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

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Exercise of rights where shares held on behalf of others: members requests

Margaret Hodge

NC44

    To move the following Clause:—

      ‘(1) This section applies for the purposes of—

        (a) section 297 (power to require circulation of statement),

        (b) section 321 (public companies: power to require circulation of resolution for AGM),

        (c) section 325 (power to require independent report on poll), and

        (d) section 517 (power to require website publication of audit concerns).

      (2) A company is required to act under any of those sections if it receives a request in relation to which the following conditions are met—

        (a) it is made by at least 100 persons;

        (b) it is authenticated by all the persons making it;

        (c) in the case of any of those persons who is not a member of the company, it is accompanied by a statement—

          (i) of the full name and address of a person (“the member”) who is a member of the company and holds shares on behalf of that person,

          (ii) that the member is holding those shares on behalf of that person in the course of a business,

          (iii) of the number of shares in the company that the member holds on behalf of that person,

          (iv) of the total amount paid up on those shares,

          (v) that those shares are not held on behalf of anyone else or, if they are, that the other person or persons are not among the other persons making the request,

          (vi) that some or all of those shares confer voting rights that are relevant for the purposes of making a request under the section in question, and

          (vii) that the person has the right to instruct the member how to exercise those rights;

        (d) in the case of any of those persons who is a member of the company, it is accompanied by a statement—

          (i) that he holds shares otherwise than on behalf of another person, or

          (ii) that he holds shares on behalf of one or more other persons but those persons are not among the other persons making the request;

        (e) it is accompanied by such evidence as the company may reasonably require of the matters mentioned in paragraph (c) and (d);

        (f) the total amount of the sums paid up on—

          (i) shares held as mentioned in paragraph (c), and

          (ii) shares held as mentioned in paragraph (d),

        divided by the number of persons making the request, is not less than £100;

        (g) the request complies with any other requirements of the section in question as to contents, timing and otherwise.’.


Shares

Margaret Hodge

NC45

    To move the following Clause:—

      ‘(1) In the Companies Acts “share”, in relation to a company, means share in the company’s share capital.

      (2) A company’s shares may no longer be converted into stock.

      (3) Stock created before the commencement of this Part may be reconverted into shares in accordance with section (Re-conversion of stock into shares).

      (4) In the Companies Acts—

        (a) references to shares include stock except where a distinction between share and stock is express or implied, and

        (b) references to a number of shares include an amount of stock where the context admits of the reference to shares being read as including stock.’.


Nature of shares

Margaret Hodge

NC46

    To move the following Clause:—

      The shares or other interest of a member in a company are personal property (or, in Scotland, moveable property) and are not in the nature of real estate (or heritage).’.


Nominal value of shares

Margaret Hodge

NC47

    To move the following Clause:—

      ‘(1) Shares in a limited company having a share capital must each have a fixed nominal value.

      (2) An allotment of a share that does not have a fixed nominal value is void.

      (3) Shares in a limited company having a share capital may be denominated in any currency, and different classes of shares may be denominated in different currencies.

      (4) If a company purports to allot shares in contravention of this section, an offence is committed by every officer of the company who is in default.

      (5) 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.’.


Numbering of shares

Margaret Hodge

NC48

    To move the following Clause:—

      ‘(1) Each share in a company having a share capital must be distinguished by its appropriate number, except in the following circumstances.

      (2) If at any time—

        (a) all the issued shares in a company are fully paid up and rank pari passu for all purposes, or

        (b) all the issued shares of a particular class in a company are fully paid up and rank pari passu for all purposes,

      none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.’.


Transferability of shares

Margaret Hodge

NC49

    To move the following Clause:—

      ‘(1) The shares or other interest of any member in a company are transferable in accordance with the company’s articles.

      (2) This is subject to—

        (a) the Stock Transfer Act 1963 (c. 18) or the Stock Transfer Act (Northern Ireland) 1963 (c.24 (N.I.)) (which enables securities of certain descriptions to be transferred by a simplified process), and

        (b) regulations under Chapter (Evidencing and transferring title to securities without written instrument) of Part (Certification and transfer of securities) of this Act (which enable title to securities to be evidenced and transferred without a written instrument).

      (3) See Part 21 of this Act generally as regards share transfers.’.


Companies having a share capital

Margaret Hodge

NC50

    To move the following Clause:—

      References in the Companies Acts to a company having a share capital are to a company that has power under its constitution to issue shares.’.


Issued and allotted share capital

Margaret Hodge

NC51

    To move the following Clause:—

      ‘(1) References in the Companies Acts—

        (a) to “issued share capital” are to shares of a company that have been issued;

        (b) to “allotted share capital” are to shares of a company that have been allotted.

      (2) References in the Companies Acts to issued or allotted shares, or to issued or allotted share capital, include shares taken on the formation of the company by the subscribers to the company’s memorandum.’.


Called-up share capital

Margaret Hodge

NC52

    To move the following Clause:—

      In the Companies Acts—

      “called-up share capital”, in relation to a company, means so much of its share capital as equals the aggregate amount of the calls made on its shares (whether or not those calls have been paid), together with—

      (a) any share capital paid up without being called, and

      (b) any share capital to be paid on a specified future date under the articles, the terms of allotment of the relevant shares or any other arrangements for payment of those shares; and

      “uncalled share capital” is to be construed accordingly.’.


Equity share capital

Margaret Hodge

NC53

    To move the following Clause:—

      In the Companies Acts “equity share capital”, in relation to a company, means its issued share capital excluding any part of that capital that does not carry any right (either as respects dividends or as respects capital) to participate beyond a specified amount in a distribution.’.


Exercise by directors of power to allot shares etc

Margaret Hodge

NC54

    To move the following Clause:—

      ‘(1) The directors of a company must not exercise any power of the company—

        (a) to allot shares in the company, or

        (b) to grant rights to subscribe for, or to convert any security into, shares in the company,

      except in accordance with section (Power of directors to allot shares etc: private company with only one class of shares) (private company with single class of shares) or section (Power of directors to allot shares etc: authorisation by company) (authorisation by company).

      (2) Subsection (1) does not apply—

        (a) to the allotment of shares in pursuance of an employees’ share scheme, or

        (b) to the grant of a right to subscribe for, or to convert any security into, shares so allotted.

      (3) If this section applies in relation to the grant of a right to subscribe for, or to convert any security into, shares, it does not apply in relation to the allotment of shares pursuant to that right.

      (4) A director who knowingly contravenes, or permits or authorises a contravention of, this section commits an offence.

      (5) 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.

      (6) Nothing in this section affects the validity of an allotment or other transaction.’.


Power of directors to allot shares etc: private company with only one class of shares

Margaret Hodge

NC55

    To move the following Clause:—

      Where a private company has only one class of shares, the directors may exercise any power of the company—

        (a) to allot shares of that class, or

        (b) to grant rights to subscribe for or to convert any security into such shares,

      except to the extent that they are prohibited from doing so by the company’s articles.’.


Power of directors to allot shares etc: authorisation by company

Margaret Hodge

NC56

    To move the following Clause:—

      ‘(1) The directors of a company may exercise a power of the company—

        (a) to allot shares in the company, or

        (b) to grant rights to subscribe for or to convert any security into shares in the company,

      if they are authorised to do so by the company’s articles or by resolution of the company.

      (2) Authorisation may be given for a particular exercise of the power or for its exercise generally, and may be unconditional or subject to conditions.

      (3) Authorisation must—

        (a) state the maximum amount of shares that may be allotted under it, and

        (b) specify the date on which it will expire, which must be not more than five years from—

          (i) in the case of authorisation contained in the company’s articles at the time of its original incorporation, the date of that incorporation;

          (ii) in any other case, the date on which the resolution is passed by virtue of which the authorisation is given.

      (4) Authorisation may—

        (a) be renewed or further renewed by resolution of the company for a further period not exceeding five years, and

        (b) be revoked or varied at any time by resolution of the company.

      (5) A resolution renewing authorisation must—

        (a) state (or restate) the maximum amount of shares that may be allotted under the authorisation or, as the case may be, the amount remaining to be allotted under it, and

        (b) specify the date on which the renewed authorisation will expire.

      (6) In relation to rights to subscribe for or to convert any security into shares in the company, references in this section to the maximum amount of shares that may be allotted under the authorisation are to the maximum amount of shares that may be allotted pursuant to the rights.

      (7) The directors may allot shares, or grant rights to subscribe for or to convert any security into shares, after authorisation has expired if—

        (a) the shares are allotted, or the rights are granted, in pursuance of an offer or agreement made by the company before the authorisation expired, and

        (b) the authorisation allowed the company to make an offer or agreement which would or might require shares to be allotted, or rights to be granted, after the authorisation had expired.

      (8) A resolution of a company to give, vary, revoke or renew authorisation under this section may be an ordinary resolution, even though it alters the company’s articles.’.


General prohibition of commissions, discounts and allowances

Margaret Hodge

NC57

    To move the following Clause:—

      ‘(1) Except as permitted by section (permitted commission) (permitted commission), a company must not apply any of its shares or capital money, either directly or indirectly, in payment of any commission, discount or allowance to any person in consideration of his—

        (a) subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or

        (b) procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company.

      (2) It is immaterial how the shares or money are so applied, whether by being added to the purchase money of property acquired by the company or to the contract price of work to be executed for the company, or being paid out of the nominal purchase money or contract price, or otherwise.

      (3) Nothing in this section affects the payment of such brokerage as has previously been lawful.’.


Permitted commission

Margaret Hodge

NC58

    To move the following Clause:—

      ‘(1) A company may, if the following conditions are satisfied, pay a commission to a person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company,

      (2) The conditions are—

        (a) the payment of the commission is authorised by the company’s articles;

        (b) the commission paid or agreed to be paid does not exceed—

          (i) 10% of the price at which the shares are issued, or

          (ii) the amount or rate authorised by the articles,

        whichever is the less.

      (3) A vendor to, or promoter of, or other person who receives payment in money or shares from, a company may apply any part of the money or shares so received in payment of any commission the payment of which directly by the company would be permitted by this section.’.


Registration of allotment

Margaret Hodge

NC59

    To move the following Clause:—

      ‘(1) A company must register an allotment of shares as soon as practicable and in any event within two months after the date of the allotment.

      (2) This does not apply if the company has issued a share warrant in respect of the shares (see section (Issue and effect of share warrant to bearer).

      (3) If a company fails to comply with this section, an offence is committed by—

        (a) the company, and

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

      (4) 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 2 on the standard scale.

      (5) For the company’s duties as to the issue of share certificates etc, see Part 21 (certification and transfer of securities)’.


Return of allotment by limited company

Margaret Hodge

NC60

    To move the following Clause:—

      ‘(1) This section applies to a company limited by shares and to a company limited by guarantee and having a share capital.

      (2) The company must, within one month of making an allotment of shares, deliver to the registrar for registration a return of the allotment.

      (3) The return must—

        (a) contain the prescribed information, and

        (b) be accompanied by a statement of capital.

      (4) The statement of capital must state with respect to the company’s share capital at the date to which the return is made up—

        (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).’.


Return of allotment by unlimited company allotting new class of shares

Margaret Hodge

NC61

    To move the following Clause:—

      ‘(1) This section applies to an unlimited company that allots shares of a class with rights that are not in all respects uniform with shares previously allotted.

      (2) The company must, within one month of making such an allotment, deliver to the registrar for registration a return of the allotment.

      (3) The return must contain the prescribed particulars of the rights attached to the shares.

      (4) For the purposes of this section shares are not to be treated as different from shares previously allotted by reason only that the former do not carry the same rights to dividends as the latter during the twelve months immediately following the former’s allotment.’.


Offence of failure to make return

Margaret Hodge

NC62

    To move the following Clause:—

      ‘(1) If a company makes default in complying with—

      section (return of allotment by limited company) (return of allotment of shares by limited company), or

      section (return of allotment by unlimited company of new class of shares) (return of allotment of new class of shares by unlimited company),

      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—

        (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.

      (3) In the case of default in delivering to the registrar within one month after the allotment the return required by section (return of allotment of shares by limited company) or (return of allotment of new class of shares by unlimited company)—

        (a) any person liable for the default may apply to the court for relief, and

        (b) the court, if satisfied—

          (i) that the omission to deliver the document was accidental or due to inadvertence, or

          (ii) that it is just and equitable to grant relief,

        may make an order extending the time for delivery of the document for such period as the court thinks proper.’.


When shares are allotted

Margaret Hodge

NC63

    To move the following Clause:—

      ‘For the purposes of the Companies Acts shares in a company are taken to be allotted when a person acquires the unconditional right to be included in the company’s register of members in respect of the shares.’.


Provisions about allotment not applicable to shares taken on formation

Margaret Hodge

NC64

    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.’.


 
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Prepared: 18 July 2006