| Company Law Reform Bill [Lords] - continued | House of Commons |
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Realised profits and losses of long term insurance business Margaret Hodge NC295 To move the following Clause:— ‘(1) The provisions of this section have effect for the purposes of this Part as it applies in relation to an authorised insurance company carrying on long term business. (2) An amount included in the relevant part of the company’s balance sheet that— (a) represents a surplus in the fund or funds maintained by it in respect of its long term business, and (b) has not been allocated to
policy holders or, as the case may be, carried forward unappropriated
in accordance with asset identification rules made under section 142(2)
of the is treated as a realised profit. (3) For the purposes of subsection (2)— (a) the relevant part of the balance sheet is that part of the balance sheet that represents accumulated profit or loss; (b) a surplus in the fund or funds maintained by the company in respect of its long term business means an excess of the assets representing that fund or those funds over the liabilities of the company attributable to its long term business, as shown by an actuarial investigation. (4) A deficit in the fund or funds maintained by the company in respect of its long term business is treated as a realised loss. For this purpose a deficit in any such fund or funds means an excess of the liabilities of the company attributable to its long term business over the assets representing that fund or those funds, as shown by an actuarial investigation. (5) Subject to subsections (2) and (4), any profit or loss arising in the company’s long term business is to be left out of account. (6) For the purposes of this section an “actuarial investigation” means an investigation made into the financial condition of an authorised insurance company in respect of its long term business— (a) carried out once in every
period of twelve months in accordance with rules made under Part 10
of the (b) carried out in accordance with a requirement imposed under section 166 of that Act,] by an actuary appointed as actuary to the company. (7) In this section “long term business” means business that consists of effecting or carrying out contracts of long term insurance. This definition must be read with section 22 of the Treatment of development costs Margaret Hodge NC296 To move the following Clause:— ‘(1) Where development costs are shown as an asset in a company’s accounts, any amount shown in respect of those costs is treated— (a) for the purposes of section (Distributions to be made only out of profits available for the purpose) (distributions to be made out of profits available for the purpose) as a realised loss, and (b) for the purposes of section (Distributions by investment companies out of accumulated revenue profits) (distributions by investment companies out of accumulated revenue profits) as a realised revenue loss. This is subject to the following exceptions. (2) Subsection (1) does not apply to any part of that amount representing an unrealised profit made on revaluation of those costs. (3) Subsection (1) does not apply if— (a) there are special circumstances in the company’s case justifying the directors in deciding that the amount there mentioned is not to be treated as required by subsection (1), (b) it is stated— (i) in the case of Companies Act accounts, in the note required by regulations under section 378 as to the reasons for showing development costs as an asset, or (ii) in the case of IAS accounts, in any note to the accounts, that the amount is not to be so treated, and (c) the note explains the circumstances relied upon to justify the decision of the directors to that effect.’. Distributions in kind: determination of amount Margaret Hodge NC297 To move the following Clause:— ‘(1) This section applies for determining the amount of a distribution consisting of or including, or treated as arising in consequence of, the sale, transfer or other disposition by a company of a non-cash asset where— (a) at the time of the distribution the company has profits available for distribution, and (b) if the amount of the distribution were to be determined in accordance with this section, the company could make the distribution without contravening this Part. (2) The amount of the distribution (or the relevant part of it) is taken to be— (a) in a case where the amount or value of the consideration for the disposal is not less than the book value of the asset, zero; (b) in any other case, the amount by which the book value of the asset exceeds the amount or value of any consideration for the disposal. (3) The company’s profits available for distribution are treated as increased by the amount (if any) by which the amount or value of any consideration for the disposition exceeds the book value of the asset. (4) In this section “book value”, in relation to an asset, means— (a) the amount at which the asset is stated in the relevant accounts, or (b) where the asset is not stated in those accounts at any amount, zero. (5) The provisions of Chapter (Justification of distribution by reference to accounts) (justification of distribution by reference to accounts) have effect subject to this section.’. Distributions in kind: treatment of unrealised profits Margaret Hodge NC298 To move the following Clause:— ‘(1) This section applies where— (a) a company makes a distribution consisting of or including, or treated as arising in consequence of, the sale, transfer or other disposition by the company of a non-cash asset, and (b) any part of the amount at which that asset is stated in the relevant accounts represents an unrealised profit. (2) That profit is treated as a realised profit— (a) for the purpose of determining the lawfulness of the distribution in accordance with this Part (whether before or after the distribution takes place), and (b) for the purpose of the application, in relation to anything done with a view to or in connection with the making of the distribution, of any provision of regulations under section 378 under which only realised profits are to be included in or transferred to the profit and loss account.’. Consequences of unlawful distribution Margaret Hodge NC299 To move the following Clause:— ‘(1) This section applies where a distribution, or part of one, made by a company to one of its members is made in contravention of this Part. (2) If at the time of the distribution the member knows or has reasonable grounds for believing that it is so made, he is liable— (a) to repay it (or that part of it, as the case may be) to the company, or (b) in the case of a distribution made otherwise than in cash, to pay the company a sum equal to the value of the distribution (or part) at that time. (3) This is without prejudice to any obligation imposed apart from this section on a member of a company to repay a distribution unlawfully made to him. (4) This section does not apply in relation to— (a) financial assistance given by a company in contravention of section (Assistance for acquisition of shares in public company) or (Assistance by public company for acquisition of shares in its private holding company), or (b) any payment made by a company in respect of the redemption or purchase by the company of shares in itself. Saving for certain older provisions in articles Margaret Hodge NC300 To move the following Clause:— ‘(1) Where immediately before the relevant date a company was authorised by a provision of its articles to apply its unrealised profits in paying up in full or in part unissued shares to be allotted to members of the company as fully or partly paid bonus shares, that provision continues (subject to any alteration of the articles) as authority for those profits to be so applied after that date. (2) For this purpose the relevant date is— (a) for companies registered in Great Britain, 22nd December 1980; (b) for companies registered in Northern Ireland, 1st July 1983.’. Restriction on application of unrealised profits Margaret Hodge NC301 To move the following Clause:— ‘A company must not apply an unrealised profit in paying up debentures or any amounts unpaid on its issued shares.’. Treatment of certain older profits or losses Margaret Hodge NC302 To move the following Clause:— ‘(1) Where the directors of a company are, after making all reasonable enquiries, unable to determine whether a particular profit made before the relevant date is realised or unrealised, they may treat the profit as realised. (2) Where the directors of a company, after making all reasonable enquiries, are unable to determine whether a particular loss made before the relevant date is realised or unrealised, they may treat the loss as unrealised. (3) For the purposes of this section the relevant date is— (a) for companies registered in Great Britain, 22nd December 1980; (b) for companies registered in Northern Ireland, 1st July 1983.’. Application of rules of law restricting distributions Margaret Hodge NC303 To move the following Clause:— ‘(1) Except as provided in this section, the provisions of this Part are without prejudice to any rule of law restricting the sums out of which, or the cases in which, a distribution may be made. (a) section (Distributions in kind: determination of amount) (distributions in kind: determination of amount) applies to determine the amount of any distribution or return of capital consisting of or including, or treated as arising in consequence of the sale, transfer or other disposition by a company of a non-cash asset; and (b) section (Distributions in kind: treatment of unrealised profits) (distributions in kind: treatment of unrealised profits) applies as it applies for the purposes of this Part. (3) In this section references to distributions are to amounts regarded as distributions for the purposes of any such rule of law as is referred to in subsection (1).’. Saving for other restrictions on distributions Margaret Hodge NC304 To move the following Clause:— ‘The provisions of this Part are without prejudice to any enactment, or any provision of a company’s articles, restricting the sums out of which, or the cases in which, a distribution may be made.’. Minor definitions Margaret Hodge NC305 To move the following Clause:— ‘(1) The following provisions apply for the purposes of this Part. (2) References to profit or losses of any description— (a) are to profits or losses of that description made at any time, and (b) except where the context otherwise requires, are to profits or losses of a revenue or capital character. (3) “Capitalisation”, in relation to a company’s profits, means any of the following operations (whenever carried out)— (a) applying the profits in wholly or partly paying up unissued shares in the company to be allotted to members of the company as fully or partly paid bonus shares, or (b) transferring the profits to capital redemption reserve. (4) References to “realised profits” and “realised losses”, in relation to a company’s accounts, are to such profits or losses of the company as fall to be treated as realised in accordance with principles generally accepted at the time when the accounts are prepared, with respect to the determination for accounting purposes of realised profits or losses. (5) Subsection (4) is without prejudice to— (a) the construction of any other expression (where appropriate) by reference to accepted accounting principles or practice, or (b) any specific provision for the treatment of profits or losses of any description as realised.’. General power to make further provision by regulations Margaret Hodge NC306 To move the following Clause:— ‘(1) The Secretary of State may by regulations modify the provisions of this Part. (2) The regulations may— (a) amend or repeal any of the provisions of this Part, or (b) make such other provision as appears to the Secretary of State appropriate in place of any of the provisions of this Part. (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.’. Charges created by a company Margaret Hodge NC307 To move the following Clause:— ‘(1) A company that creates a charge to which this section applies must deliver the prescribed particulars of the charge, together with the instrument (if any) by which the charge is created or evidenced, to the registrar for registration before the end of the period allowed for registration. (2) Registration of a charge to which this section applies may instead be effected on the application of a person interested in it. (3) Where registration is effected on the application of some person other than the company, that person is entitled to recover from the company the amount of any fees properly paid by him to the registrar on registration. (4) If a company fails to comply with subsection (1), an offence is committed by— (a) the company, and (b) every officer of it 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. (6) Subsection (4) does not apply if registration of the charge has been effected on the application of some other person. (7) This section applies to the following charges— (a) a charge on land or any interest in land, other than a charge for any rent or other periodical sum issuing out of land, (b) a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale, (c) a charge for the purposes of securing any issue of debentures, (d) a charge on uncalled share capital of the company, (e) a charge on calls made but not paid, (f) a charge on book debts of the company, (g) a floating charge on the company’s property or undertaking, (h) a charge on a ship or aircraft, or any share in a ship, (i) a charge on goodwill or on any intellectual property.’. Charges which have to be registered: supplementary Margaret Hodge NC308 To move the following Clause:— ‘(1) The holding of debentures entitling the holder to a charge on land is not, for the purposes of section (Charges created by a company)(7)(a), an interest in the land. (2) It is immaterial for the purposes of this Chapter where land subject to a charge is situated. (3) The deposit by way of security of a negotiable instrument given to secure the payment of book debts is not, for the purposes of section (Charges created by a company)(7)(f), a charge on those book debts. (4) For the purposes of section (Charges created by a company)(7)(i), “intellectual property” means— (a) any patent, trade mark, registered design, copyright or design right; (b) any licence under or in respect of any such right. (5) In this Chapter— “charge” includes mortgage, and “company” means a company registered in England and Wales or in Northern Ireland.’. Charges existing on property acquired Margaret Hodge NC309 To move the following Clause:— ‘(1) This section applies where a company acquires property which is subject to a charge of a kind which would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Chapter. (2) The company must deliver the prescribed particulars of the charge, together with a certified copy of the instrument (if any) by which the charge is created or evidenced, to the registrar for registration. (3) Subsection (2) must be complied with before the end of the period allowed for registration. (4) If default is made in complying with this section, an offence is committed by— (a) the company, and (b) every officer of it 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.’. Charge in series of debentures Margaret Hodge NC310 To move the following Clause:— ‘(1) Where a series of debentures containing, or giving by reference to another instrument, any charge to the benefit of which debenture holders of that series are entitled pari passu is created by a company, it is for the purposes of section (Charges created by a company)(1) sufficient if the required particulars, together with the deed containing the charge (or, if there is no such deed, one of the debentures of the series), are delivered to the registrar before the end of the period allowed for registration. (2) The following are the required particulars— (a) the total amount secured by the whole series, and (b) the dates of the resolutions authorising the issue of the series and the date of the covering deed (if any) by which the series is created or defined, and (c) a general description of the property charged, and (d) the names of the trustees (if any) for the debenture holders. (3) Particulars of the date and amount of each issue of debentures of a series of the kind mentioned in subsection (1) must be sent to the registrar for entry in the register of charges. (4) Failure to comply with subsection (3) does not affect the validity of the debentures issued. (5) Subsections (2) to (6) of section (Charges created by a company) apply for the purposes of this section as they apply for the purposes of that section, but as if references to the registration of the charge were a reference to the registration of the series of debentures.’. Additional registration requirement for commission etc. in relation to debentures Margaret Hodge NC311 To move the following Clause:— ‘(1) Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to a person in consideration of his— (a) subscribing or agreeing to subscribe, whether absolutely or conditionally, for debentures in a company, or (b) procuring or agreeing to procure subscriptions, whether absolute or conditional, for such debentures, the particulars required to be sent for registration under section (Charges created by a company) shall include particulars as to the amount or rate per cent. of the commission, discount or allowance so paid or made. (2) The deposit of debentures as security for a debt of the company is not, for the purposes of this section, treated as the issue of debentures at a discount. (3) Failure to comply with this section does not affect the validity of the debentures issued.’. Endorsement of certificate on debentures Margaret Hodge NC312 To move the following Clause:— ‘(1) The company shall cause a copy of every certificate of registration given under section (Register of charges to be kept by registrar) to be endorsed on every debenture or certificate of debenture stock which is issued by the company, and the payment of which is secured by the charge so registered. (2) But this does not require a company to cause a certificate of registration of any charge so given to be endorsed on any debenture or certificate of debenture stock issued by the company before the charge was created. (3) If a person knowingly and wilfully authorises or permits the delivery of a debenture or certificate of debenture stock which under this section is required to have endorsed on it a copy of a certificate of registration, without the copy being so endorsed upon it, he commits an offence. (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.’. |
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| © Parliamentary copyright 2006 | Prepared: 18 July 2006 |