| Company Law Reform Bill [Lords] - continued | House of Commons |
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Saving for certain older pre-emption requirements Margaret Hodge NC81 To move the following Clause:— ‘(1) In the case of a
public company the provisions of this Chapter do not apply to an allotment
of equity securities that are subject to a pre-emption requirement in
relation to which section 96(1) of the (2) In the case of a private
company a pre-emption requirement to which section 96(3) of the (3) A pre-emption requirement
to which section 96(4) of the Provisions about pre-emption not applicable to shares taken on formation Margaret Hodge NC82 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.’. Public companies: allotment where issue not fully subscribed Margaret Hodge NC83 To move the following Clause:— ‘(1) No allotment shall be made of shares of a public company offered for subscription unless— (a) the issue is subscribed for in full, or (b) the offer is made on terms that the shares subscribed for may be allotted— (i) in any event, or (ii) if specified conditions are met (and those conditions are met). (2) If shares are prohibited from being allotted by subsection (1) and 40 days have elapsed after the first making of the offer, all money received from applicants for shares must be repaid to them forthwith, without interest. (3) If any of the money is not
repaid within 48 days after the first making of the offer, the directors
of the company are jointly and severally liable to repay it, with interest
at the rate for the time being specified under section 17 of the A director is not so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part. (4) This section applies in the case of shares offered as wholly or partly payable otherwise than in cash as it applies in the case of shares offered for subscription. (5) In that case— (a) the references in subsection (1) to subscription shall be construed accordingly; (b) references in subsections (2) and (3) to the repayment of money received from applicants for shares include— (i) the return of any other consideration so received (including, if the case so requires, the release of the applicant from any undertaking), or (ii) if it is not reasonably practicable to return the consideration, the payment of money equal to its value at the time it was so received; (c) references to interest apply accordingly. (6) Any condition requiring or binding an applicant for shares to waive compliance with any requirement of this section is void.’. Public companies: effect of irregular allotment where issue not fully subscribed Margaret Hodge NC84 To move the following Clause:— ‘(1) An allotment made by a public company to an applicant in contravention of section (Public companies: allotment where issue not fully subscribed) (public companies: allotment where issue not fully subscribed) is voidable at the instance of the applicant within one month after the date of the allotment, and not later. (2) It is so voidable even if the company is in the course of being wound up. (3) A director of a public company who knowingly contravenes, or permits or authorises the contravention of, any provision of section (Public companies: allotment where issue not fully subscribed) with respect to allotment is liable to compensate the company and the allottee respectively for any loss, damages, costs or expenses that the company or allottee may have sustained or incurred by the contravention. (4) Proceedings to recover any such loss, damages, costs or expenses may not be brought more than two years after the date of the allotment.’. Shares not to be allotted at a discount Margaret Hodge NC85 To move the following Clause:— ‘(1) A company’s shares must not be allotted at a discount. (2) If shares are allotted in contravention of this section, the allottee is liable to pay the company an amount equal to the amount of the discount, with interest at the appropriate rate.’. Provision for different amounts to be paid on shares Margaret Hodge NC86 To move the following Clause:— A company, if so authorised by its articles, may— (a) make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares; (b) accept from any member the whole or part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up; (c) pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.’. General rule as to means of payment Margaret Hodge NC87 To move the following Clause:— ‘(1) Shares allotted by a company, and any premium on them, may be paid up in money or money’s worth (including goodwill and know-how). (2) This section does not prevent a company— (a) from allotting bonus shares to its members, or (b) from paying up, with sums available for the purpose, any amounts for the time being unpaid on any of its shares (whether on account of the nominal value of the shares or by way of premium). (3) This section has effect subject to the following provisions of this Chapter (additional rules for public companies).’. Meaning of payment in cash Margaret Hodge NC88 To move the following Clause:— ‘(1) The following provisions have effect for the purposes of the Companies Acts. (2) A share in a company is deemed paid up (as to its nominal value or any premium on it) in cash, or allotted for cash, if the consideration received for the allotment or payment up is— (a) cash received by the company, (b) a cheque reeived by the company in good faith that the directors have no reason for suspecting will not be paid, (c) a release of a liability of the company for a liquidated sum, or (d) an undertaking to pay cash to the company at a future date. (3) In relation to the allotment or payment up of shares in a company— (a) the payment of cash to a person other than the company, or (b) an undertaking to pay cash to a person other than the company, counts as consideration other than cash. This does not apply for the purposes of Chapter (allotment of equity securities: existing shareholders’ right of pre-emption) (allotment of equity securities: existing shareholders’ right of pre-emption). (4) For the purpose of determining whether a share is or is to be allotted for cash, or paid up in cash, “cash includes foreign currency.’. Public companies: shares taken by subscribers of memorandum Margaret Hodge NC89 To move the following Clause:— ‘Shares taken by a subscriber to the memorandum of a public company in pursuance of an undertaking of his in the memorandum, and any premium on the shares, must be paid up in cash.’. Public companies: must not accept undertaking to do work or perform services Margaret Hodge NC90 To move the following Clause:— ‘(1) A public company must not accept at any time, in payment up of its shares or any premium on them, an undertaking given by any person that he or another should do work or perform services for the company or any other person. (2) If a public company accepts such an undertaking in payment up of its shares or any premium on them, the holder of the shares when they or the premium are treated as paid up (in whole or in part) by the undertaking is liable— (a) to pay the company in respect of those shares an amount equal to their nominal value, together with the whole of any premium or, if the case so requires, such proportion of that amount as is treated as paid up by the undertaking; and (b) to pay interest at the appropriate rate on the amount payable under paragraph (a). (3) The reference in subsection (2) to the holder of shares includes a person who has an unconditional right— (a) to be included in the company’s register of members in respect of those shares, or (b) to have an instrument of transfer of them executed in his favour.’. Public companies: shares must be at least one-quarter paid up Margaret Hodge NC91 To move the following Clause:— ‘(1) A public company must not allot a share except as paid up at least as to one-quarter of its nominal value and the whole of any premium on it. (2) This does not apply to shares allotted in pursuance of an employees’ share scheme. (3) If a company allots a share in contravention of this section— (a) the share is to be treated as if one-quarter of its nominal value, together with the whole of any premium on it, had been received, and (b) the allottee is liable to pay the company the minimum amount which should have been received in respect of the share under subsection (1) (less the value of any consideration actually applied in payment up, to any extent, of the share and any premium on it), with interest at the appropriate rate. (4) Subsection (3) does not apply to the allotment of bonus shares, unless the allottee knew or ought to have known the shares were allotted in contravention of this section.’. Public companies: payment by long-term undertaking Margaret Hodge NC92 To move the following Clause:— ‘(1) A public company must not allot shares as fully or partly paid up (as to their nominal value or any premium on them) otherwise than in cash if the consideration for the allotment is or includes an undertaking which is to be, or may be, performed more than five years after the date of the allotment. (2) If a company allots shares in contravention of subsection (1), the allottee is liable to pay the company an amount equal to the aggregate of their nominal value and the whole of any premium (or, if the case so requires, so much of that aggregate as is treated as paid up by the undertaking), with interest at the appropriate rate. (3) Where a contract for the allotment of shares does not contravene subsection (1), any variation of the contract that has the effect that the contract would have contravened the subsection, if the terms of the contract as varied had been its original terms, is void. This applies also to the variation by a public company of the terms of a contract entered into before the company was re-registered as a public company. (4) Where— (a) a public company allots shares for a consideration which consists of or includes (in accordance with subsection (1)) an undertaking that is to be performed within five years of the allotment, and (b) the undertaking is not performed within the period allowed by the contract for the allotment of the shares, the allottee is liable to pay the company, at the end of the period so allowed, an amount equal to the aggregate of the nominal value of the shares and the whole of any premium (or, if the case so requires, so much of that aggregate as is treated as paid up by the undertaking), with interest at the appropriate rate. (5) References in this section to a contract for the allotment of shares include an ancillary contract relating to payment in respect of them.’. Liability of subsequent holders of shares Margaret Hodge NC93 To move the following Clause:— ‘(1) If a person becomes a holder of shares in respect of which— (a) there has been a contravention of any provision of this Chapter, and (b) by virtue of that contravention another is liable to pay any amount under the provision contravened, that person is also liable to pay that amount (jointly and severally with any other person so liable), subject as follows. (2) A person otherwise liable under subsection (1) is exempted from that liability if either— (a) he is a purchaser for value and, at the time of the purchase, he did not have actual notice of the contravention concerned, or (b) he derived title to the shares (directly or indirectly) from a person who became a holder of them after the contravention and was not liable under subsection (1). (3) References in this section to a holder, in relation to shares in a company, include any person who has an unconditional right— (a) to be included in the company’s register of members in respect of those shares, or (b) to have an instrument of transfer of the shares executed in his favour. (4) This section applies in relation to a failure to carry out a term of a contract as mentioned in section (Public companies: payment by long-term undertaking)(4) (public companies: payment by long-term undertaking) as they apply in relation to a contravention of a provision of this Chapter.’. Power of court to grant relief Margaret Hodge NC94 To move the following Clause:— ‘(1) This section applies in relation to liability under— section (Public companies: must not accept undertaking to do work or perform services)(2) (liability of allottee in case of breach by public company: of prohibition on accepting undertaking to do work or perform services), section (Public companies: payment by long-term undertaking)(2) or (4) (liability of allottee in case of breach by public company of prohibition on payment by long-term undertaking), or section (Liability of subsequent holders of shares) (liability of subsequent holders of shares) as it applies in relation to a contravention of those sections. (2) A person who— (a) is subject to any such liability to a company in relation to payment in respect of shares in the company, or (b) is subject to any such liability to a company by virtue of an undertaking given to it in, or in connection with, payment for shares in the company, may apply to the court to be exempted in whole or in part from the liability. (3) In the case of a liability within subsection (2)(a), the court may exempt the applicant from the liability only if and to the extent that it appears to the court just and equitable to do so having regard to— (a) whether the applicant has paid, or is liable to pay, any amount in respect of— (i) any other liability arising in relation to those shares under any provision of this Chapter, or (ii) any liability arising by virtue of any undertaking given in or in connection with payment for those shares; (b) whether any person other than the applicant has paid or is likely to pay, whether in pursuance of any order of the court or otherwise, any such amount; (c) whether the applicant or any other person— (i) has performed in whole or in part, or is likely so to perform any such undertaking, or (ii) has done or is likely to do any other thing in payment or part payment for the shares. (4) In the case of a liability within subsection (2)(b), the court may exempt the applicant from the liability only if and to the extent that it appears to the court just and equitable to do so having regard to— (a) whether the applicant has paid or is liable to pay any amount in respect of liability arising in relation to the shares under any provision of this Chapter; (b) whether any person other than the applicant has paid or is likely to pay, whether in pursuance of any order of the court or otherwise, any such amount. (5) In determining whether it should exempt the applicant in whole or in part from any liability, the court must have regard to the following overriding principles— (a) a company that has allotted shares should receive money or money’s worth at least equal in value to the aggregate of the nominal value of those shares and the whole of any premium or, if the case so requires, so much of that aggregate as is treated as paid up; (b) subject to that, where a company would, if the court did not grant the exemption, have more than one remedy against a particular person, it should be for the company to decide which remedy it should remain entitled to pursue. (6) If a person brings proceedings against another (“the contributor”) for a contribution in respect of liability to a company arising under any provision of this Chapter and it appears to the court that the contributor is liable to make such a contribution, the court may, if and to the extent that it appears to it, just and equitable to do so having regard to the respective culpability (in respect of the liability to the company) of the contributor and the person bringing the proceedings— (a) exempt the contributor in whole or in part from his liability to make such a contribution, or (b) order the contributor to make a larger contribution than, but for this subsection, he would be liable to make.’. Penalty for contravention of this Chapter Margaret Hodge NC95 To move the following Clause:— ‘(1) If a company contravenes any of the provisions of this Chapter, an offence is committed by— (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 maximum.’. Enforceability of undertakings to do work etc Margaret Hodge NC96 To move the following Clause:— ‘(1) An undertaking given by any person, in or in connection with payment for shares in a company, to do work or perform services or to do any other thing, if it is enforceable by the company apart from this Chapter, is so enforceable notwithstanding that there has been a contravention in relation to it of a provision of this Chapter. (2) This is without prejudice to section (Power of court to grant relief) (power of court to grant relief etc in respect of liabilities).’. The appropriate rate of interest Margaret Hodge NC97 To move the following Clause:— ‘(1) For the purposes of this Chapter the “appropriate rate” of interest is 5% per annum or such other rate as may be specified by order made by the Secretary of State. (2) An order under this section is subject to negative resolution procedure.’. Public company: valuation of non-cash consideration for shares Margaret Hodge NC98 To move the following Clause:— ‘(1) A public company must not allot shares as fully or partly paid up (as to their nominal value or any premium on them) otherwise than in cash unless— (a) the consideration for the allotment has been independently valued in accordance with the provisions of this Chapter, (b) the valuer’s report has been made to the company during the six months immediately preceding the allotment of the shares, and (c) a copy of the report has been sent to the proposed allottee. (2) For this purpose the application of an amount standing to the credit of— (a) any of a company’s reserve accounts, or (b) its profit and loss account, in paying up (to any extent) shares allotted to members of the company, or premiums on shares so allotted, does not count as consideration for the allotment. (3) If a company allots shares in contravention of subsection (1) and either— (a) the allottee has not received the valuer’s report required to be sent to him, or (b) there has been some other contravention of the requirements of this Chapter that the allottee knew or ought to have known amounted to a contravention, the allottee is liable to pay the company an amount equal to the aggregate of the nominal value of the shares and the whole of any premium (or, if the case so requires, so much of that aggregate as is treated as paid up by the consideration), with interest at the appropriate rate. (4) This section has effect subject to— section (exception to valuation requirement: arrangement with another company) (exception to valuation requirement: arrangement with another company), and section (exception to valuation requirement: merger) (exception to valuation requirement: merger).’. |
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| © Parliamentary copyright 2006 | Prepared: 13 July 2006 |