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 22 — Information about interests in company’s shares
306

622
Entries not to be removed from register
(1)
Entries in the register kept under section 615 (register of interests disclosed)
must not be deleted except in accordance with—
section 623 (old entries), or
section 624 (incorrect entry relating to third party).
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(2)
If an entry is deleted in contravention of subsection (1), the company must
restore it as soon as reasonably practicable.
(3)
If default is made in complying with subsection (1) or (2), an offence is
committed by—
(a)
the company, and
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(b)
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 of subsection (2), a daily default fine not exceeding
one-tenth of level 3 on the standard scale.
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623
Removal of entries from register: old entries

A company may remove an entry from the register kept under section 615
(register of interests disclosed) if more than six years have elapsed since the
entry was made.
624
Removal of entries from register: incorrect entry relating to third party
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(1)
This section applies where in pursuance of an obligation imposed by a notice
under section 606 (notice requiring information about interests in company’s
shares) a person gives to a company the name and address of another person
as being interested in shares in the company.
(2)
That other person may apply to the company for the removal of the entry from
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the register.
(3)
If the company is satisfied that the information in pursuance of which the entry
was made is incorrect, it shall remove the entry.
(4)
If an application under subsection (3) is refused, the applicant may apply to the
court for an order directing the company to remove the entry in question from
30
the register.

The court may make such an order if it thinks fit.
625
Adjustment of entry relating to share acquisition agreement
(1)
If a person who is identified in the register kept by a company under section
615 (register of interests disclosed) as being a party to an agreement to which
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section 632 applies (certain share acquisition agreements) ceases to be a party
to the agreement, he may apply to the company for the inclusion of that
information in the register.
(2)
If the company is satisfied that he has ceased to be a party to the agreement, it
shall record that information (if not already recorded) in every place where his
40
name appears in the register as a party to the agreement.

Company Law Reform Bill [HL]
Part 22 — Information about interests in company’s shares
307

(3)
If an application under this section is refused (otherwise than on the ground
that the information has already been recorded), the applicant may apply to the
court for an order directing the company to include the information in question
in the register.

The court may make such an order if it thinks fit.
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626
Duty of company ceasing to be public company
(1)
If a company ceases to be a public company, it must continue to keep any
register kept under section 615 (register of interests disclosed), and any
associated index, until the end of the period of six years after it ceased to be
such a company.
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(2)
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.
(3)
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
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of continued contravention to a daily default fine not exceeding one-tenth of
level 3 on the standard scale.
Meaning of interest in shares
627
Interest in shares: general
(1)
This section applies to determine for the purposes of this Part whether a person
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has an interest in shares.
(2)
In this Part—
(a)
a reference to an interest in shares includes an interest of any kind
whatsoever in the shares, and
(b)
any restraints or restrictions to which the exercise of any right attached
25
to the interest is or may be subject shall be disregarded.
(3)
Where an interest in shares is comprised in property held on trust, every
beneficiary of the trust is treated as having an interest in the shares.
(4)
A person is treated as having an interest in shares if—
(a)
he enters into a contract to acquire them, or
30
(b)
not being the registered holder, he is entitled—
(i)
to exercise any right conferred by the holding of the shares, or
(ii)
to control the exercise of any such right.
(5)
For the purposes of subsection (4)(b) a person is entitled to exercise or control
the exercise of a right conferred by the holding of shares if he—
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(a)
has a right (whether subject to conditions or not) the exercise of which
would make him so entitled, or
(b)
is under an obligation (whether subject to conditions or not) the
fulfilment of which would make him so entitled.
(6)
A person is treated as having an interest in shares if—
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(a)
he has a right to call for delivery of the shares to himself or to his order,
or

Company Law Reform Bill [HL]
Part 22 — Information about interests in company’s shares
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(b)
he has a right to acquire an interest in shares or is under an obligation
to take an interest in shares.

This applies whether the right or obligation is conditional or absolute.
(7)
Persons having a joint interest are treated as each having that interest.
(8)
It is immaterial that shares in which a person has an interest are unidentifiable.
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628
Interest in shares: right to subscribe for shares
(1)
Section 606 (notice by company requiring information about interests in its
shares) applies in relation to a person who has, or previously had, or is or was
entitled to acquire, a right to subscribe for shares in the company as it applies
in relation to a person who is or was interested in shares in that company.
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(2)
References in that section to an interest in shares shall be read accordingly.
629
Interest in shares: family interests
(1)
For the purposes of this Part a person is taken to be interested in shares in
which—
(a)
his spouse or civil partner, or
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(b)
any infant child or step-child of his,

is interested.
(2)
In relation to Scotland “infant” means a person under the age of 18 years.
630
Interest in shares: corporate interests
(1)
For the purposes of this Part a person is taken to be interested in shares if a
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body corporate is interested in them and—
(a)
the body or its directors are accustomed to act in accordance with his
directions or instructions, or
(b)
he is entitled to exercise or control the exercise of one-third or more of
the voting power at general meetings of the body.
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(2)
For the purposes of this section a person is treated as entitled to exercise or
control the exercise of voting power if—
(a)
another body corporate is entitled to exercise or control the exercise of
that voting power, and
(b)
he is entitled to exercise or control the exercise of one-third or more of
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the voting power at general meetings of that body corporate.
(3)
For the purposes of this section a person is treated as entitled to exercise or
control the exercise of voting power if—
(a)
he has a right (whether or not subject to conditions) the exercise of
which would make him so entitled, or
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(b)
he is under an obligation (whether or not subject to conditions) the
fulfilment of which would make him so entitled.
631
Interest in shares: agreement to acquire interests in a particular company
(1)
For the purposes of this Part an interest in shares may arise from an agreement
between two or more persons that includes provision for the acquisition by any
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Company Law Reform Bill [HL]
Part 22 — Information about interests in company’s shares
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one or more of them of interests in shares of a particular public company (the
“target company” for that agreement).
(2)
This section applies to such an agreement if—
(a)
the agreement includes provision imposing obligations or restrictions
on any one or more of the parties to it with respect to their use, retention
5
or disposal of their interests in the shares of the target company
acquired in pursuance of the agreement (whether or not together with
any other interests of theirs in the company’s shares to which the
agreement relates), and
(b)
an interest in the target company’s shares is in fact acquired by any of
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the parties in pursuance of the agreement.
(3)
The reference in subsection (2) to the use of interests in shares in the target
company is to the exercise of any rights or of any control or influence arising
from those interests (including the right to enter into an agreement for the
exercise, or for control of the exercise, of any of those rights by another person).
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(4)
Once an interest in shares in the target company has been acquired in
pursuance of the agreement, this section continues to apply to the agreement
so long as the agreement continues to include provisions of any description
mentioned in subsection (2).

This applies irrespective of—
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(a)
whether or not any further acquisitions of interests in the company’s
shares take place in pursuance of the agreement;
(b)
any change in the persons who are for the time being parties to it;
(c)
any variation of the agreement.

References in this subsection to the agreement include any agreement having
25
effect (whether directly or indirectly) in substitution for the original
agreement.
(5)
In this section—
(a)
“agreement” includes any agreement or arrangement, and
(b)
references to provisions of an agreement include—
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(i)
undertakings, expectations or understandings operative under
an arrangement, and
(ii)
any provision whether express or implied and whether
absolute or not.

References elsewhere in this Part to an agreement to which this section applies
35
have a corresponding meaning.
(6)
This section does not apply—
(a)
to an agreement that is not legally binding unless it involves mutuality
in the undertakings, expectations or understandings of the parties to it;
or
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(b)
to an agreement to underwrite or sub-underwrite an offer of shares in
a company, provided the agreement is confined to that purpose and
any matters incidental to it.
632
Extent of obligation in case of share acquisition agreement
(1)
For the purposes of this Part each party to an agreement to which section 631
45
applies is treated as interested in all shares in the target company in which any
other party to the agreement is interested apart from the agreement (whether

Company Law Reform Bill [HL]
Part 22 — Information about interests in company’s shares
310

or not the interest of the other party was acquired, or includes any interest that
was acquired, in pursuance of the agreement).
(2)
For those purposes an interest of a party to such an agreement in shares in the
target company is an interest apart from the agreement if he is interested in
those shares otherwise than by virtue of the application of section 631 (and this
5
section) in relation to the agreement.
(3)
Accordingly, any such interest of the person (apart from the agreement)
includes for those purposes any interest treated as his under section 629 or 630
(family or corporate interests) or by the application of section 631 (and this
section) in relation to any other agreement with respect to shares in the target
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company to which he is a party.
(4)
A notification with respect to his interest in shares in the target company made
to the company under this Part by a person who is for the time being a party to
an agreement to which section 631 applies must—
(a)
state that the person making the notification is a party to such an
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agreement,
(b)
include the names and (so far as known to him) the addresses of the
other parties to the agreement, identifying them as such, and
(c)
state whether or not any of the shares to which the notification relates
are shares in which he is interested by virtue of section 631 (and this
20
section) and, if so, the number of those shares.
Other supplementary provisions
633
Information protected from wider disclosure
(1)
Information in respect of which a company is for the time being entitled to any
exemption conferred by regulations under section 391(3) (information about
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related undertakings to be given in notes to accounts: exemption where
disclosure harmful to company’s business)—
(a)
must not be included in a report under section 612 (report to members
on outcome of investigation), and
(b)
must not be made available under section 618 (right to inspect and
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request copy of entries).
(2)
Where any such information is omitted from a report under section 612, that
fact must be stated in the report.
634
Reckoning of periods for fulfilling obligations

Where the period allowed by any provision of this Part for fulfilling an
35
obligation is expressed as a number of days, any day that is not a working day
shall be disregarded in reckoning that period.
635
Power to make further provision by regulations
(1)
The Secretary of State may by regulations amend—
(a)
the definition of shares to which this Part applies (section 605),
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(b)
the provisions as to notice by a company requiring information about
interests in its shares (section 606), and

Company Law Reform Bill [HL]
Part 23 — Company’s annual return
311

(c)
the provisions as to what is taken to be an interest in shares (sections
627 and 628).
(2)
The regulations may amend, repeal or replace those provisions and make such
other consequential amendments or repeals of provisions of this Part as appear
to the Secretary of State to be appropriate.
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(3)
Regulations under this section are subject to affirmative resolution procedure.
Part 23
Company’s annual return
636
Duty to deliver annual returns
(1)
Every company must deliver to the registrar successive annual returns each of
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which is made up to a date not later than the date that is from time to time the
company’s return date.
(2)
The company’s return date is—
(a)
the anniversary of the company’s incorporation, or
(b)
if the company’s last return delivered in accordance with this Part was
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made up to a different date, the anniversary of that date.
(3)
Each return must—
(a)
contain the information required by or under the following provisions
of this Part, and
(b)
be delivered to the registrar within 28 days after the date to which it is
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made up.
637
Contents of annual return: general
(1)
Every annual return must state the date to which it is made up and contain the
following information—
(a)
the address of the company’s registered office;
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(b)
the type of company it is and its principal business activities;
(c)
the prescribed particulars of—
(i)
the directors of the company, and
(ii)
in the case of a public company, the secretary or joint
secretaries;
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(d)
if the register of members is not kept available for inspection at the
company’s registered office, the address of the place where it is kept
available for inspection;
(e)
if any register of debenture holders (or a duplicate of any such register
or a part of it) is not kept available for inspection at the company’s
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registered office, the address of the place where it is kept available for
inspection.
(2)
The information as to the company’s type must be given by reference to the
classification scheme prescribed for the purposes of this section.
(3)
The information as to the company’s principal business activities may be given
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by reference to one or more categories of any prescribed system of classifying
business activities.