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]
Schedule 4 — Amendments of remaining provisions of the Companies Act 1985 relating to offences
479

(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
5
exceeding the statutory maximum (or both).”.
Failure to cancel own shares acquired by company or to apply for re-registration as private
company
10    (1)
In subsection (2) of section 149 of the Companies Act 1985 (c. 6) (penalty for
failure to cancel own shares or to re-register as private company when
10
required to do so) for the words “the company” to the end substitute “an
offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.”.
      (2)
At the end of that section add—
15
“(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,
for continued contravention, a daily default fine not exceeding one-
tenth of level 3 on the standard scale.”.
Contravention of provisions dealing with treasury shares
20
11
For section 162G of the Companies Act 1985 (failure to comply with
requirements in relation to treasury shares) substitute—
“162G
Treasury shares: penalty for contravention
(1)
If a company contravenes any of the provisions of sections 162A to
162F, an offence is committed by—
25
(a)
the company, and
(b)
every officer of the company who is in default.
(2)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
30
maximum.”.
Failure to comply with disclosure obligations in connection with purchase of own shares
12
For section 169(6) of the Companies Act 1985 (failure to comply with
disclosure requirements in connection with purchase of own shares)
substitute—
35
“(6)
If default is made in delivering to the registrar any return or
statement required by this section, an offence is committed by every
officer of the company who is in default.
(6A)
A person guilty of an offence under subsection (6) is liable—
(a)
on conviction on indictment, to a fine;
40
(b)
on summary conviction, to a fine not exceeding the statutory
maximum and, for continued contravention, a daily default
fine not exceeding one-tenth of the statutory maximum.”.

Company Law Reform Bill [HL]
Schedule 4 — Amendments of remaining provisions of the Companies Act 1985 relating to offences
480

Failure to deliver to registrar return of cancellation or disposal of treasury shares
13
For section 169A(4) of the Companies Act 1985 (c. 6) (failure to deliver to
registrar return in connection with cancellation or disposal of treasury
shares) substitute—
“(4)
If default is made in delivering to the registrar any return or
5
statement required by this section, an offence is committed by every
officer of the company who is in default.
(5)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
10
maximum and, for continued contravention, a daily default
fine not exceeding one-tenth of the statutory maximum.”.
Refusal of inspection of directors’ statement and auditors’ report relating to payment out of
capital
14
For section 175(7) of the Companies Act 1985 (refusal of inspection of
15
directors’ statement and auditors’ report relating to payment out of capital)
substitute—
“(7)
If an inspection under subsection (6) is refused, an offence is
committed by—
(a)
the company, and
20
(b)
every officer of the company who is in default.
(8)
A person guilty of an offence under subsection (7) 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.”.
25
Failure to give notice to registrar of application to court or to deliver copy of court order
15
For section 176(4) of the Companies Act 1985 (failure to give notice to
registrar of application to court or to deliver copy of court order)
substitute—
“(4)
If a company fails to comply with subsection (3), an offence is
30
committed by—
(a)
the company, and
(b)
every officer of the company 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,
35
for continued contravention, a daily default fine not exceeding one-
tenth of level 3 on the standard scale.”.
Failure to make ready certificates following allotment or transfer of shares
16
For section 185(5) of the Companies Act 1985 (failure to prepare share
certificates, etc) substitute—
40
“(5)
If default is made in complying with subsection (1), an offence is
committed by every officer of the company who is in default.

Company Law Reform Bill [HL]
Schedule 4 — Amendments of remaining provisions of the Companies Act 1985 relating to offences
481

(5A)
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.”.
Offences in connection with share warrants (Scotland)
5
17    (1)
Section 189 of the Companies Act 1985 (c. 6) (offences in connection with
share warrants (Scotland)) is amended as follows.
      (2)
In subsection (1), for the words “he is on conviction thereof” to the end
substitute “he commits an offence.”.
      (3)
In subsection (2), for the words “he is on conviction thereof” to the end
10
substitute “he commits an offence.”.
      (4)
At the end add—
“(3)
A person guilty of an offence under subsection (1) is liable on
summary conviction to imprisonment for a term not exceeding six
months or to a fine not exceeding level 5 on the standard scale (or
15
both).
(4)
A person guilty of an offence under subsection (2) is liable—
(a)
on conviction on indictment, to imprisonment for a term not
exceeding seven years or a fine (or both);
(b)
on summary conviction, to imprisonment for a term not
20
exceeding six months or a fine not exceeding the statutory
maximum (or both).”.
Failure to send to registrar particulars of charge or of issue of debentures (England and Wales)
18    (1)
In subsection (3) of section 399 of the Companies Act 1985 (failure to send to
registrar particulars of charge or of issue of debentures) for the words “the
25
company” to the end substitute “an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.”.
      (2)
At the end of that section add—
“(4)
A person guilty of an offence under this section is liable—
30
(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
maximum and, for continued contravention, a daily default
fine not exceeding one-tenth of the statutory maximum.”.
Failure to send to registrar particulars of charge on property acquired (England and Wales)
35
19
For section 400(4) of the Companies Act 1985 (failure to send to registrar
particulars of charge on property acquired) substitute—
“(4)
If default is made in complying with this section, an offence is
committed by—
(a)
the company, and
40
(b)
every officer of the company who is in default.
(5)
A person guilty of an offence under this section is liable—

Company Law Reform Bill [HL]
Schedule 4 — Amendments of remaining provisions of the Companies Act 1985 relating to offences
482

(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
maximum and, for continued contravention, a daily default
fine not exceeding one-tenth of the statutory maximum.”.
Delivery of debenture etc without endorsement of certificate of registration of charge (England
5
and Wales)
20    (1)
In subsection (3) of section 402 of the Companies Act 1985 (c. 6) (delivery of
debenture without required endorsement) for the words “he is liable” to the
end substitute “he commits an offence.”.
      (2)
At the end of that section add—
10
“(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.”.
Failure to give notice of appointment of receiver or manager, or of his ceasing to act (England
and Wales)
21
For section 405(4) of the Companies Act 1985 (notice to registrar of
15
enforcement of security) substitute—
“(4)
A person who makes default in complying with the requirements of
this section commits an offence.
(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,
20
for continued contravention, a daily default fine not exceeding one-
tenth of level 3 on the standard scale.”.
Omission of entry from company’s register of charges (England and Wales)
22    (1)
In subsection (3) of section 407 of the Companies Act 1985 (failure of officer
to make required entry in company’s register of charges) for “he is liable to
25
a fine” substitute “he commits an offence”.
      (2)
At the end of that section add—
“(4)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
30
maximum.”.
Refusal of inspection of charging instrument or of register of charges (England and Wales)
23
For section 408(3) of the Companies Act 1985 (refusal of inspection of
charging instrument or register of charges) substitute—
“(3)
If inspection of copies, or of the register, is refused, an offence is
35
committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
(3A)
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,
40

Company Law Reform Bill [HL]
Schedule 4 — Amendments of remaining provisions of the Companies Act 1985 relating to offences
483

for continued contravention, a daily default fine not exceeding one-
tenth of level 3 on the standard scale.”.
Failure to send to registrar particulars of charge or issue of debentures (Scotland)
24    (1)
In subsection (3) of section 415 of the Companies Act 1985 (c. 6) (Scotland:
failure to send registrar particulars of charge or issue of debenture) for the
5
words “the company and every officer of it” to the end substitute “an offence
is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.”.
      (2)
At the end of that section add—
10
“(4)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to a fine;
(b)
on summary conviction, to a fine not exceeding the statutory
maximum and, for continued contravention, a daily default
fine not exceeding one-tenth of the statutory maximum.”.
15
Failure to send to registrar particulars of charge on property acquired (Scotland)
25    (1)
In subsection (3) of section 416 of the Companies Act 1985 (Scotland: failure
to send registrar particulars of charge or issue of debenture) for the words
“the company and every officer of it” to the end substitute “an offence is
committed by—
20
(a)
the company, and
(b)
every officer of the company who is in default.”.
      (2)
At the end of that section add—
“(4)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to a fine;
25
(b)
on summary conviction, to a fine not exceeding the statutory
maximum and, for continued contravention, a daily default
fine not exceeding one-tenth of the statutory maximum.”.
Omission of entry from company’s register of charges (Scotland)
26    (1)
In subsection (3) of section 422 of the Companies Act 1985 (Scotland: failure
30
to make entry in company’s register of charges) for “he is liable to a fine”
substitute “he commits an offence”.
      (2)
At the end of that section add—
“(4)
A person guilty of an offence under this section is liable—
(a)
on conviction on indictment, to a fine;
35
(b)
on summary conviction, to a fine not exceeding the statutory
maximum.”.
Refusal of inspection of charging instrument or of register of charges (Scotland)
27
For section 423(3) of the Companies Act 1985 (Scotland: refusal of inspection

Company Law Reform Bill [HL]
Schedule 4 — Amendments of remaining provisions of the Companies Act 1985 relating to offences
484

of charging instrument or register of charges) substitute—
“(3)
If inspection of the copies or register is refused, an offence is
committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
5
(3A)
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.”.
Failure to annex to memorandum court order sanctioning compromise or arrangement with
10
creditors
28
For section 425(4) of the Companies Act 1985 (c. 6) (failure to annex to
company’s constitutional documents copy of court order sanctioning
compromise or arrangement with creditors) substitute—
“(4)
If a company makes default in complying with subsection (3), an
15
offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
(4A)
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.”.
20
Failure to comply with requirements to inform members and creditors about compromise or
arrangement
29
For subsection (6) of section 426 of the Companies Act 1985 (failure to inform
members or creditors in advance of meeting about compromise or
arrangement) substitute—
25
“(6)
If a company makes default in complying with any requirement of
this section, an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
(6A)
For the purposes of subsection (6) the following are treated as
30
officers of the company—
(a)
a liquidator or administrator of the company, and
(b)
a trustee of a deed for securing the issue of debentures of the
company.
(6B)
A person is not guilty of an offence under subsection (6) if he shows
35
that the default was due to the refusal of a director or trustee for
debenture holders to supply the necessary particulars of his
interests.
(6C)
A person guilty of an offence under subsection (6) is liable—
(a)
on conviction on indictment, to a fine;
40
(b)
on summary conviction, to a fine not exceeding the statutory
maximum.”.

Company Law Reform Bill [HL]
Schedule 4 — Amendments of remaining provisions of the Companies Act 1985 relating to offences
485

Failure by director or trustee for debenture holders to give information to company
30    (1)
In subsection (7) of that section (failure by director or trustee for debenture
holders to give information to company) omit “; and any person who makes
default in complying with this subsection is liable to a fine”.
      (2)
At the end of that section add—
5
“(8)
A person who makes default in complying with subsection (7)
commits an offence.
(9)
A person guilty of an offence under subsection (8) is liable on
summary conviction to a fine not exceeding level 3 on the standard
scale.”.
10
Failure to deliver to registrar copy of order for company reconstruction or amalgamation
31    (1)
In section 427(5) of the Companies Act 1985 (c. 6) (failure to deliver to
registrar copy of order for company reconstruction or amalgamation) omit
the words “; and if default is made” to the end.
      (2)
After that provision insert—
15
“(5A)
If default is made in complying with subsection (5) an offence is
committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
(5B)
A person guilty of an offence under this section is liable on summary
20
conviction to a fine not exceeding level 3 on the standard scale.”.
Failure to send notice etc relating to buy-out of minority shareholders
32    (1)
In subsection (6) of section 429 of the Companies Act 1985 (failure to send
notice etc relating to buy-out of minority shareholders) for the words from
“shall be liable to imprisonment” to the end substitute “commits an offence.”
25
      (2)
After subsection (7) of that section insert—
“(7A)
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—
30
(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) and, for continued
contravention, a daily default fine not exceeding one-
fiftieth of the statutory maximum;
35
(ii)
in Scotland or Northern Ireland, to imprisonment for
a term not exceeding six months, or to a fine not
exceeding the statutory maximum (or both) and, for
continued contravention, a daily default fine not
exceeding one-fiftieth of the statutory maximum.”.
40