House of Commons - Amendments

Company Law Reform Bill [Lords] *- continued*	House of Commons

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Calculation of new nominal values

Margaret Hodge

NC128

To move the following Clause:—

‘ ‘For each class of share the new nominal value of each share is calculated as follows:

Step One

Take the aggregate of the old nominal values of all the shares of that class.

Step Two

Translate that amount into the new currency at the rate of exchange specified in the resolution.

Step Three

Divide that amount by the number of shares in the class.’.

Effect of redenomination

Margaret Hodge

NC129

To move the following Clause:—

‘(1) The redenomination of shares does not affect any rights or obligations of members under the company’s constitution, or any restrictions affecting members under the company’s constitution.

In particular, it does not affect entitlement to dividends (including entitlement to dividends in a particular currency), voting rights or any liability in respect of amounts unpaid on shares.

(2) For this purpose the company’s constitution includes the terms on which any shares of the company are allotted or held.

(3) Subject to subsection (1), references to the old nominal value of the shares in any agreement or statement, or in any deed, instrument or document, shall (unless the context otherwise requires) be read after the resolution takes effect as references to the new nominal value of the shares.’.

Notice to registrar of redenomination

Margaret Hodge

NC130

To move the following Clause:—

‘(1) If a limited company having a share capital redenominates any of its share capital, it must within one month after doing so give notice to the registrar, specifying the shares redenominated.

(2) The notice must—

(a) state the date on which the resolution was passed, and

(b) be accompanied by a statement of capital.

(3) The statement of capital must state with respect to the company’s share capital as redenominated by the resolution—

(a) the total number of shares of the company,

(b) the aggregate nominal value of those shares,

(i) prescribed particulars of the rights attached to the shares,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class, and

(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(4) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(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, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.’.

Reduction of capital in connection with redenomination

Margaret Hodge

NC131

To move the following Clause:—

‘(1) A company that passes a resolution redenominating some or all of its shares may, for the purpose of adjusting the nominal values of the redenominated shares to obtain values that are, in the opinion of the company, more suitable, reduce its share capital under this section.

(2) A reduction of capital under this section requires a special resolution of the company.

(3) Any such resolution must be passed within three months of the resolution effecting the redenomination.

(4) The amount by which a company’s share capital is reduced under this section must not exceed 10% of the nominal value of the company’s allotted share capital immediately after the reduction.

(5) A reduction of capital under this section does not extinguish or reduce any liability in respect of share capital not paid up.

(6) Nothing in Chapter (Reduction of share capital) of this Part applies to a reduction of capital under this section.’.

Notice to registrar of reduction of capital in connection with redenomination

Margaret Hodge

NC132

To move the following Clause:—

‘(1) A company that passes a resolution under section (Reduction of capital in connection with redenomination) (reduction of capital in connection with redenomination) must within 15 days after the resolution is passed give notice to the registrar stating—

(a) the date of the resolution, and

(b) the date of the resolution under section (Redenomination of share capital) in connection with which it was passed.

This is in addition to the copies of the resolutions themselves that are required to be delivered to the registrar under Chapter 3 of Part 3.

(2) The notice must be accompanied by a statement of capital.

(3) The statement of capital must state with respect to the company’s share capital as reduced by the resolution—

(a) the total number of shares of the company,

(b) the aggregate nominal value of those shares,

(i) prescribed particulars of the rights attached to the shares,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class, and

(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(4) The registrar must register the notice and the statement on receipt.

(5) The reduction of capital is not effective until those documents are registered.

(6) The company must also deliver to the registrar, within 15 days after the resolution is passed, a statement by the directors confirming that the reduction in share capital is in accordance with section (Reduction of capital in connection with redenomation)(4) (reduction of capital not to exceed 10% of nominal value of allotted shares immediately after reduction).

(7) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(8) A person guilty of an offence under this section is liable—

(a) on conviction on indictment to a fine, and

(b) on summary conviction to a fine not exceeding the statutory maximum.’.

Redenomination reserve

Margaret Hodge

NC133

To move the following Clause:—

‘(1) The amount by which a company’s share capital is reduced under section (Reduction of capital in connection with redenomation) (reduction of capital in connection with redenomination) must be transferred to a reserve, called “the redenomination reserve”.

(2) The redenomination reserve may be applied by the company in paying up shares to be allotted to members as fully paid bonus shares.

(3) Subject to that, the provisions of the Companies Acts relating to the reduction of a company’s share capital apply as if the redenomination reserve were paid-up share capital of the company.’.

Classes of shares

Margaret Hodge

NC134

To move the following Clause:—

‘(1) For the purpose of this Chapter shares are of one class if the rights attached to them are in all respects uniform.

(2) For this purpose the rights attached to shares are not regarded as different from those attached to other shares by reason only that they do not carry the same rights to dividends in the twelve months immediately following their allotment.’.

Variation of class rights: companies having a share capital

Margaret Hodge

NC135

To move the following Clause:—

‘(1) This section is concerned with the variation of the rights attached to a class of shares in a company having a share capital.

(2) Rights attached to a class of a company’s shares may be varied if, and only if, the holders of shares of that class consent to the variation in accordance with this section.

(3) This is without prejudice to any other restrictions on the variation of the rights.

(4) The consent required for the purposes of this section on the part of the holders of a class of a company’s shares is—

(a) consent in writing from the holders of at least three-quarters in nominal value of the issued shares of that class (excluding any shares held as treasury shares), or

(b) a special resolution passed at a separate general meeting of the holders of that class sanctioning the variation.

(5) Any alteration of a provision contained in a company’s articles for the variation of the rights attached to a class of shares, or the insertion of any such provision into the articles, is itself to be treated as a variation of those rights.

(6) In this section, and (except where the context otherwise requires) in any provision in a company’s articles for the variation of the rights attached to a class of shares, references to the variation of those rights include references to their abrogation.’.

Variation of class rights: companies without a share capital

Margaret Hodge

NC136

To move the following Clause:—

‘(1) This section is concerned with the variation of the rights of a class of members of a company where the company does not have a share capital.

(2) Rights of a class of members may be varied if, and only if, the members of that class consent to the variation in accordance with this section.

(3) This is without prejudice to any other restrictions on the variation of the rights.

(4) The consent required for the purposes of this section on the part of the members of a class is—

(a) consent in writing from at least three-quarters of the members of the class, or

(b) a special resolution passed at a separate general meeting of the members of that class sanctioning the variation.

(5) Any alteration of a provision contained in a company’s articles for the variation of the rights of a class of members, or the insertion of any such provision into the articles, is itself to be treated as a variation of those rights.

(6) In this section, and (except where the context otherwise requires) in any provision in a company’s articles for the variation of the rights of a class of members, references to the variation of those rights include references to their abrogation.’.

Variation of class rights: saving for court’s powers under other provisions

Margaret Hodge

NC137

To move the following Clause:—

‘Nothing in section (Variation of class rights: companies having a share capital) or (Variation of class rights: companies without a share capital) (variation of class rights) affects the power of the court under—

section 98 (application to cancel resolution for public company to be re-registered as private);

Part (Arrangements and reconstructions) (arangements and reconstructions);

Part (Protection of members against unfair prejudice) (protection of members against unfair prejudice).’.

Right to object to variation: companies having a share capital

Margaret Hodge

NC138

To move the following Clause:—

‘(1) This section applies where the rights attached to any class of shares in a company are varied under section (Variation of class rights: companies having a share capital) (variation of class rights: companies having a share capital).

(2) The holders of not less in the aggregate than 15% of the issued shares of the class in question (being persons who did not consent to or vote in favour of the resolution for the variation) may apply to the court to have the variation cancelled.

For this purpose any of the company’s share capital held as treasury shares is disregarded.

(3) If such an application is made, the variation has no effect unless and until it is confirmed by the court.

(4) Application to the court—

(a) must be made within 21 days after the date on which the consent was given or the resolution was passed (as the case may be), and

(b) may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(5) The court, after hearing the applicant and any other persons who apply to the court to be heard and appear to the court to be interested in the application, may, if satisfied having regard to all the circumstances of the case that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation, and shall if not satisfied confirm it.

The decision of the court on any such application is final.

(6) References in this section to the variation of the rights of holders of a class of shares include references to their abrogation.’.

Right to object to variation: companies without a share capital

Margaret Hodge

NC139

To move the following Clause:—

‘(1) This section applies where the rights of any class of members of a company are varied under section (Variation of class rights: companies without a share capital) (variation of class rights: companies without a share capital).

(2) Members amounting to not less than 15% of the members of the class in question (being persons who did not consent to or vote in favour of the resolution for the variation) may apply to the court to have the variation cancelled.

(3) If such an application is made, the variation has no effect unless and until it is confirmed by the court.

(4) Application to the court must be made within 21 days after the date on which the consent was given or the resolution was passed (as the case may be) and may be made on behalf of the members entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(5) The court, after hearing the applicant and any other persons who apply to the court to be heard and appear to the court to be interested in the application, may, if satisfied having regard to all the circumstances of the case that the variation would unfairly prejudice the members of the class represented by the applicant, disallow the variation, and shall if not satisfied confirm it.

The decision of the court on any such application is final.

(6) References in this section to the variation of the rights of a class of members include references to their abrogation.’.

Copy of court order to be forwarded to the registrar

Margaret Hodge

NC140

To move the following Clause:—

‘(1) The company must within 15 days after the making of an order by the court on an application under section (Right to object to variation: companies having a share capital) or (Right to object to variation: companies without a share capital) (objection to variation of class rights) forward a copy of the order to the registrar.

(2) If default is made in complying with this section an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(3) 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, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.’.

Notice of name or other designation of class of shares

Margaret Hodge

NC141

To move the following Clause:—

‘(1) Where a company assigns a name or other designation, or a new name or other designation, to any class of its shares, it must within one month from doing so deliver to the registrar a notice giving particulars of the name or designation so assigned.

(2) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

Notice of particulars of variation of rights attached to shares

Margaret Hodge

NC142

To move the following Clause:—

‘(1) Where the rights attached to any shares of a company are varied, the company must within one month from the date on which the variation is made deliver to the registrar a notice giving particulars of the variation.

(2) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

Notice of new class of members

Margaret Hodge

NC143

To move the following Clause:—

‘(1) If a company not having a share capital creates a new class of members, the company must within one month from the date on which the new class is created deliver to the registrar a notice containing particulars of the rights attached to that class.

(2) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

Notice of name or other designation of class of members

Margaret Hodge

NC144

To move the following Clause:—

‘(1) Where a company not having a share capital assigns a name or other designation, or a new name or other designation, to any class of its members, it must within one month from doing so deliver to the registrar a notice giving particulars of the name or designation so assigned.

(2) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

Notice of particulars of variation of class rights

Margaret Hodge

NC145

To move the following Clause:—

‘(1) If the rights of any class of members of a company not having a share capital are varied, the company must within one month from the date on which the variation is made deliver to the registrar a statement containing particulars of the variation.

(2) If default is made in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

Circumstances in which a company may reduce its share capital

Margaret Hodge

NC146

To move the following Clause:—

‘(1) A limited company having a share capital may reduce its share capital—

(a) in the case of a private company limited by shares, by special resolution supported by a solvency statement (see sections (Reduction of capital supported by solvency statement) to (Registration of resolution and supporting documents));

(b) in any case, by special resolution confirmed by the court (see sections (Application to court for order of confirmation) to (Expedited procedure for re-registration as a private company)).

(2) A company may not reduce its capital under subsection (1)(a) if as a result of the reduction there would no longer be any member of the company holding shares other than redeemable shares.

(3) Subject to that, a company may reduce its share capital under this section in any way.

(4) In particular, a company may—

(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up, or

(b) either with or without extinguishing or reducing liability on any of its shares—

(i) cancel any paid-up share capital that is lost or unrepresented by available assets, or

(ii) pay off any paid-up share capital in excess of the company’s wants.

(5) A special resolution under this section may not provide for a reduction of share capital to take effect later than the date on which the resolution has effect in accordance with this Chapter.

(6) This Chapter (apart from subsection (5) above) has effect subject to any provision of the company’s articles restricting or prohibiting the reduction of the company’s share capital.’.

Prepared: 13 July 2006