| Company Law Reform Bill [Lords] - continued | House of Commons |
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Rights as personal representative or trustee Margaret Hodge NC178 To move the following Clause:— ‘Where the company is a personal representative or trustee, there shall be disregarded any rights that the company has in that capacity including, in particular— (a) any right to recover its expenses or be remunerated out of the estate or trust property, and (b) any right to be indemnified out of that property for any liability incurred by reason of any act or omission of the company in the performance of its duties as personal representative or trustee.’. Meaning of “pension scheme” Margaret Hodge NC179 To move the following Clause:— ‘(1) In this Chapter “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. (2) In subsection (1) “relevant benefits” means any pension, lump sum, gratuity or 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.’. Application of provisions to directors Margaret Hodge NC180 To move the following Clause:— ‘For the purposes of this Chapter references to “employer” and “employee”, in the context of a pension scheme or employees’ share scheme, shall be read as if a director of a company were employed by it.’. Meaning of “financial assistance” Margaret Hodge NC181 To move the following Clause:— ‘(1) In this Chapter “financial assistance” means— (a) financial assistance given by way of gift, (b) financial assistance given— (i) by way of guarantee, security or indemnity (other than an indemnity in respect of the indemnifier’s own neglect or default), or (ii) by way of release or waiver, (c) financial assistance given— (i) by way of a loan or any other agreement under which any of the obligations of the person giving the assistance are to be fulfilled at a time when in accordance with the agreement any obligation of another party to the agreement remains unfulfilled, or (ii) by way of the novation of, or the assignment (in Scotland, assignation) of rights arising under, a loan or such other agreement, or (d) any other financial assistance given by a company where— (i) the net assets of the company are reduced to a material extent by the giving of the assistance, or (ii) the company has no net assets. (2) “Net assets” here means the aggregate amount of the company’s assets less the aggregate amount of its liabilities. (3) For this purpose a company’s liabilities include— (a) where the company draws up Companies Act individual accounts, any provision of a kind specified for the purposes of this subsection by regulations under section 378, and (b) where the company draws up IAS individual accounts, any provision made in those accounts.’. Assistance for acquisition of shares in public company Margaret Hodge NC182 To move the following Clause:— ‘(1) Where a person is acquiring or proposing to acquire shares in a public company, it is not lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place. (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in it or its holding company if— (a) the company’s principal purpose in giving the assistance is not to give it for the purpose of any such acquisition, or (b) the giving of the assistance for that purpose is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (3) Where— (a) a person has acquired shares in a company, and (b) a liability has been incurred (by that or another person) for the purpose of the acquisition, it is not lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability if, at the time the assistance is given, the company is a public company. (4) Subsection (3) does not prohibit a company from giving financial assistance if— (a) the company’s principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or (b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (5) This section has effect subject to sections (Unconditional exceptions) and (Conditional exceptions) (unconditional and conditional exceptions to prohibition).’. Assistance by public company for acquisition of shares in its private holding company Margaret Hodge NC183 To move the following Clause:— ‘(1) Where a person is acquiring or proposing to acquire shares in a private company, it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place. (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in its holding company if— (a) the company’s principal purpose in giving the assistance is not to give it for the purpose of any such acquisition, or (b) the giving of the assistance for that purpose is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (3) Where— (a) a person has acquired shares in a private company, and (b) a liability has been incurred (by that or another person) for the purpose of the acquisition, it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability. (4) Subsection (3) does not prohibit a company from giving financial assistance if— (a) the company’s principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in its holding company, or (b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (5) This section has effect subject to sections (Unconditional exceptions) and (Conditional exceptions) (unconditional and conditional exceptions to prohibition).’. Prohibited financial assistance an offence Margaret Hodge NC184 To move the following Clause:— ‘(1) If a company contravenes section (Assistance for acquisition of shares in public company)(1) or (3) or section (Assistance by public company for acquisition of shares in its private holding company)(1) or (3) (prohibited financial assistance) 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 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).’. Unconditional exceptions Margaret Hodge NC185 To move the following Clause:— ‘(1) Neither section (Assistance for acquisition of shares in public company) nor section (Assistance by public company for acquisition of shares in its private holding company) prohibits a transaction to which this section applies. (2) Those transactions are— (a) a distribution of the company’s assets by way of— (i) dividend lawfully made, or (ii) distribution in the course of a company’s winding up; (b) an allotment of bonus shares; (c) a reduction of capital under Chapter (Reduction of capital) of Part (A company’s share capital); (d) a redemption of shares under Chapter (Redeemable shares) or a purchase of shares under Chapter (Purchase of own shares) of this Part; (e) anything done in pursuance of an order of the court under Part (Arrangements and reconstructions) (order sanctioning compromise or arrangement with members or creditors); (f) any thing done under an arrangement
made in pursuance of section 110 of the (g) anything done under an arrangement
made between a company and its creditors that is binding on the creditors
by virtue of Part 1 of the Conditional exceptions Margaret Hodge NC186 To move the following Clause:— ‘(1) Neither section (Assistance for acquisition of shares in public company) nor section (Assistance by public company for acquisition of shares in its private holding company) prohibits a transaction to which this section applies— (a) in the case of a private company, or (b) in the case of a public company if— (i) the company has net assets that are not reduced by the giving of the assistance, or (ii) to the extent that those assets are so reduced, the assistance is provided out of distributable profits. (2) The transactions to which this section applies are— (a) the lending of money in the ordinary course of the company’s business; (b) the provision by the company, in good faith in the interests of the company, of financial assistance for the purposes of an employees’ share scheme; (c) the provision of financial assistance by a company or any of its subsidiaries for the purposes of or in connection with anything done by the company, or a company in the same group, for the purpose of enabling or facilitating transactions in shares in the first-mentioned company between, and involving the acquisition of beneficial ownership of those share by— (i) bona fide employees or former employees of that company or of another company in the same group, or (ii) spouses or civil partners, widows, widowers or surviving civil partners, or minor children or step-children of any such employees or former employees; (d) the making by a company of loans to persons (other than directors) employed in good faith by the company with a view to enabling those persons to acquire fully paid shares in the company or its holding company to be held by them by way of beneficial ownership. (3) The references in this section to “net assets” are to the amount by which the aggregate of the company’s assets exceeds the aggregate of its liabilities. (4) For this purpose— (a) the amount of both assets and liabilities shall be taken to be as stated in the company’s accounting records immediately before the financial assistance is given, and (b) “liabilities” includes any amount retained as reasonably necessary for the purpose of providing for a liability the nature of which is clearly defined and that is either likely to be incurred or certain to be incurred but uncertain as to amount or as to the date on which it will arise. (5) For the purposes of subsection (2)(c) a company is in the same group as another company if it is a holding company or subsidiary of that company or a subsidiary of a holding company of that company.’. Definitions for this Chapter Margaret Hodge NC187 To move the following Clause:— ‘(1) In this Chapter— “distributable profits”, in relation to the giving of any financial assistance— (g) means those profits out of which the company could lawfully make a distribution equal in value to that assistance, and (h) includes, in a case where the financial assistance consists of or includes, or is treated as arising in consequence of, the sale, transfer or other disposition of a non-cash asset, any profit that, if the company were to make a distribution of that character would be available for that purpose in accordance with section (Distributions in kind: determination of amount); and “distribution” has the same meaning as in Part (Distributions) (distributions) (see section (Meaning of “distribution”)). (2) In this Chapter— (a) a reference to a person incurring a liability includes his changing his financial position by making an agreement or arrangement (whether enforceable or unenforceable, and whether made on his own account or with any other person) or by any other means, and (b) a reference to a company giving financial assistance for the purposes of reducing or discharging a liability incurred by a person for the purpose of the acquisition of shares includes its giving such assistance for the purpose of wholly or partly restoring his financial position to what it was before the acquisition took place.’. Power of limited company to issue redeemable shares Margaret Hodge NC188 To move the following Clause:— ‘(1) A limited company having a share capital may issue shares that are to be redeemed or are liable to be redeemed at the option of the company or the shareholder (“redeemable shares”), subject to the following provisions. (2) The articles of a private limited company may exclude or restrict the issue of redeemable shares. (3) A public limited company may only issue redeemable shares if it is authorised to do so by its articles. (4) No redeemable shares may be issued at a time when there are no issued shares of the company that are not redeemable.’. Terms and manner of redemption Margaret Hodge NC189 To move the following Clause:— ‘(1) The directors of a limited company may determine the terms, conditions and manner of redemption of shares if they are authorised to do so— (a) by the company’s articles, or (b) by a resolution of the company. (2) A resolution under subsection (1)(b) may be an ordinary resolution, even though it alters the company’s articles. (3) Where the directors are authorised under subsection (1) to determine the terms, conditions and manner of redemption of shares— (a) they must do so before the shares are allotted, and (b) any obligation of the company to state in a statement of capital the rights attached to the shares extends to the terms, conditions and manner of redemption. (4) Where the directors are not so authorised, the terms, conditions and manner of redemption of any redeemable shares must be stated in the company’s articles.’. Payment for redeemable shares Margaret Hodge NC190 To move the following Clause:— ‘(1) Redeemable shares in a limited company may not be redeemed unless they are fully paid. (2) The terms of redemption of shares in a limited company may provide that the amount payable on redemption may, by agreement between the company and the holder of the shares, be paid on a date later than the redemption date. (3) Unless redeemed in accordance with provision authorised by subsection (2), the shares must be paid for on redemption.’. Financing of redemption Margaret Hodge NC191 To move the following Clause:— ‘(1) A private limited company may redeem redeemable shares out of capital in accordance with Chapter (Redemption or purchase by private company out of capital) of this Part. (2) Subject to that, redeemable shares in a limited company may only be redeemed out of— (a) distributable profits of the company, or (b) the proceeds of a fresh issue of shares made for the purposes of the redemption. (3) Any premium payable on redemption of shares in a limited company must be paid out of distributable profits of the company, subject to the following provision. (4) If the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to— (a) the aggregate of the premiums received by the company on the issue of the shares redeemed, or (b) the current amount of the company’s share premium account (including any sum transferred to that account in respect of premiums on the new shares), whichever is the less. (5) The amount of the company’s share premium account is reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made under subsection (3). (6) This section is subject to section (Effect of company’s failure to redeem or purchase)(4) (terms of redemption enforceable in a winding up).’. Redeemed shares treated as cancelled Margaret Hodge NC192 To move the following Clause:— ‘Where shares in a limited company are redeemed— (a) the shares are treated as cancelled, and (b) the amount of the company’s issued share capital is diminished accordingly by the nominal value of the shares redeemed.’. Notice to registrar of redemption Margaret Hodge NC193 To move the following Clause:— ‘(1) If a limited company redeems any redeemable shares it must within one month after doing so give notice to the registrar, specifying the shares redeemed. (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 immediately following the redemption— (a) the total number of shares of the company, (b) the aggregate nominal value of those shares, (c) for each class of 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.’. Power of limited company to purchase own shares Margaret Hodge NC194 To move the following Clause:— ‘(1) A limited company having a share capital may purchase its own shares (including any redeemable shares), subject to— (a) the following provisions of this Chapter, and (b) any restriction or prohibition in the company’s articles. (2) A limited company may not purchase its own shares if as a result of the purchase there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares.’. |
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| © Parliamentary copyright 2006 | Prepared: 13 July 2006 |