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Clause 102
Invalidity of certain transactions involving directors
Amendments made : No. 103, in page 104, leave out lines 3 to 29 and insert--
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322A.--(1) This section applies where a company enters into a transaction to which the parties include--(a) a director of the company or of its holding company, or (b) a person connected with such a director or a company with whom such a director is associated,
and the board of directors, in connection with the transaction, exceed any limitation on their powers under the company's constitution.
(2) The transaction is voidable at the instance of the company. (3) Whether or not it is avoided, any such party to the transaction as is mentioned in subsection (1)(a) or (b), and any director of the company who authorised the transaction, is liable--
(a) to account to the company for any gain which he has made directly or indirectly by the transaction, and
(b) to indemnify the company for any loss or damage resulting from the transaction.
(4) Nothing in the above provisions shall be construed as excluding the operation of any other enactment or rule of law by virtue of which the transaction may be called in question or any liability to the company may arise.
(5) The transaction ceases to be voidable if--
(a) restitution of any money or other asset which was the subject-matter of the transaction is no longer possible, or (b) the company is indemnified for any loss or damage resulting from the transaction, or
(c) rights acquired bona fide for value and without actual notice of the directors' exceeding their powers by a person who is not party to the transaction would be affected by the avoidance, or (d) the transaction is ratified by the company in general meeting, by ordinary or special resolution or otherwise as the case may require.
(6) A person other than a director of the company is not liable under subsection (3) if he shows that at the time the transaction was entered into he did not know that the directors were exceeding their powers.
(7) This section does not affect the operation of section 35A in relation to any party to the transaction not within subsection (1)(a) or (b).
But where a transaction is voidable by virtue of this section and valid by virtue of that section in favour of such a person, the court may, on the application of that person or of the company, make such order affirming, severing or setting aside the transaction, on such terms, as appear to the court to be just.
(8) In this section "transaction" includes any act ; and the reference in subsection (1) to limitations under the company's constitution includes 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.".'.-- [Mr. Redwood.]
Clause 103
Statement of company's objects
Amendment made : No. 104, in page 104, line 36, leave out from formation),' to A' in line 46 and insert
after section 3 (forms of memorandum) insert--
" Statement of company's objects :general commercial company 3A. Where the company's memorandum states that the object of the company is to carry on business as a general commercial company-- (
(a) the object of the company is to carry on any trade or business whatsoever, and
(b) the company has power to do all such things as are incidental or conducive to the carrying on of any trade or business by it.". (2) In the same Chapter, for section 4 (resolution to alter objects) substitute--
Resolution to alter objects
4.--(1)'.-- [Mr. Redwood.]
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Clause 104
Charitable companies
Amendments made : No. 105, in page 105, line 37, leave out from beginning to end of line 12 on page 106 and insert
30B.--(1) Section 35 of the Companies Act 1985 (capacity of company not limited by its memorandum), and section 35A of that Act (power of directors to bind company) so far as it relates to acts which but for section 35 would be beyond the capacity of the company, do not apply to the acts of a company which is a charity except in favour of a person who
(a) gives full consideration in money or money's worth in relation to the act in question, and
(b) does not know that the act is not permitted by the company's memorandum or, as the case may be, is beyond the powers of the directors,
or who does not know at the time the act is done that the company is a charity.
(2) However, where such a company purports to transfer or grant an interest in property, the fact that the act was not permitted by the company's memorandum or, as the case may be, that the directors in connection with the act exceeded any limitation on their powers under the company's constitution, does not affect the title of a person who subsequently acquires the property or any interest in it for full consideration without actual notice of any such circumstances affecting the validity of the company's act.
(3) In any proceedings arising out of subsection (1) the burden of proving- -
(a) that a person knew that an act was not permitted by the company's memorandum or was beyond the powers of the directors, or (
(b) that a person knew that the company was a charity,
lies on the person making that allegation.
(4) Where a company is a charity, the ratification of an act under section 35(3) of the Companies Act 1985, or the ratification of a transaction to which section 322A of that Act applies (invalidity of certain transactions to which directors or their associates are parties), is ineffective without the prior written consent of the Commissioners.'.
No. 106, in page 106, line 22, after company,' insert
(cc) in all conveyances purporting to be executed by the company, '.
No. 107, in page 106, line 24, at end insert--
(1A) In subsection (1)(cc) "conveyance" means any instrument creating, transferring, varying or extinguishing an interest in land.'.-- [Mr. Redwood.]
Clause 105
Charitable Companies (Scotland)
Amendments made : No. 108, in page 107, line 8, leave out subsections (3) to (5) and insert--
(3) Section 35 of the Companies Act 1985 (capacity of company not limited by its memorandum), and section 35A of that Act (power of directors to bind company) so far as it relates to acts which but for section 35 would be beyond the capacity of the company, do not apply to the acts of a company which is a charity except in favour of a personwho--
(a) gives full consideration in money or money's worth in relation to the act in question,
(b) does not know that the act is not permitted by the company's memorandum or, as the case may be, is beyond the powers of the directors,
or who does not know at the time the act is done that the company is a charity.
(4) However, where such a company purports to transfer or grant an interest in property, the fact that the act was not permitted by the company's memorandum or, as the case may be, that the directors in connection with the act exceeded any limitation on their powers under the company's constitution, does not affect the title of a person who subsequently acquires
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the property or any interest in it for full consideration without actual notice of any such circumstances affecting the validity of the company's act.(5) In any proceedings arising out of subsection (3) the burden of proving- -
(a) that a person knew that an act was not permitted by the company's memorandum or was beyond the powers of the directors, or (
(b) that a person knew that the company was a charity,
lies on the person making that allegation.'.
No. 109, in page 107, line 32, after company,' insert
(cc) in all conveyances purporting to be executed by the company.'.
No. 110, in page 107, line 33, at end insert--
(6A) In subsection (6)(cc) "conveyance" means any document for the creation, transfer, variation or extinction of an interest in land.'.
No. 111, in page 115, line 33, leave out from section' to end of line 35 and insert
388A (dormant company exempt from obligation to appoint auditors).'.-- [Mr. Redwood.]
Clause 112
Appointment of auditors
Amendments made : No. 112, in page 118, line 12, at end insert-- Dormant company exempt from obligationto appoint auditors 388A.--(1) A company which by virtue of section 250 (dormant companies : exemption from provisions as to audit of accounts) is exempt from the provisions of Part VII relating to the audit of accounts is also exempt from the obligation to appoint auditors. (2) The following provisions apply if the exemption ceases. (3) Where section 385 applies (appointment at general meeting at which accounts are laid), the directors may appoint auditors at any time before the next meeting of the company at which accounts are to be laid ; and auditors so appointed shall hold office until the conclusion of that meeting.
(4) Where section 385A applies (appointment by private company not obliged to lay accounts), the directors may appoint auditors at any time before--
(a) the end of the period of 28 days beginning with the day on which copies of the company's annual accounts are next sent to members under section 238, or
(b) if notice is given under section 253(2) requiring the laying of the accounts before the company in general meeting, the beginning of that meeting ;
and auditors so appointed shall hold office until the end of that period or, as the case may be, the conclusion of that meeting. (5) If the directors fail to exercise their powers under subsection (3) or (4), the powers may be exercised by the company in general meeting.'.
No. 113, in page 118, line 19, at end insert--
(3) In section 46(2) of the Banking Act 1987 (duty of auditor of authorised institution to give notice to Bank of
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England of certain matters) for "appointed under section 384" substitute "appointed under Chapter V of Part XI" ; and in section 46(4) (adaptation of references in relation to Northern Ireland) for "sections 384," substitute "Chapter V of Part XI and sections".'.-- [Mr. Redwood.]Clause 113
Rights of Auditors
Amendments made : No. 114, in page 118, line 20, leave out section is' and insert sections are'.
No. 115, in page 118, line 22, at end insert--
Rights to information 389A.--(1) The auditors of a company have right of access at all times to the company's books, accounts and vouchers, and are entitled to require from the company's officers such information and explanations as they think necessary for the performance of their duties as auditors.
(2) An officer of a company commits an offence if he knowingly or recklessly makes to the company's auditors a statement (whether written or oral) which--
(a) conveys or purports to convey any information or explanations which the auditors require, or are entitled to require, as auditors of the company, and
(b) is misleading, false or deceptive in a material particular. A person guilty of an offence under this subsection is liable to imprisonment or a fine, or both.
(3) A subsidiary undertaking which is a body corporate incorporated in Great Britain, and the auditors of such an undertaking, shall give to the auditors of any parent company of the undertaking such information and explanations as they may reasonably require for the purposes of their duties as auditors of that company.
If a subsidiary undertaking fails to comply with this subsection, the undertaking and every officer of it who is in default is guilty of an offence and liable to a fine ; and if an auditor fails without reasonable excuse to comply with this subsection he is guilty of an offence and liable to a fine.
(4) A parent company having a subsidiary undertaking which is not a body corporate incorporated in Great Britain shall, if required by its auditors to do so, take all such steps as are reasonably open to it to obtain from the subsidiary undertaking such information and explanations as they may reasonably require for the purposes of their duties as auditors of that company.
If a parent company fails to comply with this subsection, the company and every officer of it who is in default is guilty of an offence and liable to a fine.
(5) Section 734 (criminal proceedings against unincorporated bodies) applies to an offence under subsection (3).'.
No. 116, in page 119, line 8, leave out subsection (2). No. 117, in page 119, line 10, at end insert--
(2A) In section 734 of the Companies Act 1985 (criminal proceedings against uncorporated bodies), in subsection (1) (offences in relation to which the provisions apply), after "under" insert "section 389A(3) or".
(2B) In Schedule 24 to the Companies Act 1985 (punishment of offences) at the appropriate place insert--
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"389A(2) Officer of company making false, misleading or deceptive statement to auditors. 1. On indictment. 2 years or a fine ; or both.2. Summary. 6 months or the statutory maximum ; or both. 389A(3) Subsidiary undertaking or its auditor failing to give information to auditors of parent company. Summary. One-fifth of the statutory maximum.
389A(4) Parent company failing to obtain from subsidiary undertaking information for purposes of audit. Summary. One-fifth of the statutory maximum.".'.-- [Mr. Redwood.]
(4) In Schedule 22 to the Companies Act 1985 (unregistered companies), in the entry for sections 384 to 393, for "393" substitute "394A".'.
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Clause 116
Statement by person ceasing to hold office as auditor
Amendments made : No. 118, in page 125, line 43, leave out Section' and insert
Sections 733 (liability of individuals for corporate default) and'.
No. 119, in page 126, line 13, at end insert--
(2A) In section 733 of the Companies Act 1985 (liability of individuals for corporate default), in subsection (1) (offences in relation to which provisions apply) after "216(3)" insert ", 394A(1)".'.
No. 120, in page 126, line 17, at end insert--
Clause 120
Supplementary provisions as to company records and related matters
Amendments made : No. 121, in page 130, line 32, at end insert-- (7) In Schedule 22 to the Companies Act 1985 (unregistered companies), in the entry for Part XXIV for "sections 706, 708 to 710, 712 and 713" substitute "sections 706 to 710A, 713 and 715A".'.-- [Mr. Redwood.]
Clause 122
Membership of holding company
Amendment made : No. 122, in page 132, line 29, after paragraphs' insert 1(1),'.-- [Mr. Redwood.]
Clause 123
Abolition of requirement to have company seal
Amendment made : No. 123, in page 132, line 32, leave out clause 123.-- [Mr. Redwood.]
Clause 126
Additional requirements for recognition : default rules, & c.
Amendment made : No 305, in page 134, line 24, at end insert-- The order bringing the above amendment into force may make such provision as appears to the Secretary of State appropriate as to the obligations of a person whose interest in a company's shares becomes notifiable by virtue of the amendment coming into force.'.-- [Mr. Nelson.]
Clause 129
Annual returns
Amendments made : No. 124, in page 137, line 43, leave out company's' and insert type of company it is and its'.
No. 125, in page 138, line 24, at end insert--
(1A) The information as to the company's type shall be given by reference to the classification scheme prescribed for the purposes of this section.'.
No. 126, in page 139, line 4, leave out from first of' to and' in line 5 and insert
issued shares of the company at the date to which the return is made up'.
No. 127, in page 139, line 11, leave out from beginning to end of line 13 and insert
issued shares of that class at the date to which the return is made up.'.
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No. 128, in page 139, line 14, leave out from beginning to end of line 35 and insert--(4) The return shall contain a list of the names and addresses of every person who--
(a) is a member of the company on the date to which the return is made up, or
(b) has ceased to be a member of the company since the date to which the last return was made up (or, in the case of the first return, since the incorporation of the company) ;
and if the names are not arranged in alphabetical order the return shall have annexed to it an index sufficient to enable the name of any person in the list to be easily found.
(5) The return shall also state--
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