Company Law Reform Bill [HL]

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL]

Company Law Reform Bill [HL]
Part 1 — General introductory provisions
1

A
Bill
To
Reform company law and restate the greater part of the enactments relating to
companies; to make other provision relating to companies and other forms of
business organisation; to make provision about business names, auditors and
actuaries; to amend Part 9 of the Enterprise Act 2002; and for connected
purposes.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Part 1
General introductory provisions
Companies and Companies Acts
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Companies
(1)
In the Companies Acts, unless the context otherwise requires—
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“company” means a company formed and registered under this Act or an
existing company; and
“existing company” means a company that immediately before the
commencement of this Part was formed and registered under—
(a)
the Companies Act 1985 (c. 6), or
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(b)
the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032
(N.I. 6)),
or was an existing company for the purposes of that Act or that Order.
(2)
Certain provisions of the Companies Acts apply to companies incorporated in
the United Kingdom that—
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(a)
are registered, but were not formed, under those Acts (see section 694),
or
(b)
are unregistered (see section 698).

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Company Law Reform Bill [HL]
Part 1 — General introductory provisions
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(3)
For provisions applying to companies incorporated outside the United
Kingdom, see Part 28 (overseas companies).
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The Companies Acts
(1)
In this Act “the Companies Acts” means—
(a)
the company law provisions of this Act,
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(b)
Part 2 of the Companies (Audit, Investigations and Community
Enterprise) Act 2004 (c. 27) (community interest companies), and
(c)
the provisions of the Companies Act 1985 (c. 6) and the Companies
Consolidation (Consequential Provisions) Act 1985 (c. 9) that remain in
force.
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(2)
The company law provisions of this Act are—
(a)
the provisions of Parts 1 to 33 of this Act, and
(b)
the provisions of Parts 38 to 40 of this Act so far as they apply for the
purposes of those Parts.
(3)
Except as otherwise provided—
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(a)
expressions that are defined for the purposes of the company law
provisions of this Act have the same meaning in the Companies Act
1985, and
(b)
expressions that are defined for the purposes of that Act have the same
meaning in the company law provisions of this Act.
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Types of company
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Limited and unlimited companies
(1)
A company is a “limited company” if the liability of its members is limited by
its constitution.

It may be limited by shares or limited by guarantee.
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(2)
If their liability is limited to the amount, if any, unpaid on the shares held by
them, the company is “limited by shares”.
(3)
If their liability is limited to such amount as the members undertake to
contribute to the assets of the company in the event of its being wound up, the
company is “limited by guarantee”.
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(4)
If there is no limit on the liability of its members, the company is an “unlimited
company”.
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Private and public companies
(1)
A “private company” is any company that is not a public company.
(2)
A “public company” is a company limited by shares or limited by guarantee
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and having a share capital—
(a)
whose certificate of incorporation states that it is a public company, and
(b)
in relation to which the requirements of the Companies Acts, or the
former Companies Acts, as to registration or re-registration as a public
company have been complied with on or after the relevant date.
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(3)
For the purposes of subsection (2)(b) the relevant date is—

Company Law Reform Bill [HL]
Part 2 — Company formation
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(a)
in relation to registration or re-registration in Great Britain, 22nd
December 1980;
(b)
in relation to registration or re-registration in Northern Ireland, 1st July
1983.
(4)
For the two major differences between private and public companies, see Part
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17.
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Companies limited by guarantee and having share capital
(1)
A company cannot be formed as, or become, a company limited by guarantee
with a share capital.
(2)
Provision to this effect has been in force—
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(a)
in Great Britain since 22nd December 1980, and
(b)
in Northern Ireland since 1st July 1983.
(3)
Any provision in the constitution of a company limited by guarantee that
purports to divide the company’s undertaking into shares or interests is a
provision for a share capital.
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This applies whether or not the nominal value or number of the shares or
interests is specified by the provision.
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Community interest companies
(1)
In accordance with Part 2 of the Companies (Audit, Investigations and
Community Enterprise) Act 2004 (c. 27)—
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(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
(b)
a company limited by guarantee and having a share capital may
become a community interest company.
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(2)
The other provisions of the Companies Acts have effect subject to that Part.
Part 2
Company formation
General
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Method of forming company
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(1)
A company is formed under this Act by one or more persons—
(a)
subscribing their names to a memorandum of association (see section
8), and
(b)
complying with the requirements of this Act as to registration (see
sections 9 to 13).
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(2)
A company may not be so formed for an unlawful purpose.

Company Law Reform Bill [HL]
Part 2 — Company formation
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Memorandum of association
(1)
A memorandum of association is a memorandum stating that the
subscribers—
(a)
wish to form a company under this Act, and
(b)
agree to become members of the company and, in the case of a company
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that is to have a share capital, to take at least one share each.
(2)
The memorandum must be in the prescribed form and must be authenticated
by each subscriber.
Requirements for registration
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Registration documents
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(1)
The memorandum of association must be delivered to the registrar together
with an application for registration of the company, the documents required by
this section and a statement of compliance.
(2)
The application for registration must state—
(a)
the company’s proposed name,
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(b)
whether the company’s registered office is to be situated in England
and Wales (or in Wales), in Scotland or in Northern Ireland,
(c)
whether the liability of the members of the company is to be limited,
and if so whether it is to be limited by shares or by guarantee, and
(d)
whether the company is to be a private or a public company.
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(3)
If the application is delivered by a person as agent for the subscribers to the
memorandum of association, it must state his name and address.
(4)
The application must contain—
(a)
in the case of a company that is to have a share capital, a statement of
capital and initial shareholdings (see section 10);
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(b)
in the case of a company that is to be limited by guarantee, a statement
of guarantee (see section 11);
(c)
a statement of the company’s proposed officers (see section 12).
(5)
The application must also contain—
(a)
a statement of the intended address of the company’s registered office;
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and
(b)
a copy of any proposed articles of association (to the extent that these
are not supplied by the default application of model articles: see section
20).
(6)
The application must be delivered—
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(a)
to the registrar of companies for England and Wales, if the registered
office of the company is to be situated in England and Wales (or in
Wales);
(b)
to the registrar of companies for Scotland, if the registered office of the
company is to be situated in Scotland;
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(c)
to the registrar of companies for Northern Ireland, if the registered
office of the company is to be situated in Northern Ireland.