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 31 — Companies: supplementary provisions
387

797
Right to hard copy version
(1)
Where a member of a company or a holder of a company’s debentures has
received a document or information from the company otherwise than in hard
copy form, he is entitled to require the company to send him a version of the
document or information in hard copy form.
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(2)
The company must send the document or information in hard copy form
within 21 days of receipt of the request from the member or debenture holder.
(3)
The company may not make a charge for providing the document or
information in that form.
(4)
If a company fails to comply with this section, an offence is committed by the
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company and every officer of it who is in default.
(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.
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(6)
This section has effect subject to any contrary provision in an enactment.
798
Requirement of authentication
(1)
This section applies in relation to the authentication of a document or
information sent or supplied by a person to a company.
(2)
A document or information sent or supplied in hard copy form is sufficiently
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authenticated if it is signed by the person sending or supplying it.
(3)
A document or information sent or supplied in electronic form is sufficiently
authenticated—
(a)
if the identity of the sender is confirmed in a manner specified by the
company, or
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(b)
where no such manner has been specified by the company, if the
communication contains or is accompanied by a statement of the
identity of the sender and the company has no reason to doubt the truth
of that statement.
(4)
Where a document or information is sent or supplied by one person on behalf
30
of another, nothing in this section affects any provision of the company’s
articles under which the company may require reasonable evidence of the
authority of the former to act on behalf of the latter.
799
Deemed delivery of documents and information
(1)
This section applies in relation to documents and information sent or supplied
35
by a company.
(2)
Where—
(a)
the document or information is sent by post (whether in hard copy or
electronic form) to an address in the United Kingdom, and
(b)
the company is able to show that it was properly addressed, prepaid
40
and posted,

it is deemed to have been received by the intended recipient 48 hours after it
was posted.

Company Law Reform Bill [HL]
Part 31 — Companies: supplementary provisions
388

(3)
Where—
(a)
the document or information is sent or supplied by electronic means,
and
(b)
the company is able to show that it was properly addressed,

it is deemed to have been received by the intended recipient 48 hours after it
5
was sent.
(4)
Where the document or information is sent or supplied by means of a website,
it is deemed to have been received by the intended recipient—
(a)
when the material was first made available on the website, or
(b)
if later, when the recipient received (or is deemed to have received)
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notice of the fact that the material was available on the website.
(5)
In calculating a period of hours for the purposes of this section, no account
shall be taken of any part of a day that is not a working day.
(6)
This section has effect subject to—
(a)
any contrary provision of the Companies Acts;
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(b)
in its application to documents or information sent or supplied by a
company to its members, any contrary provision of the company’s
articles;
(c)
in its application to documents or information sent or supplied by a
company to its debentures holders, any contrary provision in the
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instrument constituting the debentures;
(d)
in its application to documents or information sent or supplied by a
company to a person otherwise than in his capacity as a member or
debenture holder, any contrary provision in an agreement between the
company and that person.
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800
Interpretation of company communications provisions
(1)
In the company communications provisions—
“address” includes a number or address used for the purposes of sending
or receiving documents or information by electronic means;
“document” includes summons, notice, order or other legal process and
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registers;
“traded company” means a company whose securities are admitted to
trading on a regulated market.
(2)
References in the company communications provisions to provisions of the
Companies Acts authorising or requiring a document or information to be sent
35
or supplied include all such provisions, whatever expression is used, and
references to documents or information being sent or supplied shall be
construed accordingly.
(3)
References in the company communications provisions to documents or
information being sent or supplied by or to a company include references to
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documents or information being sent or supplied by or to the directors of a
company acting on behalf of the company.

Company Law Reform Bill [HL]
Part 31 — Companies: supplementary provisions
389

Notice of appointment of certain officers
801
Duty to notify registrar of certain appointments etc
(1)
Notice must be given to the registrar of the appointment in relation to a
company of—
(a)
a judicial factor (in Scotland),
5
(b)
a receiver and manager appointed under section 18 of the Charities Act
1993 (c. 10), or
(c)
a manager appointed under section 47 of the Companies (Audit,
Investigations and Community Enterprise) Act 2004 (c. 27).
(2)
The notice must be given—
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(a)
in the case of appointment of a judicial factor, by the judicial factor;
(b)
in the case of appointment of a receiver and manager under section 18
of the Charities Act 1993, by the Charity Commission;
(c)
in the case of appointment of a manager under section 47 of the
Companies (Audit, Investigations and Community Enterprise) Act
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2004, by the Regulator of Community Interest Companies.
(3)
The notice must specify an address at which service of documents (including
legal process) may be effected on the person appointed.

Notice of a change in the address for service may be given to the registrar by
the person appointed.
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(4)
Where notice has been given under this section of the appointment of a person,
notice must also be given to the registrar of the termination of the appointment.

This notice must be given by the person specified in subsection (2).
802
Offence of failure to give notice
(1)
If a judicial factor fails to give notice of his appointment in accordance with
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section 801 within the period of 14 days after the appointment he commits an
offence.
(2)
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, a daily default fine not exceeding one-tenth of level
30
5 on the standard scale.
Courts and legal proceedings
803
Meaning of “the court”
(1)
Except as otherwise provided, in the Companies Acts “the court” means—
(a)
in England and Wales, the High Court or (subject to subsection (3)) a
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county court;
(b)
in Scotland, the Court of Session or the sheriff court;
(c)
in Northern Ireland, the High Court.
(2)
The provisions of the Companies Acts conferring jurisdiction on “the court” as
defined above have effect subject to any enactment or rule of law relating to the
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allocation of jurisdiction or distribution of business between courts in any part
of the United Kingdom.

Company Law Reform Bill [HL]
Part 31 — Companies: supplementary provisions
390

(3)
The Lord Chancellor may, with the concurrence of the Lord Chief Justice, by
order—
(a)
exclude a county court from having jurisdiction under the Companies
Acts, and
(b)
for the purposes of that jurisdiction attach that court’s district, or any
5
part of it, to another county court.
(4)
The Lord Chief Justice may nominate a judicial office holder (as defined in
section 109(4) of the Constitutional Reform Act 2005 (c. 4)) to exercise his
functions under subsection (3).
804
Power of court to grant relief in certain cases
10
(1)
If in proceedings for negligence, default, breach of duty or breach of trust
against—
(a)
an officer of a company, or
(b)
a person employed by a company as auditor (whether he is or is not an
officer of the company),
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it appears to the court hearing the case that the officer or person is or may be
liable but that he acted honestly and reasonably, and that having regard to all
the circumstances of the case (including those connected with his
appointment) he ought fairly to be excused, the court may relieve him, either
wholly or in part, from his liability on such terms as it thinks fit.
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(2)
If any such officer or person has reason to apprehend that a claim will or might
be made against him in respect of negligence, default, breach of duty or breach
of trust—
(a)
he may apply to the court for relief, and
(b)
the court has the same power to relieve him as it would have had if it
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had been a court before which proceedings against him for negligence,
default, breach of duty or breach of trust had been brought.
(3)
Where the directors of a company take advantage of the exemption conferred
by section 466 (small charities: independent examiner’s report in lieu of audit)
this section, as it has effect in England and Wales and Northern Ireland, applies
30
in relation to a person appointed as independent examiner as it applies in
relation to a person appointed to act as auditor.
(4)
Where a case to which subsection (1) applies is being tried by a judge with a
jury, the judge, after hearing the evidence, may, if he is satisfied that the
defendant (in Scotland, the defender) ought in pursuance of that subsection to
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be relieved either in whole or in part from the liability sought to be enforced
against him, withdraw the case from the jury and forthwith direct judgment to
be entered for the defendant (in Scotland, grant decree of absolvitor) on such
terms as to costs (in Scotland, expenses) or otherwise as the judge may think
proper.
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Company Law Reform Bill [HL]
Part 32 — Companies: interpretation
391

Part 32
Companies: interpretation
Meaning of "undertaking" and related expressions
805
Meaning of “undertaking” and related expressions
(1)
In the Companies Acts “undertaking” means—
5
(a)
a body corporate or partnership, or
(b)
an unincorporated association carrying on a trade or business, with or
without a view to profit.
(2)
In the Companies Acts references to shares—
(a)
in relation to an undertaking with capital but no share capital, are to
10
rights to share in the capital of the undertaking; and
(b)
in relation to an undertaking without capital, are to interests—
(i)
conferring any right to share in the profits or liability to
contribute to the losses of the undertaking, or
(ii)
giving rise to an obligation to contribute to the debts or
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expenses of the undertaking in the event of a winding up.
(3)
Other expressions appropriate to companies shall be construed, in relation to
an undertaking which is not a company, as references to the corresponding
persons, officers, documents or organs, as the case may be, appropriate to
undertakings of that description.
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This is subject to provision in any specific context providing for the translation
of such expressions.
(4)
References in the Companies Acts to “fellow subsidiary undertakings” are to
undertakings which are subsidiary undertakings of the same parent
undertaking but are not parent undertakings or subsidiary undertakings of
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each other.
(5)
In the Companies Acts “group undertaking”, in relation to an undertaking,
means an undertaking which is—
(a)
a parent undertaking or subsidiary undertaking of that undertaking, or
(b)
a subsidiary undertaking of any parent undertaking of that
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undertaking.
806
Parent and subsidiary undertakings
(1)
This section (together with Schedule 8) defines “parent undertaking” and
“subsidiary undertaking” for the purposes of the Companies Acts.
(2)
An undertaking is a parent undertaking in relation to another undertaking, a
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subsidiary undertaking, if—
(a)
it holds a majority of the voting rights in the undertaking, or
(b)
it is a member of the undertaking and has the right to appoint or
remove a majority of its board of directors, or
(c)
it has the right to exercise a dominant influence over the undertaking—
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(i)
by virtue of provisions contained in the undertaking’s articles,
or
(ii)
by virtue of a control contract, or

Company Law Reform Bill [HL]
Part 32 — Companies: interpretation
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(d)
it is a member of the undertaking and controls alone, pursuant to an
agreement with other shareholders or members, a majority of the
voting rights in the undertaking.
(3)
For the purposes of subsection (2) an undertaking shall be treated as a member
of another undertaking—
5
(a)
if any of its subsidiary undertakings is a member of that undertaking,
or
(b)
if any shares in that other undertaking are held by a person acting on
behalf of the undertaking or any of its subsidiary undertakings.
(4)
An undertaking is also a parent undertaking in relation to another
10
undertaking, a subsidiary undertaking, if—
(a)
it has the power to exercise, or actually exercises, dominant influence or
control over it, or
(b)
it and the subsidiary undertaking are managed on a unified basis.
(5)
A parent undertaking shall be treated as the parent undertaking of
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undertakings in relation to which any of its subsidiary undertakings are, or are
to be treated as, parent undertakings; and references to its subsidiary
undertakings shall be construed accordingly.
(6)
Schedule 8 contains provisions explaining expressions used in this section and
otherwise supplementing this section.
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(7)
In this section and that Schedule references to shares, in relation to an
undertaking, are to allotted shares.
Other definitions
807
Hard copy and electronic form and related expressions
(1)
The following provisions apply for the purposes of the Companies Acts.
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(2)
A document or information is sent or supplied in hard copy form if it is sent or
supplied in a paper copy or similar form capable of being read.

References to hard copy have a corresponding meaning.
(3)
A document or information is sent or supplied in electronic form if it is sent or
supplied—
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(a)
by electronic means (for example, by e-mail or fax), or
(b)
by any other means while in an electronic form (for example, sending a
disk by post).

References to electronic copy have a corresponding meaning.
(4)
A document or information is sent or supplied by electronic means if it is—
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(a)
sent initially and received at its destination by means of electronic
equipment for the processing (which expression includes digital
compression) or storage of data, and
(b)
entirely transmitted, conveyed and received by wire, by radio, by
optical means or by other electromagnetic means.
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References to electronic means have a corresponding meaning.
(5)
A document or information authorised or required to be sent or supplied in
electronic form must be sent or supplied in a form, and by a means, that the
sender or supplier reasonably considers will enable the recipient—

Company Law Reform Bill [HL]
Part 32 — Companies: interpretation
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(a)
to read it, and
(b)
to retain a copy of it.
(6)
For the purposes of this section, a document or information can be read only
if—
(a)
it can be read with the naked eye, or
5
(b)
to the extent that it consists of images (for example photographs,
pictures, maps, plans or drawings), it can be seen with the naked eye.
(7)
The provisions of this section apply whether the provision of the Companies
Acts in question uses the words “sent” or “supplied” or uses other words (such
as “deliver”, “provide”, “produce” or, in the case of a notice, “give”) to refer to
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the sending or supplying of a document or information.
808
Classes of shares
(1)
For the purpose of the Companies Acts shares are of one class if the rights
attached to them are in all respects uniform.
(2)
For this purpose the rights attached to shares are not regarded as different from
15
those attached to other shares by reason only that they do not carry the same
rights to dividends in the twelve months immediately following their
allotment.
809
Dormant companies
(1)
For the purposes of the Companies Acts a company is “dormant” during any
20
period in which it has no significant accounting transaction.
(2)
A “significant accounting transaction” means a transaction that is required by
section 368 to be entered in the company’s accounting records.
(3)
In determining whether or when a company is dormant, there shall be
disregarded—
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(a)
any transaction arising from the taking of shares in the company by a
subscriber to the memorandum as a result of an undertaking of his in
connection with the formation of the company;
(b)
any transaction consisting of the payment of—
(i)
a fee to the registrar on a change of the company’s name,
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(ii)
a fee to the registrar on the re-registration of the company,
(iii)
a penalty under section 437 (penalty for failure to file accounts),
or
(iv)
a fee to the registrar for the registration of an annual return.
(4)
Any reference in the Companies Acts to a body corporate other than a
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company being dormant has a corresponding meaning.
810
Meaning of “EEA State” and related expressions

In the Companies Acts—
“EEA State” means a state which is a Contracting Party to the Agreement
on the European Economic Area signed at Oporto on 2nd May 1992 (as
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it has effect from time to time);
“EEA company” and “EEA undertaking” mean a company or
undertaking governed by the law of an EEA State.