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

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Duty of company as to issue of certificates etc on transfer

Margaret Hodge

NC267

    To move the following Clause:—

      ‘(1) A company must, within two months after the date on which a transfer of any of its shares, debentures or debenture stock is lodged with the company, complete and have ready for delivery—

        (a) the certificates of the shares transferred,

        (b) the debentures transferred, or

        (c) the certificates of the debenture stock transferred.

      (2) For this purpose a “transfer” means—

        (a) a transfer duly stamped and otherwise valid, or

        (b) an exempt transfer within the Stock Transfer Act 1982 (c. 41),

      but does not include a transfer that the company is for any reason entitled to refuse to register and does not register.

      (3) Subsection (1) does not apply—

        (a) if the conditions of issue of the shares, debentures or debenture stock provide otherwise,

        (b) in the case of a transfer to a financial institution (see section (Issue of certificates etc: allotment or transfer to financial institution)), or

        (c) in the case of a transfer of shares if, following the transfer, the company has issued a share warrant in respect of the shares (see section (Issue and effect of share warrant to bearer)).

      (4) Subsection (1) has effect subject to section (Issue of certificates etc: cases within the Stock Transfer Act 1982) (cases where the Stock Transfer Act 1982 (c. 41) applies).

      (5) If default is made in complying with subsection (1) an offence is committed by every officer of the company who is in default.

      (6) 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.’.


Issue of certificates etc: cases within the Stock Transfer Act 1982

Margaret Hodge

NC268

    To move the following Clause:—

      ‘(1) Section (Duty of company as to issue of certificates etc on transfer)(1) (duty of company as to issue of certificates etc on transfer) does not apply in the case of a transfer to a person where, by virtue of regulations under section 3 of the Stock Transfer Act 1982 (c. 41), he is not entitled to a certificate or other document of or evidencing title in respect of the securities transferred.

      (2) But if in such a case the transferee—

        (a) subsequently becomes entitled to such a certificate or other document by virtue of any provision of those regulations, and

        (b) gives notice in writing of that fact to the company,

      section (Duty of company as to issue of certificates etc on transfer) (duty to company as to issue of certificates etc) has effect as if the reference in subsection (1) of that section to the date of the lodging of the transfer were a reference to the date of the notice.’.


Issue of certificates etc: allotment or transfer to financial institution

Margaret Hodge

NC269

    To move the following Clause:—

      ‘(1) A company—

        (a) of which shares or debentures are alloted to a financial institution,

        (b) of which debenture stock is allotted to a financial institution, or

        (c) with which a transfer for transferring shares, debentures or debenture stock to a financial institution is lodged,

      is not required in consequence of that allotment or transfer to comply with section (Duty of company as to issue of certificates etc on allotment)(1) or (Duty of company as to issue of certificates etc on transfer)(1) (duty of company as to issue of certificates etc).

      (2) A “financial institution” means—

        (a) a recognised clearing house acting in relation to a recognised investment exchange, or

        (b) a nominee of—

          (i) a recognised clearing house acting in that way, or

          (ii) a recognised investment exchange,

        designated for the purposes of this section in the rules of the recognised investment exchange in question.

      (3) Expressions used in subsection (2) have the same meaning as in Part 18 of the Financial Services and Markets Act 2000 (c. 8).’.


Issue and effect of share warrant to bearer

Margaret Hodge

NC270

    To move the following Clause:—

      ‘(1) A company limited by shares may, if so authorised by its articles, issue with respect to any fully paid shares a warrant (a “share warrant”) stating that the bearer of the warrant is entitled to the shares specified in it.

      (2) A share warrant issued under the company’s common seal or (in the case of a company registered in Scotland) subscribed in accordance with the Requirements of Writing (Scotland) Act 1995 (c. 7) entitles the bearer to the shares specified in it and the shares may be transferred by delivery of the warrant.

      (3) A company that issues a share warrant may, if so authorised by its articles, provide (by coupons or otherwise) for the payment of the future dividends on the shares included in the warrant.’.


Duty of company as to issue of certificates on surrender of share warrant

Margaret Hodge

NC271

    To move the following Clause:—

      ‘(1) A company must, within two months of the surrender of a share warrant for cancellation, complete and have ready for delivery the certificates of the shares specified in the warrant.

      (2) Subsection (1) does not apply if the company’s articles provide otherwise.

      (3) If default is made in complying with subsection (1) an offence is committed by every officer of the company who is in default.

      (4) A person guilty of an offence under subsection (3) 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.’.


Offences in connection with share warrants (Scotland)

Margaret Hodge

NC272

    To move the following Clause:—

      ‘(1) If in Scotland a person—

        (a) with intent to defraud, forges or alters, or offers, utters, disposes of, or puts off, knowing the same to be forged or altered, any share warrant or coupon, or any document purporting to be a share warrant or coupon issued in pursuance of this Act, or

        (b) by means of any such forged or altered share warrant, coupon or document—

          (i) demands or endeavours to obtain or receive any share or interest in a company under this Act, or

          (ii) demands or endeavours to receive any dividend or money payment in respect of any such share or interest,

        knowing the warrant, coupon or document to be forged or altered,

      he commits an offence.

      (2) If in Scotland a person without lawful authority or excuse (of which proof lies on him)—

        (a) engraves or makes on any plate, wood, stone, or other material, any share warrant or coupon purporting to be—

          (i) a share warrant or coupon issued or made by any particular company in pursuance of this Act, or

          (ii) a blank share warrant or coupon so issued or made, or

          (iii) a part of such a share warrant or coupon, or

        (b) uses any such plate, wood, stone, or other material, for the making or printing of any such share warrant or coupon, or of any such blank share warrant or coupon or of any part of such a share warrant or coupon, or

        (c) knowingly has in his custody or possession any such plate, wood, stone, or other material,

      he commits an offence.

      (3) A person guilty of an offence under subsection (1) is liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding level 5 on the standard scale (or both).

      (4) A person guilty of an offence under subsection (2) is liable—

        (a) on conviction on indictment, to imprisonment for a term not exceeding seven years or a fine (or both);

        (b) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum (or both).’.


Issue of certificates etc: court order to make good default

Margaret Hodge

NC273

    To move the following Clause:—

      ‘(1) If a company on which a notice has been served requiring it to make good any default in complying with—

        (a) section (Duty of company as to issue of certificates etc on allotment)(1) (duty of company as to issue of certificates etc on allotment),

        (b) section (Duty of company as to issue of certificates etc on transfer)(1) (duty of company as to issue of certificates etc on transfer), or

        (c) section (Duty of company as to issue of certificates etc on surrender of share warrant)(1) (duty of company as to issue of certificates etc on surrender of share warrant),

      fails to make good the default within ten days after service of the notice, the person entitled to have the certificates or the debentures delivered to him may apply to the court.

      (2) The court may on such an application make an order directing the company and any officer of it to make good the default within such time as may be specified in the order.

      (3) The order may provide that all costs (in Scotland, expenses) of and incidental to the application are to be borne by the company or by an officer of it responsible for the default.’.


Scope of this Chapter

Margaret Hodge

NC274

    To move the following Clause:—

      ‘In this Chapter—

        (a) “securities” means shares, debentures, debenture stock, loan stock, bonds, units of a collective investment scheme within the meaning of the Financial Services and Markets Act 2000 (c. 8) and other securities of any description;

        (b) references to title to securities include any legal or equitable interest in securities;

        (c) references to a transfer of title include a transfer by way of security;

        (d) references to transfer without a written instrument include, in relation to bearer securities, transfer without delivery.’.


Power to make regulations

Margaret Hodge

NC275

    To move the following Clause:—

      ‘(1) The power to make regulations under this Chapter is exercisable by the Treasury and the Secretary of State, either jointly or concurrently.

      (2) References in this Chapter to the authority having power to make regulations shall accordingly be read as references to both or either of them, as the case may require.

      (3) Regulations under this Chapter are subject to affirmative resolution procedure.’.


Provision enabling procedures for evidencing and transferring title

Margaret Hodge

NC276

    To move the following Clause:—

      ‘(1) Provision may be made by regulations for enabling title to securities to be evidenced and transferred without a written instrument.

      (2) The regulations may make provision—

        (a) for procedures for recording and transferring title to securities, and

        (b) for the regulation of those procedures and the persons responsible for or involved in their operation.

      (3) The regulations must contain such safeguards as appear to the authority making the regulations appropriate for the protection of investors and for ensuring that competition is not restricted, distorted or prevented.

      (4) The regulations may, for the purpose of enabling or facilitating the operation of the procedures provided for by the regulations, make provision with respect to the rights and obligations of persons in relation to securities dealt with under the procedures.

      (5) The regulations may include provision for the purpose of giving effect to—

        (a) the transmission of title to securities by operation of law;

        (b) any restriction on the transfer of title to securities arising by virtue of the provisions of any enactment or instrument, court order or agreement;

        (c) any power conferred by any such provision on a person to deal with securities on behalf of the person entitled.

      (6) The regulations may make provision with respect to the persons responsible for the operation of the procedures provided for by the regulations—

        (a) as to the consequences of their insolvency or incapacity, or

        (b) as to the transfer from them to other persons of their functions in relation to those procedures.’.


Provision requiring arrangements to be adopted

Margaret Hodge

NC277

    To move the following Clause:—

      ‘(1) Regulations under this Chapter may make provision—

        (a) enabling the members of a company or of any designated class of companies to adopt, by ordinary resolution, arrangements under which title to securities is required to be evidenced and transferred without a written instrument; or

        (b) requiring companies, or any designated class of companies, to adopt such arrangements.

      (2) The regulations may make such provision—

        (a) in respect of all securities issued by a company, or

        (b) in respect of all securities of a specified description.

      (3) The arrangements provided for by regulations making such provision as is mentioned in subsection (1) must not be such that a person who, but for the arrangements would be entitled—

        (a) to have his name entered in the company’s register of members, or

        (b) to give instructions in respect of any securities,

      ceases to be so entitled.

      (4) The regulations may—

        (a) prohibit the issue of any certificate by the company in respect of the issue or transfer of securities,

        (b) require the provision by the company to holders of securities of statements (at specified intervals or on specified occasions) of the securities held in their name, and

        (c) make provision as to the matters of which any such certificate or statement is, or is not, evidence.

      (5) In this section—

        (a) references to a designated class of companies are to a class designated in the regulations or by order under section (Provision requiring arrangements to be adopted: order-making powers); and

        (b) “specified” means specified in the regulations.’.


Provision requiring arrangements to be adopted: order-making powers

Margaret Hodge

NC278

    To move the following Clause:—

      ‘(1) The authority having power to make regulations under this Chapter may by order—

        (a) designate classes of companies for the purposes of section (Provision requiring arrangements to be adopted) (provision requiring arrangements to be adopted);

        (b) provide that, in relation to securities of a specified description—

          (i) in a designated class of companies, or

          (ii) in a specified company or class of companies,

        specified provisions of regulations made under this Chapter by virtue of that section either do not apply or apply subject to specified modifications.

      (2) In subsection (1) “specified” means specified in the order.

      (3) An order under this section is subject to negative resolution procedure.’.


Provision that may be included in regulations

Margaret Hodge

NC279

    To move the following Clause:—

      ‘Regulations under this Chapter may—

        (a) modify or exclude any provision of any enactment or instrument, or any rule of law;

        (b) apply, with such modifications as may be appropriate, the provisions of any enactment or instrument (including provisions creating criminal offences);

        (c) require the payment of fees, or enable persons to require the payment of fees, of such amounts as may be specified in the regulations or determined in accordance with them;

        (d) empower the authority making the regulations to delegate to any person willing and able to discharge them any functions of the authority under the regulations.’.


Duty to consult

Margaret Hodge

NC280

    To move the following Clause:—

      ‘Before making—

        (a) regulations under this Chapter, or

        (b) any order under section (Provision requiring arrangements to be adopted: order making powers),

      the authority having power to make regulations under this Chapter must carry out such consultation as appears to it to be appropriate.’.


Meaning of distribution

Margaret Hodge

NC281

    To move the following Clause:—

      ‘(1) In this Part “distribution” means every description of distribution of a company’s assets to its members, whether in cash or otherwise, subject to the following exceptions.

      (2) The following are not distributions for the purposes of this Part—

        (a) an issue of shares as fully or partly paid bonus shares;

        (b) the reduction of share capital—

          (i) by extinguishing or reducing the liability of any of the members on any of the company’s shares in respect of share capital not paid up, or

          (ii) by paying off paid up share capital;

        (c) the redemption or purchase of any of the company’s own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealised profits in accordance with Chapter (Redeemable shares) or (Purchase of own shares) of Part (Acquisition by limited company of its own shares);

        (d) a distribution of assets to members of the company on its winding up.’.


Distributions to be made only out of profits available for the purpose

Margaret Hodge

NC282

    To move the following Clause:—

      ‘(1) A company may only make a distribution out of profits available for the purpose.

      (2) A company’s profits available for distribution are its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital duly made.

      (3) Subsection (2) has effect subject to sections (Distributions by investment companies out of accumulated revenue profits) and (Power to extend provisions relating to investment companies) (investment companies etc: distributions out of accumulated revenue profits).’.


Net asset restriction on distributions by public companies

Margaret Hodge

NC283

    To move the following Clause:—

      ‘(1) A public company may only make a distribution—

        (a) if the amount of its net assets is not less than the aggregate of its called-up share capital and undistributable reserves, and

        (b) if, and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate.

      (2) For this purpose a company’s “net assets” means the aggregate of the company’s assets less the aggregate of its liabilities.

      (3) “Liabilities” here includes—

        (a) where the relevant accounts are Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 378;

        (b) where the relevant accounts are IAS accounts, provisions of any kind.

      (4) A company’s undistributable reserves are—

        (a) its share premium account;

        (b) its capital redemption reserve;

        (c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by capitalisation) exceed its accumulated, unrealised losses (so far as not previously written off in a reduction or reorganisation of capital duly made);

        (d) any other reserve that the company is prohibited from distributing—

          (i) by any enactment (other than one contained in this Part), or

          (ii) by its articles.

      The reference in paragraph (c) to capitalisation does not include a transfer of profits of the company to its capital redemption reserve.

      (5) A public company must not include any uncalled share capital as an asset in any accounts relevant for purposes of this section.

      (6) Subsection (1) has effect subject to sections (Distributions by investment companies out of accumulated revenue profits) and (Power to extend provisions relating to investment companies) (investment companies etc: distributions out of accumulated revenue profits).’.


 
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Prepared: 18 July 2006