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 1 — Auditors, accounts, directors’ liabilities and investigations
Chapter 4 — Investigations
29

(a)
comprised in, or in an instrument made under, an Act of the
Scottish Parliament;
(b)
comprised in subordinate legislation (within the meaning of the
Interpretation Act 1978);
(c)
whenever passed or made.”
5
23
Power to enter and remain on premises
After section 453 of the Companies Act 1985 insert—
“453A  Power to enter and remain on premises
(1)
An inspector or investigator may act under subsection (2) in relation to
a company if—
10
(a)
he is authorised to do so by the Secretary of State, and
(b)
he thinks that to do so will materially assist him in the exercise
of his functions under this Part in relation to the company.
(2)
An inspector or investigator may at all reasonable times—
(a)
require entry to relevant premises, and
15
(b)
remain there for such period as he thinks necessary for the
purpose mentioned in subsection (1)(b).
(3)
Relevant premises are premises which the inspector or investigator
believes are used (wholly or partly) for the purposes of the company’s
business.
20
(4)
In exercising his powers under subsection (2), an inspector or
investigator may be accompanied by such other persons as he thinks
appropriate.
(5)
A person who intentionally obstructs a person lawfully acting under
subsection (2) or (4)—
25
(a)
is guilty of an offence, and
(b)
is liable on conviction to a fine.
(6)
Sections 732 (restriction on prosecutions), 733 (liability of individuals
for corporate default) and 734 (criminal proceedings against
unincorporated bodies) apply to the offence under subsection (5).
30
(7)
An inspector is a person appointed under section 431, 432 or 442.
(8)
An investigator is a person authorised for the purposes of section 447.
453B
  Power to enter and remain on premises: procedural
(1)
This section applies for the purposes of section 453A.
(2)
The requirements of subsection (3) must be complied with at the time
35
an inspector or investigator seeks to enter relevant premises under
section 453A(2)(a).
(3)
The requirements are—
(a)
the inspector or investigator must produce evidence of his
identity and evidence of his appointment or authorisation (as
40
the case may be);
(b)
any person accompanying the inspector or investigator must
produce evidence of his identity.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts, directors’ liabilities and investigations
Chapter 4 — Investigations
30

(4)
The inspector or investigator must, as soon as practicable after
obtaining entry, give to an appropriate recipient a written statement
containing such information as to—
(a)
the powers of the investigator or inspector (as the case may be)
under section 453A;
5
(b)
the rights and obligations of the company, occupier and the
persons present on the premises,

as may be prescribed by regulations.
(5)
If during the time the inspector or investigator is on the premises there
is no person present who appears to him to be an appropriate recipient
10
for the purposes of subsection (8), the inspector or investigator must as
soon as reasonably practicable send to the company—
(a)
a notice of the fact and time that the visit took place, and
(b)
the statement mentioned in subsection (4).
(6)
As soon as reasonably practicable after exercising his powers under
15
section 453A(2), the inspector or investigator must prepare a written
record of the visit and—
(a)
if requested to do so by the company he must give it a copy of
the record;
(b)
in a case where the company is not the sole occupier of the
20
premises, if requested to do so by an occupier he must give the
occupier a copy of the record.
(7)
The written record must contain such information as may be prescribed
by regulations.
(8)
If the inspector or investigator thinks that the company is the sole
25
occupier of the premises an appropriate recipient is a person who is
present on the premises and who appears to the inspector or
investigator to be—
(a)
an officer of the company, or
(b)
a person otherwise engaged in the business of the company if
30
the inspector or investigator thinks that no officer of the
company is present on the premises.
(9)
If the inspector or investigator thinks that the company is not the
occupier or sole occupier of the premises an appropriate recipient is—
(a)
a person who is an appropriate recipient for the purposes of
35
subsection (8), and (if different)
(b)
a person who is present on the premises and who appears to the
inspector or investigator to be an occupier of the premises or
otherwise in charge of them.
(10)
A statutory instrument containing regulations made under this section
40
is subject to annulment in pursuance of a resolution of either House of
Parliament.”
24
Failure to comply with certain requirements
After section 453B of the Companies Act 1985 (c. 6) (inserted by section 23)

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 1 — Auditors, accounts, directors’ liabilities and investigations
Chapter 5 — Supplementary
31

insert—
“453C  Failure to comply with certain requirements
(1)
This section applies if a person fails to comply with a requirement
imposed by an inspector, the Secretary of State or an investigator in
pursuance of either of the following provisions—
5
(a)
section 447;
(b)
section 453A.
(2)
The inspector, Secretary of State or investigator (as the case may be)
may certify the fact in writing to the court.
(3)
If, after hearing—
10
(a)
any witnesses who may be produced against or on behalf of the
alleged offender;
(b)
any statement which may be offered in defence,

the court is satisfied that the offender failed without reasonable excuse
to comply with the requirement, it may deal with him as if he had been
15
guilty of contempt of the court.”
Chapter 5
Supplementary
25
Minor and consequential amendments
(1)
Schedule 2 (minor and consequential amendments relating to Part 1) has effect.
20
(2)
That Schedule has effect subject to the modifications set out in subsection (3)—
(a)
in relation to England and Wales, in the case of an offence committed
before section 154(1) of the Criminal Justice Act 2003 (c. 44) comes into
force, and
(b)
in relation to Scotland.
25
(3)
The modifications are—
(a)
the amendment in paragraph 10(2) has effect as if for “12 months” there
were substituted “6 months”;
(b)
the amendment in paragraph 10(3) has effect as if for “12 months”, in
both places where it occurs, there were substituted “3 months”;
30
(c)
the amendment in paragraph 10(4) has effect as if for “12 months” there
were substituted “6 months”;
(d)
the amendment in paragraph 26(2) has effect as if for “12 months” there
were substituted “6 months”; and
(e)
the amendment in paragraph 26(3) has effect as if for “12 months” there
35
were substituted “6 months”.

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

Part 2
Community interest companies
Introductory
26
Community interest companies
(1)
There is to be a new type of company to be known as the community interest
5
company.
(2)
In accordance with this Part—
(a)
a company limited by shares or a company limited by guarantee and
not having a share capital may be formed as or become a community
interest company, and
10
(b)
a company limited by guarantee and having a share capital may
become a community interest company.
(3)
A community interest company established for charitable purposes is to be
treated as not being so established, and accordingly—
(a)
is not a charity, and
15
(b)
must not be given such intimation as is mentioned in section 1(7) of the
Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40)
(Scottish charities).
27
Regulator
(1)
There is to be an officer known as the Regulator of Community Interest
20
Companies (referred to in this Part as “the Regulator”).
(2)
The Secretary of State must appoint a person to be the Regulator.
(3)
The Regulator has such functions relating to community interest companies as
are conferred or imposed by or by virtue of this Act or any other enactment.
(4)
The Regulator must adopt an approach to the discharge of those functions
25
which is based on good regulatory practice, that is an approach adopted
having regard to—
(a)
the likely impact on those who may be affected by the discharge of
those functions,
(b)
the outcome of consultations with, and with organisations
30
representing, community interest companies and others with relevant
experience, and
(c)
the desirability of using the Regulator’s resources in the most efficient
and economic way.
(5)
The Regulator may issue guidance, or otherwise provide assistance, about any
35
matter relating to community interest companies.
(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
40
accessible to, and capable of being easily understood by, those at whom it is
aimed; and any other assistance provided under this section must be provided

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
33

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.
28
Appeal Officer
(1)
There is to be an officer known as the Appeal Officer for Community Interest
5
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
enactment lie to the Appeal Officer.
10
(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—
(a)
dismiss the appeal,
15
(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.
(7)
Schedule 4 (further provisions about the Appeal Officer) has effect.
20
29
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
Property Holder.
25
(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.
Requirements
30
30
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.
(2)
If regulations authorise community interest companies to distribute assets to
their members, the regulations may impose limits on the extent to which they
35
may do so.
(3)
Regulations may impose limits on the payment of interest on debentures
issued by, or debts of, community interest companies.

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
34

(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
5
(b)
may set different limits for different descriptions of community interest
companies.
(6)
The Regulator must (in accordance with section 27)—
(a)
undertake appropriate consultation before setting a limit, and
(b)
in setting a limit, have regard to its likely impact on community interest
10
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.
31
Distribution of assets on winding up
15
(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.
20
32
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
25
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
30
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
35
particular) include—
(a)
provisions about the transfer and distribution of the company’s assets
(including their distribution on a winding up),
(b)
provisions about the payment of interest on debentures issued by the
company or debts of the company,
40
(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
company, and

Companies (Audit, Investigations and Community Enterprise) Bill [HL]
Part 2 — Community interest companies
35

(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
memorandum or articles of the company by regulations under
5
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
ability of a community interest company under section 4 of the Companies Act
10
1985 to alter its memorandum with respect to the statement of its objects.
33
Names
(1)
The name of a community interest company which is not a public company
must end with—
(a)
“community interest company”, or
15
(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.”,

if the memorandum of the company states that the company’s registered office
20
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
(b)
“community interest p.l.c.”.
25
(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
is to be situated in Wales.
30
(5)
Section 25 of the Companies Act 1985 (c. 6) (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.
34
Community interest company reports
35
(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 is to be treated as requiring the
directors of a community interest company to deliver to the registrar of
40
companies a copy of the community interest company report.
(3)
Regulations—