House of Commons - Amendments

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

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Alteration of share capital of limited company

Margaret Hodge

NC122

To move the following Clause:—

‘(1) A limited company having a share capital may not alter its share capital except in the following ways.

(2) The company may—

(a) increase its share capital by allotting new shares in accordance with this Part, or

(b) reduce its share capital in accordance with Chapter (Reduction of share capital) of this Part.

(3) The company may—

(a) sub-divide or consolidate all or any of its share capital in accordance with section (Sub-division or consolidation of shares), or

(b) reconvert stock into shares in accordance with section (Re-conversion of stock into shares).

(4) The company may redenominate all or any of its shares in accordance with section (Redenomination of share capital) and may reduce its share capital in accordance with section (Reduction of capital in connection with redenomination) in connection with such a redenomination.

(5) Nothing in this section affects—

(a) the power of a company to purchase its own shares, or to redeem shares, in accordance with Part 19;

(b) the power of a company to purchase shares in pursuance of an order of the court under—

(i) section 98 (application to court to cancel resolution for re-registration as a private company),

(ii) section (Application to court to cancel resolution)(6) (powers of court on objection to redemption or purchase of shares out of capital),

(iii) section 534 (remedial order in case of breach of prohibition of public offers by private company), or

(iv) Part (Protection of members against unfair prejudice) (protection of members against unfair prejudice);

(c) the forfeiture of shares, or the acceptance of shares surrendered in lieu, in pursuance of the company’s articles, for failure to pay any sum payable in respect of the shares;

(d) the cancellation of shares under section (Duty to cancel shares in public company held by or for the company) (duty to cancel shares held by or for a public company);

(e) the power of a company—

(i) to enter into a compromise or arrangement in accordance with Part (Arrangements and reconstructions) (arrangements and reconstructions), or

(ii) to do anything required to comply with an order of the court on an application under that Part.’.

Sub-division or consolidation of shares

Margaret Hodge

NC123

To move the following Clause:—

‘(1) A limited company having a share capital may—

(a) sub-divide its shares, or any of them, into shares of a smaller nominal amount than its existing shares, or

(b) consolidate and divide all or any of its share capital into shares of a larger nominal amount than its existing shares.

(2) In any sub-division, consolidation or division of shares under this section, the proportion between the amount paid and the amount (if any) unpaid on each resulting share must be the same as it was in the case of the share from which that share is derived.

(3) A company may exercise a power conferred by this section only if its members have passed an ordinary resolution authorising it to do so.

(4) A resolution under subsection (3) may authorise a company—

(a) to exercise more than one of the powers conferred by this section;

(b) to exercise a power on more than one occasion;

(5) The company’s articles may exclude or restrict the exercise of any power conferred by this section.’.

Notice to registrar of sub-division or consolidation

Margaret Hodge

NC124

To move the following Clause:—

‘(1) If a company exercises the power conferred by section (Sub-division or consolidation of shares) (sub-division or consolidation of shares) it must within one month after doing so give notice to the registrar, specifying the shares affected.

(2) The notice must be accompanied by a statement of capital.

(3) The statement of capital must state with respect to the company’s share capital immediately following the exercise of the power—

(a) the total number of shares of the company,

(b) the aggregate nominal value of those 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).

(4) 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.

(5) 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.’.

Re-conversion of stock into shares

Margaret Hodge

NC125

To move the following Clause:—

‘(1) A limited company that has converted paid-up shares into stock (before the repeal by this Act of the power to do so) may re-convert that stock into paid-up shares of any nominal value.

(2) A company may exercise the power conferred by this section only if its members have passed an ordinary resolution authorising it to do so.

(3) A resolution under subsection (2) may authorise a company to exercise the power conferred by this section—

(a) on more than one occasion;

(b) at a specified time or in specified circumstances.’.

Notice to registrar of re-conversion of stock into shares

Margaret Hodge

NC126

To move the following Clause:—

‘(1) If a company exercises a power conferred by section (Re-conversion of stock into shares) (reconversion of stock into shares) it must within one month after doing so give notice to the registrar, specifying the stock affected.

(2) The notice must be accompanied by a statement of capital.

(3) The statement of capital must state with respect to the company’s share capital immediately following the exercise of the power—

(a) the total number of shares of the company,

(b) the aggregate nominal value of those 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).

(4) If default is made in complying this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

Redenomation of share capital

Margaret Hodge

NC127

To move the following Clause:—

‘(1) A limited company having a share capital may by ordinary resolution redenominate its share capital or any class of its share capital.

“Redenominate” means convert shares from having a fixed nominal value in one currency to having a fixed nominal value in another currency.

(2) The conversion must be made at an appropriate spot rate of exchange specified in the resolution.

(3) The rate must be either—

(a) a rate prevailing on a day specified in the resolution, or

(b) a rate determined by taking the average of rates prevailing on each consecutive day of a period specified in the resolution.

The day or period specified for the purposes of paragraph (a) or (b) must be within the period of 28 days ending on the day before the resolution is passed.

(4) A resolution under this section may specify conditions which must be met before the redenomination takes effect.

(5) Redenomination in accordance with a resolution under this section takes effect—

(a) on the day on which the resolution is passed, or

(b) on such later day as may be determined in accordance with the resolution.

(6) A resolution under this section lapses if the redenomination for which it provides has not taken effect at the end of the period of 28 days beginning on the date on which it is passed.

(7) A company’s articles may prohibit or restrict the exercise of the power conferred by this section.’.

Calculation of new nominal values

Margaret Hodge

NC128

To move the following Clause:—

‘ ‘For each class of share the new nominal value of each share is calculated as follows:

Step One

Take the aggregate of the old nominal values of all the shares of that class.

Step Two

Translate that amount into the new currency at the rate of exchange specified in the resolution.

Step Three

Divide that amount by the number of shares in the class.’.

Effect of redenomination

Margaret Hodge

NC129

To move the following Clause:—

‘(1) The redenomination of shares does not affect any rights or obligations of members under the company’s constitution, or any restrictions affecting members under the company’s constitution.

In particular, it does not affect entitlement to dividends (including entitlement to dividends in a particular currency), voting rights or any liability in respect of amounts unpaid on shares.

(2) For this purpose the company’s constitution includes the terms on which any shares of the company are allotted or held.

(3) Subject to subsection (1), references to the old nominal value of the shares in any agreement or statement, or in any deed, instrument or document, shall (unless the context otherwise requires) be read after the resolution takes effect as references to the new nominal value of the shares.’.

Notice to registrar of redenomination

Margaret Hodge

NC130

To move the following Clause:—

‘(1) If a limited company having a share capital redenominates any of its share capital, it must within one month after doing so give notice to the registrar, specifying the shares redenominated.

(2) The notice must—

(a) state the date on which the resolution was passed, and

(b) be accompanied by a statement of capital.

(3) The statement of capital must state with respect to the company’s share capital as redenominated by the resolution—

(a) the total number of shares of the company,

(b) the aggregate nominal value of those 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).

(4) 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.

Reduction of capital in connection with redenomination

Margaret Hodge

NC131

To move the following Clause:—

‘(1) A company that passes a resolution redenominating some or all of its shares may, for the purpose of adjusting the nominal values of the redenominated shares to obtain values that are, in the opinion of the company, more suitable, reduce its share capital under this section.

(2) A reduction of capital under this section requires a special resolution of the company.

(3) Any such resolution must be passed within three months of the resolution effecting the redenomination.

(4) The amount by which a company’s share capital is reduced under this section must not exceed 10% of the nominal value of the company’s allotted share capital immediately after the reduction.

(5) A reduction of capital under this section does not extinguish or reduce any liability in respect of share capital not paid up.

(6) Nothing in Chapter (Reduction of share capital) of this Part applies to a reduction of capital under this section.’.

Notice to registrar of reduction of capital in connection with redenomination

Margaret Hodge

NC132

To move the following Clause:—

‘(1) A company that passes a resolution under section (Reduction of capital in connection with redenomination) (reduction of capital in connection with redenomination) must within 15 days after the resolution is passed give notice to the registrar stating—

(a) the date of the resolution, and

(b) the date of the resolution under section (Redenomination of share capital) in connection with which it was passed.

This is in addition to the copies of the resolutions themselves that are required to be delivered to the registrar under Chapter 3 of Part 3.

(2) The notice must be accompanied by a statement of capital.

(3) 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,

(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).

(4) The registrar must register the notice and the statement on receipt.

(5) The reduction of capital is not effective until those documents are registered.

(6) The company must also deliver to the registrar, within 15 days after the resolution is passed, a statement by the directors confirming that the reduction in share capital is in accordance with section (Reduction of capital in connection with redenomation)(4) (reduction of capital not to exceed 10% of nominal value of allotted shares immediately after reduction).

(7) 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.

(8) 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.’.

Redenomination reserve

Margaret Hodge

NC133

To move the following Clause:—

‘(1) The amount by which a company’s share capital is reduced under section (Reduction of capital in connection with redenomation) (reduction of capital in connection with redenomination) must be transferred to a reserve, called “the redenomination reserve”.

(2) The redenomination reserve may be applied by the company in paying up shares to be allotted to members as fully paid bonus shares.

(3) Subject to that, the provisions of the Companies Acts relating to the reduction of a company’s share capital apply as if the redenomination reserve were paid-up share capital of the company.’.

Classes of shares

Margaret Hodge

NC134

To move the following Clause:—

‘(1) For the purpose of this Chapter shares are of one class if the rights attached to them are in all respects uniform.

(2) For this purpose the rights attached to shares are not regarded as different from those attached to other shares by reason only that they do not carry the same rights to dividends in the twelve months immediately following their allotment.’.

Variation of class rights: companies having a share capital

Margaret Hodge

NC135

To move the following Clause:—

‘(1) This section is concerned with the variation of the rights attached to a class of shares in a company having a share capital.

(2) Rights attached to a class of a company’s shares may be varied if, and only if, the holders of shares of that class consent to the variation in accordance with this section.

(3) This is without prejudice to any other restrictions on the variation of the rights.

(4) The consent required for the purposes of this section on the part of the holders of a class of a company’s shares is—

(a) consent in writing from the holders of at least three-quarters in nominal value of the issued shares of that class (excluding any shares held as treasury shares), or

(b) a special resolution passed at a separate general meeting of the holders of that class sanctioning the variation.

(5) Any amendment of a provision contained in a company’s articles for the variation of the rights attached to a class of shares, or the insertion of any such provision into the articles, is itself to be treated as a variation of those rights.

(6) In this section, and (except where the context otherwise requires) in any provision in a company’s articles for the variation of the rights attached to a class of shares, references to the variation of those rights include references to their abrogation.’.

Variation of class rights: companies without a share capital

Margaret Hodge

NC136

To move the following Clause:—

‘(1) This section is concerned with the variation of the rights of a class of members of a company where the company does not have a share capital.

(2) Rights of a class of members may be varied if, and only if, the members of that class consent to the variation in accordance with this section.

(3) This is without prejudice to any other restrictions on the variation of the rights.

(4) The consent required for the purposes of this section on the part of the members of a class is—

(a) consent in writing from at least three-quarters of the members of the class, or

(b) a special resolution passed at a separate general meeting of the members of that class sanctioning the variation.

(5) Any amendment of a provision contained in a company’s articles for the variation of the rights of a class of members, or the insertion of any such provision into the articles, is itself to be treated as a variation of those rights.

(6) In this section, and (except where the context otherwise requires) in any provision in a company’s articles for the variation of the rights of a class of members, references to the variation of those rights include references to their abrogation.’.

Variation of class rights: saving for court’s powers under other provisions

Margaret Hodge

NC137

To move the following Clause:—

‘Nothing in section (Variation of class rights: companies having a share capital) or (Variation of class rights: companies without a share capital) (variation of class rights) affects the power of the court under—

section 98 (application to cancel resolution for public company to be re-registered as private);

Part (Arrangements and reconstructions) (arangements and reconstructions);

Part (Protection of members against unfair prejudice) (protection of members against unfair prejudice).’.

Prepared: 20 July 2006