| Company Law Reform Bill [Lords] - continued | House of Commons |
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Offence of failure to make return Margaret Hodge NC62 To move the following Clause:— ‘(1) If a company makes default in complying with— section (return of allotment by limited company) (return of allotment of shares by limited company), or section (return of allotment by unlimited company of new class of shares) (return of allotment of new class of shares by unlimited company), an offence is committed by 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 maximum and, for continued contravention, a daily default fine not exceeding one-tenth of the statutory maximum. (3) In the case of default in delivering to the registrar within one month after the allotment the return required by section (return of allotment of shares by limited company) or (return of allotment of new class of shares by unlimited company)— (a) any person liable for the default may apply to the court for relief, and (b) the court, if satisfied— (i) that the omission to deliver the document was accidental or due to inadvertence, or (ii) that it is just and equitable to grant relief, may make an order extending the time for delivery of the document for such period as the court thinks proper.’. When shares are allotted Margaret Hodge NC63 To move the following Clause:— ‘For the purposes of the Companies Acts shares in a company are taken to be allotted when a person acquires the unconditional right to be included in the company’s register of members in respect of the shares.’. Provisions about allotment not applicable to shares taken on formation Margaret Hodge NC64 To move the following Clause:— ‘The provisions of this Chapter have no application in relation to the taking of shares by the subscribers to the memorandum on the formation of the company.’. Meaning of “equity securities” and related expressions Margaret Hodge NC65 To move the following Clause:— ‘(1) In this Chapter— “equity securities” means— (c) ordinary shares in the company, or (d) rights to subscribe for, or to convert securities into, ordinary shares in the company; “ordinary shares” means shares other than shares that as respects dividends and capital carry a right to participate only up to a specified amount in a distribution. (2) References in this Chapter to the allotment of equity securities include— (a) the grant of a right to subscribe for, or to convert any securities into, ordinary shares in the company, and (b) the sale of ordinary shares in the company that immediately before the sale are held by the company as treasury shares.’. Existing shareholders’ right of pre-emption Margaret Hodge NC66 To move the following Clause:— ‘(1) A company must not allot equity securities to a person on any terms unless— (a) it has made an offer to each person who holds ordinary shares in the company to allot to him on the same or more favourable terms a proportion of those securities that is as nearly as practicable equal to the proportion in nominal value held by him of the ordinary share capital of the company, and (b) the period during which any such offer may be accepted has expired or the company has received notice of the acceptance or refusal of every offer so made. (2) Securities that a company has offered to allot to a holder of ordinary shares may be allotted to him, or anyone in whose favour he has renounced his right to their allotment, without contravening subsection (1)(b). (3) If subsection (1) applies in relation to the grant of such a right, it does not apply in relation to the allotment of shares in pursuance of that right. (4) Shares held by the company as treasury shares are disregarded for the purposes of this section, so that— (a) the company is not treated as a person who holds ordinary shares, and (b) the shares are not treated as forming part of the ordinary share capital of the company. (5) This section is subject to— (a) sections (Exception to pre-emption right: bonus shares) to (Exception to pre-emption right: securities held under employees’ share scheme) (exceptions to pre-emption right), (b) sections (Exclusion of requirements by private companies) and (Exclusion of pre-emption right: articles conferring corresponding right) (exclusion of rights of pre-emption), (c) sections (Disapplication of pre-emption rights: private company with only one class of shares) to (Disapplication of pre-emption rights: sale of treasury shares) (disapplication of pre-emption rights), and (d) section (Saving for certain older pre-emption requirements) (saving for certain older pre-emption procedures).’. Communication of pre-emption offers to shareholders Margaret Hodge NC67 To move the following Clause:— ‘(1) This section has effect as to the manner in which offers required by section (Existing shareholders’ right of pre-emption) are to be made to holders of a company’s shares. (2) The offer may be made in hard copy or electronic form. (3) If the holder is the holder of a share warrant, the offer may be made by causing it, or a notice specifying where a copy of it can be obtained or inspected, to be published in the Gazette. (4) The offer must state a period of not less than 21 days during which it may be accepted and the offer shall not be withdrawn before the end of that period. (5) The Secretary of State may by regulations made by statutory instrument— (a) reduce the period specified in subsection (4) (but not to less than 14 days), or (b) increase that period. (6) A statutory instrument containing regulations made under subsection (5) is subject to affirmative resolution procedure.’. Liability of company and officers in case of contravention Margaret Hodge NC68 To move the following Clause:— ‘(1) This section applies where there is a contravention of— section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption), or section (Communication of pre-emption offers to shareholders) (communication of pre-emption offers to shareholders). (2) The company and every officer of it who knowingly authorised or permitted the contravention are jointly and severally liable to compensate any person to whom an offer should have been made in accordance with those provisions for any loss, damage, costs or expenses which the person has sustained or incurred by reason of the contravention. (3) No proceedings to recover any such loss, damage, costs or expenses shall be commenced after the expiration of two years— (a) from the delivery to the registrar of companies of the return of allotment in question, or (b) where equity securities other than shares are granted, from the date of the grant. Exception to pre-emption right: bonus shares Margaret Hodge NC69 To move the following Clause:— ‘Section (Existing shareholders’ right of pre-emption)(1) (existing shareholders’ right of pre-emption) does not apply in relation to— (a) the allotment of bonus shares, or (b) the grant of a right to subscribe for, or to convert securities into, bonus shares.’. Exception to pre-emption right: issue for non-cash consideration Margaret Hodge NC70 To move the following Clause:— ‘Section (Existing shareholders’ right of pre-emption)(1) (existing shareholders’ right of pre-emption) does not apply to a particular allotment of equity securities if these are, or are to be, wholly or partly paid up otherwise than in cash.’. Exception to pre-emption right: securities held under employees’ share scheme Margaret Hodge NC71 To move the following Clause:— ‘Section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption) does not apply to the allotment of securities that would, apart from any renunciation or assignment of the right to their allotment, be held under an employees’ share scheme.’. Exclusion of requirements by private companies Margaret Hodge NC72 To move the following Clause:— ‘(1) All or any of the requirements of— (a) section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption), or (b) section (Communication of pre-emption offers to shareholders) (communication of pre-emption offers to shareholders), may be excluded by provision contained in the articles of a private company. (2) They may be excluded— (a) generally in relation to the allotment by the company of equity securities, or (b) in relation to allotments of a particular description. (3) Any requirement or authorisation contained in the articles of a private company that is inconsistent with either of those sections is treated for the purposes of this section as a provision excluding that section. (4) A provision to which section (Exclusion of pre-emption right: articles conferring corresponding right) applies (exclusion of pre-emption right: corresponding right conferred by articles) is not to be treated as inconsistent with section (Existing shareholders’ right of pre-emption).’. Exclusion of pre-emption right: articles conferring corresponding right Margaret Hodge NC73 To move the following Clause:— ‘(1) The provisions of this section apply where, in a case in which section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption) would otherwise apply— (a) a company’s articles contain provision (“pre-emption provision”) prohibiting the company from allotting ordinary shares of a particular class unless it has complied with the condition that it makes such an offer as is described in section (Existing shareholders’ right of pre-emption)(1) to each person who holds ordinary shares of that class, and (b) in accordance with that provision— (i) the company makes an offer to allot shares to such a holder, and (ii) he or anyone in whose favour he has renounced his right to their allotment accepts the offer. (2) In that case, section (Existing shareholders’ right of pre-emption) does not apply to the allotment of those shares and the company may allot them accordingly. (3) The provisions of section (Communication of pre-emption offers to shareholders) (communication of pre-emption offers to shareholders) apply in relation to offers made in pursuance of the pre-emption provision of the company’s articles. This is subject to section (Exclusion of requirements by private companies) (exclusion of requirements by private companies). (4) If there is contravention of the pre-emption provision of the company’s articles, the company, and every officer of it who knowingly authorised or permitted the contravention, are jointly and severally liable to compensate any person to whom an offer should have been made under the provision for any loss, damage, costs or expenses which the person has sustained or incurred by reason of the contravention. (5) No proceedings to recover any such loss, damage, costs or expenses shall be commenced after the expiration of two years— (a) from the delivery to the registrar of companies of the return of allotment, or (b) where equity securities other than shares are granted, from the date of the grant.’. Disapplication of pre-emption rights:private company with only one class of shares Margaret Hodge NC74 To move the following Clause:— ‘(1) The directors of a private company that has only one class of shares may be given power by the articles, or by a special resolution of the company, to allot equity securities of that class as if section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) did not apply to the allotment, or (b) applied to the allotment with such modifications as the directors may determine. (2) Where the directors make an allotment under this section, the provisions of this Chapter have effect accordingly.’. Disapplication of pre-emption rights:directors acting under general authorisation Margaret Hodge NC75 To move the following Clause:— ‘(1) Where the directors of a company are generally authorised for the purposes of section (Power of directors to allot shares etc: authorisation by company) (power of directors to allot shares etc: authorisation by company), they may be given power by the articles, or by a special resolution of the company, to allot equity securities pursuant to that authorisation as if section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) did not apply to the allotment, or (b) applied to the allotment with such modifications as the directors may determine. (2) Where the directors make an allotment under this section, the provisions of this Chapter have effect accordingly. (3) The power conferred by this section ceases to have effect when the authorisation to which it relates— (a) is revoked or (b) would (if not renewed) expire. But if the authorisation is renewed the power may also be renewed, for a period not longer than that for which the authorisation is renewed, by a special resolution of the company. (4) Notwithstanding that the power conferred by this section has expired, the directors may allot equity securities in pursuance of an offer or agreement previously made by the company if the power enabled the company to make an offer or agreement that would or might require equity securities to be allotted after it expired.’. Disapplication of pre-emption rights by special resolution Margaret Hodge NC76 To move the following Clause:— ‘(1) Where the directors of a company are authorised for the purposes of section (Power of directors to allot shares etc: authorisation by company) (power of directors to allot shares etc: authorisation by company), whether generally or otherwise, the company may by special resolution resolve that section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) does not apply to a specified allotment of equity securities to be made pursuant to that authorisation, or (b) applies to the allotment with such modifications as may be specified in the resolution. (2) Where such a resolution is passed the provisions of this Chapter have effect accordingly. (3) A special resolution under this section ceases to have effect when the authorisation to which it relates— (a) is revoked or (b) would (if not renewed) expire. But if the authorisation is renewed the resolution may also be renewed, for a period not longer than that for which the authorisation is renewed, by a special resolution of the company. (4) Notwithstanding that any such resolution has expired, the directors may allot equity securities in pursuance of an offer or agreement previously made by the company if the resolution enabled the company to make an offer or agreement that would or might require equity securities to be allotted after it expired. (5) A special resolution under this section, or a special resolution to renew such a resolution, must not be proposed unless— (a) it is recommended by the directors, and (b) the directors have complied with the following provisions. (6) Before such a resolution is proposed, the directors must make a written statement setting out— (a) their reasons for making the recommendation, (b) the amount to be paid to the company in respect of the equity securities to be allotted, and (c) the directors’ justification of that amount. (7) The directors’ statement must— (a) if the resolution is proposed as a written resolution, be sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him; (b) if the resolution is proposed at a general meeting, be circulated to the members entitled to notice of the meeting with that notice.’. Liability for false statement in directors’ statement Margaret Hodge NC77 To move the following Clause:— ‘(1) This section applies in relation to a directors’ statement under section (Disapplication of pre-emption rights by special resolution) (special resolution disapplying pre-emption rights) that is sent, submitted or circulated under subsection (7) of that section. (2) A person who knowingly or recklessly authorises or permits the inclusion of any matter that is misleading, false or deceptive in a material particular in such a statement commits an offence. (3) 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— (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 exceeding the statutory maximum (or both).’. Disapplication of pre-emption rights: sale of treasury shares Margaret Hodge NC78 To move the following Clause:— ‘(1) This section applies in relation to a sale of shares that is an allotment of equity securities by virtue of section (Meaning of “equity securities” and related expressions)(2)(b) (sale of shares held by company as treasury shares). (2) The directors of a company may be given power by the articles, or by a special resolution of the company, to allot equity securities as if section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) did not apply to the allotment, or (b) applied to the allotment with such modifications as the directors may determine. (3) The provisions of section (Disapplication of pre-emption rights:directors acting under general authorisation)(2) and (4) apply in that case as they apply to a case within subsection (1) of that section. (4) The company may by special resolution resolve that section (Existing shareholders’ right of pre-emption)— (a) shall not apply to a specified allotment of securities, or (b) shall apply to the allotment with such modifications as may be specified in the resolution. (5) The provisions of section (Disapplication of pre-emption rights by special resolution)(2) and (4) to (7) apply in that case as they apply to a case within subsection (1) of that section.’. References to holder of shares in relation to offer Margaret Hodge NC79 To move the following Clause:— ‘(1) In this Chapter, in relation to an offer to allot securities required by— (a) section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption), or (b) any provision to which section (Exclusion of pre-emption right: articles conferring corresponding right) applies (articles conferring corresponding right), a reference (however expressed) to the holder of shares of any description is to whoever was the holder of shares of that description at the close of business on a date to be specified in the offer. (2) The specified date must fall within the period of 28 days immediately before the date of the offer.’. Saving for other restrictions on offer or allotment Margaret Hodge NC80 To move the following Clause:— ‘(1) The provisions of this Chapter are without prejudice to any other enactment by virtue of which a company is prohibited (whether generally or in specified circumstances) from offering or alloting equity securities to any person. (2) Where a company cannot by virtue of such an enactment offer or allot equity securities to a holder of ordinary shares of the company, those shares are disregarded for the purposes of section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption), so that— (a) the person is not treated as a person who holds ordinary shares, and (b) the shares are not treated as forming part of the ordinary share capital of the company.’. |
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| © Parliamentary copyright 2006 | Prepared: 13 July 2006 |