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SCHEDULE 18
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CONTROL OF POLITICAL DONATIONS BY COMPANIES: NEW PART XA OF COMPANIES ACT 1985 |
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PART XA |
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CONTROL OF POLITICAL DONATIONS |
| Introductory provisions. |
347A. - (1) This Part has effect for controlling-
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(a) contributions and other donations made by companies to registered parties and other EU political organisations; and |
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(b) EU political expenditure incurred by companies. |
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(2) The following provisions have effect for the purposes of this Chapter.
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(3) "Director" includes shadow director.
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(4) "Donation", in relation to an organisation, means anything that would constitute a donation for the purposes of Part IV of the Political Parties, Elections and Referendums Act 2000 in accordance with sections 45 and 46 of that Act (references in those sections to a registered party being read as applying equally to an organisation which is not such a party); and-
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(a) subsections (3), (4) and (6) of section 45 of that Act shall apply, with any necessary modifications, for the purpose of determining whether something is a donation to an organisation for the purposes of this Part as they apply for the purpose of determining whether something is a donation to a registered party for the purposes of Part IV of that Act; and |
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(b) section 47 of that Act shall similarly apply for the purpose of determining, for the purposes of this Part, the value of any donation. |
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(5) "EU political expenditure", in relation to a company, means any expenditure incurred by the company in respect of the preparation, publication or dissemination of any advertising or any other promotional or publicity material-
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(a) of whatever nature, and |
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(b) however published or otherwise disseminated, |
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which, at the time of publication or dissemination, is capable of being reasonably regarded as intended to affect public support for any EU political organisation.
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(6) "EU political organisation" means-
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(a) a registered party; or |
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(b) any other organisation which carries on, or proposes to carry on, activities of any political nature in the United Kingdom or any other member State. |
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(7) "The relevant time", in relation to any donation or expenditure made or incurred by a company or subsidiary undertaking, means-
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(a) the time when the donation or expenditure is made or incurred; or |
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(b) if earlier, the time when any contract is entered into by the company or undertaking in pursuance of which the donation or expenditure is made or incurred. |
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(8) "Subsidiary undertaking" has the same meaning as in Part VII.
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| Prohibition on donations and political expenditure by companies. |
347B. - (1) A company must not-
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(a) make any donation to any registered party or to any other EU political organisation, or |
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(b) incur any EU political expenditure, |
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unless the donation or expenditure is authorised by virtue of an approval resolution passed by the company in general meeting before the relevant time.
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This subsection has effect subject to section 347C(3).
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(2) For the purposes of this section an approval resolution is a qualifying resolution which authorises the company to do either (or both) of the following, namely-
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(a) make donations to EU political organisations not exceeding in total a sum specified in the resolution, or |
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(b) incur EU political expenditure not exceeding in total a sum so specified, |
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during the requisite period beginning with the date of the resolution.
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(3) In subsection (2)-
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(a) "qualifying resolution" means an ordinary resolution or, if the directors so determine or the articles so require- |
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(i) a special resolution, or
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(ii) a resolution passed by any percentage of the members greater than that required for an ordinary resolution;
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(b) "the requisite period" means four years or such shorter period as the directors may determine or the articles may require; |
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and the directors may make a determination for the purposes of paragraph (a) or (b) above except where any provision of the articles operates to prevent them from doing so.
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(4) The resolution must be expressed in general terms conforming with subsection (2), and accordingly may not purport to authorise particular donations or expenditure.
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(5) Where a company makes any donation or incurs any expenditure in contravention of subsection (1), no ratification or other approval made or given by the company or its members after the relevant time is capable of operating to nullify that contravention.
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(6) Nothing in this section enables a company to be authorised to do anything that it could not lawfully do apart from this section.
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| Special rules for subsidiaries. |
347C. - (1) This section applies where a company is a subsidiary of another company ("the holding company").
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(2) Where the subsidiary is not a wholly-owned subsidiary of the holding company-
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(a) it must not make any donation or incur any expenditure to which subsection (1) of section 347B applies unless the donation or expenditure is authorised by virtue of a subsidiary approval resolution passed by the holding company in general meeting before the relevant time; and |
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(b) this requirement applies in addition to that imposed by that subsection. |
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(3) Where the subsidiary is a wholly-owned subsidiary of the holding company-
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(a) it must not make any donation or incur any expenditure to which subsection (1) of section 347B applies unless the donation or expenditure is authorised by virtue of a subsidiary approval resolution passed by the holding company in general meeting before the relevant time; and |
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(b) this requirement applies in place of that imposed by that subsection. |
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(4) For the purposes of this section a subsidiary approval resolution is a qualifying resolution of the holding company which authorises the subsidiary to do either (or both) of the following, namely-
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(a) make donations to EU political organisations not exceeding in total a sum specified in the resolution, or |
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(b) incur EU political expenditure not exceeding in total a sum so specified, |
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during the requisite period beginning with the date of the resolution.
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(5) Subsection (3) of section 347B shall apply for the purposes of subsection (4) above as it applies for the purposes of subsection (2) of that section.
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(6) The resolution must be expressed in general terms conforming with subsection (4), and accordingly may not purport to authorise particular donations or expenditure.
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(7) The resolution may not relate to donations or expenditure by more than one subsidiary.
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(8) Where a subsidiary makes any donation or incurs any expenditure in contravention of subsection (2) or (3), no ratification or other approval made or given by the holding company or its members after the relevant time is capable of operating to nullify that contravention.
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(9) Nothing in this section enables a company to be authorised to do anything that it could not lawfully do apart from this section.
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| Special rule for parent company of non-GB subsidiary undertaking. |
347D. - (1) This section applies where a company ("the parent company") has a subsidiary undertaking which is incorporated or otherwise established outside Great Britain.
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(2) The parent company shall take all such steps as are reasonably open to it to secure that the subsidiary undertaking does not make any donation or incur any expenditure to which subsection (1) of section 347B applies except to the extent that the donation or expenditure is authorised by virtue of a subsidiary approval resolution passed by the parent company in general meeting before the relevant time.
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(3) For the purposes of this section a subsidiary approval resolution is a qualifying resolution of the parent company which authorises the subsidiary undertaking to do either (or both) of the following, namely-
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(a) make donations to EU political organisations not exceeding in total a sum specified in the resolution, or |
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(b) incur EU political expenditure not exceeding in total a sum so specified, |
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during the requisite period beginning with the date of the resolution.
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(4) Subsection (3) of section 347B shall apply for the purposes of subsection (3) above as it applies for the purposes of subsection (2) of that section.
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(5) The resolution must be expressed in general terms conforming with subsection (3), and accordingly may not purport to authorise particular donations or expenditure.
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(6) The resolution may not relate to donations or expenditure by more than one subsidiary undertaking.
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(7) Where a subsidiary undertaking makes any donation or incurs any expenditure which (to any extent) is not authorised as mentioned in subsection (2), no ratification or other approval made or given by the parent company or its members after the relevant time is capable of operating to authorise that donation or expenditure.
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| Remedies for breach of prohibitions on company donations etc. |
347E. - (1) This section applies where a company has made any donation or incurred any expenditure in contravention of any of the provisions of sections 347B and 347C.
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(2) Every person who was a director of the company at the relevant time is liable to pay the company-
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(a) the amount of the donation or expenditure made or incurred in contravention of the provisions in question; and |
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(b) damages in respect of any loss or damage sustained by the company as a result of the donation or expenditure having been made or incurred in contravention of those provisions. |
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(3) Every such person is also liable to pay the company interest on the amount mentioned in subsection (2)(a) in respect of the period-
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(a) beginning with the date when the donation or expenditure was made or incurred, and |
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(b) ending with the date when that amount is paid to the company by any such person; |
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and such interest shall be payable at such rate as the Secretary of State may prescribe by regulations.
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(4) Where two or more persons are subject to a particular liability arising by virtue of any provision of this section, each of those persons is jointly and severally liable.
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(5) Where only part of any donation or expenditure was made or incurred in contravention of any of the provisions of sections 347B and 347C, this section applies only to so much of it as was so made or incurred.
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(6) Where-
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(a) this section applies as mentioned in subsection (1), and |
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(b) the company in question is a subsidiary of another company ("the holding company"), |
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then (subject to subsection (7)) subsections (2) to (5) shall, in connection with the donation or expenditure made or incurred by the subsidiary, apply in relation to the holding company as they apply in relation to the subsidiary.
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(7) Those subsections do not apply in relation to the holding company if-
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(a) the subsidiary is not a wholly-owned subsidiary of the holding company; and |
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(b) the donation or expenditure was authorised by such a resolution of the holding company as is mentioned in section 347C(2)(a). |
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(8) Nothing in section 727 shall apply in relation to any liability of any person arising under this section.
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