House of Commons portcullis
House of Commons
Session 2005 - 06
Internet Publications
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

10

(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

15

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

20

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

35

   

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.

40

 
 

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

291

 

   

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

15

(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

40

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),

10

   

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—

15

(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.

20

(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

40

(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.

40

 
 

Company Law Reform Bill [HL]
Part 20 — Debentures

294

 

(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,

20

(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

35

(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

45

 
 

Company Law Reform Bill [HL]
Part 20 — Debentures

295

 

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).

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2006
Revised 26 May 2006