| Company Law Reform Bill [Lords] - continued | House of Commons |
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Agreement for transfer of non-cash asset: requirement of approval by members Margaret Hodge NC106 To move the following Clause:— ‘(1) The following conditions must have been complied with— (a) the terms of the agreement must have been approved by an ordinary resolution of the company, (b) the requirements of this section must have been complied with as respects the circulation to members of copies of the valuer’s report under section (Agreement for transfer of non-cash asset: requirement of independent valuation), and (c) a copy of the proposed resolution must have been sent to the other party to the proposed agreement. (2) The reference in subsection (1)(c) to the other party to the proposed agreement is to the person referred to in section (Public company: agreement for transfer of non-cash asset in initial period)(1)(a). (3) The requirements of this section as to circulation of copies of the valuer’s report are as follows— (a) if the resolution is proposed as a written resolution, copies of the valuer’s report must 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, copies of the valuer’s report must be circulated to the members entitled to notice of the meeting not later than the date on which notice of the meeting is given.’. Copy of resolution to be delivered to registrar Margaret Hodge NC107 To move the following Clause:— ‘(1) A company that has passed a resolution under section (Agreement for transfer of non-cash asset: requirement of approval by members) with respect to the transfer of an asset must, within 15 days of doing so, deliver to the registrar a copy of the resolution together with the valuer’s report required by that section. (2) If a company fails to comply with subsection (1), an offence is committed by— (a) the company, and (b) every officer of the company who is in default. (3) 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.’. Adaptation of provisions in relation to company re-registering as public Margaret Hodge NC108 To move the following Clause:— ‘The provisions of sections (Public company: agreement for transfer of non-cash asset in initial period) to (Copy of resolution to be delivered to registrar) (public companies: transfer of non-cash assets) apply with the following adaptations in relation to a company re-registered as a public company— (a) the reference in section (Public company: agreement for transfer of non-cash asset in initial period)(1)(a) to a person who is a subscriber to the company’s memorandum shall be read as a reference to a person who is a member of the company on the date of re-registration; (b) the reference in section (Public company: agreement for transfer of non-cash asset in initial period)(2) to the date of the company being issued with a certificate under section (Public company: requirement as to minimum share capital) (trading certificate) shall be read as a reference to the date of re-registration.’. Agreement for transfer of non-cash asset: effect of contravention Margaret Hodge NC109 To move the following Clause:— ‘(1) This section applies where a public company enters into an agreement in contravention of section (Public company: agreement for transfer of non-cash asset in initial period) and either— (a) the other party to the agreement has not received the valuer’s report required to be sent to him, or (b) there has been some other contravention of the requirements of this Chapter that the other party to the agreement knew or ought to have known amounted to a contravention. (2) In those circumstances— (a) the company is entitled to recover from that person any consideration given by it under the agreement, or an amount equal to the value of the consideration at the time of the agreement, and (b) the agreement, so far as not carried out, is void. (3) If the agreement is or includes an agreement for the allotment of shares in the company, then— (a) whether or not the agreement also contravenes section (Public company: valuation of non-cash consideration for shares) (valuation of non-cash consideration for shares), this section does not apply to it in so far as it is for the allotment of shares, and (b) the allottee is liable to pay the company 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 consideration), with interest at the appropriate rate.’. Liability of subsequent holders of shares Margaret Hodge NC110 To move the following Clause:— ‘(1) If a person becomes a holder of shares in respect of which— (a) there has been a contravention of section (Public company: valuation of non-cash consideration for shares) (public company: valuation of non-cash consideration for shares), and (b) by virtue of that contravention another is liable to pay any amount under the provision contravened, that person is also liable to pay that amount (jointly and severally with any other person so liable), unless he is exempted from liability under subsection (3) below. (2) If a company enters into an agreement in contravention of section (Public company: agreement for transfer of non-cash asset in initial period) and— (a) the agreement is or includes an agreement for the allotment of shares in the company, (b) a person becomes a holder of shares allotted under the agreement, and (c) by virtue of the agreement and allotment under it another person is liable to pay an amount under section (Agreement for transfer of non-cash asset: effect of contravention), the person who becomes the holder of the shares is also liable to pay that amount (jointly and severally with any other person so liable), unless he is exempted from liability under subsection (3) below. This applies whether or not the agreement also contravenes section (Public company: valuation of non-cash consideration for shares). (3) A person otherwise liable under subsection (1) or (2) is exempted from that liability if either— (a) he is a purchaser for value and, at the time of the purchase, he did not have actual notice of the contravention concerned, or (b) he derived title to the shares (directly or indirectly) from a person who became a holder of them after the contravention and was not liable under subsection (1). (4) References in this section to a holder, in relation to shares in a company, include any 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 the shares executed in his favour.’. Power of court to grant relief Margaret Hodge NC111 To move the following Clause:— ‘(1) A person who— (a) is liable to a company under any provision of this Chapter in relation to payment in respect of any shares in the company, or (b) is liable to a company by virtue of an undertaking given to it in, or in connection with, payment for any shares in the company, may apply to the court to be exempted in whole or in part from the liability. (2) In the case of a liability within subsection (1)(a), the court may exempt the applicant from the liability only if and to the extent that it appears to the court just and equitable to do so having regard to— (a) whether the applicant has paid, or is liable to pay, any amount in respect of— (i) any other liability arising in relation to those shares under any provision of this Chapter, or (ii) any liability arising by virtue of any undertaking given in or in connection with payment for those shares; (b) whether any person other than the applicant has paid or is likely to pay, whether in pursuance of any order of the court or otherwise, any such amount; (c) whether the applicant or any other person— (i) has performed in whole or in part, or is likely so to perform any such undertaking, or (ii) has done or is likely to do any other thing in payment or part payment for the shares. (3) In the case of a liability within subsection (1)(b), the court may exempt the applicant from the liability only if and to the extent that it appears to the court just and equitable to do so having regard to— (a) whether the applicant has paid or is liable to pay any amount in respect of liability arising in relation to the shares under any provision of this Chapter; (b) whether any person other than the applicant has paid or is likely to pay, whether in pursuance of any order of the court or otherwise, any such amount. (4) In determining whether it should exempt the applicant in whole or in part from any liability, the court must have regard to the following overriding principles— (a) that a company that has allotted shares should receive money or money’s worth at least equal in value to the aggregate of the nominal value of those shares and the whole of any premium or, if the case so requires, so much of that aggregate as is treated as paid up; (b) subject to this, that where such a company would, if the court did not grant the exemption, have more than one remedy against a particular person, it should be for the company to decide which remedy it should remain entitled to pursue. (5) If a person brings proceedings against another (“the contributor”) for a contribution in respect of liability to a company arising under any provision of this Chapter and it appears to the court that the contributor is liable to make such a contribution, the court may, if and to the extent that it appears to it, just and equitable to do so having regard to the respective culpability (in respect of the liability to the company) of the contributor and the person bringing the proceedings— (a) exempt the contributor in whole or in part from his liability to make such a contribution, or (b) order the contributor to make a larger contribution than, but for this subsection, he would be liable to make. (6) Where a person is liable to a company under section (Agreement for transfer of non-cash asset: effect of contravention)(2) (agreement for transfer of non-cash asset: effect of contravention), the court may, on application, exempt him in whole or in part from that liability if and to the extent that it appears to the court to be just and equitable to do so having regard to any benefit accruing to the company by virtue of anything done by him towards the carrying out of the agreement mentioned in that subsection.’. Penalty for contravention of this Chapter Margaret Hodge NC112 To move the following Clause:— ‘(1) This section applies where a company contravenes—— section (Public company: valuation of non-cash consideration for shares) (public company allotting shares for non-cash consideration), or section (Public company: agreement for transfer of non-cash asset in initial period) (public company entering into agreement for transfer of non-cash asset). (2) An offence is committed by— (a) the company, and (b) every officer of the company who is in default. (3) 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.’. Enforceability of undertakings to do work etc Margaret Hodge NC113 To move the following Clause:— ‘(1) An undertaking given by any person, in or in connection with payment for shares in a company, to do work or perform services or to do any other thing, if it is enforceable by the company apart from this Chapter, is so enforceable notwithstanding that there has been a contravention in relation to it of a provision of this Chapter. (2) This is without prejudice to section (Power of court to grant relief) (power of court to grant relief etc in respect of liabilities).’. The appropriate rate of interest Margaret Hodge NC114 To move the following Clause:— ‘(1) For the purposes of this Chapter the “appropriate rate” of interest is 5% per annum or such other rate as may be specified by order made by the Secretary of State. (2) An order under this section is subject to negative resolution procedure.’. Application of share premiums Margaret Hodge NC115 To move the following Clause:— ‘(1) If a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares must be transferred to an account called “the share premium account”. (2) Where, on issuing shares, a company has transferred a sum to the share premium account, it may use that sum to write off— (a) the expenses of the issue of those shares; (b) any commission paid on the issue of those shares. (3) The company may use the share premium account to pay up new shares to be allotted to members as fully paid bonus shares. (4) Subject to subsections (2) and (3), the provisions of the Companies Acts relating to the reduction of a company’s share capital apply as if the share premium account were part of its paid-up share capital. (5) This section has effect subject to— section (Group reconstruction relief) (group reconstruction relief); section (Merger relief) (merger relief); section (Power to make further provision by regulations) (power to make further provisions by regulations). (6) In this Chapter “the issuing company” means the company issuing shares as mentioned in subsection (1) above.’. Group reconstruction relief Margaret Hodge NC116 To move the following Clause:— ‘(1) This section applies where the issuing company— (a) is a wholly owned subsidiary of another company (“the holding company”), and (b) allots shares— (i) to the holding company or (ii) to another wholly-owned subsidiary of the holding company, in consideration for the transfer to the issuing company of non-cash assets of a company (“the transferor company”) that is a member of the group of companies that comprises the holding company and all its wholly-owned subsidiaries. (2) Where the shares in the issuing company allotted in consideration for the transfer are issued at a premium, the issuing company is not required by section (Application of share premiums) to transfer any amount in excess of the minimum premium value to the share premium account. (3) The minimum premium value means the amount (if any) by which the base value of the consideration for the shares allotted exceeds the aggregate nominal value of the shares. (4) The base value of the consideration for the shares allotted is the amount by which the base value of the assets transferred exceeds the base value of any liabilities of the transferor company assumed by the issuing company as part of the consideration for the assets transferred. (5) For the purposes of this section— (a) the base value of assets transferred is taken as— (i) the cost of those assets to the transferor company, or (ii) if less, the amount at which those assets are stated in the transferor company’s accounting records immediately before the transfer; (b) the base value of the liabilities assumed is taken as the amount at which they are stated in the transferor company’s accounting records immediately before the transfer.’. Merger relief Margaret Hodge NC117 To move the following Clause:— ‘(1) This section applies where the issuing company has secured at least a 90% equity holding in another company in pursuance of an arrangement providing for the allotment of equity shares in the issuing company on terms that the consideration for the shares allotted is to be provided— (a) by the issue or transfer to the issuing company of equity shares in the other company, or (b) by the cancellation of any such shares not held by the issuing company. (2) If the equity shares in the issuing company allotted in pursuance of the arrangment in consideration for the acquisition or cancellation of equity shares in the other company are issued at a premium, section (Application of share premiums) does not apply to the premiums on those shares. (3) Where the arrangement also provides for the allotment of any shares in the issuing company on terms that the consideration for those shares is to be provided— (a) by the issue or transfer to the issuing company of non-equity shares in the other company, or (b) by the cancellation of any such shares in that company not held by the issuing company, relief under subsection (2) extends to any shares in the issuing company allotted on those terms in pursuance of the arrangement. (4) This section does not apply in a case falling within section (Group reconstruction relief) (group reconstruction relief).’. Merger relief: meaning of 90% equity holding Margaret Hodge NC118 To move the following Clause:— ‘(1) The following provisions have effect to determine for the purposes of section (Merger relief) (merger relief) whether a company (“company A”) has secured a 90% equity holding in another company (“company B”) in pursuance of such an arrangement as is mentioned in subsection (1) of that section. (2) Company A has a 90% equity holding in company B if in consequence of an acquisition or cancellation of equity shares in company B (in pursuance of that arrangement) it holds equity shares in company B of an aggregate amount equal to 90% or more of the nominal value of that company’s equity share capital. (3) For this purpose— (a) it is immaterial whether any of those shares were acquired in pursuance of the arrangement; and (b) shares in company B held by the company as treasury shares are excluded in determining the nominal value of company B’s share capital. (4) Where the equity share capital of company B is divided into different classes of shares, company A is not regarded as having a 90% equity holding in company B unless the requirements of subsection (2) are met in relation to each of those classes of shares taken separately. (5) For the purposes of this section shares held by— (a) a company that is company A’s holding company or subsidiary, or (b) a subsidiary of company A’s holding company, or (c) its or their nominees, are treated as held by company A.’. Power to make further provision by regulations Margaret Hodge NC119 To move the following Clause:— ‘(1) The Secretary of State may by regulations make such provision as he thinks appropriate— (a) for relieving companies from the requirements of section (Application of share premiums) (application of share premiums) in relation to premiums other than cash premiums; (b) for restricting or otherwise modifying any relief from those requirements provided by this Chapter. (2) Regulations under this section are subject to affirmative resolution procedure.’. Relief may be reflected in company’s balance sheet Margaret Hodge NC120 To move the following Clause:— ‘An amount corresponding to the amount representing the premiums, or part of the premiums, on shares issued by a company that by virtue of any relief under this Chapter is not included in the company’s share premium account may also be disregarded in determining the amount at which any shares or other consideration provided for the shares issued is to be included in the company’s balance sheet.’ Interpretation of this Chapter Margaret Hodge NC121 To move the following Clause:— ‘(1) In this Chapter— “arrangement” means any agreement, scheme or arrangement (including an arrangement sanctioned in accordance with— (e) Part (Arrangements and reconstructions) (arrangements and reconstructions), or (f) section 110 of the “company”, except in reference to the issuing company, includes any body corporate; “equity shares” means shares comprised in a company’s equity share capital, and “non-equity shares” means shares (of any class) that are not so comprised; “the issuing company” has the meaning given by section (Application of share premiums)(6). (2) References in this Chapter (however expressed) to— (a) the acquisition by a company of shares in another company, and (b) the issue or allotment of shares to, or the transfer of shares to or by, a company, include (respectively) the acquisition of shares by, and the issue or allotment or transfer of shares to or by, a nominee of that company. The reference in section (Group reconstruction relief) to the transferor company shall be read accordingly. (3) References in this Chapter to the transfer of shares in a company include the transfer of a right to be included in the company’s register of members in respect of those shares.’. |
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| © Parliamentary copyright 2006 | Prepared: 20 July 2006 |