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 35 — Statutory Auditors
Chapter 6 — Supplementary and general
431

886
Jurisdiction and procedure in respect of offences
(1)
Summary proceedings for an offence under this Part may, without prejudice to
any jurisdiction exercisable apart from this section, be taken—
(a)
against a body corporate or unincorporated association at any place at
which it has a place of business, and
5
(b)
against an individual at any place where he is for the time being.
(2)
Proceedings for an offence alleged to have been committed under this Part by
an unincorporated association must be brought in the name of the association
(and not in that of any of its members), and for the purposes of any such
proceedings any rules of court relating to the service of documents apply as in
10
relation to a body corporate.
(3)
Section 33 of the Criminal Justice Act 1925 (c. 86) and Schedule 3 to the
Magistrates’ Courts Act 1980 (c. 43) (procedure on charge of offence against a
corporation) apply in a case in which an unincorporated association is charged
in England and Wales with an offence under this Part as they apply in the case
15
of a corporation.
(4)
Section 18 of the Criminal Justice Act (Northern Ireland) 1945 (c. 15 (N.I.)) and
Article 166 and Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order
1981 (S.I. 1981/1675 (N.I. 26)) (procedure on charge of offence against a
corporation) apply in a case in which an unincorporated association is charged
20
in Northern Ireland with an offence under this Part as they apply in the case of
a corporation.
(5)
In relation to proceedings on indictment in Scotland for an offence alleged to
have been committed under this Part by an unincorporated association, section
70 of the Criminal Procedure (Scotland) Act 1995 (proceedings on indictment
25
against bodies corporate) applies as if the association were a body corporate.
(6)
A fine imposed on an unincorporated association on its conviction of such an
offence must be paid out of the funds of the association.
Notices etc
887
Service of notices
30
(1)
This section has effect in relation to any notice, direction or other document
required or authorised by or by virtue of this Part to be given to or served on
any person other than the Secretary of State.
(2)
Any such document may be given to or served on the person in question—
(a)
by delivering it to him,
35
(b)
by leaving it at his proper address, or
(c)
by sending it by post to him at that address.
(3)
Any such document may—
(a)
in the case of a body corporate, be given to or served on an officer of
that body;
40
(b)
in the case of a partnership, be given to or served on any partner;
(c)
in the case of an unincorporated association other than a partnership,
be given to or served on any member of the governing body of that
association.

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 6 — Supplementary and general
432

(4)
For the purposes of this section and section 7 of the Interpretation Act 1978
(c. 30) (service of documents by post) in its application to this section, the
proper address of any person is his last known address (whether of his
residence or of a place where he carries on business or is employed) and also—
(a)
in the case of a person who is eligible under the rules of a recognised
5
supervisory body for appointment as a statutory auditor and who does
not have a place of business in the United Kingdom, the address of that
body;
(b)
in the case of a body corporate or an officer of that body, the address of
the registered or principal office of that body in the United Kingdom;
10
(c)
in the case of an unincorporated association other than a partnership or
a member of its governing body, its principal office in the United
Kingdom.
888
Documents in electronic form
(1)
This section applies where—
15
(a)
section 887 authorises the giving or sending of a notice, direction or
other document by its delivery to a particular person (“the recipient”),
and
(b)
the notice, direction or other document is transmitted to the recipient—
(i)
by means of an electronic communications network, or
20
(ii)
by other means but in a form that requires the use of apparatus
by the recipient to render it intelligible.
(2)
The transmission has effect for the purposes of this Part as a delivery of the
notice, direction or other document to the recipient, but only if the recipient has
indicated to the person making the transmission his willingness to receive the
25
notice, direction or other document in the form and manner used.
(3)
An indication to a person for the purposes of subsection (2)—
(a)
must be given to the person in such manner as he may require,
(b)
may be a general indication or an indication that is limited to notices,
directions or other documents of a particular description,
30
(c)
must state the address to be used,
(d)
must be accompanied by such other information as the person requires
for the making of the transmission, and
(e)
may be modified or withdrawn at any time by a notice given to the
person in such manner as he may require.
35
(4)
In this section “electronic communications network” has the same meaning as
in the Communications Act 2003 (c. 21).
Interpretation
889
Meaning of “associate”
(1)
In this Part “associate”, in relation to a person, is to be construed as follows.
40
(2)
In relation to an individual, “associate” means—
(a)
that individual’s spouse, civil partner or minor child or step-child,
(b)
any body corporate of which that individual is a director, and
(c)
any employee or partner of that individual.

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 6 — Supplementary and general
433

(3)
In relation to a body corporate, “associate” means—
(a)
any body corporate of which that body is a director,
(b)
any body corporate in the same group as that body, and
(c)
any employee or partner of that body or of any body corporate in the
same group.
5
(4)
In relation to a partnership constituted under the law of Scotland, or any other
country or territory in which a partnership is a legal person, “associate”
means—
(a)
any body corporate of which that partnership is a director,
(b)
any employee of or partner in that partnership, and
10
(c)
any person who is an associate of a partner in that partnership.
(5)
In relation to a partnership constituted under the law of England and Wales or
Northern Ireland, or the law of any other country or territory in which a
partnership is not a legal person, “associate” means any person who is an
associate of any of the partners.
15
(6)
In subsections (2)(b), (3)(a) and (4)(a), in the case of a body corporate which is
a limited liability partnership, “director” is to be read as “member”.
890
Minor definitions
(1)
In this Part, unless a contrary intention appears—
“address” means—
20
(a)
in relation to an individual, his usual residential or business
address;
(b)
in relation to a firm, its registered or principal office in the
United Kingdom;
“company” means any company or other body the accounts of which
25
must be audited in accordance with Part 16;
“director”, in relation to a body corporate, includes any person occupying
in relation to it the position of a director (by whatever name called) and
any person in accordance with whose directions or instructions (not
being advice given in a professional capacity) the directors of the body
30
are accustomed to act;
“firm” means any entity, whether or not a legal person, which is not an
individual and includes a body corporate, a corporation sole and a
partnership or other unincorporated association;
“group”, in relation to a body corporate, means the body corporate, any
35
other body corporate which is its holding company or subsidiary and
any other body corporate which is a subsidiary of that holding
company;
“holding company” and “subsidiary” are to be read in accordance with
section 736 of the Companies Act 1985 (c. 6);
40
“officer”, in relation to a body corporate, includes a director, a manager, a
secretary or, where the affairs of the body are managed by its members,
a member;
“parent undertaking” and “subsidiary undertaking” are to be read in
accordance with section 806 and Schedule 8.
45
(2)
For the purposes of this Part a body is to be regarded as “established in the
United Kingdom” if and only if—

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 6 — Supplementary and general
434

(a)
it is incorporated or formed under the law of the United Kingdom or a
part of the United Kingdom, or
(b)
its central management and control are exercised in the United
Kingdom;

and any reference to a qualification “obtained in the United Kingdom” is to a
5
qualification obtained from such a body.
(3)
The Secretary of State may by regulations make such modifications of this Part
as appear to him to be necessary or appropriate for the purposes of its
application in relation to any firm, or description of firm, which is not a body
corporate or a partnership.
10
(4)
Regulations under subsection (3) are subject to negative resolution procedure.
891
Index of defined expressions
The following Table shows provisions defining or otherwise explaining
expressions used in this Part (other than provisions defining or explaining an
expression used only in the same section)—
15

Expression
Provision

address
section 890(1)

appropriate qualification
section 848

associate
section 889

audited person
section 839(2)

20

Auditor General
section 855(1)

company
section 890(1)

delegation order
section 881(1)

director (of a body corporate)
section 890(1)

enactment
section 918

25

established in the United Kingdom
section 890(2)

firm
section 890(1)

group (in relation to a body corporate)
section 890(1)

holding company
section 890(1)

main purposes of this Part
section 838

30

member (of a supervisory body)
section 846(2)

obtained in the United Kingdom
section 890(2)

officer
section 890(1)

parent undertaking
section 890(1)

Company Law Reform Bill [HL]
Part 35 — Statutory Auditors
Chapter 6 — Supplementary and general
435

Expression
Provision

qualifying body
section 849(1)

recognised, in relation to a
section 849(3) and

professional qualification
Schedule 11

recognised, in relation to a qualifying
paragraph 1(2) of Schedule

5

body
11

recognised, in relation to a
section 846(4) and

supervisory body
Schedule 10

registered third country auditor
section 870(1)

rules of a qualifying body
section 849(2)

10

rules of a supervisory body
section 846(3)

statutory auditor, statutory audit and
section 839(1)

statutory audit work

subsidiary
section 890(1)

supervisory body
section 846(1)

15

subsidiary undertaking
section 890(1)

third country auditor, third country
section 870(1)

audit and third country audit work

Miscellaneous and general
892
Power to make provision in consequence of changes affecting accountancy
20
bodies
(1)
The Secretary of State may by regulations make such amendments of
enactments as appear to him to be necessary or expedient in consequence of
any change of name, merger or transfer of engagements affecting—
(a)
a recognised supervisory body or recognised qualifying body, or
25
(b)
a body of accountants referred to in, or approved, authorised or
otherwise recognised for the purposes of, any other enactment.
(2)
Regulations under this section are subject to negative resolution procedure.
893
Consequential amendments
Schedule 14 contains consequential amendments relating to this Part.
30

Company Law Reform Bill [HL]
Part 36 — Transparency obligations and related matters
436

Part 36
Transparency obligations and related matters
Introductory
894
The transparency obligations directive
In Part 6 of the Financial Services and Markets Act 2000 (c. 8) (which makes
5
provision about official listing, prospectus requirements for transferable
securities, etc), in section 103(1) (interpretation), at the appropriate place
insert—
““the transparency obligations directive” means Directive 2004/
109/EC of the European Parliament and of the Council relating
10
to the harmonisation of transparency requirements in relation
to information about issuers whose securities are admitted to
trading on a regulated market;”.
Transparency obligations
895
Transparency rules
15
After section 89 of the Financial Services and Markets Act 2000 insert—
“Transparency obligations
89A
Transparency rules
(1)
The competent authority may make rules for the purposes of the
transparency obligations directive.
20
(2)
The rules may include provision for dealing with any matters arising
out of or related to any provision of the transparency obligations
directive.
(3)
The rules may include provision requiring—
(a)
the provision of voteholder information to issuers or others (see
25
section 89B), and
(b)
the provision of information by issuers to the public or to the
competent authority (see section 89C).
(4)
The competent authority may also make rules—
(a)
for the purpose of ensuring that voteholder information in
30
respect of voting shares traded on a UK market other than a
regulated market is made public or notified to the competent
authority;
(b)
providing for persons who hold comparable instruments (see
section 89D(1)(c)) in respect of voting shares to be treated, in the
35
circumstances specified in the rules, as holding some or all of
the voting rights in respect of those shares.
(5)
Without prejudice to subsections (1) to (3), rules under subsection (4)
may, in particular, make provision—
(a)
specifying how the proportion of—
40

Company Law Reform Bill [HL]
Part 36 — Transparency obligations and related matters
437

(i)
the total voting rights in respect of shares in an issuer, or
(ii)
the total voting rights in respect of a particular class of
shares in an issuer,

held by a person is to be determined;
(b)
specifying the circumstances in which, for the purposes of any
5
determination of the voting rights held by a person (“P”) in
respect of voting shares in an issuer, any voting rights held, or
treated by virtue of subsection (4)(b) as held, by another person
in respect of voting shares in the issuer are to be regarded as
held by P;
10
(c)
specifying the nature of the information which must be
included in any notification;
(d)
about the form of any notification;
(e)
requiring any notification to be given within a specified period;
(f)
specifying the manner in which any information is to be made
15
public and the period within which it must be made public;
(g)
specifying circumstances in which any of the requirements
imposed by rules under subsection (4) does not apply.
(6)
Rules under this section are referred to in this Part as “transparency
rules”.
20
89B
Provision of voteholder information
(1)
Transparency rules may make provision for voteholder information in
respect of voting shares to be notified, in circumstances specified in the
rules—
(a)
to the issuer, or
25
(b)
to the public,

or to both.
(2)
In this Part “voteholder information” in respect of voting shares means
information relating to the proportion of voting rights held by a person
in respect of the shares.
30
(3)
Transparency rules may require notification of voteholder information
relating to a person—
(a)
initially, not later than such date as may be specified in the rules
for the purposes of the first indent of Article 30.2 of the
transparency obligations directive, and
35
(b)
subsequently, in accordance with the following provisions.
(4)
Transparency rules under subsection (3)(b) may require notification of
voteholder information relating to a person only where there is a
notifiable change in the proportion of—
(a)
the total voting rights in respect of shares in the issuer, or
40
(b)
the total voting rights in respect of a particular class of share in
the issuer,

held by the person.
(5)
For this purpose there is a “notifiable change” in the proportion of
voting rights held by a person when the proportion changes—
45
(a)
from being a proportion less than a designated proportion to a
proportion equal to or greater than that designated proportion,