| Company Law Reform Bill [Lords] - continued | House of Commons |
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Disapplication of pre-emption rights:private company with only one class of shares Margaret Hodge NC74 To move the following Clause:— ‘(1) The directors of a private company that has only one class of shares may be given power by the articles, or by a special resolution of the company, to allot equity securities of that class as if section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) did not apply to the allotment, or (b) applied to the allotment with such modifications as the directors may determine. (2) Where the directors make an allotment under this section, the provisions of this Chapter have effect accordingly.’. Disapplication of pre-emption rights:directors acting under general authorisation Margaret Hodge NC75 To move the following Clause:— ‘(1) Where the directors of a company are generally authorised for the purposes of section (Power of directors to allot shares etc: authorisation by company) (power of directors to allot shares etc: authorisation by company), they may be given power by the articles, or by a special resolution of the company, to allot equity securities pursuant to that authorisation as if section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) did not apply to the allotment, or (b) applied to the allotment with such modifications as the directors may determine. (2) Where the directors make an allotment under this section, the provisions of this Chapter have effect accordingly. (3) The power conferred by this section ceases to have effect when the authorisation to which it relates— (a) is revoked or (b) would (if not renewed) expire. But if the authorisation is renewed the power may also be renewed, for a period not longer than that for which the authorisation is renewed, by a special resolution of the company. (4) Notwithstanding that the power conferred by this section has expired, the directors may allot equity securities in pursuance of an offer or agreement previously made by the company if the power enabled the company to make an offer or agreement that would or might require equity securities to be allotted after it expired.’. Disapplication of pre-emption rights by special resolution Margaret Hodge NC76 To move the following Clause:— ‘(1) Where the directors of a company are authorised for the purposes of section (Power of directors to allot shares etc: authorisation by company) (power of directors to allot shares etc: authorisation by company), whether generally or otherwise, the company may by special resolution resolve that section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) does not apply to a specified allotment of equity securities to be made pursuant to that authorisation, or (b) applies to the allotment with such modifications as may be specified in the resolution. (2) Where such a resolution is passed the provisions of this Chapter have effect accordingly. (3) A special resolution under this section ceases to have effect when the authorisation to which it relates— (a) is revoked or (b) would (if not renewed) expire. But if the authorisation is renewed the resolution may also be renewed, for a period not longer than that for which the authorisation is renewed, by a special resolution of the company. (4) Notwithstanding that any such resolution has expired, the directors may allot equity securities in pursuance of an offer or agreement previously made by the company if the resolution enabled the company to make an offer or agreement that would or might require equity securities to be allotted after it expired. (5) A special resolution under this section, or a special resolution to renew such a resolution, must not be proposed unless— (a) it is recommended by the directors, and (b) the directors have complied with the following provisions. (6) Before such a resolution is proposed, the directors must make a written statement setting out— (a) their reasons for making the recommendation, (b) the amount to be paid to the company in respect of the equity securities to be allotted, and (c) the directors’ justification of that amount. (7) The directors’ statement must— (a) if the resolution is proposed as a written resolution, be sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him; (b) if the resolution is proposed at a general meeting, be circulated to the members entitled to notice of the meeting with that notice.’. Liability for false statement in directors’ statement Margaret Hodge NC77 To move the following Clause:— ‘(1) This section applies in relation to a directors’ statement under section (Disapplication of pre-emption rights by special resolution) (special resolution disapplying pre-emption rights) that is sent, submitted or circulated under subsection (7) of that section. (2) A person who knowingly or recklessly authorises or permits the inclusion of any matter that is misleading, false or deceptive in a material particular in such a statement commits an offence. (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 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).’. Disapplication of pre-emption rights: sale of treasury shares Margaret Hodge NC78 To move the following Clause:— ‘(1) This section applies in relation to a sale of shares that is an allotment of equity securities by virtue of section (Meaning of “equity securities” and related expressions)(2)(b) (sale of shares held by company as treasury shares). (2) The directors of a company may be given power by the articles, or by a special resolution of the company, to allot equity securities as if section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption)— (a) did not apply to the allotment, or (b) applied to the allotment with such modifications as the directors may determine. (3) The provisions of section (Disapplication of pre-emption rights:directors acting under general authorisation)(2) and (4) apply in that case as they apply to a case within subsection (1) of that section. (4) The company may by special resolution resolve that section (Existing shareholders’ right of pre-emption)— (a) shall not apply to a specified allotment of securities, or (b) shall apply to the allotment with such modifications as may be specified in the resolution. (5) The provisions of section (Disapplication of pre-emption rights by special resolution)(2) and (4) to (7) apply in that case as they apply to a case within subsection (1) of that section.’. References to holder of shares in relation to offer Margaret Hodge NC79 To move the following Clause:— ‘(1) In this Chapter, in relation to an offer to allot securities required by— (a) section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption), or (b) any provision to which section (Exclusion of pre-emption right: articles conferring corresponding right) applies (articles conferring corresponding right), a reference (however expressed) to the holder of shares of any description is to whoever was the holder of shares of that description at the close of business on a date to be specified in the offer. (2) The specified date must fall within the period of 28 days immediately before the date of the offer.’. Saving for other restrictions on offer or allotment Margaret Hodge NC80 To move the following Clause:— ‘(1) The provisions of this Chapter are without prejudice to any other enactment by virtue of which a company is prohibited (whether generally or in specified circumstances) from offering or alloting equity securities to any person. (2) Where a company cannot by virtue of such an enactment offer or allot equity securities to a holder of ordinary shares of the company, those shares are disregarded for the purposes of section (Existing shareholders’ right of pre-emption) (existing shareholders’ right of pre-emption), so that— (a) the person is not treated as a person who holds ordinary shares, and (b) the shares are not treated as forming part of the ordinary share capital of the company.’. Saving for certain older pre-emption requirements Margaret Hodge NC81 To move the following Clause:— ‘(1) In the case of a
public company the provisions of this Chapter do not apply to an allotment
of equity securities that are subject to a pre-emption requirement in
relation to which section 96(1) of the (2) In the case of a private
company a pre-emption requirement to which section 96(3) of the (3) A pre-emption requirement
to which section 96(4) of the Provisions about pre-emption not applicable to shares taken on formation Margaret Hodge NC82 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.’. Public companies: allotment where issue not fully subscribed Margaret Hodge NC83 To move the following Clause:— ‘(1) No allotment shall be made of shares of a public company offered for subscription unless— (a) the issue is subscribed for in full, or (b) the offer is made on terms that the shares subscribed for may be allotted— (i) in any event, or (ii) if specified conditions are met (and those conditions are met). (2) If shares are prohibited from being allotted by subsection (1) and 40 days have elapsed after the first making of the offer, all money received from applicants for shares must be repaid to them forthwith, without interest. (3) If any of the money is not
repaid within 48 days after the first making of the offer, the directors
of the company are jointly and severally liable to repay it, with interest
at the rate for the time being specified under section 17 of the A director is not so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part. (4) This section applies in the case of shares offered as wholly or partly payable otherwise than in cash as it applies in the case of shares offered for subscription. (5) In that case— (a) the references in subsection (1) to subscription shall be construed accordingly; (b) references in subsections (2) and (3) to the repayment of money received from applicants for shares include— (i) the return of any other consideration so received (including, if the case so requires, the release of the applicant from any undertaking), or (ii) if it is not reasonably practicable to return the consideration, the payment of money equal to its value at the time it was so received; (c) references to interest apply accordingly. (6) Any condition requiring or binding an applicant for shares to waive compliance with any requirement of this section is void.’. Public companies: effect of irregular allotment where issue not fully subscribed Margaret Hodge NC84 To move the following Clause:— ‘(1) An allotment made by a public company to an applicant in contravention of section (Public companies: allotment where issue not fully subscribed) (public companies: allotment where issue not fully subscribed) is voidable at the instance of the applicant within one month after the date of the allotment, and not later. (2) It is so voidable even if the company is in the course of being wound up. (3) A director of a public company who knowingly contravenes, or permits or authorises the contravention of, any provision of section (Public companies: allotment where issue not fully subscribed) with respect to allotment is liable to compensate the company and the allottee respectively for any loss, damages, costs or expenses that the company or allottee may have sustained or incurred by the contravention. (4) Proceedings to recover any such loss, damages, costs or expenses may not be brought more than two years after the date of the allotment.’. Shares not to be allotted at a discount Margaret Hodge NC85 To move the following Clause:— ‘(1) A company’s shares must not be allotted at a discount. (2) If shares are allotted in contravention of this section, the allottee is liable to pay the company an amount equal to the amount of the discount, with interest at the appropriate rate.’. Provision for different amounts to be paid on shares Margaret Hodge NC86 To move the following Clause:— A company, if so authorised by its articles, may— (a) make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares; (b) accept from any member the whole or part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up; (c) pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.’. General rule as to means of payment Margaret Hodge NC87 To move the following Clause:— ‘(1) Shares allotted by a company, and any premium on them, may be paid up in money or money’s worth (including goodwill and know-how). (2) This section does not prevent a company— (a) from allotting bonus shares to its members, or (b) from paying up, with sums available for the purpose, any amounts for the time being unpaid on any of its shares (whether on account of the nominal value of the shares or by way of premium). (3) This section has effect subject to the following provisions of this Chapter (additional rules for public companies).’. Meaning of payment in cash Margaret Hodge NC88 To move the following Clause:— ‘(1) The following provisions have effect for the purposes of the Companies Acts. (2) A share in a company is deemed paid up (as to its nominal value or any premium on it) in cash, or allotted for cash, if the consideration received for the allotment or payment up is— (a) cash received by the company, (b) a cheque reeived by the company in good faith that the directors have no reason for suspecting will not be paid, (c) a release of a liability of the company for a liquidated sum, or (d) an undertaking to pay cash to the company at a future date. (3) In relation to the allotment or payment up of shares in a company— (a) the payment of cash to a person other than the company, or (b) an undertaking to pay cash to a person other than the company, counts as consideration other than cash. This does not apply for the purposes of Chapter (allotment of equity securities: existing shareholders’ right of pre-emption) (allotment of equity securities: existing shareholders’ right of pre-emption). (4) For the purpose of determining whether a share is or is to be allotted for cash, or paid up in cash, “cash includes foreign currency.’. Public companies: shares taken by subscribers of memorandum Margaret Hodge NC89 To move the following Clause:— ‘Shares taken by a subscriber to the memorandum of a public company in pursuance of an undertaking of his in the memorandum, and any premium on the shares, must be paid up in cash.’. Public companies: must not accept undertaking to do work or perform services Margaret Hodge NC90 To move the following Clause:— ‘(1) A public company must not accept at any time, in payment up of its shares or any premium on them, an undertaking given by any person that he or another should do work or perform services for the company or any other person. (2) If a public company accepts such an undertaking in payment up of its shares or any premium on them, the holder of the shares when they or the premium are treated as paid up (in whole or in part) by the undertaking is liable— (a) to pay the company in respect of those shares an amount equal to their nominal value, together with the whole of any premium or, if the case so requires, such proportion of that amount as is treated as paid up by the undertaking; and (b) to pay interest at the appropriate rate on the amount payable under paragraph (a). (3) The reference in subsection (2) to the holder of shares includes a person who has an unconditional right— (a) to be included in the company’s register of members in respect of those shares, or (b) to have an instrument of transfer of them executed in his favour.’. Public companies: shares must be at least one-quarter paid up Margaret Hodge NC91 To move the following Clause:— ‘(1) A public company must not allot a share except as paid up at least as to one-quarter of its nominal value and the whole of any premium on it. (2) This does not apply to shares allotted in pursuance of an employees’ share scheme. (3) If a company allots a share in contravention of this section— (a) the share is to be treated as if one-quarter of its nominal value, together with the whole of any premium on it, had been received, and (b) the allottee is liable to pay the company the minimum amount which should have been received in respect of the share under subsection (1) (less the value of any consideration actually applied in payment up, to any extent, of the share and any premium on it), with interest at the appropriate rate. (4) Subsection (3) does not apply to the allotment of bonus shares, unless the allottee knew or ought to have known the shares were allotted in contravention of this section.’. Public companies: payment by long-term undertaking Margaret Hodge NC92 To move the following Clause:— ‘(1) A public company must not allot shares as fully or partly paid up (as to their nominal value or any premium on them) otherwise than in cash if the consideration for the allotment is or includes an undertaking which is to be, or may be, performed more than five years after the date of the allotment. (2) If a company allots shares in contravention of subsection (1), the allottee is liable to pay the company an amount equal to the aggregate of their nominal value and the whole of any premium (or, if the case so requires, so much of that aggregate as is treated as paid up by the undertaking), with interest at the appropriate rate. (3) Where a contract for the allotment of shares does not contravene subsection (1), any variation of the contract that has the effect that the contract would have contravened the subsection, if the terms of the contract as varied had been its original terms, is void. This applies also to the variation by a public company of the terms of a contract entered into before the company was re-registered as a public company. (4) Where— (a) a public company allots shares for a consideration which consists of or includes (in accordance with subsection (1)) an undertaking that is to be performed within five years of the allotment, and (b) the undertaking is not performed within the period allowed by the contract for the allotment of the shares, the allottee is liable to pay the company, at the end of the period so allowed, an amount equal to the aggregate of the nominal value of the shares and the whole of any premium (or, if the case so requires, so much of that aggregate as is treated as paid up by the undertaking), with interest at the appropriate rate. (5) References in this section to a contract for the allotment of shares include an ancillary contract relating to payment in respect of them.’. |
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| © Parliamentary copyright 2006 | Prepared: 20 July 2006 |