| Company Law Reform Bill [Lords] - continued | House of Commons |
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Payment for purchase of own shares Margaret Hodge NC195 To move the following Clause:— ‘(1) A limited company may not purchase its own shares unless they are fully paid. (2) Where a limited company purchases its own shares, the shares must be paid for on purchase.’. Financing of purchase of own shares Margaret Hodge NC196 To move the following Clause:— ‘(1) A private limited company may purchase its own shares out of capital in accordance with Chapter (Redemption or purchase by private company out of capital) of this Part. (2) Subject to that— (a) a limited company may only purchase its own shares out of— (i) distributable profits of the company, or (ii) the proceeds of a fresh issue of shares made for the purpose of financing the purchase, and (b) any premium payable on the purchase by a limited company of its own shares must be paid out of distributable profits of the company, subject to subsection (3). (3) If the shares to be purchased were issued at a premium, any premium payable on their purchase by the company may be paid out of the proceeds of a fresh issue of shares made for the purpose of financing the purchase, up to an amount equal to— (a) the aggregate of the premiums received by the company on the issue of the shares purchased, 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. (4) 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). (5) This section has effect subject to section (Effect of company’s failure to redeem or purchase)(4) (terms of purchase enforceable in a winding up).’. Authority for purchase of own shares Margaret Hodge NC197 To move the following Clause:— ‘(1) A limited company may only purchase its own shares— (a) by an off-market purchase, in pursuance of a contract approved in advance in accordance with section (Authority for off-market purchase); (b) by a market purchase, authorised in accordance with section (Authority for market purchase). (2) A purchase is “off-market” if the shares either— (a) are purchased otherwise than on a recognised investment exchange, or (b) are purchased on a recognised investment exchange but are not subject to a marketing arrangement on the exchange. (3) For this purpose a company’s shares are subject to a marketing arrangement on a recognised investment exchange if— (a) they are listed under Part
6 of the (b) the company has been afforded facilities for dealings in the shares to take place on the exchange— (i) without prior permission for individual transactions from the authority governing that investment exchange, and (ii) without limit as to the time during which those facilities are to be available. (4) A purchase is a “market purchase” if it is made on a recognised investment exchange and is not an off-market purchase by virtue of subsection (2)(b). (5) In this section “recognised
investment exchange” means a recognised investment exchange (within
the meaning of Part 18 of the Authority for off-market purchase Margaret Hodge NC198 To move the following Clause:— ‘(1) A company may only make an off-market purchase of its own shares in pursuance of a contract approved in advance in accordance with this section. (2) Either— (a) the terms of the proposed contract must be authorised by special resolution of the company before the contract is entered into, or (b) the purchase must be in pursuance of a contingent purchase contract authorised by special resolution of the company before it was entered into. (3) A “contingent purchase contract” means a contract, entered into by the company and relating to shares in the company, that does not amount to a contract to purchase the shares but under which the company may (subject to any conditions) become entitled or obliged to purchase the shares. (4) The authority conferred by a resolution under this section may be varied, revoked or from time to time renewed by a special resolution of the company. (5) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed. (6) A resolution conferring, varying, revoking or renewing authority under this section is subject to— section (Resolution authorising off-market purchase: exercise of voting rights) (exercise of voting rights), and section Resolution authorising off-market purchase: disclosure of details of contract) (disclosure of details of contract).’. Resolution authorising off-market purchase: exercise of voting rights Margaret Hodge NC199 To move the following Clause:— ‘(1) This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section (Authority for off-market purchase) (authority for off-market purchase of own shares). (2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member. (3) Where the resolution is proposed at a meeting of the company, it is not effective if— (a) any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution, and (b) the resolution would not have been passed if he had not done so. (4) For this purpose— (a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll; (b) notwithstanding anything in the company’s articles, any member of the company may demand a poll on that question; (c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.’. Resolution authorising off-market purchase: disclosure of details of contract Margaret Hodge NC200 To move the following Clause:— ‘(1) This section applies in relation to a resolution to confer, vary, revoke or renew authority for the purposes of section (Authority for off-market purchase) (authority for off-market purchase of own shares). (2) A copy of the proposed contract (if it is in writing) or a memorandum setting out its terms (if it is not) must be made available to members— (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him; (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both— (i) at the company’s registered office for not less than 15 days ending with the date of the meeting, and (ii) at the meeting itself. (3) A memorandum of contract terms so made available must include the names of the members holding shares to which the contract relates. (4) A copy of the contract so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the contract itself. (5) The resolution is not validly passed if the requirements of this section are not complied with.’. Variation of contract for off-market purchase Margaret Hodge NC201 To move the following Clause:— ‘(1) A company may only agree to a variation of a contract authorised under section (Authority for off-market purchase) (authority for off-market purchase) if the variation is approved in advance in accordance with this section. (2) The terms of the variation must be authorised by a special resolution of the company before it is agreed to. (3) That authority may be varied, revoked or from time to time renewed by a special resolution of the company. (4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed. (5) A resolution conferring, varying, revoking or renewing authority under this section is subject to— section (Resolution authorising variation: exercise of voting rights) (exercise of voting rights), and section (Resolution authorising variation: disclosure of details of variation) (disclosure of details of variation).’. Resolution authorising variation: exercise of voting rights Margaret Hodge NC202 To move the following Clause:— ‘(1) This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section (Variation of contract for off-market purchase) (variation of contract for off-market purchase of own shares). (2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member. (3) Where the resolution is proposed at a meeting of the company, it is not effective if— (a) any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution, and (b) the resolution would not have been passed if he had not done so. (4) For this purpose— (a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll; (b) notwithstanding anything in the company’s articles, any member of the company may demand a poll on that question; and (c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.’. Resolution authorising variation: disclosure of details of variation Margaret Hodge NC203 To move the following Clause:— ‘(1) This section applies in relation to a resolution under section (Variation of contract for off-market purchase) (variation of contract for off-market purchase of own shares). (2) A copy of the proposed variation (if it is in writing) or a written memorandum giving details of the proposed variation (if it is not) must be made available to members— (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him; (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both— (i) at the company’s registered office for not less than 15 days ending with the date of the meeting, and (ii) at the meeting itself. (3) There must also be made available as mentioned in subsection (2) a copy of the original contract or, as the case may be, a memorandum of its terms, together with any variations previously made. (4) A memorandum of the proposed variation so made available must include the names of the members holding shares to which the variation relates. (5) A copy of the proposed variation so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the variation itself. (6) The resolution is not validly passed if the requirements of this section are not complied with.’. Release of company’s rights under contract for off-market purchase Margaret Hodge NC204 To move the following Clause:— ‘(1) An agreement by a company to release its rights under a contract approved under section (Authority for off-market purchase) (authorisation of off-market purchase) is void unless the terms of the release agreement are approved in advance in accordance with this section. (2) The terms of the proposed agreement must be authorised by a special resolution of the company before the agreement is entered into. (3) That authority may be varied, revoked or from time to time renewed by a special resolution of the company. (4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed. (5) The provisions of— section (Resolution authorising variation: exercise of voting rights) (exercise of voting rights), and section (Resolution authorising variation: disclosure of details of variation) (disclosure of details of variation), apply to a resolution authorising a proposed release agreement as they apply to a resolution authorising a proposed variation.’. Authority for market purchase Margaret Hodge NC205 To move the following Clause:— ‘(1) A company may only make a market purchase of its own shares if the purchase has first been authorised by a resolution of the company. (2) That authority— (a) may be general or limited to the purchase of shares of a particular class or description, and (b) may be unconditional or subject to conditions. (3) The authority must— (a) specify the maximum number of shares authorised to be acquired, and (b) determine both the maximum and minimum prices that may be paid for the shares. (4) The authority may be varied, revoked or from time to time renewed by a resolution of the company. (5) A resolution conferring, varying or renewing authority must specify a date on which it is to expire, which must not be later than 18 months after the date on which the resolution is passed. (6) A company may make a purchase of its own shares after the expiry of the time limit specified if— (a) the contract of purchase was concluded before the authority expired, and (b) the terms of the authority permitted the company to make a contract of purchase that would or might be executed wholly or partly after its expiration. (7) A resolution to confer or vary authority under this section may determine either or both the maximum and minimum price for purchase by— (a) specifying a particular sum, or (b) providing a basis or formula for calculating the amount of the price (but without reference to any person’s discretion or opinion).’. Copy of contract or memorandum to be available for inspection Margaret Hodge NC206 To move the following Clause:— ‘(1) This section applies where a company has entered into— (a) a contract approved under section (Authority for off-market purchase) (authorisation of contract for off-market purchase), or (b) a contract for a purchase authorised under section (Authority for market purchase) (authorisation of market purchase). (2) The company must keep available for inspection at its registered office— (a) a copy of the contract, or (b) if the contract is not in writing, a written memorandum setting out its terms. (3) The copy or memorandum must be kept available for inspection from the conclusion of the contract until the end of the period of ten years beginning with— (a) the date on which the purchase of all the shares in pursuance of the contract is completed or, (b) the date on which the contract otherwise determines. (4) Every copy or memorandum required to be kept under this section must be kept open to inspection without charge— (a) by any member of the company, and (b) in the case of a public company, by any other person. (5) The provisions of this section apply to a variation of a contract as they apply to the original contract.’. Enforcement of right to inspect copy or memorandum Margaret Hodge NC207 To move the following Clause:— ‘(1) If default is made in complying with section (Copy of contract or memorandum to be available for inspection)(2) or (3), or an inspection required under section (Copy of contract or memorandum to be available for inspection)(4) is refused, 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 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. (3) In the case of refusal of an inspection required under section (Copy of contract or memorandum to be available for inspection)(4) the court may by order compel an immediate inspection.’. No assignment of company’s right to purchase own shares Margaret Hodge NC208 To move the following Clause:— ‘The rights of a company under a contract authorised under— (a) section (Authority for off-market purchase) (authority for off-market purchase), or (b) section (Authority for market purchase) (authority for market purchase) are not capable of being assigned.’. Payments apart from purchase price to be made out of distributable profits Margaret Hodge NC209 To move the following Clause:— ‘(1) A payment made by a company in consideration of— (a) acquiring any right with respect to the purchase of its own shares in pursuance of a contingent purchase contract approved under section (Authority for off-market purchase) (authorisation of off-market purchase), (b) the variation of any contract approved under that section, or (c) the release of any of the company’s obligations with respect to the purchase of any of its own shares under a contract— (i) approved under section (Authority for off-market purchase), or (ii) authorised under section (Authority for market purchase) (authorisation of market purchase), must be made out of the company’s distributable profits. (2) If this requirement is not met in relation to a contract, then— (a) in a case within subsection (1)(a), no purchase by the company of its own shares in pursuance of that contract may be made under this Chapter; (b) in a case within subsection (1)(b), no such purchase following the variation may be made under this Chapter; (c) in a case within subsection (1)(c), the purported release is void.’. Treatment of shares purchased Margaret Hodge NC210 To move the following Clause:— ‘Where a limited company makes a purchase of its own shares in accordance with this Chapter, then— (a) if section (Treasury shares) (treasury shares) applies, the shares may be held and dealt with in accordance with Chapter (Treasury shares) of this Part; (b) if that section does not apply— (i) the shares are treated as cancelled, and (ii) the amount of the company’s issued share capital is diminished accordingly by the nominal value of the shares cancelled.’. Return to registrar of purchase of own shares Margaret Hodge NC211 To move the following Clause:— ‘(1) Where a company purchases shares under this Chapter, it must deliver a return to the registrar within the period of 28 days beginning with the date on which the shares are delivered to it. (2) The return must distinguish— (a) shares in relation to which section (Treasury shares) (treasury shares) applies and shares in relation to which that section does not apply, and (b) shares in relation to which that section applies— (i) that are cancelled forthwith (under section (Treasury shares: cancellation) (cancellation of treasury shares)), and (ii) that are not so cancelled. (3) The return must state, with respect to shares of each class purchased— (a) the number and nominal value of the shares, and (b) the date on which they were delivered to the company. (4) In the case of a public company the return must also state— (a) the aggregate amount paid by the company for the shares, and (b) the maximum and minimum prices paid in respect of shares of each class purchased. (5) Particulars of shares delivered to the company on different dates and under different contracts may be included in a single return. In such a case the amount required to be stated under subsection (4)(a) is the aggregate amount paid by the company for all the shares to which the return relates. (6) If default is made in complying with this section an offence is committed by every officer of the company who is in default. (7) 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.’. |
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| © Parliamentary copyright 2006 | Prepared: 13 July 2006 |