Companies (Audit, Investigations and Community Enterprise) Bill [HL]

House of Commons

Session 2002 - 03
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Companies (Audit, Investigations and Community Enterprise) Bill [HL]

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
29

(6)
The Secretary of State may require the Regulator to issue guidance or otherwise
provide assistance about any matter relating to community interest companies
which is specified by the Secretary of State.
(7)
Any guidance issued under this section must be such that it is readily
accessible to, and capable of being easily understood by, those at whom it is
5
aimed; and any other assistance provided under this section must be provided
in the manner which the Regulator considers is most likely to be helpful to
those to whom it is provided.
(8)
Schedule 3 (further provisions about the Regulator) has effect.
26
Appeal Officer
10
(1)
There is to be an officer known as the Appeal Officer for Community Interest
Companies (referred to in this Part as “the Appeal Officer”).
(2)
The Secretary of State must appoint a person to be the Appeal Officer.
(3)
The Appeal Officer has the function of determining appeals against decisions
and orders of the Regulator which under or by virtue of this Act or any other
15
enactment lie to the Appeal Officer.
(4)
An appeal to the Appeal Officer against a decision or order of the Regulator
may be brought on the ground that the Regulator made a material error of law
or fact.
(5)
On such an appeal the Appeal Officer must—
20
(a)
dismiss the appeal,
(b)
allow the appeal, or
(c)
remit the case to the Regulator.
(6)
Where a case is remitted the Regulator must reconsider it in accordance with
any rulings of law and findings of fact made by the Appeal Officer.
25
(7)
Schedule 4 (further provisions about the Appeal Officer) has effect.
27
Official Property Holder
(1)
There is to be an officer known as the Official Property Holder for Community
Interest Companies (referred to in this Part as “the Official Property Holder”).
(2)
The Regulator must appoint a member of the Regulator’s staff to be the Official
30
Property Holder.
(3)
The Official Property Holder has such functions relating to property of
community interest companies as are conferred or imposed by or by virtue of
this Act or any other enactment.
(4)
Schedule 5 (further provisions about the Official Property Holder) has effect.
35
Requirements
28
Cap on distributions and interest
(1)
Community interest companies must not distribute assets to their members
unless regulations make provision authorising them to do so.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
30

(2)
If regulations authorise community interest companies to distribute assets to
their members, the regulations may impose limits on the extent to which they
may do so.
(3)
Regulations may impose limits on the payment of interest on debentures
issued by, or debts of, community interest companies.
5
(4)
Regulations under this section may make provision for limits to be set by the
Regulator.
(5)
The Regulator—
(a)
may set a limit by reference to a rate determined by any other person
(as it has effect from time to time), and
10
(b)
may set different limits for different descriptions of community interest
companies.
(6)
The Regulator must (in accordance with section 25)—
(a)
undertake appropriate consultation before setting a limit, and
(b)
in setting a limit, have regard to its likely impact on community interest
15
companies.
(7)
Regulations under this section may include power for the Secretary of State to
require the Regulator to review a limit or limits.
(8)
Where the Regulator sets a limit he must publish notice of it in the Gazette.
29
Distribution of assets on winding up
20
(1)
Regulations may make provision for and in connection with the distribution,
on the winding up of a community interest company, of any assets of the
company which remain after satisfaction of the company’s liabilities.
(2)
The regulations may, in particular, amend or modify the operation of any
enactment or instrument.
25
30
Memorandum and articles
(1)
The memorandum of a community interest company must state that the
company is to be a community interest company.
(2)
Section 7(1) of the Companies Act 1985 (c. 6) (articles) applies in relation to a
community interest company limited by shares as if it were a company limited
30
by guarantee (so that articles must be registered).
(3)
The memorandum and articles of a community interest company of any
description—
(a)
must at all times include such provisions as regulations require to be
included in the memorandum and articles of every community interest
35
company or a community interest company of that description, and
(b)
must not include such provisions as regulations require not to be so
included.
(4)
The provisions required by regulations under subsection (3)(a) to be included
in the memorandum or articles of a community interest company may (in
40
particular) include—
(a)
provisions about the transfer and distribution of the company’s assets
(including their distribution on a winding up),

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
31

(b)
provisions about the payment of interest on debentures issued by the
company or debts of the company,
(c)
provisions about membership of the company,
(d)
provisions about the voting rights of members of the company,
(e)
provisions about the appointment and removal of directors of the
5
company, and
(f)
provisions about voting at meetings of directors of the company.
(5)
The memorandum and articles of a community interest company are of no
effect to the extent that they—
(a)
are inconsistent with provisions required to be included in the
10
memorandum or articles of the company by regulations under
subsection (3)(a), or
(b)
include provisions required not to be included by regulations under
subsection (3)(b).
(6)
Regulations may make provision for and in connection with restricting the
15
ability of a community interest company under section 4 of the Companies Act
1985 (c. 6) to alter its memorandum with respect to the statement of its objects.
31
Names
(1)
The name of a community interest company which is not a public company
must end with—
20
(a)
“community interest company”, or
(b)
“c.i.c.”.
(2)
But the name of such a company may (instead) end with—
(a)
“cwmni buddiant cymunedol”, or
(b)
“c.b.c.”,
25

if the memorandum of the company states that the company’s registered office
is to be situated in Wales.
(3)
The name of a community interest company which is a public company must
end with—
(a)
“community interest public limited company”, or
30
(b)
“community interest p.l.c.”.
(4)
But the name of such a company may (instead) end with—
(a)
“cwmni buddiant cymunedol cyhoeddus cyfyngedig”, or
(b)
“cwmni buddiant cymunedol c.c.c.”,

if the memorandum of the company states that the company’s registered office
35
is to be situated in Wales.
(5)
Section 25 of the Companies Act 1985 (company name to end with “public
limited company” or “limited” or equivalent) does not apply to community
interest companies.
(6)
Schedule 6 (further provisions about names) has effect.
40

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
32

32
Community interest company reports
(1)
The directors of a community interest company must prepare in respect of each
financial year a report about the company’s activities during the financial year
(a “community interest company report”).
(2)
Section 242(1) of the Companies Act 1985 (c. 6) is to be treated as requiring the
5
directors of a community interest company to deliver to the registrar of
companies a copy of the community interest company report.
(3)
Regulations—
(a)
must make provision requiring community interest company reports to
include information about the remuneration of directors,
10
(b)
may make provision as to the form of, and other information to be
included in, community interest company reports, and
(c)
may apply provisions of the Companies Act 1985 relating to directors’
reports to community interest company reports (with any appropriate
modifications).
15
(4)
The registrar of companies must forward to the Regulator a copy of each
community interest company report delivered to the registrar by virtue of this
section.
33
Community interest test and excluded companies
(1)
This section has effect for the purposes of this Part.
20
(2)
A company satisfies the community interest test if a reasonable person might
consider that its activities are being carried on for the benefit of the community.
(3)
An object stated in the memorandum of a company is a community interest
object of the company if a reasonable person might consider that the carrying
on of activities by the company in furtherance of the object is for the benefit of
25
the community.
(4)
Regulations may provide that activities of a description prescribed by the
regulations are to be treated as being, or as not being, activities which a
reasonable person might consider are activities carried on for the benefit of the
community.
30
(5)
“Community” includes a section of the community (whether in Great Britain or
anywhere else); and regulations may make provision about what does, does
not or may constitute a section of the community.
(6)
A company is an excluded company if it is a company of a description
prescribed by regulations.
35
Becoming a community interest company
34
New companies
(1)
If a company is to be formed as a community interest company, the documents
delivered to the registrar of companies under section 10 of the Companies Act
1985 (memorandum, articles and statement of names and particulars of
40
directors and secretary) must be accompanied by the prescribed formation
documents.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
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(2)
“The prescribed formation documents” means such statutory declarations or
other declarations or statements as are required by regulations to accompany
the documents delivered under that section, in such form as may be approved
in accordance with the regulations.
(3)
On receiving the documents delivered under that section and the prescribed
5
formation documents the registrar of companies must (instead of registering
the memorandum and articles)—
(a)
forward a copy of each of the documents to the Regulator, and
(b)
retain the documents pending the Regulator’s decision.
(4)
The Regulator must decide whether the company is eligible to be formed as a
10
community interest company.
(5)
A company is eligible to be formed as a community interest company if—
(a)
the memorandum and articles comply with the requirements imposed
by and by virtue of section 30 and the company’s name complies with
section 31, and
15
(b)
the Regulator, having regard to the documents delivered under section
10 of the Companies Act 1985 (c. 6), the prescribed formation
documents and any other relevant considerations, considers that the
company will satisfy the community interest test and is not an excluded
company.
20
(6)
The Regulator must give notice of the decision to the registrar of companies
(but the registrar is not required to record it).
(7)
If the Regulator gives notice of a decision that the company is eligible to be
formed as a community interest company, section 12 of the Companies Act
1985 (registration of memorandum and articles) applies; and if the registrar
25
registers the memorandum and articles he must also retain and record the
prescribed formation documents.
(8)
The certificate of incorporation under section 13 of the Companies Act 1985
(effect of registration) is to contain a statement that the company is a
community interest company.
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(9)
The fact that the certificate of incorporation contains such a statement is
conclusive evidence that the company is a community interest company.
(10)
If the Regulator decides that the company is not eligible to be formed as a
community interest company, any subscriber to the memorandum may appeal
to the Appeal Officer against the decision.
35
35
Existing companies: requirements
(1)
If a company is to become a community interest company, the company
must—
(a)
by special resolution alter its memorandum to state that it is to be a
community interest company,
40
(b)
by special resolutions under the Companies Act 1985 make such
alterations of its memorandum and articles as it considers necessary to
comply with requirements imposed by and by virtue of section 30 or
otherwise appropriate in connection with becoming a community
interest company, and
45
(c)
by special resolution change its name to comply with section 31.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
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(2)
Section 380(1) of the Companies Act 1985 (c. 6) (forwarding of copies of special
resolutions to registrar of companies) must be complied with in relation to each
of the special resolutions at the same time.
(3)
If the special resolutions include one under section 4 or 17 of the Companies
Act 1985 (alterations of memorandum)—
5
(a)
copies of the special resolutions must not be forwarded to the registrar
of companies before the relevant date, and
(b)
section 380(1) has effect in relation to them as if it referred to 15 days
after the relevant date.
(4)
If an application is made under section 5 of the Companies Act 1985 (objection
10
to alteration of memorandum under section 4 or 17), the relevant date is—
(a)
the date on which the court determines the application (or, if there is
more than one application, the date on which the last to be determined
by the court is determined), or
(b)
such later date as the court may order.
15
(5)
If there is no application under section 5 of that Act, the relevant date is the end
of the period for making such an application.
(6)
The copies of the special resolutions forwarded to the registrar of companies
must be accompanied by—
(a)
a copy of the memorandum and articles of the company as altered by
20
the special resolutions, and
(b)
the prescribed conversion documents.
(7)
“The prescribed conversion documents” means such statutory declarations or
other declarations or statements as are required by regulations to accompany
the copies of the special resolutions, in such form as may be approved in
25
accordance with the regulations.
36
Existing companies: decisions etc.
(1)
On receiving under section 35 the copies of the special resolutions, the
memorandum and articles as altered by the special resolutions and the
prescribed conversion documents, the registrar of companies must (instead of
30
recording the special resolutions and entering a new name on the register)—
(a)
forward a copy of each of the documents to the Regulator, and
(b)
retain the documents pending the Regulator’s decision.
(2)
The alterations of the memorandum and articles made by the special
resolutions are to take effect only as provided by this section.
35
(3)
The Regulator must decide whether the company is eligible to become a
community interest company.
(4)
A company is eligible to become a community interest company if—
(a)
the memorandum and articles as altered by the special resolutions
comply with the requirements imposed by and by virtue of section 30
40
and the company’s name as so altered complies with section 31, and
(b)
the Regulator, having regard to the special resolutions, the
memorandum and articles as altered, the prescribed conversion
documents and any other relevant considerations, considers that the
company will satisfy the community interest test and is not an excluded
45
company.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
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(5)
The Regulator must give notice of the decision to the registrar of companies
(but the registrar is not required to record it).
(6)
If the Regulator gives notice of a decision that the company is eligible to
become a community interest company, section 28(6) of the Companies Act
1985 (c. 6) (registration of new name) applies; and if the registrar of companies
5
enters the new name of the company on the register the registrar must also
retain and record the special resolutions and the prescribed conversion
documents.
(7)
On the special resolutions being recorded, the alterations to the company’s
articles and memorandum made by the special resolutions take effect.
10
(8)
The certificate of incorporation under section 28(6) of the Companies Act 1985
is to contain a statement that the company is a community interest company.
(9)
The fact that the certificate of incorporation contains such a statement is
conclusive evidence that the company is a community interest company.
(10)
If the Regulator decides that the company is not eligible to become a
15
community interest company, the company may appeal to the Appeal Officer
against the decision.
37
Existing companies: charities
(1)
A charitable company may not by special resolution change its name to comply
with section 31 without the prior written consent of the Charity
20
Commissioners.
(2)
If a charitable company contravenes subsection (1), the Charity Commissioners
may apply to the High Court for an order quashing any altered certificate of
incorporation issued under section 28(6) of the Companies Act 1985.
(3)
If a charitable company becomes a community interest company, that does not
25
affect the application of—
(a)
any property acquired under any disposition or agreement previously
made otherwise than for full consideration in money or money’s worth,
or any property representing property so acquired,
(b)
any property representing income which has previously accrued, or
30
(c)
the income from any such property.
(4)
“Charitable company” means a company which is a charity, other than one to
which section 38 applies.
38
Existing companies: Scottish charities
(1)
A Scottish charitable company may not become a community interest
35
company.
(2)
If a Scottish charitable company purports by special resolution to change its
name to comply with section 31, the Commissioners of Inland Revenue may
apply to the Court of Session for an order quashing any altered certificate of
incorporation issued under section 28(6) of the Companies Act 1985.
40
(3)
Regulations may repeal subsections (1) and (2); and subsections (4) to (7) have
effect on and after the day on which regulations under this subsection come
into force.