Company Law Reform Bill [HL]

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

Company Law Reform Bill [HL]

Company Law Reform Bill [HL]
Part 4 — A company’s capacity and related matters
20

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Authentication of documents

A document or proceedings requiring authentication by a company is
sufficiently authenticated for the purposes of the law of England and Wales or
Northern Ireland by a signature of—
(a)
a director of the company, or
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(b)
a person authorised by the company to act on its behalf.
Formalities of doing business under the law of Scotland
49
Execution of documents by companies
(1)
The following provisions form part of the law of Scotland only.
(2)
Notwithstanding the provisions of any enactment, a company need not have a
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company seal.
(3)
For the purposes of any enactment—
(a)
providing for a document to be executed by a company by affixing its
common seal, or
(b)
referring (in whatever terms) to a document so executed,
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a document signed or subscribed by or on behalf of the company in accordance
with the provisions of the Requirements of Writing (Scotland) Act 1995 (c. 7)
has effect as if so executed.
Other matters
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Official seal for use abroad
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(1)
A company that has a common seal may have an official seal for use outside
the United Kingdom.
(2)
The official seal must be a facsimile of the company’s common seal, with the
addition on its face of the place or places where it is to be used.
(3)
The official seal when duly affixed to a document has the same effect as the
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company’s common seal.

This subsection does not extend to Scotland.
(4)
A company having an official seal for use outside the United Kingdom may—
(a)
by writing under its common seal, or
(b)
as respects Scotland, by writing subscribed in accordance with the
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Requirements of Writing (Scotland) Act 1995,

authorise any person appointed for the purpose to affix the official seal to any
deed or other document to which the company is party.
(5)
As between the company and a person dealing with such an agent, the agent’s
authority continues—
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(a)
during the period mentioned in the instrument conferring the
authority, or
(b)
if no period is mentioned, until notice of the revocation or termination
of the agent’s authority has been given to the person dealing with him.

Company Law Reform Bill [HL]
Part 5 — A company’s name
Chapter 1 — General requirements
21

(6)
The person affixing the official seal must certify in writing on the deed or other
document to which the seal is affixed the date on which, and place at which, it
is affixed.
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Official seal for share certificates etc
(1)
A company that has a common seal may have an official seal for use—
5
(a)
for sealing securities issued by the company, or
(b)
for sealing documents creating or evidencing securities so issued.
(2)
The official seal—
(a)
must be a facsimile of the company’s common seal, with the addition
on its face of the word “Securities”, and
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(b)
when duly affixed to the document has the same effect as the
company’s common seal.
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Pre-incorporation contracts, deeds and obligations
(1)
A contract that purports to be made by or on behalf of a company at a time
when the company has not been formed has effect, subject to any agreement to
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the contrary, as one made with the person purporting to act for the company
or as agent for it, and he is personally liable on the contract accordingly.
(2)
Subsection (1) applies—
(a)
to the making of a deed under the law of England and Wales or
Northern Ireland, and
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(b)
to the undertaking of an obligation under the law of Scotland,

as it applies to the making of a contract.
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Bills of exchange and promissory notes

A bill of exchange or promissory note is deemed to have been made, accepted
or endorsed on behalf of a company if made, accepted or endorsed in the name
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of, or by or on behalf or on account of, the company by a person acting under
its authority.
Part 5
A company’s name
Chapter 1
30
General requirements
Prohibited names
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Prohibited names

A company must not be registered under the Companies Acts by a name if, in
the opinion of the Secretary of State—
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(a)
its use by the company would constitute an offence, or
(b)
it is offensive.

Company Law Reform Bill [HL]
Part 5 — A company’s name
Chapter 1 — General requirements
22

Sensitive words and expressions
55
Names suggesting connection with government or public authority
(1)
The approval of the Secretary of State is required for a company to be
registered under the Companies Acts by a name that would be likely to give
the impression that the company is connected with—
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(a)
Her Majesty’s Government, any part of the Scottish administration or
Her Majesty’s Government in Northern Ireland,
(b)
a local authority, or
(c)
any public authority specified for the purposes of this section by
regulations made by the Secretary of State.
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(2)
For the purposes of this section—
“local authority” means—
(a)
a local authority within the meaning of the Local Government
Act 1972 (c. 70), the Common Council of the City of London or
the Council of the Isles of Scilly,
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(b)
a council constituted under section 2 of the Local Government
etc. (Scotland) Act 1994 (c. 39), or
(c)
a district council in Northern Ireland;
“public authority” includes any person or body having functions of a
public nature.
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(3)
Regulations under this section are subject to affirmative resolution procedure.
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Other sensitive words or expressions
(1)
The approval of the Secretary of State is required for a company to be
registered under the Companies Acts by a name that includes a word or
expression for the time being specified in regulations made by the Secretary of
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State under this section.
(2)
Regulations under this section are subject to approval after being made.
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Duty to seek comments of government department or other specified body
(1)
The Secretary of State may by regulations under—
(a)
section 55 (name suggesting connection with government or public
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authority), or
(b)
section 56 (other sensitive words or expressions),

require that, in connection with an application for the approval of the Secretary
of State under that section, the applicant must seek the view of a specified
Government department or other body.
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(2)
Where such a requirement applies, the applicant must request the specified
department or other body (in writing) to indicate whether (and if so why) it has
any objections to the proposed name.
(3)
Where a request under this section is made in connection with an application
for the registration of a company under this Act, the application must—
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(a)
include a statement that a request under this section has been made,
and
(b)
be accompanied by a copy of any response received.

Company Law Reform Bill [HL]
Part 5 — A company’s name
Chapter 2 — Indications of company type or legal form
23

(4)
Where a request under this section is made in connection with a change in a
company’s name, the notice of the change sent to the registrar must be
accompanied by—
(a)
a statement by a director or secretary of the company that a request
under this section has been made, and
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(b)
a copy of any response received.
Permitted characters etc
58
Permitted characters etc
(1)
The Secretary of State may make provision by regulations—
(a)
as to the letters or other characters, signs or symbols (including accents
10
and other diacritical marks) and punctuation that may be used in the
name of a company registered under the Companies Acts; and
(b)
specifying a standard style or format for the name of a company for the
purposes of registration.
(2)
The regulations may prohibit the use of specified characters, signs or symbols
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when appearing in a specified position (in particular, at the beginning of a
name).
(3)
A company may not be registered under the Companies Acts by a name that
consists of or includes anything that is not permitted in accordance with
regulations under this section.
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(4)
Regulations under this section are subject to negative resolution procedure.
Chapter 2
Indications of company type or legal form
Required indications for limited companies
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Public limited companies
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(1)
The name of a limited company that is a public company must end with
“public limited company” or “p.l.c.”.
(2)
In the case of a Welsh company, its name may instead end with “cwmni
cyfyngedig cyhoeddus” or “c.c.c.”.
(3)
This section does not apply to community interest companies (but see section
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33(3) and (4) of the Companies (Audit, Investigations and Community
Enterprise) Act 2004 (c. 27)).
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Private limited companies
(1)
The name of a limited company that is a private company must end with
“limited” or “ltd.”.
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(2)
In the case of a Welsh company, its name may instead end with “cyfyngedig”
or “cyf.”.
(3)
Certain companies are exempt from this requirement (see section 61).

Company Law Reform Bill [HL]
Part 5 — A company’s name
Chapter 2 — Indications of company type or legal form
24

(4)
This section does not apply to community interest companies (but see section
33(1) and (2) of the Companies (Audit, Investigations and Community
Enterprise) Act 2004 (c. 27)).
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Exemption from requirement as to use of “limited”
(1)
A private company is exempt from section 60 (requirement to have name
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ending with “limited” or permitted alternative) if—
(a)
it is a charity,
(b)
it is exempted from the requirement of that section by regulations made
by the Secretary of State, or
(c)
it meets the conditions specified in—
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section 62 (continuation of existing exemption: companies limited
by shares), or
section 63 (continuation of existing exemption: companies limited
by guarantee).
(2)
The registrar may refuse to register a private limited company by a name that
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does not include the word “limited” (or a permitted alternative) unless a
statement has been delivered to him that the company meets the conditions for
exemption.
(3)
The registrar may accept the statement as sufficient evidence of the matters
stated in it.
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(4)
Regulations under this section are subject to negative resolution procedure.
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Continuation of existing exemption: companies limited by shares
(1)
This section applies to a private company limited by shares—
(a)
that on 25th February 1982—
(i)
was registered in Great Britain, and
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(ii)
had a name that, by virtue of a licence under section 19 of the
Companies Act 1948 (c. 38) (or corresponding earlier
legislation), did not include the word “limited” or any of the
permitted alternatives, or
(b)
that on 30th June 1983—
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(i)
was registered in Northern Ireland, and
(ii)
had a name that, by virtue of a licence under section 19 of the
Companies Act (Northern Ireland) 1960 (c. 22 (N.I.)) (or
corresponding earlier legislation), did not include the word
“limited” or any of the permitted alternatives.
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(2)
A company to which this section applies is exempt from section 60
(requirement to have name ending with “limited” or permitted alternative) so
long as—
(a)
it continues to meet the following two conditions, and
(b)
it does not change its name.
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(3)
The first condition is that the objects of the company are the promotion of
commerce, art, science, education, religion, charity or any profession, and
anything incidental or conducive to any of those objects.
(4)
The second condition is that the company’s articles—

Company Law Reform Bill [HL]
Part 5 — A company’s name
Chapter 2 — Indications of company type or legal form
25

(a)
require its income to be applied in promoting its objects,
(b)
prohibit the payment of dividends, or any return of capital, to its
members, and
(c)
require all the assets that would otherwise be available to its members
generally to be transferred on its winding up either—
5
(i)
to another body with objects similar to its own, or
(ii)
to another body the objects of which are the promotion of
charity and anything incidental or conducive thereto,

(whether or not the body is a member of the company).
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Continuation of existing exemption: companies limited by guarantee
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(1)
A private company limited by guarantee that immediately before the
commencement of this Part—
(a)
was exempt by virtue of section 30 of the Companies Act 1985 (c. 6) or
Article 40 of the Companies (Northern Ireland) Order 1986 (S.I. 1986/
1032 (N.I. 6)) from the requirement to have a name including the word
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“limited” or a permitted alternative, and
(b)
had a name that did not include the word “limited” or any of the
permitted alternatives,

is exempt from section 60 (requirement to have name ending with “limited” or
permitted alternative) so long as it continues to meet the following two
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conditions and does not change its name.
(2)
The first condition is that the objects of the company are the promotion of
commerce, art, science, education, religion, charity or any profession, and
anything incidental or conducive to any of those objects.
(3)
The second condition is that the company’s articles—
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(a)
require its income to be applied in promoting its objects,
(b)
prohibit the payment of dividends to its members, and
(c)
require all the assets that would otherwise be available to its members
generally to be transferred on its winding up either—
(i)
to another body with objects similar to its own, or
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(ii)
to another body the objects of which are the promotion of
charity and anything incidental or conducive thereto,

(whether or not the body is a member of the company).
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Exempt company: restriction on alteration of articles
(1)
A private company—
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(a)
that is exempt under section 62 or 63 from the requirement to use
“limited” (or a permitted alternative) as part of its name, and
(b)
whose name does not include “limited” or any of the permitted
alternatives,

must not alter its articles so that it ceases to comply with the conditions for
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exemption under that section.
(2)
If subsection (1) above is contravened an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the company.
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Company Law Reform Bill [HL]
Part 5 — A company’s name
Chapter 2 — Indications of company type or legal form
26

(3)
A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 5 on the standard scale and, for
continued contravention, to a daily default fine not exceeding one-tenth of
level 5 on the standard scale.
(4)
Where immediately before the commencement of this section—
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(a)
a company was exempt by virtue of section 30 of the Companies Act
1985 (c. 6) or Article 40 of the Companies (Northern Ireland) Order 1986
(S.I. 1986/1032 (N.I. 6)) from the requirement to have a name including
the word “limited” (or a permitted alternative), and
(b)
the company’s memorandum or articles contained provision
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preventing an alteration of them without the approval of—
(i)
the Board of Trade or a Northern Ireland department (or any
other department or Minister), or
(ii)
the Charity Commission,

that provision, and any condition of any such licence as is mentioned in section
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62(1)(a)(ii) or (b)(ii) requiring such provision, shall cease to have effect.

This does not apply if, or to the extent that, the provision is required by or
under any other enactment.
(5)
It is hereby declared that any such provision as is mentioned in subsection
(4)(a) formerly contained in a company’s memorandum was at all material
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times capable, with the appropriate approval, of being altered or removed
under section 17 of the Companies Act 1985 or Article 28 of the Companies
(Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) (or corresponding
earlier enactments).
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Power to direct change of name in case of company ceasing to be entitled to
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exemption
(1)
If it appears to the Secretary of State that a company whose name does not
include “limited” or any of the permitted alternatives—
(a)
has ceased to be entitled to exemption under section 61(1)(a) or (b), or
(b)
in the case of a company within section 62 or 63 (which impose
30
conditions as to the objects and articles of the company)—
(i)
has carried on any business other than the promotion of any of
the objects mentioned in subsection (3) of section 62 or, as the
case may be, subsection (2) of section 63, or
(ii)
has acted inconsistently with the provision required by
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subsection (4)(a) or (b) of section 62 or, as the case may be,
subsection (3)(a) or (b) of section 63,

the Secretary of State may direct the company to change its name so that it ends
with “limited” or one of the permitted alternatives.
(2)
The direction must be in writing and must specify the period within which the
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company is to change its name.
(3)
A change of name in order to comply with a direction under this section may
be made by resolution of the directors.

This is without prejudice to any other method of changing the company’s
name.
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(4)
Where a resolution of the directors is passed in accordance with subsection (3),
the company must give notice to the registrar of the change.