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 13 — Resolutions and meetings
Chapter 5 — Additional requirements for quoted companies
147

(3)
Where the partnership ceases, the appointment is to be treated as extending
to—
(a)
any partnership that succeeds to the practice of that partnership, or
(b)
any other person who succeeds to that practice having previously
carried it on in partnership.
5
(4)
For the purposes of subsection (3)—
(a)
a partnership is regarded as succeeding to the practice of another
partnership only if the members of the successor partnership are
substantially the same as those of the former partnership, and
(b)
a partnership or other person is regarded as succeeding to the practice
10
of a partnership only if it or he succeeds to the whole or substantially
the whole of the business of the former partnership.
(5)
Where the partnership ceases and the appointment is not treated under
subsection (3) as extending to any partnership or other person, the
appointment may with the consent of the company be treated as extending to
15
a partnership, or other person, who succeeds to—
(a)
the business of the former partnership, or
(b)
such part of it as is agreed by the company is to be treated as comprising
the appointment.
330
The independent assessor’s report
20
(1)
The report of the independent assessor must state his opinion whether—
(a)
the procedures adopted in connection with the poll or polls were
adequate;
(b)
the votes cast (including proxy votes) were fairly and accurately
recorded and counted;
25
(c)
the validity of members’ appointments of proxies was fairly assessed;
(d)
the notice of the meeting complied with section 308 (notice of meeting
to contain statement of rights to appoint proxy);
(e)
section 309 (company-sponsored invitations to appoint proxies) was
complied with in relation to the meeting.
30
(2)
The report must give his reasons for the opinions stated.
(3)
If he is unable to form an opinion on any of those matters, the report must
record that fact and state the reasons for it.
(4)
The report must state the name of the independent assessor.
331
Rights of independent assessor: right to attend meeting etc
35
(1)
Where an independent assessor has been appointed to report on a poll, he is
entitled to attend—
(a)
the meeting at which the poll may be taken, and
(b)
any subsequent proceedings in connection with the poll.
(2)
He is also entitled to be provided by the company with a copy of—
40
(a)
the notice of the meeting, and
(b)
any other communication provided by the company in connection with
the meeting to persons who have a right to vote on the matter to which
the poll relates.

Company Law Reform Bill [HL]
Part 13 — Resolutions and meetings
Chapter 5 — Additional requirements for quoted companies
148

(3)
The rights conferred by this section are only to be exercised to the extent that
the independent assessor considers necessary for the preparation of his report.
(4)
If the independent assessor is a firm, the right under subsection (1) to attend
the meeting and any subsequent proceedings in connection with the poll is
exercisable by an individual authorised by the firm in writing to act as its
5
representative for that purpose.
332
Rights of independent assessor: right to information
(1)
The independent assessor is entitled to access to the company’s records
relating to—
(a)
any poll on which he is to report;
10
(b)
the meeting at which the poll or polls may be, or were, taken.
(2)
The independent assessor may require anyone who at any material time was—
(a)
a director or secretary of the company,
(b)
an employee of the company,
(c)
a person holding or accountable for any of the company’s records,
15
(d)
a member of the company, or
(e)
an agent of the company,

to provide him with information or explanations for the purpose of preparing
his report.
(3)
For this purpose “agent” includes the company’s bankers, solicitors and
20
auditor.
(4)
A statement made by a person in response to a requirement under this section
may not be used in evidence against him in criminal proceedings except
proceedings for an offence under section 333 (offences relating to provision of
information).
25
(5)
A person is not required by this section to disclose information in respect of
which a claim to legal professional privilege (in Scotland, to confidentiality of
communications) could be maintained in legal proceedings.
333
Offences relating to provision of information
(1)
A person who fails to comply with a requirement under section 332 without
30
delay commits an offence unless it was not reasonably practicable for him to
provide the required information or explanation.
(2)
A person guilty of an offence under subsection (1) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.
(3)
A person commits an offence who knowingly or recklessly makes to an
35
independent assessor a statement (oral or written) that—
(a)
conveys or purports to convey any information or explanations which
the independent assessor requires, or is entitled to require, under
section 332, and
(b)
is misleading, false or deceptive in a material particular.
40
(4)
A person guilty of an offence under subsection (3) is liable—
(a)
on conviction on indictment, to imprisonment for a term not exceeding
two years or a fine (or both);

Company Law Reform Bill [HL]
Part 13 — Resolutions and meetings
Chapter 5 — Additional requirements for quoted companies
149

(b)
on summary conviction—
(i)
in England and Wales, to imprisonment for a term not
exceeding twelve months or to a fine not exceeding the
statutory maximum (or both);
(ii)
in Scotland or Northern Ireland, to imprisonment for a term not
5
exceeding six months, or to a fine not exceeding the statutory
maximum (or both).
(5)
Nothing in this section affects any right of an auditor to apply for an injunction
(in Scotland, an interdict or an order for specific performance) to enforce any
of his rights under section 331 or 332.
10
334
Information to be made available on website
(1)
Where an independent assessor has been appointed to report on a poll, the
company must ensure that the following information is made available on a
website—
(a)
the fact of his appointment,
15
(b)
his identity,
(c)
the text of the resolution or, as the case may be, a description of the
subject matter of the poll to which his appointment relates, and
(d)
a copy of a report by him which complies with section 330.
(2)
The provisions of section 336 (requirements as to website availability) apply.
20
(3)
In the event of default in complying with this section (or with the requirements
of section 336 as it applies for the purposes of this section), an offence is
committed by every officer of the company who is in default.
(4)
A person guilty of an offence under subsection (3) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.
25
(5)
Failure to comply with this section (or the requirements of section 336) does not
affect the validity of—
(a)
the poll, or
(b)
the resolution or other business (if passed or agreed to) to which the
poll relates.
30
Supplementary
335
Application of provisions to class meetings
(1)
The provisions of—
section 324 (results of poll to be made available on website), and
sections 325 to 334 (independent report on poll),
35

apply (with any necessary modifications) in relation to a meeting of holders of
a class of shares of a quoted company in connection with the variation of the
rights attached to such shares as they apply in relation to a general meeting of
the company.
(2)
For the purposes of this section—
40
(a)
any alteration of a provision contained in a company’s articles for the
variation of the rights attached to a class of shares, or the insertion of

Company Law Reform Bill [HL]
Part 13 — Resolutions and meetings
Chapter 5 — Additional requirements for quoted companies
150

any such provision into the articles, is itself to be treated as a variation
of those rights, and
(b)
references to the variation of rights attached to a class of shares include
references to their abrogation.
336
Requirements as to website availability
5
(1)
The following provisions apply for the purposes of—
section 324 (results of poll to be made available on website), and
section 334 (report of independent observer to be made available on
website).
(2)
The information must be made available on a website that—
10
(a)
is maintained by or on behalf of the company, and
(b)
identifies the company in question.
(3)
Access to the information on the website, and the ability to obtain a hard copy
of the information from the website, must not be conditional on the payment
of a fee or otherwise restricted.
15
(4)
The information—
(a)
must be made available as soon as reasonably practicable, and
(b)
must be kept available throughout the period of two years beginning
with the date on which it is first made available on a website in
accordance with this section.
20
(5)
A failure to make information available on a website throughout the period
specified in subsection (4)(b) is disregarded if—
(a)
the information is made available on the website for part of that period,
and
(b)
the failure is wholly attributable to circumstances that it would not be
25
reasonable to have expected the company to prevent or avoid.
337
Power to limit or extend the types of company to which provisions of this
Chapter apply
(1)
The Secretary of State may by regulations—
(a)
limit the types of company to which some or all of the provisions of this
30
Chapter apply, or
(b)
extend some or all of the provisions of this Chapter to additional types
of company.
(2)
Regulations under this section extending the application of any provision of
this Chapter are subject to affirmative resolution procedure.
35
(3)
Any other regulations under this section are subject to negative resolution
procedure.
(4)
Regulations under this section may—
(a)
amend the provisions of this Chapter (apart from this section);
(b)
repeal and re-enact provisions of this Chapter with modifications of
40
form or arrangement, whether or not they are modified in substance;
(c)
contain such consequential, incidental and supplementary provisions
(including provisions amending, repealing or revoking enactments) as
the Secretary of State thinks fit.

Company Law Reform Bill [HL]
Part 13 — Resolutions and meetings
Chapter 6 — Records of resolutions and meetings
151

Chapter 6
Records of resolutions and meetings
338
Records of resolutions and meetings etc
(1)
Every company must keep records comprising—
(a)
copies of all resolutions of members passed otherwise than at general
5
meetings,
(b)
minutes of all proceedings of general meetings, and
(c)
details provided to the company in accordance with section 340
(decisions of sole member).
(2)
The records must be kept for at least ten years from the date of the resolution,
10
meeting or decision (as appropriate).
(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
conviction to a fine not exceeding level 3 on the standard scale and, for
15
continued contravention, a daily default fine not exceeding one-tenth of level
3 on the standard scale.
339
Records as evidence of resolutions etc
(1)
This section applies to the records kept in accordance with section 338.
(2)
The record of a resolution passed otherwise than at a general meeting, if
20
purporting to be signed by a director of the company or by the company
secretary, is evidence (in Scotland, sufficient evidence) of the passing of the
resolution.
(3)
Where there is a record of a written resolution of a private company, the
requirements of this Act with respect to the passing of the resolution are
25
deemed to be complied with unless the contrary is proved.
(4)
The minutes of proceedings of a general meeting, if purporting to be signed by
the chairman of that meeting or by the chairman of the next general meeting,
are evidence (in Scotland, sufficient evidence) of the proceedings at the
meeting.
30
(5)
Where there is a record of proceedings of a general meeting of a company,
then, until the contrary is proved—
(a)
the meeting is deemed duly held and convened,
(b)
all proceedings at the meeting are deemed to have duly taken place,
and
35
(c)
all appointments at the meeting are deemed valid.
340
Records of decisions by sole member
(1)
This section applies to a company limited by shares or by guarantee that has
only one member.
(2)
Where the member takes any decision that—
40
(a)
may be taken by the company in general meeting, and

Company Law Reform Bill [HL]
Part 13 — Resolutions and meetings
Chapter 7 — Supplementary provisions
152

(b)
has effect as if agreed by the company in general meeting,

he must (unless that decision is taken by way of a written resolution) provide
the company with details of that decision.
(3)
If a person fails to comply with this section he commits an offence.
(4)
A person guilty of an offence under this section is liable on summary
5
conviction to a fine not exceeding level 2 on the standard scale.
(5)
Failure to comply with this section does not affect the validity of any decision
referred to in subsection (2).
341
Inspection of records of resolutions and meetings
(1)
The company must at all times—
10
(a)
keep available for inspection at its registered office the records referred
to in section 338 (records of resolutions etc) relating to the previous ten
years, and
(b)
open those records to inspection by any member without charge.
(2)
Any member is entitled on payment of such fee as may be prescribed to be
15
furnished with a copy of any of those records.
(3)
If an inspection required under this section is refused or if a copy requested
under this section is not sent, 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
20
conviction to a fine not exceeding level 3 on the standard scale and, for
continued contravention, to a daily default fine not exceeding one-tenth of
level 3 on the standard scale.
(5)
In the case of any such refusal or default, the court may by order compel an
immediate inspection of the records or direct that the copies required be sent
25
to the persons who requested them.
342
Records of resolutions and meetings of class of members
The provisions of this Chapter apply (with necessary modifications) in relation
to resolutions and meetings of—
(a)
holders of a class of shares, and
30
(b)
in the case of a company without a share capital, a class of members,
as they apply in relation to resolutions of members generally and to general
meetings.
Chapter 7
Supplementary provisions
35
343
Meaning of “quoted company”

In this Part “quoted company” has the same meaning as in Part 15 of this Act.

Company Law Reform Bill [HL]
Part 14 — Control of political donations and expenditure
153

Part 14
Control of political donations and expenditure
Introductory
344
Introductory

This Part has effect for controlling—
5
(a)
political donations made by companies to political parties, to other
political organisations and to independent election candidates, and
(b)
political expenditure incurred by companies.
Donations and expenditure to which this Part applies
345
Political parties, organisations etc to which this Part applies
10
(1)
This Part applies to a political party if—
(a)
it is registered under Part 2 of the Political Parties, Elections and
Referendums Act 2000 (c. 41), or
(b)
it carries on, or proposes to carry on, activities for the purposes of or in
connection with the participation of the party in any election or
15
elections to public office held in a member State other than the United
Kingdom.
(2)
This Part applies to an organisation (a “political organisation”) if it carries on,
or proposes to carry on, activities that are capable of being reasonably regarded
as intended—
20
(a)
to affect public support for a political party to which, or an independent
election candidate to whom, this Part applies, or
(b)
to influence voters in relation to any national or regional referendum
held under the law of the United Kingdom or another member State.
(3)
This Part applies to an independent election candidate at any election to public
25
office held in the United Kingdom or another member State.
(4)
Any reference in the following provisions of this Part to a political party,
political organisation or independent election candidate, or to political
expenditure, is to a party, organisation, independent candidate or expenditure
to which this Part applies.
30
346
Meaning of “political donation”
(1)
The following provisions have effect for the purposes of this Part as regards the
meaning of “political donation”.
(2)
In relation to a political party or other political organisation—
(a)
“political donation” means anything that in accordance with sections 50
35
to 52 of the Political Parties, Elections and Referendums Act 2000—
(i)
constitutes a donation for the purposes of Chapter 1 of Part 4 of
that Act (control of donations to registered parties), or