Company Law Reform Bill [HL]

House of Commons

Session 2005 - 06
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Company Law Reform Bill [HL]

Company Law Reform Bill [HL]
Schedule 2 — Specified persons, descriptions of disclosures etc for the purposes of section 648
Part 2 — Specified descriptions of disclosures
465


Until the coming into force of that Part, the references to section 881 and Part
35 are to be read as references to section 46 of the Companies Act 1989 (c. 40)
and Part 2 of that Act respectively.
54
A disclosure for the purpose of enabling or assisting a recognised
supervisory or qualifying body, within the meaning of Part 35 of this Act, to
5
exercise its functions as such.

Until the coming into force of that Part, the reference to it is to be read as a
reference to Part 2 of the Companies Act 1989.
55
A disclosure for the purpose of enabling or assisting an official receiver
(including the Accountant in Bankruptcy in Scotland and the Official
10
Assignee in Northern Ireland) to exercise his functions under the enactments
relating to insolvency.
56
A disclosure for the purpose of enabling or assisting the Insolvency
Practitioners Tribunal to exercise its functions under the Insolvency Act 1986
(c. 45).
15
57
A disclosure for the purpose of enabling or assisting a body that is for the
time being a recognised professional body for the purposes of section 391 of
the Insolvency Act 1986 (recognised professional bodies) to exercise its
functions as such.
58
A disclosure for the purpose of enabling or assisting an overseas regulatory
20
authority to exercise its regulatory functions.

“Overseas regulatory authority” and “regulatory functions” have the same
meaning as in section 82 of the Companies Act 1989.
59
A disclosure for the purpose of enabling or assisting the Regulator of
Community Interest Companies to exercise functions under the Companies
25
(Audit, Investigations and Community Enterprise) Act 2004 (c. 27).
60
A disclosure with a view to the institution of, or otherwise for the purposes
of, criminal proceedings.
61
A disclosure for the purpose of enabling or assisting a person authorised by
the Secretary of State under Part 2, 3 or 4 of the Proceeds of Crime Act 2002
30
(c. 29) to exercise his functions.
62
A disclosure with a view to the institution of, or otherwise for the purposes
of, proceedings on an application under section 6, 7 or 8 of the Company
Directors Disqualification Act 1986 (c. 46) (disqualification for unfitness).
63
A disclosure with a view to the institution of, or otherwise for the purposes
35
of, proceedings before the Financial Services and Markets Tribunal.
64
A disclosure for the purposes of proceedings before the Financial Services
Tribunal by virtue of the Financial Services and Markets Act 2000
(Transitional Provisions) (Partly Completed Procedures) Order 2001
(S.I. 2001/3592).
40
65
A disclosure for the purposes of proceedings before the Pensions Regulator
Tribunal.
66
A disclosure for the purpose of enabling or assisting a body appointed under
section 14 of the Companies (Audit, Investigations and Community
Enterprise) Act 2004 (supervision of periodic accounts and reports of issuers
45

Company Law Reform Bill [HL]
Schedule 2 — Specified persons, descriptions of disclosures etc for the purposes of section 648
Part 3 — Overseas regulatory bodies
466

of listed securities) to exercise functions mentioned in subsection (2) of that
section.
67
A disclosure with a view to the institution of, or otherwise for the purposes
of, disciplinary proceedings relating to the performance by a solicitor,
barrister, advocate, foreign lawyer, auditor, accountant, valuer or actuary of
5
his professional duties.

“Foreign lawyer” has the meaning given by section 89(9) of the Courts and
Legal Services Act 1990 (c. 41).
68
A disclosure with a view to the institution of, or otherwise for the purposes
of, disciplinary proceedings relating to the performance by a public servant
10
of his duties.

“Public servant” means an officer or employee of the Crown or of any public
or other authority for the time being designated for the purposes of this
paragraph by the Secretary of State by order subject to negative resolution
procedure.
15
69
A disclosure for the purpose of the provision of a summary or collection of
information framed in such a way as not to enable the identity of any person
to whom the information relates to be ascertained.
70
A disclosure in pursuance of any Community obligation.
Part 3
20
Overseas regulatory bodies
71
A disclosure is made in accordance with this Part of this Schedule if—
(a)
it is made to a person or body within paragraph 72, and
(b)
it is made for the purpose of enabling or assisting that person or body
to exercise the functions mentioned in that paragraph.
25
72
The persons or bodies that are within this paragraph are those exercising
functions of a public nature, under legislation in any country or territory
outside the United Kingdom, that appear to the Panel to be similar to its own
functions or those of the Financial Services Authority.
73
In determining whether to disclose information to a person or body in
30
accordance with this Part of this Schedule, the Panel must have regard to the
following considerations—
(a)
whether the use that the person or body is likely to make of the
information is sufficiently important to justify making the
disclosure;
35
(b)
whether the person or body has adequate arrangements to prevent
the information from being used or further disclosed otherwise than
for the purposes of carrying out the functions mentioned in
paragraph 72 or any other purposes substantially similar to those for
which information disclosed to the Panel could be used or further
40
disclosed.

Company Law Reform Bill [HL]
Schedule 3 — Amendments to Part 13A of the Companies Act 1985
467

Schedule 3
Section 675

Amendments to Part 13A of the Companies Act 1985
Section 428: meaning of “takeover offer”
1     (1)
Section 428 of the Companies Act 1985 (c. 6) is amended as follows.
      (2)
In subsection (3) (certain differences in terms of offer to be disregarded), for
5
“notwithstanding any” substitute “notwithstanding—
(a)
any difference permitted by subsection (3A), or
(b)
any”.
      (3)
After that subsection insert—
“(3A)
A difference is permitted by this subsection where—
10
(a)
shares carry an entitlement to a particular dividend which
other shares of the same class, by reason of being allotted
later, do not carry; and
(b)
the difference is in the value of consideration offered for the
shares allotted earlier as against that offered for those allotted
15
later, and merely reflects the difference in entitlement to the
dividend.”.
      (4)
After subsection (4) insert—
“(4A)
Where there are holders of shares in a company to whom an offer to
acquire shares in the company is not communicated, that does not
20
prevent the offer from being a takeover offer for the purposes of this
Part if—
(a)
those shareholders have no registered address in the United
Kingdom;
(b)
the offer was not communicated to those shareholders in
25
order not to contravene the law of a country or territory
outside the United Kingdom; and
(c)
either—
(i)
the offer is published in the Gazette, or
(ii)
the offer can be inspected, or a copy of it obtained, at
30
a place in an EEA State or on a website, and a notice is
published in the Gazette specifying the address of
that place or website.
(4B)
Where an offer is made to acquire shares in a company and there are
persons for whom, by reason of the law of a country or territory
35
outside the United Kingdom, it is impossible to accept the offer, or
more difficult to do so, that does not prevent the offer from being a
takeover offer for the purposes of this Part.
(4C)
It is not to be inferred—
(a)
that an offer which is not communicated to every holder of
40
shares in the company cannot be a takeover offer for the
purposes of this Part unless the requirements of paragraphs
(a) to (c) of subsection (4A) are met; or
(b)
that an offer which is impossible, or more difficult, for certain
persons to accept cannot be a takeover offer for those
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Company Law Reform Bill [HL]
Schedule 3 — Amendments to Part 13A of the Companies Act 1985
468

purposes unless the reason for the impossibility or difficulty
is the one mentioned in subsection (4B).”.
      (5)
In subsection (5) (shares already held by the offeror)—
(a)
after “contracted to acquire” insert “(whether unconditionally or
subject to conditions being met)”;
5
(b)
for the words after “the subject of a contract” substitute “intended to
secure that the holder will accept the offer when it is made, being a
contract entered into—
(a)
by deed and for no consideration;
(b)
for consideration of negligible value; or
10
(c)
for consideration consisting of a promise by the
offeror to make the offer”.
      (6)
In subsection (6) (adaptation for Scotland), for ““and under seal”” substitute
““by deed and””.
      (7)
After that subsection insert—
15
“(6A)
In this Part “date of the offer” means—
(a)
where the offer is published, the date of publication;
(b)
where the offer is not published, or where any notices of the
offer are given before the date of publication, the date when
notices of the offer (or the first such notices) are given.”.
20
      (8)
In subsection (7) (revised offers), for the words from “and references” to the
end substitute “and references in subsection (6A) to the offer shall
accordingly be construed as references to the original offer”.
Section 429: right of offeror to buy out minority shareholders
2     (1)
Section 429 of the Companies Act 1985 (c. 6) is amended as follows.
25
      (2)
For subsections (1) and (2) (which determine when the right to buy out
arises) substitute—
“(1)
Subsection (1A) applies in a case where a takeover offer does not
relate to shares of different classes.
(1A)
If the offeror has, by virtue of acceptances of the offer, acquired or
30
unconditionally contracted to acquire—
(a)
not less than nine-tenths in value of the shares to which the
offer relates, and
(b)
in a case where the shares to which the offer relates are voting
shares, not less than nine-tenths of the voting rights carried
35
by those shares,

he may give notice to the holder of any shares to which the offer
relates which the offeror has not acquired or unconditionally
contracted to acquire that he desires to acquire those shares.
(2)
Subsection (2A) applies in a case where a takeover offer relates to
40
shares of different classes.
(2A)
If the offeror has, by virtue of acceptances of the offer, acquired or
unconditionally contracted to acquire—
(a)
not less than nine-tenths in value of the shares of any class to
which the offer relates, and
45

Company Law Reform Bill [HL]
Schedule 3 — Amendments to Part 13A of the Companies Act 1985
469

(b)
in a case where the shares of that class are voting shares, not
less than nine-tenths of the voting rights carried by those
shares,

he may give notice to the holder of any shares of that class to which
the offer relates which the offeror has not acquired or
5
unconditionally contracted to acquire that he desires to acquire those
shares.”.
      (3)
After subsection (2A) (substituted by sub-paragraph (2) above) insert—
“(2B)
In the case of a takeover offer which includes among the shares to
which it relates—
10
(a)
shares that are allotted after the date of the offer, or
(b)
relevant treasury shares (within the meaning of section 428)
that cease to be held as treasury shares after the date of the
offer,

the offeror’s entitlement to give a notice under subsection (1A) or
15
(2A) on any particular date shall be determined as if the shares to
which the offer relates did not include any allotted, or ceasing to be
held as treasury shares, on or after that date.”.
      (4)
For subsection (3) (when notice to be given) substitute—
“(3)
No notice shall be given under subsection (1A) or (2A) after the end
20
of—
(a)
the period of three months beginning with the day after the
last day on which the offer can be accepted; or
(b)
the period of six months beginning with the date of the offer,
where that period ends earlier and the offer is one to which
25
subsection (3A) applies.
(3A)
This subsection applies to an offer if the time allowed for acceptance
of the offer is not governed by rules under section 643(1) of the
Company Law Reform Act 2006 that give effect to Article 7 of the
Takeovers Directive.
30

In this subsection “the Takeovers Directive” has the same meaning as
in section 643 of that Act.”.
      (5)
After subsection (3A) (inserted by sub-paragraph (4) above) insert—
“(3B)
Subsection (3C) applies where—
(a)
the requirements for the giving of a notice under subsection
35
(1A) or (2A) are satisfied; and
(b)
there are shares in the company which the offeror has
contracted to acquire subject to conditions being met, and in
relation to which the contract has not become unconditional.
(3C)
The offeror’s entitlement to give a notice under subsection (1A) or
40
(2A) shall be determined as if—
(a)
the shares to which the offer relates included shares falling
within paragraph (b) of subsection (3B); and
(b)
in relation to shares falling within that paragraph, the words
“by virtue of acceptances of the offer” in subsection (1A) or
45
(2A) were omitted.”.

Company Law Reform Bill [HL]
Schedule 3 — Amendments to Part 13A of the Companies Act 1985
470

      (6)
For the words before paragraph (a) of subsection (8) substitute—
“(8)
Subsection (8A) applies where a takeover offer is made and, during
the period beginning with the date of the offer and ending when the
offer can no longer be accepted, the offeror acquires or
unconditionally contracts to acquire any of the shares to which the
5
offer relates but otherwise than by virtue of acceptances of the offer.
(8A)
If—”.
      (7)
In subsection (8A) (formed by sub-paragraph (6) above), in paragraph (a),
for “they” substitute “the shares”.
Section 430: effect of notice under section 429
10
3     (1)
Section 430 of the Companies Act 1985 (c. 6) is amended as follows.
      (2)
After subsection (3) (choice of consideration) insert—
“(3A)
Subsection (3) applies whether or not any time-limit or other
conditions applicable to the choice under the terms of the offer can
still be complied with.”.
15
      (3)
In subsection (4) (consideration taken to be cash equivalent)—
(a)
for the words before paragraph (a) substitute “If the consideration
offered to or (as the case may be) chosen by the holder of the shares”;
(b)
for “the chosen consideration” substitute “the consideration offered
or (as the case may be) chosen”.
20
Section 430A: right of minority shareholder to be bought out by offeror
4     (1)
Section 430A of the Companies Act 1985 is amended as follows.
      (2)
For subsections (1) to (2) (which determine when the right to be bought out
arises) substitute—
“(1A)
Subsections (1B) and (1C) apply in a case where a takeover offer
25
relates to all the shares in a company.

For this purpose a takeover offer relates to all the shares in a
company if it is an offer to acquire all the shares in the company
within the meaning of section 428.
(1B)
The holder of any voting shares to which the offer relates who has
30
not accepted the offer may require the offeror to acquire those shares
if, at any time before the end of the period within which the offer can
be accepted—
(a)
the offeror has by virtue of acceptances of the offer acquired
or unconditionally contracted to acquire some (but not all) of
35
the shares to which the offer relates; and
(b)
those shares, with or without any other shares in the
company which he has acquired or contracted to acquire
(whether unconditionally or subject to conditions being
met)—
40
(i)
amount to not less than nine-tenths in value of all the
voting shares in the company (or would do so but for
section 430G(1)), and

Company Law Reform Bill [HL]
Schedule 3 — Amendments to Part 13A of the Companies Act 1985
471

(ii)
carry not less than nine-tenths of the voting rights in
the company (or would do so but for section 430G(1)).
(1C)
The holder of any non-voting shares to which the offer relates who
has not accepted the offer may require the offeror to acquire those
shares if, at any time before the end of the period within which the
5
offer can be accepted—
(a)
the offeror has by virtue of acceptances of the offer acquired
or unconditionally contracted to acquire some (but not all) of
the shares to which the offer relates; and
(b)
those shares, with or without any other shares in the
10
company which he has acquired or contracted to acquire
(whether unconditionally or subject to conditions being met),
amount to not less than nine-tenths in value of all the shares
in the company (or would do so but for section 430G(1)).
(2)
If a takeover offer relates to shares of any class or classes and at any
15
time before the end of the period within which the offer can be
accepted—
(a)
the offeror has by virtue of acceptances of the offer acquired
or unconditionally contracted to acquire some (but not all) of
the shares of any class to which the offer relates, and
20
(b)
those shares, with or without any other shares of that class
which he has acquired or contracted to acquire (whether
unconditionally or subject to conditions being met)—
(i)
amount to not less than nine-tenths in value of all the
shares of that class, and
25
(ii)
in a case where the shares of that class are voting
shares, carry not less than nine-tenths of the voting
rights carried by the shares of that class,

the holder of any shares of that class to which the offer relates who
has not accepted the offer may require the offeror to acquire those
30
shares.”.
      (3)
In subsection (2A) (calculation of nine-tenths of value of shares), for “(1) and
(2)” substitute “(1B), (1C) and (2)”.
      (4)
After that subsection insert—
“(2B)
Rights conferred on the holder of shares by subsection (1B), (1C) or
35
(2) are exercisable by a written communication addressed to the
offeror.
(2C)
Rights conferred on the holder of shares by subsection (1B), (1C) or
(2) are not exercisable after the end of the period of three months
from—
40
(a)
the end of the period within which the offer can be accepted;
or
(b)
if later, the date of the notice that must be given under
subsection (3).”.
      (5)
For subsection (3) (notice of shareholder’s rights to be given by offeror)
45