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Company Law Reform Bill [HL]


Company Law Reform Bill [HL]
Part 10 — Company directors
Chapter 7 — Directors’ liabilities

100

 

(2)   

If when a directors’ report is approved any qualifying third party indemnity

provision (whether made by the company or otherwise) is in force for the

benefit of one or more directors of the company, the report must state that such

provision is in force.

(3)   

If at any time during the financial year to which a directors’ report relates any

5

such provision was in force for the benefit of one or more persons who were

then directors of the company, the report must state that such provision was in

force.

(4)   

If when a directors’ report is approved qualifying third party indemnity

provision made by the company is in force for the benefit of one or more

10

directors of an associated company, the report must state that such provision

is in force.

(5)   

If at any time during the financial year to which a directors’ report relates any

such provision was in force for the benefit of one or more persons who were

then directors of an associated company, the report must state that such

15

provision was in force.

220     

Copy of qualifying third party indemnity provision to be available for

inspection

(1)   

This section has effect where qualifying third party indemnity provision is

made for a director of a company, and applies—

20

(a)   

to the company of which he is a director (whether the provision is made

by that company or an associated company), and

(b)   

where the provision is made by an associated company, to that

company.

(2)   

That company or, as the case may be, each of them must keep available for

25

inspection—

(a)   

a copy of the qualifying third party indemnity provision, or

(b)   

if the provision is not in writing, a written memorandum setting out its

terms.

(3)   

The copy or memorandum must be kept available for inspection at—

30

(a)   

the company’s registered office;

(b)   

the place where its register of members is kept available for inspection

(if not at its registered office); or

(c)   

its principal place of business (if that is situated in the part of the United

Kingdom in which the company is registered).

35

(4)   

The copy or memorandum must be retained by the company for at least one

year from the date of termination or expiry of the provision and must be kept

available for inspection during that time.

(5)   

The company must give notice to the registrar—

(a)   

of the place at which the copy or memorandum is kept available for

40

inspection, and

(b)   

of any change in that place,

   

unless it has at all times been kept at the company’s registered office.

(6)   

If default is made in complying with subsection (2), (3) or (4), or default is made

for 14 days in complying with subsection (5), an offence is committed by every

45

officer of the company who is in default.

 
 

Company Law Reform Bill [HL]
Part 10 — Company directors
Chapter 7 — Directors’ liabilities

101

 

(7)   

A person guilty of an offence under this section is liable on summary

conviction to a fine not exceeding level 3 on the standard scale and, for

continued contravention, a daily default fine not exceeding one-tenth of level

3 on the standard scale.

(8)   

The provisions of this section apply to a variation of a qualifying third party

5

indemnity provision as they apply to the original provision.

221     

Right of member to inspect and request copy

(1)   

Every copy or memorandum required to be kept by a company under section

220 must be open to inspection by any member of the company without charge.

(2)   

Any member of the company is entitled, on request and on payment of such

10

fee as may be prescribed, to be provided with a copy of any such copy or

memorandum.

   

The copy must be provided within seven days after the request is received by

the company.

(3)   

If an inspection required under subsection (1) is refused, or default is made in

15

complying with subsection (2), an offence is committed by every officer of the

company who is in default.

(4)   

A person guilty of an offence under this section is liable on summary

conviction to a fine not exceeding level 3 on the standard scale and, for

continued contravention, a daily default fine not exceeding one-tenth of level

20

3 on the standard scale.

(5)   

In the case of any such refusal or default the court may by order compel an

immediate inspection or, as the case may be, direct that the copy required be

sent to the person requiring it.

Ratification of acts giving rise to liability

25

222     

Ratification of acts of directors

(1)   

This section applies to the ratification by a company of conduct by a director

amounting to negligence, default, breach of duty or breach of trust in relation

to the company.

(2)   

The decision of the company to ratify such conduct—

30

(a)   

must be taken by the members, and

(b)   

may be taken by ordinary resolution, subject to anything in the

company’s articles requiring a higher majority (or unanimity).

(3)   

Where the resolution is proposed as a written resolution neither the director (if

a member of the company) nor any member connected with him is an eligible

35

member.

(4)   

Where the resolution is proposed at a meeting, it is passed only if the necessary

majority is obtained disregarding votes in favour of the resolution by the

director (if a member of the company) and any member connected with him.

   

This does not prevent the director or any such member from attending, being

40

counted towards the quorum and taking part in the proceedings at any

meeting at which the decision is considered.

(5)   

For the purposes of this section—

 
 

Company Law Reform Bill [HL]
Part 10 — Company directors
Chapter 8 — Directors’ residential addresses: protection from disclosure

102

 

(a)   

“conduct” includes acts and omissions;

(b)   

“director” includes a former director;

(c)   

a shadow director is treated as a director; and

(d)   

in section 235 (meaning of “connected person”), subsection (3) does not

apply (exclusion of person who is himself a director).

5

(6)   

Nothing in this section affects—

(a)   

the validity of a decision taken by unanimous consent of the members

of the company, or

(b)   

any power of the directors to agree not to sue, or to settle or release a

claim made by them on behalf of the company.

10

(7)   

This section does not affect any other enactment or rule of law imposing

additional requirements for valid ratification or any rule of law as to acts that

are incapable of being ratified by the company.

Chapter 8

Directors’ residential addresses: protection from disclosure

15

223     

Protected information

(1)   

This Chapter makes provision for protecting, in the case of a company director

who is an individual—

(a)   

information as to his usual residential address;

(b)   

the information that his service address is his usual residential address.

20

(2)   

That information is referred to in this Chapter as “protected information”.

(3)   

Information does not cease to be protected information on the individual

ceasing to be a director of the company.

   

References in this Chapter to a director include, to that extent, a former

director.

25

224     

Protected information: restriction on use or disclosure by company

(1)   

A company must not use or disclose protected information about any of its

directors, except—

(a)   

for communicating with the director concerned,

(b)   

in order to comply with any requirement of the Companies Acts as to

30

particulars to be sent to the registrar, or

(c)   

in accordance with section 227 (disclosure under court order).

(2)   

Subsection (1) does not prohibit any use or disclosure of protected information

with the consent of the director concerned.

225     

Protected information: restriction on use or disclosure by registrar

35

(1)   

The registrar must omit protected information from the material on the register

that is available for inspection where—

(a)   

it is contained in a document delivered to him in which such

information is required to be stated, and

 
 

Company Law Reform Bill [HL]
Part 10 — Company directors
Chapter 8 — Directors’ residential addresses: protection from disclosure

103

 

(b)   

in the case of a document having more than one part, it is contained in

a part of the document in which such information is required to be

stated.

(2)   

The registrar is not obliged—

(a)   

to check other documents or (as the case may be) other parts of the

5

document to ensure the absence of protected information, or

(b)   

to omit from the material that is available for public inspection

anything registered before this Chapter comes into force.

(3)   

The registrar must not use or disclose protected information except—

(a)   

as permitted by section 226 (permitted use or disclosure by registrar),

10

or

(b)   

in accordance with section 227 (disclosure under court order).

226     

Permitted use or disclosure by the registrar

(1)   

The registrar may use protected information for communicating with the

director in question.

15

(2)   

The registrar may disclose protected information—

(a)   

to a public authority specified for the purposes of this section by

regulations made by the Secretary of State, or

(b)   

to a credit reference agency.

(3)   

The Secretary of State may make provision by regulations—

20

(a)   

specifying conditions for the disclosure of protected information in

accordance with this section, and

(b)   

providing for the charging of fees.

(4)   

In this section—

“credit reference agency” means a person carrying on a business

25

comprising the furnishing of information relevant to the financial

standing of individuals, being information collected by the agency for

that purpose; and

“public authority” includes any person or body having functions of a

public nature.

30

(5)   

Regulations under this section are subject to negative resolution procedure.

227     

Disclosure under court order

(1)   

The court may make an order for the disclosure of protected information by the

company or by the registrar if—

(a)   

there is evidence that service of documents at a service address other

35

than the director’s usual residential address is not effective to bring

them to the notice of the director, or

(b)   

it is necessary or expedient for the information to be provided in

connection with the enforcement of an order or decree of the court,

   

and the court is otherwise satisfied that it is appropriate to make the order.

40

(2)   

An order for disclosure by the registrar is to be made only if the company—

(a)   

does not have the director’s usual residential address, or

(b)   

has been dissolved.

 
 

Company Law Reform Bill [HL]
Part 10 — Company directors
Chapter 8 — Directors’ residential addresses: protection from disclosure

104

 

(3)   

The order may be made on the application of a liquidator, creditor or member

of the company, or any other person appearing to the court to have a sufficient

interest.

(4)   

The order must specify the persons to whom, and purposes for which,

disclosure is authorised.

5

228     

Circumstances in which registrar may put address on the public record

(1)   

The registrar may put a director’s usual residential address on the public

record if—

(a)   

communications sent by the registrar to the director and requiring a

response within a specified period remain unanswered, or

10

(b)   

there is evidence that service of documents at a service address

provided in place of the director’s usual residential address is not

effective to bring them to the notice of the director.

(2)   

The registrar must give notice of the proposal—

(a)   

to the director, and

15

(b)   

to every company of which the registrar has been notified that the

individual is a director.

(3)   

The notice must—

(a)   

state the grounds on which it is proposed to put the director’s usual

residential address on the public record, and

20

(b)   

specify a period within which representations may be made before that

is done.

(4)   

It must be sent to the director at his usual residential address, unless it appears

to the registrar that service at that address may be ineffective to bring it to the

individual’s notice, in which case it may be sent to any service address

25

provided in place of that address.

(5)   

The registrar must take account of any representations received within the

specified period.

(6)   

What is meant by putting the address on the public record is explained in

section 229.

30

229     

Putting the address on the public record

(1)   

The registrar, on deciding in accordance with section 228 that a director’s usual

residential address is to be put on the public record, shall proceed as if notice

of a change of registered particulars had been given—

(a)   

stating that address as the director’s service address, and

35

(b)   

stating that the director’s usual residential address is the same as his

service address.

(2)   

The registrar must give notice of having done so—

(a)   

to the director, and

(b)   

to the company.

40

(3)   

On receipt of the notice the company must—

(a)   

enter the director’s usual residential address in its register of directors

as his service address, and

 
 

Company Law Reform Bill [HL]
Part 10 — Company directors
Chapter 9 — Supplementary provisions

105

 

(b)   

state in its register of directors’ residential addresses that his usual

residential address is the same as his service address.

(4)   

If the company has been notified by the director in question of a more recent

address as his usual residential address, it must—

(a)   

enter that address in its register of directors as the director’s service

5

address, and

(b)   

give notice to the registrar as on a change of registered particulars.

(5)   

If a company fails to comply with subsection (3) or (4), an offence is committed

by—

(a)   

the company, and

10

(b)   

every officer of the company who is in default.

(6)   

A person guilty of an offence under subsection (5) is liable on summary

conviction to a fine not exceeding level 5 on the standard scale and, for

continued contravention, a daily default fine not exceeding one-tenth of level

5 on the standard scale.

15

(7)   

A director whose usual residential address has been put on the public record

by the registrar under this section may not register a service address other than

his usual residential address for a period of five years from the date of the

registrar’s decision.

Chapter 9

20

Supplementary provisions

Provision for employees on cessation or transfer of business

230     

Power to make provision for employees on cessation or transfer of business

(1)   

The powers of the directors of a company include (if they would not otherwise

do so) power to make provision for the benefit of persons employed or

25

formerly employed by the company, or any of its subsidiaries, in connection

with the cessation or the transfer to any person of the whole or part of the

undertaking of the company or that subsidiary.

(2)   

This power is exercisable notwithstanding the general duty imposed by section

158 (duty to promote the success of the company).

30

(3)   

In the case of a company that is a charity it is exercisable notwithstanding any

restrictions on the directors’ powers (or the company’s capacity) flowing from

the objects of the company.

(4)   

The power may only be exercised if sanctioned—

(a)   

by a resolution of the company, or

35

(b)   

by a resolution of the directors,

   

in accordance with the following provisions.

(5)   

The resolution of the company required is an ordinary resolution, subject to

anything in the company’s articles requiring a higher majority (or unanimity).

(6)   

A resolution of the directors—

40

(a)   

must be authorised by the company’s articles, and

 
 

Company Law Reform Bill [HL]
Part 10 — Company directors
Chapter 9 — Supplementary provisions

106

 

(b)   

is not sufficient sanction for payments to or for the benefit of directors,

former directors or shadow directors.

(7)   

Any other requirements of the company’s articles as to the exercise of the

power conferred by this section must be complied with.

(8)   

Any payment under this section must be made—

5

(a)   

before the commencement of any winding up of the company, and

(b)   

out of profits of the company that are available for dividend.

Records of meetings of directors

231     

Minutes of directors’ meetings

(1)   

Every company must cause minutes of all proceedings at meetings of its

10

directors to be recorded.

(2)   

The records must be kept for at least ten years from the date of the meeting.

(3)   

If a company fails to comply with this section, an offence is committed by every

officer of the company who is in default.

(4)   

A person guilty of an offence under this section is liable on summary

15

conviction to a fine not exceeding level 3 on the standard scale and, for

continued contravention, a daily default fine not exceeding one-tenth of level

3 on the standard scale.

232     

Minutes as evidence

(1)   

Minutes recorded in accordance with section 231, if purporting to be

20

authenticated by the chairman of the meeting or by the chairman of the next

directors’ meeting, are evidence (in Scotland, sufficient evidence) of the

proceedings at the meeting.

(2)   

Where minutes have been made in accordance with that section of the

proceedings of a meeting of directors, then, until the contrary is proved—

25

(a)   

the meeting is deemed duly held and convened,

(b)   

all proceedings at the meeting are deemed to have duly taken place,

and

(c)   

all appointments at the meeting are deemed valid.

Meaning of "director" and "shadow director"

30

233     

“Director”

   

In the Companies Acts “director” includes any person occupying the position

of director, by whatever name called.

234     

“Shadow director”

(1)   

In the Companies Acts “shadow director”, in relation to a company, means a

35

person in accordance with whose directions or instructions the directors of the

company are accustomed to act.

 
 

 
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