioned under Part 26, the application to the court
under section 896;

(b) in the case of a compromise or arrangement to be
sanctioned under Part 26A, the application to the
court under section 901C(1).”

(10) 40In section 922 (approval of members of companies involved in the
division)—

(a) in subsection (1), for “compromise or arrangement” substitute
“scheme”;

(b) in subsection (2), after “931” insert “, 931A”.

(11) 45In section 923 (directors’ explanatory report (division))—

(a) in subsection (2), for paragraph (a) (but not the “and” following it)

substitute—

“(a) the required statement explaining the effect of the
compromise or arrangement,”;

(b) after that subsection insert—

“(2A) 5In subsection (2) “the required statement explaining the effect
of the compromise or arrangement” means—

(a) in a case where a meeting is summoned under section
896 in relation to the compromise or arrangement, the
statement required by section 897;

(b) 10in a case where a meeting is summoned under section
901C in relation to the compromise or arrangement,
the statement required by section 901D.”

(12) In section 925 (supplementary accounting statement (division)), in
subsection (1)(b), after “931” insert “, 931A”.

(13) 15In section 928 (approval of articles of new transferee company (division))—

(a) the wording of the section becomes subsection (1) of that section;

(b) after that subsection insert—

“(2) Subsection (1) does not apply in the case of a compromise or
arrangement to be sanctioned under Part 26A.”

(14) 20Before section 932 (but after the heading “Other exceptions”) insert—

“931A Other circumstances in which meeting of members of transferor
company not required (division)

In the case of a compromise or arrangement to be sanctioned under
Part 26A, it is not necessary for the scheme to be approved by the
25members of the transferor company.”

(15) In section 933 (agreement to dispense with reports etc (division))—

(a) in subsection (3), for “the application to the court under section 896”
substitute “the relevant application”;

(b) after that subsection insert—

“(4) 30In subsection (3) “the relevant application” means—

(a) in the case of a compromise or arrangement to be
sanctioned under Part 26, the application to the court
under section 896;

(b) in the case of a compromise or arrangement to be
35sanctioned under Part 26A, the application to the
court under section 901C(1).”

(16) In section 939 (court to fix date for transfer of undertaking etc of transferor
company), in subsection (1)(b), after “section 900” insert “or, as the case may
be, section 901J”.

(17) 40In section 940 (liability of transferee companies for each other’s defaults)—

(a) in subsection (2), after “If” insert “, in the case of a compromise or
arrangement to be sanctioned under Part 26,”;

(b) after that subsection insert—

“(2A) If, in the case of a compromise or arrangement to be
45sanctioned under Part 26A, a number representing 75% in

value of the creditors or any class of creditors of the
transferor company, present and voting either in person or
by proxy at a meeting summoned for the purposes of
agreeing to the scheme, so agree, subsection (1) does not
5apply in relation to the liabilities owed to the creditors or that
class of creditors.”

37 (1) In Part 31 (dissolution and restoration to the register), Chapter 1 (striking
off) is amended as follows.

(2) In section 1005 (circumstances in which application for voluntary striking off
10may not be made: other proceedings not concluded), in subsection (1)(a),
after “Part 26” insert “or 26A”.

(3) In section 1009 (circumstances in which application for voluntary striking off
to be withdrawn), in subsection (1)(b), after “Part 26” insert “or 26A”.

38 In section 1078 (documents subject to disclosure requirements), in
15subsection (3), for “section 899 or 900” substitute “section 899, 900, 901F or
901J”.

39 (1) Schedule 8 (index of defined expressions) is amended as follows.

(2) In the entry for “arrangement”, after the entry for Part 26 insert—

(3) 20In the entry for “company”, after the entry for Part 26 insert—

Housing and Regeneration Act 2008

40 In Part 2 of the Housing and Regeneration Act 2008 (regulation of social
housing), in section 160 (company: arrangements and reconstructions), at
25the end insert—

“(7) The registered provider must notify the regulator of any order under
section 901F of the Companies Act 2006 (court sanction for
compromise or arrangement).

(8) An order under section 901F of the Companies Act 2006 does not
30take effect until the registered provider has confirmed to the registrar
of companies that the regulator has been notified.

(9) The registered provider must notify the regulator of any order under
section 901J of the Companies Act 2006 (powers of court to facilitate
reconstruction or amalgamation).

(10) 35The requirement in section 901J(6) of the Companies Act 2006
(sending copy of order to registrar) is satisfied only if the copy is
accompanied by confirmation that the regulator has been notified.”

Corporation Tax Act 2009

41 In section 1319 of the Corporation Tax Act 2009 (other definitions), in
paragraph (b) of the definition of “statutory insolvency arrangement”, after
“Part 26” insert “or 26A”.

5Corporation Tax Act 2010

42 The Corporation Tax Act 2010 is amended as follows.

43 (1) Part 7ZA (restrictions on obtaining certain deductions) is amended as
follows.

(2) In section 269ZH (meaning of “insolvency procedures”), in subsection (5)(a),
10after “Part 26” insert “or 26A”.

(3) In section 269ZY (meaning of “relevant reversal credit”), in subsection (8)(b),
after “Part 26” insert “or 26A”.

44 In Part 14 (change in company ownership), in section 724A (disregard of
change in parent company), in subsection (7)(a), after “Part 26” insert “or
1526A”.

Third Parties (Rights against Insurers) Act 2010

45 In section 6 of the Third Parties (Rights against Insurers) Act 2010 (corporate
bodies etc), in subsection (1), after “section 899” insert “or 901F”.

Housing (Scotland) Act 2010 (asp 17)2010 (asp 17)

46 20Part 8 of the Housing (Scotland) Act 2010 (registered social landlords:
organisational change etc) is amended as follows.

47 (1) Section 100A (restructuring by company: proposed restructuring) is
amended as follows.

(2) In subsection (1)—

(a) 25for “This section applies” substitute “Subsections (2) and (3) apply”;

(b) omit the “and” after paragraph (b);

(c) for paragraph (c) substitute—

“(c) the restructuring will result in a tenant under a
Scottish secure tenancy ceasing to be a tenant of the
30company in respect of which the order is made, and

(d) the company is not being wound up and is not in
administration.”

(3) In subsection (3), for “this section” substitute “this subsection”.

(4) After subsection (3) insert—

“(4) 35Subsections (5) and (6) apply where—

(a) a court order is made in respect of the company under section
901C(1) of the Companies Act 2006,

(b) the meeting summoned by the court order is to agree a
restructuring of a type mentioned in section 901J(1) of that
40Act,