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 8 — Members of a company
Chapter 2 — Register of members
54

119
Information as to state of register and index
(1)
When a person inspects the register, or the company provides him with a copy
of the register or any part of it, the company must inform him of the most
recent date (if any) on which alterations were made to the register and there
were no further alterations to be made.
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(2)
When a person inspects the index of members’ names, the company must
inform him whether there is any alteration to the register that is not reflected
in the index.
(3)
If a company fails to provide the information required under subsection (1) or
(2), an offence is committed by—
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(a)
the company, and
(b)
every officer of the company who is in default.
(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.
120
Removal of entries relating to former members
15

An entry relating to a former member of the company may be removed from
the register after the expiration of ten years from the date on which he ceased
to be a member.
Special cases
121
Share warrants
20
(1)
On the issue of a share warrant the company must—
(a)
enter in the register of members—
(i)
the fact of the issue of the warrant,
(ii)
a statement of the shares included in the warrant,
distinguishing each share by its number so long as the share has
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a number, and
(iii)
the date of the issue of the warrant,

and
(b)
amend the register, if necessary, so that no person is named on the
register as the holder of the shares specified in the warrant.
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(2)
Until the warrant is surrendered, the particulars specified in subsection (1)(a)
are deemed to be those required by this Act to be entered in the register of
members.
(3)
The bearer of a share warrant may, if the articles of the company so provide, be
deemed a member of the company within the meaning of this Act, either to the
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full extent or for any purposes defined in the articles.
(4)
Subject to the company’s articles, the bearer of a share warrant is entitled, on
surrendering it for cancellation, to have his name entered as a member in the
register of members.
(5)
The company is responsible for any loss incurred by any person by reason of
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the company entering in the register the name of a bearer of a share warrant in
respect of the shares specified in it without the warrant being surrendered and
cancelled.

Company Law Reform Bill [HL]
Part 8 — Members of a company
Chapter 2 — Register of members
55

(6)
On the surrender of a share warrant, the date of the surrender must be entered
in the register.
122
Single member companies
(1)
If a limited company is formed under this Act with only one member there
shall be entered in the company’s register of members, with the name and
5
address of the sole member, a statement that the company has only one
member.
(2)
If the number of members of a limited company falls to one, or if an unlimited
company with only one member becomes a limited company on re-
registration, there shall upon the occurrence of that event be entered in the
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company’s register of members, with the name and address of the sole
member—
(a)
a statement that the company has only one member, and
(b)
the date on which the company became a company having only one
member.
15
(3)
If the membership of a limited company increases from one to two or more
members there shall upon the occurrence of that event be entered in the
company’s register of members, with the name and address of the person who
was formerly the sole member—
(a)
a statement that the company has ceased to have only one member, and
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(b)
the date on which that event occurred.
(4)
If a company makes default in complying with this section, an offence is
committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
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(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 in the case
of continued contravention to a daily default fine not exceeding one-tenth of
level 3 on the standard scale.
123
Company holding its own shares as treasury shares
30
(1)
Where a company purchases its own shares in circumstances in which section
162A of the Companies Act 1985 (c. 6) (treasury shares) applies—
(a)
the requirements of section 112 above (register of members) need not be
complied with if the company cancels all of the shares forthwith after
the purchase, and
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(b)
if the company does not cancel all of the shares forthwith after the
purchase, any share that is so cancelled shall be disregarded for the
purposes of that section.
(2)
Subject to subsection (1), where a company holds shares as treasury shares the
company must be entered in the register as the member holding those shares.
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Company Law Reform Bill [HL]
Part 8 — Members of a company
Chapter 2 — Register of members
56

Supplementary
124
Power of court to rectify register
(1)
If—
(a)
the name of any person is, without sufficient cause, entered in or
omitted from a company’s register of members, or
5
(b)
default is made or unnecessary delay takes place in entering on the
register the fact of any person having ceased to be a member,

the person aggrieved, or any member of the company, or the company, may
apply to the court for rectification of the register.
(2)
The court may either refuse the application or may order rectification of the
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register and payment by the company of any damages sustained by any party
aggrieved.
(3)
On such an application the court may decide any question relating to the title
of a person who is a party to the application to have his name entered in or
omitted from the register, whether the question arises between members or
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alleged members, or between members or alleged members on the one hand
and the company on the other hand, and generally may decide any question
necessary or expedient to be decided for rectification of the register.
(4)
In the case of a company required by this Act to send a list of its members to
the registrar of companies, the court, when making an order for rectification of
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the register, shall by its order direct notice of the rectification to be given to the
registrar.
125
Trusts not to be entered on register

No notice of any trust, expressed, implied or constructive, shall be entered on
the register in England and Wales or Northern Ireland, or be receivable by the
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registrar.
126
Register to be evidence

The register of members is prima facie evidence of any matters which are by
this Act directed or authorised to be inserted in it.
127
Time limit for claims arising from entry in register
30
(1)
Liability incurred by a company—
(a)
from the making or deletion of an entry in the register of members, or
(b)
from a failure to make or delete any such entry,

is not enforceable more than ten years after the date on which the entry was
made or deleted or, as the case may be, the failure first occurred.
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(2)
This is without prejudice to any lesser period of limitation (and, in Scotland, to
any rule that the obligation giving rise to the liability prescribes before the
expiry of that period).

Company Law Reform Bill [HL]
Part 8 — Members of a company
Chapter 3 — Prohibition on subsidiary being member of its holding company
57

128
Overseas branch registers
(1)
Nothing in this Chapter affects the power of a company to keep an overseas
branch register under section 362 of, and Schedule 14 to, the Companies Act
1985 (c. 6).
(2)
The Secretary of State may make provision by regulations—
5
(a)
as to the circumstances in which a company is to be regarded as
keeping a register in a particular country or territory, and
(b)
modifying any provision of this Chapter as it applies in relation to an
overseas branch register.
(3)
Regulations under this section are subject to negative resolution procedure.
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Chapter 3
Prohibition on subsidiary being member of its holding company
General prohibition
129
Prohibition on subsidiary being a member of its holding company
(1)
Except as provided by this Chapter—
15
(a)
a body corporate cannot be a member of a company that is its holding
company, and
(b)
any allotment or transfer of shares in a company to its subsidiary is
void.
(2)
The exceptions are provided for in—
20
section 131 (subsidiary acting as personal representative or trustee), and
section 134 (subsidiary acting as authorised dealer in securities).
130
Shares acquired before prohibition became applicable
(1)
Where a body corporate became a holder of shares in a company—
(a)
before the relevant date, or
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(b)
on or after that date and before the commencement of this Chapter in
circumstances in which the prohibition in section 23(1) of the
Companies Act 1985 or Article 33(1) of the Companies (Northern
Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) (or any corresponding
earlier enactment), as it then had effect, did not apply, or
30
(c)
on or after the commencement of this Chapter in circumstances in
which the prohibition in section 129 did not apply,

it may continue to be a member of the company.
(2)
The relevant date for the purposes of subsection (1)(a) is—
(a)
1st July 1948 in the case of a company registered in Great Britain, and
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(b)
1st April 1961 in the case of a company registered in Northern Ireland.
(3)
So long as it is permitted to continue as a member of a company by virtue of
this section, an allotment to it of fully paid shares in the company may be
validly made by way of capitalisation of reserves of the company.

Company Law Reform Bill [HL]
Part 8 — Members of a company
Chapter 3 — Prohibition on subsidiary being member of its holding company
58

(4)
But, so long as the prohibition in section 129 would (apart from this section)
apply, it has no right to vote in respect of the shares mentioned in subsection
(1) above, or any shares allotted as mentioned in subsection (2) above, on a
written resolution or at meetings of the company or of any class of its members.
Subsidiary acting as personal representative or trustee
5
131
Subsidiary acting as personal representative or trustee
(1)
The prohibition in section 129 (prohibition on subsidiary being a member of its
holding company) does not apply where the subsidiary is concerned only—
(a)
as personal representative, or
(b)
as trustee,
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unless, in the latter case, the holding company or a subsidiary of it is
beneficially interested under the trust.
(2)
For the purpose of ascertaining whether the holding company or a subsidiary
is so interested, there shall be disregarded—
(a)
any interest held only by way of security for the purposes of a
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transaction entered into by the holding company or subsidiary in the
ordinary course of a business that includes the lending or money;
(b)
any interest within—
section 132 (interests to be disregarded: residual interest under
pension scheme or employees’ share scheme), or
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section 133 (interests to be disregarded: employer’s rights of
recovery under pension scheme or employees’ share scheme);
(c)
any rights that the company or subsidiary has in its capacity as trustee,
including in particular—
(i)
any right to recover its expenses or be remunerated out of the
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trust property, and
(ii)
any right to be indemnified out of the trust property for any
liability incurred by reason of any act or omission in the
performance of its duties as trustee.
132
Interests to be disregarded: residual interest under pension scheme or
30
employees’ share scheme
(1)
Where shares in a company are held on trust for the purposes of a pension
scheme or employees’ share scheme, there shall be disregarded for the
purposes of section 131 any residual interest that has not vested in possession.
(2)
A “residual interest” means a right of the company or subsidiary (“the residual
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beneficiary”) to receive any of the trust property in the event of—
(a)
all the liabilities arising under the scheme having been satisfied or
provided for, or
(b)
the residual beneficiary ceasing to participate in the scheme, or
(c)
the trust property at any time exceeding what is necessary for satisfying
40
the liabilities arising or expected to arise under the scheme.
(3)
In subsection (2)—
(a)
the reference to a right includes a right dependent on the exercise of a
discretion vested by the scheme in the trustee or another person, and

Company Law Reform Bill [HL]
Part 8 — Members of a company
Chapter 3 — Prohibition on subsidiary being member of its holding company
59

(b)
the reference to liabilities arising under a scheme includes liabilities
that have resulted, or may result, from the exercise of any such
discretion.
(4)
For the purposes of this section a residual interest vests in possession—
(a)
in a case within subsection (2)(a), on the occurrence of the event
5
mentioned there (whether or not the amount of the property receivable
pursuant to the right is ascertained);
(b)
in a case within subsection (2)(b) or (c), when the residual beneficiary
becomes entitled to require the trustee to transfer to him any of the
property receivable pursuant to the right.
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(5)
In this section “pension scheme” means a scheme for the provision of benefits
consisting of or including relevant benefits for or in respect of employees or
former employees.
(6)
In subsection (5)—
(a)
“relevant benefits” here means any pension, lump sum, gratuity or
15
other like benefit given or to be given on retirement or on death or in
anticipation of retirement or, in connection with past service, after
retirement or death; and
(b)
“employee” shall be read as if a director of a company were employed
by it.
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133
Interests to be disregarded: employer’s rights of recovery under pension
scheme or employees’ share scheme
(1)
Where shares in a company are held on trust for the purposes of a pension
scheme or employees’ share scheme, there shall be disregarded for the
purposes of section 131 any charge or lien on, or set-off against, any benefit or
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other right or interest under the scheme for the purpose of enabling the
employer or former employer of a member of the scheme to obtain the
discharge of a monetary obligation due to him from the member.
(2)
In the case of a trust for the purposes of a pension scheme there shall also be
disregarded any right to receive from the trustee of the scheme, or as trustee of
30
the scheme to retain, an amount that can be recovered or retained, under
section 61 of the Pension Schemes Act 1993 (c. 48) or section 57 of the Pension
Schemes (Northern Ireland) Act 1993 (c. 49) (deduction of contributions
equivalent premium from refund of scheme contributions) or otherwise, as
reimbursement or partial reimbursement for any contributions equivalent
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premium paid in connection with the scheme under Part 3 of that Act.
(3)
In this section “pension scheme” means a scheme for the provision of benefits
consisting of or including relevant benefits for or in respect of employees or
former employees.

“Relevant benefits” here means any pension, lump sum, gratuity or other like
40
benefit given or to be given on retirement or on death or in anticipation of
retirement or, in connection with past service, after retirement or death.
(4)
In this section “employer” and “employee” shall be read as if a director of a
company were employed by it.