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 19 — Share capital
290

Redenomination of share capital
586
Redenomination of share capital
(1)
A limited company having a share capital may by ordinary resolution
redenominate its share capital or any class of its share capital.

“Redenominate” means convert shares from having a fixed nominal value in
5
one currency to having a fixed nominal value in another currency.
(2)
The conversion must be made at an appropriate spot rate of exchange specified
in the resolution.
(3)
The rate must be either—
(a)
a rate prevailing on a day specified in the resolution, or
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(b)
a rate determined by taking the average of rates prevailing on each
consecutive day of a period specified in the resolution.

The day or period specified for the purposes of paragraph (a) or (b) must be
within the period of 28 days ending on the day before the resolution is passed.
(4)
A resolution under this section may specify conditions which must be met
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before the redenomination takes effect.
(5)
Redenomination in accordance with a resolution under this section takes
effect—
(a)
on the day on which the resolution is passed, or
(b)
on such later day as may be determined in accordance with the
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resolution.
(6)
A resolution under this section lapses if the redenomination for which it
provides has not taken effect at the end of the period of 28 days beginning on
the date on which it is passed.
(7)
A company’s articles may prohibit or restrict the exercise of the power
25
conferred by this section.
587
Calculation of new nominal values

For each class of share the new nominal value of each share is calculated as
follows:

Step One
30

Take the aggregate of the old nominal values of all the shares of that class.

Step Two

Translate that amount into the new currency at the rate of exchange specified
in the resolution.

Step Three
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Divide the resulting figure by the number of shares in the class.
588
Effect of redenomination
(1)
The redenomination of shares does not affect any rights or obligations of
members under the company’s constitution, or any restrictions affecting
members under the company’s constitution.
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Part 19 — Share capital
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In particular, it does not affect entitlement to dividends (including entitlement
to dividends in a particular currency), voting rights or any liability in respect
of amounts unpaid on shares.
(2)
For this purpose the company’s constitution includes the terms on which any
shares of the company are allotted or held.
5
(3)
Subject to subsection (1), references to the old nominal value of the shares in
any agreement or statement, or in any deed, instrument or document, shall
(unless the context otherwise requires) be read after the resolution takes effect
as references to the new nominal value of the shares.
589
Notice to registrar of redenomination
10
(1)
If a company having a share capital redenominates any of its share capital, it
must within one month after doing so give notice to the registrar, specifying
the shares redenominated.
(2)
The notice must—
(a)
state the date on which the resolution was passed, and
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(b)
be accompanied by a statement of capital.
(3)
The statement of capital must state with respect to the company’s share capital
as redenominated by the resolution—
(a)
the total number of shares of the company,
(b)
the aggregate nominal value of those shares,
20
(c)
for each class of shares—
(i)
prescribed particulars of the rights attached to the shares,
(ii)
the total number of shares of that class, and
(iii)
the aggregate nominal value of shares of that class, and
(d)
the amount paid up and the amount (if any) unpaid on each share
25
(whether on account of the nominal value of the share or by way of
premium).
(4)
If default is made in complying with this section, an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
30
(5)
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.
590
Reduction of capital in connection with redenomination
35
(1)
A company that passes a resolution redenominating some or all of its shares
may, for the purpose of adjusting the nominal values of the redenominated
shares to obtain values that are, in the opinion of the company, more suitable,
reduce its share capital under this section.
(2)
A reduction of capital under this section requires a special resolution of the
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company.
(3)
Any such resolution must be passed within three months of the resolution
effecting the redenomination.

Company Law Reform Bill [HL]
Part 19 — Share capital
292

(4)
The amount by which a company’s share capital is reduced under this section
must not exceed 10% of the nominal value of the company’s allotted share
capital immediately after the reduction.
(5)
A reduction of capital under this section does not extinguish or reduce any
liability in respect of share capital not paid up.
5
(6)
Nothing in—
(a)
sections 135 to 135C of the Companies Act 1985 (c. 6) (reduction of
capital supported by solvency statement), or
(b)
sections 135 and 136 to 141 of that Act (reduction of capital requiring
confirmation by court),
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applies to a reduction of capital under this section.
591
Notice to registrar of reduction of capital in connection with redenomination
(1)
A company that passes a resolution under section 590 (reduction of capital in
connection with redenomination) must within 15 days after the resolution is
passed give notice to the registrar stating—
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(a)
the date of the resolution, and
(b)
the date of the resolution under section 586 in connection with which it
was passed.

This is in addition to the copies of the resolutions themselves that are required
to be delivered to the registrar under Chapter 3 of Part 3.
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(2)
The notice must be accompanied by a statement of capital.
(3)
The statement of capital must state with respect to the company’s share capital
as reduced by the resolution—
(a)
the total number of shares of the company,
(b)
the aggregate nominal value of those shares,
25
(c)
for each class of shares—
(i)
prescribed particulars of the rights attached to the shares,
(ii)
the total number of shares of that class, and
(iii)
the aggregate nominal value of shares of that class, and
(d)
the amount paid up and the amount (if any) unpaid on each share
30
(whether on account of the nominal value of the share or by way of
premium).
(4)
The registrar must register the notice and statement on receipt.
(5)
The reduction of capital is not effective until those documents are registered.
(6)
The company must also deliver to the registrar, within 15 days after the
35
resolution is passed, a statement by the directors confirming that the reduction
in share capital is in accordance with section 590(4) (reduction of capital not to
exceed 10% of nominal value of allotted shares immediately after reduction).
(7)
If a company fails to comply with this section, an offence is committed by—
(a)
the company, and
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(b)
every officer of the company who is in default.
(8)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment to a fine, and
(b)
on summary conviction to a fine not exceeding the statutory maximum.

Company Law Reform Bill [HL]
Part 20 — Debentures
293

592
Redenomination reserve
(1)
The amount by which a company’s share capital is reduced under section 590
(reduction of capital in connection with redenomination) must be transferred
to a reserve, called “the redenomination reserve”.
(2)
The redenomination reserve may be applied by the company in paying up
5
shares to be allotted to members as fully paid bonus shares.
(3)
Subject to that, the provisions of the Companies Acts relating to the reduction
of a company’s share capital apply as if the redenomination reserve were paid-
up share capital of the company.
Part 20
10
Debentures
593
Register of debenture holders
(1)
Any register of debenture holders of a company that is kept by the company
must be kept available for inspection—
(a)
at the company’s registered office, or
15
(b)
at another place in the part of the United Kingdom in which the
company is registered.
(2)
A company must give notice to the registrar of the place where any such
register is kept available for inspection and of any change in that place.
(3)
No such notice is required if the register has, at all times since it came into
20
existence, been kept available for inspection at the company’s registered office.
(4)
If a company makes default for 14 days in complying with subsection (2), an
offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default,
25
(5)
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 in the case
of continued contravention to a daily default fine not exceeding one-tenth of
level 3 on the standard scale.
(6)
References in this section to a register of debenture holders include a
30
duplicate—
(a)
of a register of debenture holders that is kept outside the United
Kingdom, or
(b)
of any part of such a register.
594
Register of debenture holders: right to inspect and require copy
35
(1)
Every register of debenture holders of a company must, except when duly
closed, be open to the inspection—
(a)
of the registered holder of any such debentures, or any holder of shares
in the company, without charge, and
(b)
of any other person on payment of such fee as may be prescribed.
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Part 20 — Debentures
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(2)
Any person may require a copy of the register, or any part of it, on payment of
such fee as may be prescribed.
(3)
A person seeking to exercise either of the rights conferred by this section must
make a request to the company to that effect.
(4)
The request must contain the following information—
5
(a)
in the case of an individual, his name and address;
(b)
in the case of an organisation, the name and address of an individual
responsible for making the request on behalf of the organisation;
(c)
the purpose for which the information is to be used; and
(d)
whether the information will be disclosed to any other person, and if
10
so—
(i)
where that person is an individual, his name and address,
(ii)
where that person is an organisation, the name and address of
an individual responsible for receiving the information on its
behalf, and
15
(iii)
the purpose for which the information is to be used by that
person.
(5)
For the purposes of this section a register is “duly closed” if it is closed in
accordance with provision contained—
(a)
in the articles or in the debentures,
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(b)
in the case of debenture stock in the stock certificates, or
(c)
in the trust deed or other document securing the debentures or
debenture stock.

The total period for which a register is closed in any year must not exceed 30
days.
25
(6)
References in this section to a register of debenture holders include a
duplicate—
(a)
of a register of debenture holders that is kept outside the United
Kingdom, or
(b)
of any part of such a register.
30
595
Register of debenture holders: response to request for inspection or copy
(1)
Where a company receives a request under section 594 (register of debenture
holders: right to inspect and require copy), it must within five working days
either—
(a)
comply with the request, or
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(b)
apply to the court.
(2)
If it applies to the court it must notify the person making the request.
(3)
If on an application under this section the court is satisfied that the inspection
or copy is not sought for a proper purpose—
(a)
it shall direct the company not to comply with the request, and
40
(b)
it may further order that the company’s costs (in Scotland, expenses) on
the application be paid in whole or in part by the person who made the
request, even if he is not a party to the application.
(4)
If the court makes such a direction and it appears to the court that the company
is or may be subject to other requests made for a similar purpose (whether
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Part 20 — Debentures
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made by the same person or different persons), it may direct that the company
is not to comply with any such request.

The order must contain such provision as appears to the court appropriate to
identify the requests to which it applies.
(5)
If on an application under this section the court does not direct the company
5
not to comply with the request, the company must comply with the request
immediately upon the court giving its decision or, as the case may be, the
proceedings being discontinued.
596
Register of debenture holders: refusal of inspection or default in providing
copy
10
(1)
If an inspection required under section 594 (register of debenture holders: right
to inspect and require copy) is refused or default is made in providing a copy
required under that section, otherwise than in accordance with an order of the
court, an offence is committed by—
(a)
the company, and
15
(b)
every officer of the company who is in default.
(2)
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.
20
(3)
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 requesting it.
597
Register of debenture holders: offences in connection with request for or
disclosure of information
25
(1)
It is an offence for a person knowingly or recklessly to make in a request under
section 594 (register of debenture holders: right to inspect or require copy) a
statement that is misleading, false or deceptive in a material particular.
(2)
It is an offence for a person in possession of information obtained by exercise
of either of the rights conferred by that section—
30
(a)
to do anything that results in the information being disclosed to
another person, or
(b)
to fail to do anything with the result that the information is disclosed to
another person,

knowing or having reason to suspect that person may use the information for
35
a purpose that is not a proper purpose.
(3)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to imprisonment for a term not exceeding
two years or a fine (or both);
(b)
on summary conviction—
40
(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
exceeding six months, or to a fine not exceeding the statutory
45
maximum (or both).