House of Commons - Amendments

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

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Meaning of “subsidiary” etc

Margaret Hodge

NC417

To move the following Clause:—

‘(1) A company is a “subsidiary” of another company, its “holding company”, if that other company—

(a) hold a majority of the voting rights in it, or

(b) is a member of it and has the right to appoint or remove a majority of its board of directors, or

(c) is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it,

or if it is a subsidiary of a company that is itself a subsidiary of that other company.

(2) A company is a “wholly-owned subsidiary” of another company if it has no members except that other and that other’s wholly-owned subsidiaries or persons acting on behalf of that other or its wholly-owned subsidiaries.

(3) Schedule 1 contains provisions explaining expressions used in this section and otherwise supplementing this section.

(4) In this section and that Schedule “company” includes any body corporate.’.

Meaning of “subsidiary” etc: power to amend

Margaret Hodge

NC418

To move the following Clause:—

‘(1) The Secretary of State may by regulations amend the provisions of section (Meaning of “subsidiary” etc) (meaning of “subsidiary” etc) and Schedule (Meaning of “subsidiary” etc: supplementary provisions) (meaning of “subsidiary” etc: supplementary provisions) so as to alter the meaning of the expressions “subsidiary”, “holding company” or “wholly-owned subsidiary”.

(2) Regulations under this section are subject to negative resolution procedure.

(3) Any amendment made by regulations under this section does not apply for the purposes of enactments outside the Companies Acts unless the regulations so provide.

(4) So much of section 23(3) of the Interpretation Act 1978 (c. 30) as applies section 17(2)(a) of that Act (effect of repeal and re-enactment) to deeds, instruments and documents other than enactments does not apply in relation to any repeal and re-enactment effected by regulations under this section.’.

Meaning of “banking company” and “banking group”

Margaret Hodge

NC419

To move the following Clause:—

‘(1) This section defines “banking company” and “banking group” for the purposes of the Companies Acts.

(2) “Banking company” means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to accept deposits, other than—

(a) a person who is not a company, and

(b) a person who has such permission only for the purpose of carrying on another regulated activity in accordance with permission under that Part.

(3) The definition in subsection (2) must be read with section 22 of that Act, any relevant order under that section and Schedule 2 to that Act.

(4) References to a banking group are to a group where the parent company is a banking company or where—

(a) the parent company’s principal subsidiary undertakings are wholly or mainly credit institutions, and

(b) the parent company does not itself carry on any material business apart from the acquisition, management and disposal of interests in subsidiary undertakings.

“Group” here means a parent undertaking and its subsidiary undertakings.

(5) For the purposes of subsection (4)—

(a) a parent company’s principal subsidiary undertakings are the subsidiary undertakings of the company whose results or financial position would principally affect the figures shown in the group accounts, and

(b) the management of interests in subsidiary undertakings includes the provision of services to such undertakings.’.

Meaning of “insurance company” and related expressions

Margaret Hodge

NC420

To move the following Clause:—

‘(1) This section defines “insurance company”, “authorised insurance company”, “insurance group” and “insurance market activity” for the purposes of the Companies Acts.

(2) An “authorised insurance company” means a person (whether incorporated or not) who has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to effect or carry out contracts of insurance.

(3) An “insurance company” means—

(a) an authorised insurance company, or

(b) any other person (whether incorporated or not) who—

(i) carries on insurance market activity, or

(ii) may effect or carry out contracts of insurance under which the benefits provided by that person are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle.

(4) Neither expression includes a friendly society within the meaning of the Friendly Societies Act 1992 (c. 40).

(5) References to an insurance group are to a group where the parent company is an insurance company or where—

(a) the parent company’s principal subsidiary undertakings are wholly or mainly insurance companies, and

(b) the parent company does not itself carry on any material business apart from the acquisition, management and disposal of interests in subsidiary undertakings.

“Group” here means a parent undertaking and its subsidiary undertakings.

(6) For the purposes of subsection (5)—

(b) the management of interests in subsidiary undertakings includes the provision of services to such undertakings.

(7) “Insurance market activity” has the meaning given in section 316(3) of the Financial Services and Markets Act 2000 (c. 8).

(8) References in this section to contracts of insurance and to the effecting or carrying out of such contracts must be read with section 22 of that Act, any relevant order under that section and Schedule 2 to that Act.’.

“Employees’ share scheme”

Margaret Hodge

NC421

To move the following Clause:—

‘For the purposes of the Companies Acts an employees’ share scheme is a scheme for encouraging or facilitating the holding of shares in or debentures of a company by or for the benefit of—

(a) the bona fide employees or former employees of—

(i) the company,

(ii) any subsidiary of the company, or

(iii) the company’s holding company or any subsidiary of the company’s holding company, or

(b) the spouses, civil partners, surviving spouses, surviving civil partners, or minor children or step-children of such employees or former employees.’.

Meaning of “prescribed”

Margaret Hodge

NC422

To move the following Clause:—

‘In the Companies Acts “prescribed” means prescribed (by order or by regulations) by the Secretary of State.’.

Persons subject to foreign restrictions

Margaret Hodge

NC423

To move the following Clause:—

‘(1) This section defines what is meant by references in this Part to a person being subject to foreign restrictions.

(2) A person is subject to foreign restrictions if under the law of a country or territory outside the United Kingdom—

(a) he is, by reason of misconduct or unfitness, disqualified to any extent from acting in connection with the affairs of a company,

(b) he is, by reason of misconduct or unfitness, required—

(i) to obtain permission from a court or other authority, or

(ii) to meet any other condition,

before acting in connection with the affairs of a company,

(c) he has, by reason of misconduct or unfitness, given undertakings to a court or other authority of a country or territory outside the United Kingdom—

(i) not to act in connection with the affairs of a company, or

(ii) restricting the extent to which, or the way in which, he may do so.

(3) The references in subsection (2) to acting in connection with the affairs of a company are to doing any of the following—

(a) being a director of a company,

(b) acting as receiver of a company’s property, or

(4) In this section—

(a) “company” means a company incorporated or formed under the law of the country or territory in question, and

(b) in relation to such a company—

“director” means the holder of an office corresponding to that of director of a UK company; and

“receiver” includes any corresponding officer under the law of that country or territory.’.

Meaning of “the court” and “UK company”

Margaret Hodge

NC424

To move the following Clause:—

‘In this Part—

“the court” means—

(q) in England and Wales, the High Court or a county court;

(r) in Scotland, the Court of Session or the sheriff court;

(s) in Northern Ireland, the High Court;

“UK company” means a body corporate that—

(t) is a company as defined in section 1 of this Act, or

(u) is registered under the Companies Acts by virtue of section 694 (bodies not formed under Companies Acts but authorised to register).’.

Disqualification of persons subject to foreign restrictions

Margaret Hodge

NC425

To move the following Clause:—

‘(1) The Secretary of State may make provision by regulations disqualifying a person subject to foreign restrictions from—

(a) being a director of a UK company,

(b) acting as receiver of a UK company’s property, or

(c) in any way, whether directly or indirectly, being concerned or taking part in the promotion, formation or management of a UK company.

(2) The regulations may provide that a person subject to foreign restrictions—

(a) is disqualified automatically by virtue of the regulations, or

(b) may be disqualified by order of the court on the application of the Secretary of State.

(3) The regulations may provide that the Secretary of State may accept an undertaking (a “disqualification undertaking”) from a person subject to foreign restrictions that he will not do anything which would be in breach of a disqualification under subsection (1).

(4) In this Part—

(a) a “person disqualified under this Part” is a person—

(i) disqualified as mentioned in subsection (2)(a) or (b), or

(ii) who has given and is subject to a disqualification undertaking;

(b) references to a breach of a disqualification include a breach of a disqualification undertaking.

(5) The regulations may provide for applications to the court by persons disqualified under this Part for permission to act in a way which would otherwise be in breach of the disqualification.

(6) The regulations must provide that a person ceases to be disqualified under this Part on his ceasing to be subject to foreign restrictions.

(7) Regulations under this section are subject to affirmative resolution procedure.’.

Disqualification regulations: supplementary

Margaret Hodge

NC426

To move the following Clause:—

‘(1) Regulations under section (Disqualification of persons subject to foreign restrictions) may make different provision for different cases and may in particular distinguish between cases by reference to—

(a) the conduct on the basis of which the person became subject to foreign restrictions;

(b) the nature of the foreign restrictions;

(2) Regulations under section (Disqualification of persons subject to foreign restrictions)(2)(b) or (5) (provision for applications to the court)—

(a) must specify the grounds on which an application may be made;

(b) may specify factors to which the court shall have regard in determining an application.

(3) The regulations may, in particular, require the court to have regard to the following factors—

(a) whether the conduct on the basis of which the person became subject to foreign restrictions would, if done in relation to a UK company, have led a court to make a disqualification order on an application under the Company Directors Disqualification Act 1986 (c. 46) or the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4));

(b) in a case in which the conduct on the basis of which the person became subject to foreign restrictions would not be unlawful if done in relation to a UK company, the fact that the person acted unlawfully under foreign law;

(d) whether the person’s activities (or proposed activities) in relation to UK companies are undertaken (or are proposed to be undertaken) outside the United Kingdom.

(4) Regulations under section (Disqualification of persons subject to foreign restrictions)(3) (provision as to undertakings given to the Secretary of State) may include provision allowing the Secretary of State, in determining whether to accept an undertaking, to take into account matters other than criminal convictions notwithstanding that the person may be criminally liable in respect of those matters.

(5) Regulations under section (Disqualification of persons subject to foreign restrictions)(5) (provision for application to court for permission to act) may include provision—

(a) entitling the Secretary of State to be represented at the hearing of the application, and

(b) as to the giving of evidence or the calling of witnesses by the Secretary of State at the hearing of the application.’.

Offence of breach of disqualification

Margaret Hodge

NC427

To move the following Clause:—

‘(1) Regulations under section (Disqualification of persons subject to foreign restrictions) may provide that a person disqualified under this Part who acts in breach of the disqualification commits an offence.

(2) The regulations may provide that a person guilty of such an offence 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).

(3) In relation to an offence committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (c. 44), for “twelve months” in subsection (2)(b)(i) substitute “six months”.’.

Personal liability for debts of company

Margaret Hodge

NC428

To move the following Clause:—

‘(1) The Secretary of State may provide by regulations that a person who, at a time when he is subject to foreign restrictions—

(a) is a director of a UK company, or

(b) is involved in the management of a UK company,

is personally responsible for all debts and other liabilities of the company incurred during that time.

(2) A person who is personally responsible by virtue of this section for debts and other liabilities of a company is jointly and severally liable in respect of those debts and liabilities with—

(a) the company, and

(b) any other person who (whether by virtue of this section or otherwise) is so liable.

(3) For the purposes of this section a person is involved in the management of a company if he is concerned, whether directly or indirectly, or takes part, in the management of the company.

(4) The regulations may make different provision for different cases and may in particular distinguish between cases by reference to—

(a) the conduct on the basis of which the person became subject to foreign restrictions;

(b) the nature of the foreign restrictions;

(5) Regulations under this section are subject to affirmative resolution procedure.’.

Statements from persons subject to foreign restrictions

Margaret Hodge

NC429

To move the following Clause:—

‘(1) The Secretary of State may make provision by regulations requiring a person who—

(a) is subject to foreign restrictions, and

(b) is not disqualified under this Part,

to send a statement to the registrar if he does anything that, if done by a person disqualified under this Part, would be in breach of the disqualification.

(2) The statement must include such information as may be specified in the regulations relating to—

(a) the person’s activities in relation to UK companies, and

(b) the foreign restrictions to which the person is subject.

(3) The statement must be sent to the registrar within such period as may be specified in the regulations.

(4) The regulations may make different provision for different cases and may in particular distinguish between cases by reference to—

(a) the conduct on the basis of which the person became subject to foreign restrictions;

(b) the nature of the foreign restrictions;

(5) Regulations under this section are subject to affirmative resolution procedure.’.

Statements from persons disqualified

Margaret Hodge

NC430

To move the following Clause:—

‘(1) The Secretary of State may make provision by regulations requiring a person who—

(a) is subject to foreign restrictions, and

(b) is not disqualified under this Part,

to send a statement to the registrar if he does anything that, if done by a person disqualified under this Part, would be in breach of the disqualification.

(2) The statement must include such information as may be specified in the regulations relating to—

(a) the person’s activities in relation to UK companies, and

(b) the foreign restrictions to which the person is subject.

(3) The statement must be sent to the registrar within such period as may be specified in the regulations.

(4) The regulations may make different provision for different cases and may in particular distinguish between cases by reference to—

(a) the conduct on the basis of which the person became subject to foreign restrictions;

(b) the nature of the foreign restrictions;

(5) Regulations under this section are subject to affirmative resolution procedure.’.

Statements: whether to be made public

Margaret Hodge

NC431

To move the following Clause:—

‘(1) Regulations under section (Statements from persons subject to foreign restrictions) or (Statements from persons disqualified) may provide that a statement sent to the registrar of companies under the regulations is to be treated as a record relating to a company for the purposes of section 733 (the companies register).

(2) The regulations may make provision as to the circumstances in which such a statement is to be, or may be—

(a) withheld from public inspection, or

(b) removed from the register.

(3) The regulations may, in particular, provide that a statement is not to be withheld from public inspection or removed from the register unless the person to whom it relates provides such information, and satisfies such other conditions, as may be specified.

(4) The regulations may provide that section 751 (note of removal of material from the register) does not apply, or applies with such modifications as may be specified, in the case of material removed from the register under the regulations.

(5) In this section “specified” means specified in the regulatons.’.

Prepared: 13 July 2006