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Column 1195Moynihan, Hon Colin
Pattie, Rt Hon Sir Geoffrey
Peacock, Mrs Elizabeth
Porter, David (Waveney)
Powell, William (Corby)
Ridley, Rt Hon Nicholas
Shepherd, Richard (Aldridge)
Smith, Tim (Beaconsfield)
Soames, Hon Nicholas
Stradling Thomas, Sir John
Taylor, John M (Solihull)
Thompson, D. (Calder Valley)
Thompson, Patrick (Norwich N)
Townsend, Cyril D. (B'heath)
Twinn, Dr Ian
Waddington, Rt Hon David
Wardle, Charles (Bexhill)
Young, Sir George (Acton)
Tellers for the Noes :
Mr. Irvine Patnick and
Mr. Tom Sackville.
Question accordingly negatived.
Mr. Robert Hayward (Kingswood) : On a point of order, Madam Deputy Speaker. Could you please clarify, for a relatively new Member, how, under the Companies Bill, we can give full and due consideration to the fact that this evening the Conservative party in Westminster city council dramatically increased its majority in a byelection?
Madam Deputy Speaker : That is a total waste of the time of the House. It has nothing to do with the Bill or with the Chair. It being after Eleven o'clock, Madam Deputy Speaker-- proceeded, pursuant to the Order this day, to put forthwith the Question, That all new clauses and new schedules relating to part V of the Bill standing in the name of, or moved by, a member of the Government, be added to the Bill.
.--(1) The Secretary of State may by regulation made by statutory instrument make such amendments of the provisions of the Companies Act 1985 relating to orders imposing restrictions on shares as appear to him necessary or expedient
(a) for enabling orders to be made in a form protecting the rights of third parties ;
(b) with respect to the circumstances in which restrictions may be relaxed or removed ;
(c) with respect to the making of interim orders by a court. (2) The provisions referred to in subsection (1) are section 210(5), section 216(1) and (2), section 445 and Part XV of the Companies Act 1985.
(3) The regulations may make different provision for different cases and may contain such transitional and other supplementary and incidental provisions as appear to the Secretary of State to be appropriate.
(4) Regulations under this section shall not be made unless a draft of the regulations has been laid before Parliament and approved by Resolution of each House of Parliament.'.-- [Mr. Tim Smith.]
Brought up, read the First and Second time, and added to the Bill.
.--(1) In Part V of the Companies Act 1985 (share capital, its increase, maintenance and reduction). Chapter III (redeemable shares, purchase by a company of its own shares) is amended as follows.
Column 1196(2) After section 159 (power to issue redeemable shares) insert-- "Terms and manner of redemption 159A.--(1) Redeemable shares may not be issued unless the following conditions are satisfied as regards the terms and manner of redemption.
(2) The date on or by which, or dates between which, the shares are to be or may be redeemed must be specified in the company's articles or, if the articles so provide, fixed by the directors, and in the latter case the date or dates must be fixed before the shares are issued.
(3) Any other circumstances in which the shares are to be or may be redeemed must be specified in the company's articles.
(4) The amount payable on redemption must be specified in, or determined in accordance with, the company's articles, and in the latter case the articles must not provide for the amount to be determined by reference to any person's discretion or opinion. (5) Any other terms and conditions of redemption shall be specified in the company's articles.
(6) Nothing in this section shall be construed as requiring a company to provide in its articles for any matter for which provision is made by this Act.".
(3) In section 160 (financing, &c. of redemption)--
(a) omit subsection (3) (which is superseded by the new section 159A), and
(b) in subsection (4) (cancellation of shares on redemption) for "redeemed under this section" substitute "redeemed under this Chapter".
(4) In section 162 (power of company to purchase own shares), for subsection (2) (application of provisions relating to redeemable shares) substitute--
"(2) Sections 159, 160 and 161 apply to the purchase by a company under this section of its own shares as they apply to the redemption of redeemable shares".".-- [Mr. Nicholas Baker.]
Brought up, read the First and Second time, and added to the Bill.
Amendment made :
Execution of deeds abroad 1.--(1) Section 38 of the Companies Act 1985 (execution of deeds abroad) is amended as follows.
(2) In subsection (1) (appointment of attorney to execute deeds), after "A company may" insert "under the law of England and Wales". (3) For subsection (2) (effect of deed executed by attorney) substitute--
"(2) A deed executed by such an attorney on behalf of the company has the same effect as if it were executed under the company's common seal.".
Official seal for use abroad 2.--(1) Section 39 of the Companies Act 1985 (power to have official seal for use abroad) is amended as follows.
(2) In subsection (1), after "A company" insert "which has a common seal" and for "the common seal of the company" substitute "its common seal".
(3) For subsection (2) (effect of sealing with official seal) substitute--
"(2) The official seal when duly affixed to a document has the same effect as the company's common seal.".
(4) In subsection (3) (instrument authorising person to affix official seal), after "by writing under its common seal" insert "or, in the case of a company registered in Scotland, subscribed in accordance with section 36B,".
Official seal for share certificates, &c. 3.--(1) Section 40 of the Companies Act 1985 (official seal for share certificates, &c.) is amended as follows.
(2) After "A company" insert "which has a common seal" and for "the company's common seal" substitute "its common seal".
Column 1197(3) At the end add--
"The official seal when duly affixed to a document has the same effect as the company's common seal.".
Authentication of documents
4. In section 41 of the Companies Act 1985 (authentication of documents), for the words from "may be signed" to the end substitute "is sufficiently authenticated for the purposes of the law of England and Wales by the signature of a director, secretary or other authorised officer of the company.".
Share certificate as evidence of title 5. For section 186 of the Companies Act 1985 (certificate to be evidence of title) substitute-- "Certificate to be evidence of title. 186.--(1) A certificate under the common seal of the company (or, in the case of a company registered in Scotland, subscribed in accordance with section 36B) specifying any shares held by a member is--
(a) in England and Wales, prima facie evidence, and
(b) in Scotland, sufficient evidence unless the contrary is shown, of his title to the shares.".
Share warrants to bearer 6. For section 188 of the Companies Act 1985 (issue and effect of share warrant to bearer) substitute-- "Issue and effect of share warrant to bearer. 188.--(1) A company limited by shares may, if so authorised by its articles, issue with respect to any fully paid shares a warrant (a "share warrant") stating that the bearer of the warrant is entitled to the shares specified in it.
(2) A share warrant issued under the company's common seal (or, in the case of a company registered in Scotland, subscribed in accordance with section 36B) entitles the bearer to the shares specified in it ; and the shares may be transferred by delivery of the warrant.
(3) A company which issues a share warrant may, if so authorised by its articles, provide (by coupons or otherwise) for the payment of the future dividends on the shares included in the warrant.". Identification of company on common seal 7. In section 350 of the Companies Act 1985 (identification of company on company seal), for subsection (1) substitute
"(1) A company which has a common seal shall have its name engraved in legible characters on the seal ; and if it fails to comply with this subsection it is liable to a fine.".
Floating charges under Scots law 8. In section 462 of the Companies Act 1985 (power of company to create floating charge), for subsections (2) and (3) substitute--
"(2) In the case of a company which the Court of Session has jurisdiction to wind up, a floating charge may be created only by a written instrument which is presumed under section 36B to be subscribed by the company.".
9. In section 466(2) of the Companies Act 1985 (execution of instrument altering floating charge)--
(a) at the beginning of the subsection insert "Without prejudice to any enactment or rule of law regarding the execution of documents," ;
(b) omit paragraph (a) ;
(c) at the end of paragraph (b) insert " ; or", and
(d) omit paragraph (d) and the word "or" preceding it.
10. In section 53(3) of the Insolvency Act 1986 (execution of instrument appointing receiver), in paragraph (a) for "in accordance with the provisions of section 36 of the Companies Act as if it were a contract" substitute "in accordance with section 36B of the Companies Act 1985".'.-- [Mr. Redwood.]
Madam Deputy Speaker-- then proceeded to put forthwith the Question on amendments, relating to part V of the Bill, standing in the name of, or moved by a Member of the Government, of which notice had been given, to that part of the Bill to be concluded at Eleven o'clock.
Amendments made : No. 94, in page 102, line 48, leave out from of' to end of line 50 and insert
anything in the company's memorandum.'.
No. 95, in page 103, leave out lines 1 to 8 and insert--
(2) A member of a company may bring proceedings to restrain the doing of an act which but for subsection (1) would be beyond the company's capacity ; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(3) It remains the duty of the directors to observe any limitations on their powers flowing from the company's memorandum ; and action by the directors which but for subsection (1) would be beyond the company's capacity may only be ratified by the company by special resolution.
A resolution ratifying such action shall not affect any liability incurred by the directors or any other person ; relief from any such liability must be agreed to separately by special resolution. (4) The operation of this section is restricted by section 30B(1) of the Charities Act 1960 and section 105(3) of the Companies Act 1989 in relation to companies which are charities ; and section 322A below (invalidity of certain transactions to which directors or their associates are parties) has effect notwithstanding this section.'. No. 96, in page 103, line 21, at end insert--
(c) a person shall be presumed to have acted in good faith unless the contrary is proved.'.
No. 97, in page 103, leave out lines 22 to 26 and insert
(2A) The references above to limitations on the directors' powers under the company's constitution include limitations deriving-- (a) from a resolution of the company in general meeting or a meeting of any class of shareholders, or
(b) from any agreement between the members of the company or of any class of shareholders.'.
No. 98, in page 103, line 29, leave out from directors ;' to end of line 31 and insert
but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(3A) Nor does that subsection affect any liability incurred by the directors, or any other person, by reason of the directors' exceeding their powers.'.
No. 99, page 103, leave out lines 32 to 41.
No. 100, in page 103, line 41, at end insert--
(4) The operation of this section is restricted by section 30B(1) of the Charities Act 1960 and section 105(3) of the Companies Act 1989 in relation to companies which are charities ; and section 322A below (invalidity of certain transactions to which directors or their associates are parties) has effect notwithstanding this section.'. No. 101, in page 103, line 43, leave out from is' to or' in line 44 and insert
permitted by the company's memorandum'.
No. 102, in page 103, line 46, at end insert--
(1A) In Schedule 21 to the Companies Act 1985 (effect of registration of companies not formed under that Act), in paragraph 6 (general application of provisions of Act), after sub-paragraph (5) insert--
"(6) Where by virtue of sub-paragraph (4) or (5) a company does not have power to alter a provision, it does not have power to ratify acts of the directors in contravention of the provision.".'.-- [Mr. Redwood.]