| Company Law Reform Bill [Lords] - continued | House of Commons |
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Solvency statement Margaret Hodge NC148 To move the following Clause:— ‘(1) A solvency statement is a statement that each of the directors— (a) has formed the opinion, as regards the company’s situation at the date of the statement, that there is no ground on which the company could then be found to be unable to pay (or otherwise discharge) its debts; and (b) has also formed the opinion— (i) if it is intended to commence the winding up of the company within twelve months of that date, that the company will be able to pay (or otherwise discharge) its debts in full within twelve months of the commencement of the winding up; or (ii) in any other case, that the company will be able to pay (or otherwise discharge) its debts as they fall due during the year immediately following that date. (2) In forming those opinions, the directors must take into account all of the company’s liabilities (including any contingent or prospective liabilities). (3) The solvency statement must be in the prescribed form and must state— (a) the date on which it is made, and (b) the name of each director of the company. (4) If the directors make a solvency statement without having reasonable grounds for the opinions expressed in it, and the statement is delivered to the registrar, an offence is committed by every director who is in default. (5) A person guilty of an offence under subsection (4) 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).’. Registration of resolution and supporting documents Margaret Hodge NC149 To move the following Clause:— ‘(1) Within 15 days after the resolution for reducing share capital is passed the company must deliver to the registrar— (a) a copy of the solvency statement, and (b) a statement of capital. This is in addition to the copy of the resolution itself that is required to be delivered to the registrar under Chapter 3 of Part 3. (2) 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, (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). (3) The registrar must register the documents delivered to him under subsection (1) on receipt. (4) The resolution does not take effect until those documents are registered. (5) The company must also deliver to the registrar, within 15 days after the resolution is passed, a statement by the directors confirming that the solvency statement was— (a) made not more than 15 days before the date on which the resolution was passed, and (b) provided to members in accordance with section (Reduction of capital supported by solvency statement)(2) or (3). (6) The validity of a resolution is not affected by— (a) a failure to deliver the documents required to be delivered to the registrar under subsection (1) within the time specified in that subsection, or (b) a failure to comply with subsection (5). (7) If the company delivers to the registrar a solvency statement that was not provided to members in accordance with section (Reduction of capital supported by solvency statement)(2) or (3), an offence is committed by every officer of the company who is in default. (8) 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. (9) A person guilty of an offence under subsection (7) or (8) is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum.’. Application to court for order of confirmation Margaret Hodge NC150 To move the following Clause:— ‘(1) Where a company has passed a resolution for reducing share capital, it may apply to the court for an order confirming the reduction. (2) If the proposed reduction of capital involves either— (a) diminution of liability in respect of unpaid share capital, or (b) the payment to a shareholder of any paid-up share capital, section (Creditors entitled to object to reduction) applies (creditors entitled to object to reduction) unless the court directs otherwise. (3) The court may, if having regard to any special circumstances of the case it thinks proper to do so, direct that section (Creditors entitled to object to reduction) is not to apply as regards any class or classes of creditors. (4) The court may direct that section (Creditors entitled to object to reduction) is to apply in any other case.’. Creditors entitled to object to reduction Margaret Hodge NC151 To move the following Clause:— ‘(1) Where this section applies (see section (Application to court for order of confirmation)(2) and (4)), every creditor of the company who at the date fixed by the court is entitled to any debt or claim that, if that date were the commencement of the winding up of the company would be admissible in proof against the company, is entitled to object to the reduction of capital. (2) The court shall settle a list of creditors entitled to object. (3) For that purpose the court— (a) shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and (b) may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction of capital. (4) If a creditor entered on the list whose debt or claim is not discharged or has not determined does not consent to the reduction, the court may, if it thinks fit, dispense with the consent of that creditor on the company securing payment of his debt or claim. (5) For this purpose the debt or claim must be secured by appropriating (as the court may direct) the following amount— (a) if the company admits the full amount of the debt or claim or, though not admitting it, is willing to provide for it, the full amount of the debt or claim; (b) if the company does not admit, and is not willing to provide for, the full amount of the debt or claim, or if the amount is contingent or not ascertained, an amount fixed by the court after the like enquiry and adjudication as if the company were being wound up by the court.’. Offences in connection with list of creditors Margaret Hodge NC152 To move the following Clause:— ‘(1) If an officer of the company— (a) intentionally or recklessly— (i) conceals the name of a creditor entitled to object to the reduction of capital, or (ii) misrepresents the nature or amount of the debt or claim of a creditor, or (b) is knowingly concerned in any such concealment or misrepresentation, he commits an offence. (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.’. Court order confirming reduction Margaret Hodge NC153 To move the following Clause:— ‘(1) The court may make an order confirming the reduction of capital on such terms and conditions as it thinks fit. (2) The court must not confirm the reduction unless it is satisfied, with respect to every creditor of the company who is entitled to object to the reduction of capital that either— (a) his consent to the reduction has been obtained, or (b) his debt or claim has been discharged, or has determined or has been secured. (3) Where the court confirms the reduction, it may order the company to publish (as the court directs) the reasons for reduction of capital, or such other information in regard to it as the court thinks expedient with a view to giving proper information to the public, and (if the court thinks fit) the causes that led to the reduction. (4) The court may, if for any special reason it thinks proper to do so, make an order directing that the company must, during such period (commencing on or at any time after the date of the order) as is specified in the order, add to its name as its last words the words “and reduced”. If such an order is made, those words are, until the end of the period specified in the order, deemed to be part of the company’s name.’. Registration of order and statement of capital Margaret Hodge NC154 To move the following Clause:— ‘(1) The registrar, on production of an order of the court confirming the reduction of a company’s share capital and the delivery of a copy of the order and of a statement of capital (approved by the court), shall register the order and statement. This is subject to section (Public company reducing capital below authorised minimum) (public company reducing capital below authorised minimum). (2) The statement of capital must state with respect to the company’s share capital as altered by the order— (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). (3) The resolution for reducing share capital, as confirmed by the court’s order, takes effect— (a) in the case of a reduction of share capital that forms part of a compromise or arrangement sanctioned by the court under Part (Arrangements and reconstructions) (arrangements and reconstructions)— (i) on delivery of the order and statement of capital to the registrar, or (ii) if the court so orders, on the registration of the order and statement of capital; (b) in any other case, on the registration of the order and statement of capital. (4) Notice of the registration of the order and statement of capital must be published in such manner as the court may direct. (5) The registrar must certify the registration of the order and statement of capital. (6) The certificate— (a) must be signed by the registrar or authenticated by the registrar’s official seal, and (b) is conclusive evidence— (i) that the requirements of this Act with respect to the reduction of share capital have been complied with, and (ii) that the company’s share capital is as stated in the statement of capital.’. Public company reducing capital below authorised minimum Margaret Hodge NC155 To move the following Clause:— ‘(1) This section applies where the court makes an order confirming a reduction of a public company’s capital that has the effect of bringing the nominal value of its allotted share capital below the authorised minimum (see section 538). (2) The registrar must not register the order unless either— (a) the court so directs, or (b) the company is first re-registered as a private company. (3) Section (Expedited procedure for re-registration as a private company) provides an expedited procedure for re-registration in these circumstances.’. Expedited procedure for re-registration as a private company Margaret Hodge NC156 To move the following Clause:— ‘(1) The court may authorise the company to be re-registered as a private company without its having passed the special resolution required by section 97. (2) If it does so, the court must specify in the order the changes to the company’s name and articles to be made in connection with the re-registration. (3) The company may then be re-registered as a private company if an application to that effect is delivered to the registrar together with— (a) a copy of the court’s order, and (b) notice of the company’s name, and a copy of the company’s articles, as altered by the court’s order. (4) On receipt of such an application the registrar must issue a certificate of incorporation altered to meet the circumstances of the case. (5) The certificate must state that it is issued on re-registration and the date on which it is issued. (6) On the issue of the certificate— (a) the company by virtue of the issue of the certificate becomes a private company, and (b) the changes in the company’s name and articles take effect. (7) The certificate is conclusive evidence that the requirements of this Act as to re-registration have been complied with.’. Liability of members following reduction of capital Margaret Hodge NC157 To move the following Clause:— ‘(1) Where a company’s share capital is reduced a member of the company (past or present) is not liable in respect of any share to any call or contribution exceeding in amount the difference (if any) between— (a) the nominal amount of the share as notified to the registrar in the statement of capital delivered under section (Registration of resolution and supporting documents) or (Registration of order and statement of capital), and (b) the amount paid on the share or the reduced amount (if any) which is deemed to have been paid on it, as the case may be. (2) This is subject to section (Liability to creditor in case of omission from list of creditors) (liability to creditor in case of omission from list). (3) Nothing in this section affects the rights of the contributories among themselves.’. Liability to creditor in case of omission from list of creditors Margaret Hodge NC158 To move the following Clause:— ‘(1) This section applies where, in the case of a reduction of capital confirmed by the court— (a) a creditor entitled to object to the reduction of share capital is by reason of his ignorance— (i) of the proceedings for reduction of share capital, or (ii) of their nature and effect with respect to his debt or claim, not entered on the list of creditors, and (b) after the reduction of capital the company is unable to pay the amount of his debt or claim. (2) Every person who was a member of the company at the date on which the resolution for reducing capital took effect under section (Registration of order and statement of capital)(3) is liable to contribute for the payment of the debt or claim an amount not exceeding that which he would have been liable to contribute if the company had commenced to be wound up on the day before that date. (3) If the company is wound up, the court on the application of the creditor in question, and proof of ignorance as mentioned in subsection (1)(a), may (if it thinks fit)— (a) settle accordingly a list of persons liable to contribute under this section, and (b) make and enforce calls and orders on them as if they were ordinary contributories in a winding up. (4) The reference in subsection
(1)(b) to a company being unable to pay the amount of a debt or claim
has the same meaning as in section 123 of the Shares no bar to damages against company Margaret Hodge NC159 To move the following Clause:— ‘A person is not debarred from obtaining damages or other compensation from a company by reason only of his holding or having held shares in the company or any right to apply or subscribe for shares or to be included in the company’s register of members in respect of shares.’. Public companies: duty of directors to call meeting on serious loss of capital Margaret Hodge NC160 To move the following Clause:— ‘(1) Where the net assets of a public company are half or less of its called-up share capital, the directors must call a general meeting of the company to consider whether any, and if so what, steps should be taken to deal with the situation. (2) They must do so not later than 28 days from the earliest day on which that fact is known to a director of the company. (3) The meeting must be convened for a date not later than 56 days from that day. (4) If there is a failure to convene a meeting as required by this section, each of the directors of the company who— (a) knowingly authorises or permits the failure, or (b) after the period during which the meeting should have been convened, knowingly authorises or permits the failure to continue, 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 authorises the consideration at a meeting convened in pursuance of subection (1) of any matter that could not have been considered at that meeting apart from this section.’. General power to make further provision by regulations Margaret Hodge NC161 To move the following Clause:— ‘(1) The Secretary of State may by regulations modify the following provisions of this Part— Sections (General prohibition of commissions, discounts and allowances) and (Permitted commission), Chapter (Payment for shares) (payment for shares), Chapter (Public companies: independent valuation of non-cash consideration) (public companies: independent valuation of non-cash consideration), Chapter (Share premiums) (share premiums), sections (Redenomination of share capital) to (Redenomination reserve) (redenomination of share capital), Chapter (Reduction of share capital) (reduction of capital), and section (Public companies: duty of directors to call meeting on serious loss of capital) (public companies: duty of directors to call meeting on serious loss of capital). (2) The regulations may— (a) amend or repeal any of those provisions, or (b) make such other provision as appears to the Secretary of State appropriate in place of any of those provisions. (3) Regulations under this section may make consequential amendments or repeals in other provisions of this Act, or in other enactments. (4) Regulations under this section are subject to affirmative resolution procedure.’. General rule against limited company acquiring its own shares Margaret Hodge NC162 To move the following Clause:— ‘(1) A limited company must not acquire its own shares, whether by purchase, subscription or otherwise, except in accordance with the provisions of this Part. (2) If a company purports to act in contravention of this section— (a) an offence is committed by— (i) the company, and (ii) every officer of the company who is in default, and (b) the purported acquisition is void. (3) 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 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 a fine not exceeding the statutory maximum (or both).’. |
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| © Parliamentary copyright 2006 | Prepared: 18 July 2006 |