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 2 — Company formation
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Statement of capital and initial shareholdings
(1)
The statement of capital and initial shareholdings required to be delivered in
the case of a company that is to have a share capital must comply with this
section.
(2)
It must state—
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(a)
the total number of shares of the company to be taken on formation by
the subscribers to the memorandum of association,
(b)
the aggregate nominal value of those shares,
(c)
for each class of shares—
(i)
prescribed particulars of the rights attached to the shares,
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(ii)
the total number of shares of that class, and
(iii)
the aggregate nominal value of shares of that class, and
(d)
the amount to be paid up and the amount (if any) to be unpaid on each
share (whether on account of the nominal value of the share or by way
of premium).
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(3)
It must contain such information as may be prescribed for the purpose of
identifying the subscribers to the memorandum of association.
(4)
It must state, with respect to each subscriber to the memorandum—
(a)
the number, nominal value (of each share) and class of shares to be
taken by him on formation, and
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(b)
the amount to be paid up and the amount (if any) to be unpaid on each
share (whether on account of the nominal value of the share or by way
of premium).
(5)
Where a subscriber to the memorandum is to take shares of more than one
class, the information required under subsection (4)(a) is required for each
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class.
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Statement of guarantee
(1)
The statement of guarantee required to be delivered in the case of a company
that is to be limited by guarantee must comply with this section.
(2)
It must contain the names and addresses of the subscribers to the
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memorandum.
(3)
It must state that each member undertakes that, if the company is wound up
while he is a member, or within one year after he ceases to be a member, he will
contribute to the assets of the company such amount as may be required for—
(a)
payment of the debts and liabilities of the company contracted before
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he ceases to be a member,
(b)
payment of the costs, charges and expenses of winding up, and
(c)
adjustment of the rights of the contributories among themselves,

not exceeding a specified amount.
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Statement of proposed officers
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(1)
The statement of the company’s proposed officers required to be delivered to
the registrar must contain the required particulars of—
(a)
the person who is, or persons who are, to be the first director or
directors of the company;

Company Law Reform Bill [HL]
Part 2 — Company formation
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(b)
in the case of a company that is to be a public company, the person who
is (or the persons who are) to be the first secretary (or joint secretaries)
of the company.
(2)
The required particulars are the particulars that will be required to be stated in
the company’s register of directors and register of directors’ residential
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addresses (see sections 147 to 151) or, as the case may be, its register of
secretaries (see sections 260 to 262).
(3)
The statement must also contain a consent by each of the persons named as a
director, as secretary or as one of joint secretaries, to act in the relevant
capacity.
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If all the partners in a firm are to be joint secretaries, consent may be given by
one partner on behalf of all of them.
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Statement of compliance
(1)
The statement of compliance required to be delivered to the registrar is a
statement that the requirements of this Act as to registration have been
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complied with.
(2)
The registrar may accept the statement of compliance as sufficient evidence of
compliance.
Registration and its effect
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Registration
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(1)
If the registrar is satisfied that the requirements of this Act as to registration are
complied with, he shall register the documents delivered to him.
(2)
References in the Companies Acts to registration of the company are to
registration under this section (or, where the context requires, under
corresponding earlier provisions).
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Issue of certificate of incorporation
(1)
On the registration of a company, the registrar of companies shall give a
certificate that the company is incorporated.
(2)
The certificate must state—
(a)
the name and registered number of the company,
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(b)
the date of its incorporation,
(c)
whether it is a limited or unlimited company, and if it is limited
whether it is limited by shares or limited by guarantee,
(d)
whether it is a private or a public company, and
(e)
whether the company’s registered office is situated in England and
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Wales (or in Wales), in Scotland or in Northern Ireland.
(3)
The certificate must be signed by the registrar or authenticated by the
registrar’s official seal.
(4)
The certificate is conclusive evidence that the requirements of this Act as to
registration have been complied with and that the company is duly registered
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under this Act.

Company Law Reform Bill [HL]
Part 3 — A company’s constitution
Chapter 2 — Articles of association
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Effect of registration
(1)
The registration of a company has the following effects as from the date of
incorporation.
(2)
The subscribers to the memorandum, together with such other persons as may
from time to time become members of the company, are a body corporate by
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the name stated in the certificate of incorporation.
(3)
That body corporate is capable of exercising all the functions of an
incorporated company.
(4)
The status and registered office of the company are as stated in, or in
connection with, the application for registration.
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(5)
In the case of a company having a share capital, the subscribers to the
memorandum become holders of the shares specified in the statement of
capital and initial shareholdings.
(6)
The persons named in the statement of proposed officers—
(a)
as director, or
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(b)
in the case of a public company, as secretary or joint secretary of the
company,

are deemed to have been appointed to that office.
Part 3
A company’s constitution
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Chapter 1
Introductory
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A company’s constitution

Unless the context otherwise requires, references in the Companies Acts to a
company’s constitution include—
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(a)
the company’s articles, and
(b)
any resolutions and agreements to which Chapter 3 of this Part applies.
Chapter 2
Articles of association
General
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Articles of association
(1)
A company must have articles of association prescribing regulations for the
company.
(2)
Unless it is a company to which model articles apply by virtue of section 20
(default application of model articles in case of limited company), it must
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register articles of association.
(3)
A company’s articles of association must—

Company Law Reform Bill [HL]
Part 3 — A company’s constitution
Chapter 2 — Articles of association
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(a)
be contained in a single document, and
(b)
be divided into paragraphs numbered consecutively.
(4)
References in the Companies Acts to a company’s “articles” are to its articles of
association.
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Power of Secretary of State to prescribe model articles
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(1)
The Secretary of State may by regulations prescribe model articles of
association for companies.
(2)
Different model articles may be prescribed for different descriptions of
company.
(3)
A company may adopt all or any of the provisions of model articles.
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(4)
Any amendment of model articles by regulations under this section does not
affect a company registered before the amendment takes effect.

“Amendment” here includes addition, alteration or repeal.
(5)
Regulations under this section are subject to negative resolution procedure.
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Default application of model articles
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(1)
On the formation of a limited company—
(a)
if articles are not registered, or
(b)
if articles are registered, in so far as they do not exclude or modify the
relevant model articles,

the relevant model articles (so far as applicable) form part of the company’s
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articles in the same manner and to the same extent as if articles in the form of
those articles had been duly registered.
(2)
The “relevant model articles” means the model articles prescribed for a
company of that description as in force at the date on which the company is
registered.
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Alteration of articles
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Alteration of articles
(1)
A company may alter its articles by special resolution.
(2)
In the case of a company that is a charity, this is subject to—
(a)
in England and Wales, section 64 of the Charities Act 1993 (c. 10);
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(b)
in Northern Ireland, Article 9 of the Charities (Northern Ireland) Order
1987 (S.I. 1987/2048 (N.I. 19)).
(3)
In the case of a company that is registered in the Scottish Charity Register, this
is subject to—
(a)
section 112 of the Companies Act 1989 (c. 40), and
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(b)
section 16 of the Charities and Trustee Investment (Scotland) Act 2005
(asp 10).