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 7 — Communications by a traded company
Part 6 — Supplementary provisions
504

      (2)
This paragraph has effect subject to any requirements or contrary provision
in the Companies Acts.
Part 6
Supplementary provisions
Joint holders of shares or debentures
5
19    (1)
This paragraph applies in relation to documents or information to be sent or
supplied to joint holders of shares or debentures of a company.
      (2)
Anything to be agreed or specified by the holder must be agreed or specified
by all the joint holders.
      (3)
Anything authorised or required to be sent or supplied to the holder may be
10
sent or supplied either—
(a)
to each of the joint holders, or
(b)
to the holder whose name appears first in the register of members or
the relevant register of debenture holders.
      (4)
This paragraph has effect subject to anything in the company’s articles.
15
Death or bankruptcy of holder of shares
20    (1)
This paragraph has effect in the case of the death or bankruptcy of a holder
of a traded company’s shares.
      (2)
Documents or information required or authorised to be sent or supplied to
the member may be sent or supplied to the persons claiming to be entitled
20
to the shares in consequence of the death or bankruptcy—
(a)
by name, or
(b)
by the title of representatives of the deceased, or trustee of the
bankrupt, or by any like description,

at the address in the United Kingdom supplied for the purpose by those so
25
claiming.
      (3)
Until such an address has been so supplied, a document or information may
be sent or supplied in any manner in which it might have been sent or
supplied if the death or bankruptcy had not occurred.
      (4)
This paragraph has effect subject to anything in the company’s articles.
30
      (5)
References in this paragraph to the bankruptcy of a person include—
(a)
the sequestration of the estate of a person;
(b)
a person’s estate being the subject of a protected trust deed (within
the meaning of the Bankruptcy (Scotland) Act 1985 (c. 66)).

In such a case the reference in sub-paragraph (2)(b) to the trustee of the
35
bankrupt is to be read as the permanent or interim trustee (within the
meaning of that Act) on the sequestrated estate or, as the case may be, the
trustee under the protected deed.

Company Law Reform Bill [HL]
Schedule 8 — Parent and subsidiary undertakings: supplementary provisions
505

Schedule 8
Section 806

Parent and subsidiary undertakings: supplementary provisions
Introduction
1
The provisions of this Schedule explain expressions used in section 806
(parent and subsidiary undertakings) and otherwise supplement that
5
section.
Voting rights in an undertaking
2     (1)
In section 806(2)(a) and (d) the references to the voting rights in an
undertaking are to the rights conferred on shareholders in respect of their
shares or, in the case of an undertaking not having a share capital, on
10
members, to vote at general meetings of the undertaking on all, or
substantially all, matters.
      (2)
In relation to an undertaking which does not have general meetings at which
matters are decided by the exercise of voting rights the references to holding
a majority of the voting rights in the undertaking shall be construed as
15
references to having the right under the constitution of the undertaking to
direct the overall policy of the undertaking or to alter the terms of its
constitution.
Right to appoint or remove a majority of the directors
3     (1)
In section 806(2)(b) the reference to the right to appoint or remove a majority
20
of the board of directors is to the right to appoint or remove directors
holding a majority of the voting rights at meetings of the board on all, or
substantially all, matters.
      (2)
An undertaking shall be treated as having the right to appoint to a
directorship if—
25
(a)
a person’s appointment to it follows necessarily from his
appointment as director of the undertaking, or
(b)
the directorship is held by the undertaking itself.
      (3)
A right to appoint or remove which is exercisable only with the consent or
concurrence of another person shall be left out of account unless no other
30
person has a right to appoint or, as the case may be, remove in relation to that
directorship.
Right to exercise dominant influence
4     (1)
For the purposes of section 806(2)(c) an undertaking shall not be regarded as
having the right to exercise a dominant influence over another undertaking
35
unless it has a right to give directions with respect to the operating and
financial policies of that other undertaking which its directors are obliged to
comply with whether or not they are for the benefit of that other
undertaking.
      (2)
A “control contract” means a contract in writing conferring such a right
40
which—
(a)
is of a kind authorised by the articles of the undertaking in relation
to which the right is exercisable, and

Company Law Reform Bill [HL]
Schedule 8 — Parent and subsidiary undertakings: supplementary provisions
506

(b)
is permitted by the law under which that undertaking is established.
      (3)
This paragraph shall not be read as affecting the construction of section
806(4)(a).
Rights exercisable only in certain circumstances or temporarily incapable of exercise
5     (1)
Rights which are exercisable only in certain circumstances shall be taken into
5
account only—
(a)
when the circumstances have arisen, and for so long as they continue
to obtain, or
(b)
when the circumstances are within the control of the person having
the rights.
10
      (2)
Rights which are normally exercisable but are temporarily incapable of
exercise shall continue to be taken into account.
Rights held by one person on behalf of another
6
Rights held by a person in a fiduciary capacity shall be treated as not held by
him.
15
7     (1)
Rights held by a person as nominee for another shall be treated as held by
the other.
      (2)
Rights shall be regarded as held as nominee for another if they are
exercisable only on his instructions or with his consent or concurrence.
Rights attached to shares held by way of security
20
8
Rights attached to shares held by way of security shall be treated as held by
the person providing the security—
(a)
where apart from the right to exercise them for the purpose of
preserving the value of the security, or of realising it, the rights are
exercisable only in accordance with his instructions, and
25
(b)
where the shares are held in connection with the granting of loans as
part of normal business activities and apart from the right to exercise
them for the purpose of preserving the value of the security, or of
realising it, the rights are exercisable only in his interests.
Rights attributed to parent undertaking
30
9     (1)
Rights shall be treated as held by a parent undertaking if they are held by
any of its subsidiary undertakings.
      (2)
Nothing in paragraph 7 or 8 shall be construed as requiring rights held by a
parent undertaking to be treated as held by any of its subsidiary
undertakings.
35
      (3)
For the purposes of paragraph 8 rights shall be treated as being exercisable
in accordance with the instructions or in the interests of an undertaking if
they are exercisable in accordance with the instructions of or, as the case may
be, in the interests of any group undertaking.

Company Law Reform Bill [HL]
Schedule 9 — Index of defined expressions
507

Disregard of certain rights
10
The voting rights in an undertaking shall be reduced by any rights held by
the undertaking itself.
Supplementary
11
References in any provision of paragraphs 6 to 10 to rights held by a person
5
include rights falling to be treated as held by him by virtue of any other
provision of those paragraphs but not rights which by virtue of any such
provision are to be treated as not held by him.
Schedule 9
Section 814

Index of defined expressions
10

abbreviated accounts
sections 428(4) and 429(3)

accounting reference date and accounting
section 373

reference period

accounting standards (in Part 15)
section 448

accounts meeting
section 421(3)

15

acquisition, in relation to a non-cash asset
section 739(2) of the 1985 Act

address

— generally
section 793

—in the company communications
section 800(1)

provisions

20

affirmative resolution procedure, in
section 915

relation to regulations and orders

allotment and related expressions
section 738 of the 1985 Act

allotted shares and allotted share capital
section 556(2) and (3)

annual accounts (in Part 15)
section 455

25

annual accounts and reports (in Part 15)
section 455

annual general meeting
section 319

annual return
section 636

appropriate audit authority (in sections
section 515(1)

512, 513 and 514)

30

the appropriate rate (in sections 99 to 105
section 107 of the 1985 Act

of the 1985 Act)

Company Law Reform Bill [HL]
Schedule 9 — Index of defined expressions
508

approval after being made, in relation to
section 916

regulations and orders

arrangement (in sections 425 and 426 of the
section 425(6)(b) of the 1985 Act

1985 Act)

articles
section 18

5

associated bodies corporate and associated
section 239

company (in Part 10)

authenticated, in relation to a document or
section 798

information sent or supplied to a company

authentication, by a company of
section 48

10

documents or proceedings (in England and

Wales or Northern Ireland)

authorised group, of members of a
section 353(2)

company (in Part 14)

authorised insurance company
section 742C of the 1985 Act

15

authorised minimum (for the purposes of
section 538

sections 536 and 537)

bank holiday
section 744 of the 1985 Act

banking company
section 742B of the 1985 Act

body corporate
section 813

20

books and papers, books or papers
section 744 of the 1985 Act

called-up share capital
section 737(1) of the 1985 Act

capital redemption reserve
section 170(1) of the 1985 Act

capitalisation, in relation to a company’s
section 280(2) of the 1985 Act

profits (in Part 8 of the 1985 Act)

25

Case 1 Scheme, Case 2 Scheme, Case 3
section 427A(8) of the 1985 Act

Scheme (in section 427A of, and Schedule

15B to, the 1985 Act)

cause of action, in relation to derivative
section 248(6)

proceedings (in Chapter 2 of Part 11)

30

certified translation (in Part 29)
section 760

circulation date, in relation to a written
section 273

resolution (in Part 13)

class of shares
section 808

the Companies Acts
section 2

35

Companies Act accounts
sections 377(1)(a) and 385(2)(a)

Companies Act group accounts
section 385(2)(a)

Company Law Reform Bill [HL]
Schedule 9 — Index of defined expressions
509

Companies Act individual accounts
section 377(1)(a)

company

  — in the Companies Acts
section 1

  — in sections 131 to 133 of the 1985 Act
section 133(4) of the 1985 Act

  — in Chapter 2 of Part 12 of the 1985 Act
section 410(5) of the 1985 Act

5

  — in sections 425 and 426 of the 1985 Act
section 425(6)(a) of the 1985 Act

  — in Chapter 2 of Part 24
section 671(1)

the company communications provisions
section 794

company records (in Part 31)
section 786

compromise or arrangement (in section
section 427A(8) of the 1985 Act

10

427A of, and Schedule 15B to, the 1985 Act)

connected with, in relation to a director (in
sections 235 to 237

Part 10)

the Consequential Provisions Act
section 744 of the 1985 Act

constitution, of a company

15

  — in the Companies Acts
section 17

  — in Part 10
section 240

controlling, of a body corporate by a
section 238

director (in Part 10)

corporation
section 813

20

the court
section 803

credit institution
section 813

credit transaction (in Chapter 4 of Part 10)
section 186

daily default fine
section 778

date of creation of a charge (in Chapter 2 of
section 410(5) of the 1985 Act

25

Part 12 of the 1985 Act)

date of the offer (in Part 13A of the 1985
section 428(6A) of the 1985 Act

Act)

debenture
section 744 of the 1985 Act

debt securities

30

  — in Part 3 of Schedule 7
paragraph 8(4) of Schedule 7

  — in Part 4 of Schedule 7
paragraph 12(7) of Schedule 7

derivative claim (in Chapter 1 of Part 11)
section 243

Company Law Reform Bill [HL]
Schedule 9 — Index of defined expressions
510

derivative proceedings (in Chapter 2 of
section 248

Part 11)

Directive disclosure requirements
section 731

director

  — in the Companies Acts
section 233

5

  — in Chapter 1 of Part 11
section 243(5)

  — in Chapter 2 of Part 11
section 248(6)

  — in Part 14
section 361(1)

directors’ remuneration report
section 403(1)

director’s report (in Schedule 15B to the
paragraph 3(a) of Schedule 15B to the

10

1985 Act)
1985 Act

distributable profits

  — in Chapter 6 of Part 5 of the 1985 Act
section 152(1)(b) of the 1985 Act

  — in Chapter 7 of Part 5 of the 1985 Act
section 181 of the 1985 Act

distribution

15

  — in Chapter 6 of Part 5 of the 1985 Act
section 152(1)(c) of the 1985 Act

  — in Part 8 of the 1985 Act
section 263(2) of the 1985 Act

document

  — in Part 29
section 766(1)

  — in the company communications
section 800(1)

20

provisions

dormant, in relation to a company or other
section 809

body corporate

draft terms (in Schedule 15B to the 1985
paragraph 2(1)(a) of Schedule 15B to

Act)
the 1985 Act

25

EEA State and related expressions
section 810

electronic form, electronic copy, electronic

means

  — for the purposes of the Companies
section 807(3) and (4)

Acts

30

  — in relation to communications to a
Part 3 of Schedule 5

company

  — in relation to communications by a
Part 3 of Schedule 6

company other than a traded company