| Company Law Reform Bill [Lords] - continued | House of Commons |
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Issue of certificate of incorporation on re-registration Margaret Hodge NC169 To move the following Clause:— (2) The registrar must issue a certificate of incorporation altered to meet the circumstances of the case. (3) The certificate must state that it is issued on re-registration and the date on which it is issued. (4) On the issue of the certificate— (a) the company by virtue of the issue of the certificate becomes a private company, and (b) the changes in the company’s name and articles take effect. (5) The certificate is conclusive evidence that the requirements of this Act as to re-registration have been complied with.’. Effect of failure to register Margaret Hodge NC170 To move the following Clause:— ‘(1) If a public company that is required by section (Duty to cancel shares in public company held by or for the company) to apply to be re-registered as a private company fails to do so before the end of the period specified in subsection (3) of that section, Chapter 1 of Part 17 (prohibition of public offers by private company) applies to it as if it were a private company. (2) Subject to that, the company continues to be treated as a public company until it is so registered.’. Offence in case of failure to cancel shares or re-register Margaret Hodge NC171 To move the following Clause:— ‘(1) This section applies where a company, when required to do by section (Duty to cancel shares in public company held by or for the company)— (a) fails to cancel any shares, or (b) fails to make an application for re-registration as a private company, within the time specified in subsection (3) of that section. (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 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.’. Application of provisions to company re-registering as public company Margaret Hodge NC172 To move the following Clause:— ‘(1) This section applies where, after shares in a private company— (a) are forfeited in pursuance of the company’s articles or are surrendered to the company in lieu of forfeiture, (b) are acquired by the company (otherwise than by any of the methods permitted by this Part), the company having a beneficial interest in the shares, (c) are acquired by a nominee of the company from a third party without financial assistance being given directly or indirectly by the company, the company having a beneficial interest in the shares, or (d) are acquired by a person with financial assistance given to him, directly or indirectly, by the company for the purpose of or in connection with the acquisition, the company having a beneficial interest in the shares, the company is re-registered as a public company. (2) In that case the provisions of sections (Duty to cancel shares in public company held by or for the company) to (Offence in case of failure to cancel shares or re-register) apply to the company as if it had been a public company at the time of the forfeiture, surrender or acquisition, subject to the following modification. (3) The modification is that the period specified in section (Duty to cancel shares in public company held by or for the company)(3)(a), (b) or (c) (period for complying with obligations under that section) runs from the date of the re-registration of the company as a public company.’. Accounting treatment of shares held by public company or nominee Margaret Hodge NC173 To move the following Clause:— ‘(1) Where— (a) a public company, or a nominee of a public company, acquires shares in the company, and (b) those shares are shown in a balance sheet of the company as an asset, an amount equal to the value of the shares must be transferred out of profits available for dividend to a reserve fund and is not then available for distribution. (2) Subsection (1) applies to an interest in shares as it applies to shares. As it so applies the reference to the value of the shares shall be read as a reference to the value to the company of its interest in the shares.’. Public companies: general rule against lien or charge on own shares Margaret Hodge NC174 To move the following Clause:— ‘(1) A lien or other charge of a public company on its own shares (whether taken expressly or otherwise) is void, except as permitted by this section. (2) In the case of any description of company, a charge is permitted if the shares are not fully paid up and the charge is for an amount payable in respect of the shares. (3) In the case of a company whose ordinary business— (a) includes the lending of money, or (b) consists of the provision of credit or the bailment (in Scotland, hiring) of goods under a hire purchase agreement, or both, a charge is permitted (whether the shares are fully paid or not) if it arises in connection with a transaction entered into by the company in the ordinary course of that business. (4) In the case of a company that has been re-registered as a public company, a charge is permitted if it was in existence immediately before the application for re-registration.’. Interests to be disregarded in determining whether company has beneficial interest Margaret Hodge NC175 To move the following Clause:— ‘In determining for the purposes of this Chapter whether a company has a beneficial interest in shares, there shall be disregarded any such interest as is mentioned in— section (Residual interest under pension scheme or employees’ share scheme) (residual interest under pension scheme or employees’ share scheme), section (Employer’s charges and other rights of recovery) (employer’s charges and other rights of recovery) or section (Rights as personal representative or trustee) (rights as personal representative or trustee).’. Residual interest under pension scheme or employees’ share scheme Margaret Hodge NC176 To move the following Clause:— ‘(1) Where the shares are held on trust for the purposes of a pension scheme or employees’ share scheme, there shall be disregarded any residual interest of the company that has not vested in possession. (2) A “residual interest” means a right of the company to receive any of the trust property in the event of— (a) all the liabilities arising under the scheme having been satisfied or provided for, or (b) the company ceasing to participate in the scheme, or (c) the trust property at any time exceeding what is necessary for satisfying the liabilities arising or expected to arise under the scheme. (3) In subsection (2)— (a) the reference to a right includes a right dependent on the exercise of a discretion vested by the scheme in the trustee or another person, and (b) the reference to liabilities arising under a scheme includes liabilities that have resulted, or may result, from the exercise of any such discretion. (4) For the purposes of this section a residual interest vests in possession— (a) in a case within subsection (2)(a), on the occurrence of the event mentioned there (whether or not the amount of the property receivable pursuant to the right is ascertained); (b) in a case within subsection (2)(b) or (c), when the company becomes entitled to require the trustee to transfer to it any of the property receivable pursuant to that right. (5) Where by virtue of this section shares are exempt from section (Treatment of shares held by nominee) or (Liability of others where nominee fails to make payment in respect of shares) (shares held by company’s nominee) at the time they are taken, issued or acquired but the residual interest in question vests in possession before they are disposed of or fully paid up, those sections apply to the shares as if they had been taken, issued or acquired on the date on which that interest vests in possession. (6) Where by virtue of this section shares are exempt from sections (Duty to cancel shares in public company held by or for the company) to (Application of provisions to company re-registering as public company) (shares held by or for public company) at the time they are acquired but the residual interest in question vests in possession before they are disposed of, those sections apply to the shares as if they had been acquired on the date on which the interest vests in possession.’. Employer’s charges and other rights of recovery Margaret Hodge NC177 To move the following Clause:— ‘(1) Where the shares are held on trust for the purposes of a pension scheme there shall be disregarded— (a) any charge or lien on, or set-off against, any benefit or other right or interest under the scheme for the purpose of enabling the employer or former employer of a member of the scheme to obtain the discharge of a monetary obligation due to him from the member; (b) any right to receive from
the trustee of the scheme, or as trustee of the scheme to retain, an
amount that can be recovered or retained under section 61 of the (2) Where the shares are held on trust for the purposes of an employees’ share scheme, there shall be disregarded any charge or lien on, or set-off against, any benefit or other right or interest under the scheme for the purpose of enabling the employer or former employer of a member of the scheme to obtain the discharge of a monetary obligation due to him from the member.’. Rights as personal representative or trustee Margaret Hodge NC178 To move the following Clause:— ‘Where the company is a personal representative or trustee, there shall be disregarded any rights that the company has in that capacity including, in particular— (a) any right to recover its expenses or be remunerated out of the estate or trust property, and (b) any right to be indemnified out of that property for any liability incurred by reason of any act or omission of the company in the performance of its duties as personal representative or trustee.’. Meaning of “pension scheme” Margaret Hodge NC179 To move the following Clause:— ‘(1) In this Chapter “pension scheme” means a scheme for the provision of benefits consisting of or including relevant benefits for or in respect of employees or former employees. (2) In subsection (1) “relevant benefits” means any pension, lump sum, gratuity or other like benefit given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service, after retirement or death.’. Application of provisions to directors Margaret Hodge NC180 To move the following Clause:— ‘For the purposes of this Chapter references to “employer” and “employee”, in the context of a pension scheme or employees’ share scheme, shall be read as if a director of a company were employed by it.’. Meaning of “financial assistance” Margaret Hodge NC181 To move the following Clause:— ‘(1) In this Chapter “financial assistance” means— (a) financial assistance given by way of gift, (b) financial assistance given— (i) by way of guarantee, security or indemnity (other than an indemnity in respect of the indemnifier’s own neglect or default), or (ii) by way of release or waiver, (c) financial assistance given— (i) by way of a loan or any other agreement under which any of the obligations of the person giving the assistance are to be fulfilled at a time when in accordance with the agreement any obligation of another party to the agreement remains unfulfilled, or (ii) by way of the novation of, or the assignment (in Scotland, assignation) of rights arising under, a loan or such other agreement, or (d) any other financial assistance given by a company where— (i) the net assets of the company are reduced to a material extent by the giving of the assistance, or (ii) the company has no net assets. (2) “Net assets” here means the aggregate amount of the company’s assets less the aggregate amount of its liabilities. (3) For this purpose a company’s liabilities include— (a) where the company draws up Companies Act individual accounts, any provision of a kind specified for the purposes of this subsection by regulations under section 378, and (b) where the company draws up IAS individual accounts, any provision made in those accounts.’. Assistance for acquisition of shares in public company Margaret Hodge NC182 To move the following Clause:— ‘(1) Where a person is acquiring or proposing to acquire shares in a public company, it is not lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place. (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in it or its holding company if— (a) the company’s principal purpose in giving the assistance is not to give it for the purpose of any such acquisition, or (b) the giving of the assistance for that purpose is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (3) Where— (a) a person has acquired shares in a company, and (b) a liability has been incurred (by that or another person) for the purpose of the acquisition, it is not lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability if, at the time the assistance is given, the company is a public company. (4) Subsection (3) does not prohibit a company from giving financial assistance if— (a) the company’s principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or (b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (5) This section has effect subject to sections (Unconditional exceptions) and (Conditional exceptions) (unconditional and conditional exceptions to prohibition).’. Assistance by public company for acquisition of shares in its private holding company Margaret Hodge NC183 To move the following Clause:— ‘(1) Where a person is acquiring or proposing to acquire shares in a private company, it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place. (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in its holding company if— (a) the company’s principal purpose in giving the assistance is not to give it for the purpose of any such acquisition, or (b) the giving of the assistance for that purpose is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (3) Where— (a) a person has acquired shares in a private company, and (b) a liability has been incurred (by that or another person) for the purpose of the acquisition, it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability. (4) Subsection (3) does not prohibit a company from giving financial assistance if— (a) the company’s principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in its holding company, or (b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company. (5) This section has effect subject to sections (Unconditional exceptions) and (Conditional exceptions) (unconditional and conditional exceptions to prohibition).’. Prohibited financial assistance an offence Margaret Hodge NC184 To move the following Clause:— ‘(1) If a company contravenes section (Assistance for acquisition of shares in public company)(1) or (3) or section (Assistance by public company for acquisition of shares in its private holding company)(1) or (3) (prohibited financial assistance) an offence is committed by— (a) the company, and (b) every officer of the company who is in default. (2) 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).’. Unconditional exceptions Margaret Hodge NC185 To move the following Clause:— ‘(1) Neither section (Assistance for acquisition of shares in public company) nor section (Assistance by public company for acquisition of shares in its private holding company) prohibits a transaction to which this section applies. (2) Those transactions are— (a) a distribution of the company’s assets by way of— (i) dividend lawfully made, or (ii) distribution in the course of a company’s winding up; (b) an allotment of bonus shares; (c) a reduction of capital under Chapter (Reduction of capital) of Part (A company’s share capital); (d) a redemption of shares under Chapter (Redeemable shares) or a purchase of shares under Chapter (Purchase of own shares) of this Part; (e) anything done in pursuance of an order of the court under Part (Arrangements and reconstructions) (order sanctioning compromise or arrangement with members or creditors); (f) any thing done under an arrangement
made in pursuance of section 110 of the (g) anything done under an arrangement
made between a company and its creditors that is binding on the creditors
by virtue of Part 1 of the Conditional exceptions Margaret Hodge NC186 To move the following Clause:— ‘(1) Neither section (Assistance for acquisition of shares in public company) nor section (Assistance by public company for acquisition of shares in its private holding company) prohibits a transaction to which this section applies— (a) in the case of a private company, or (b) in the case of a public company if— (i) the company has net assets that are not reduced by the giving of the assistance, or (ii) to the extent that those assets are so reduced, the assistance is provided out of distributable profits. (2) The transactions to which this section applies are— (a) the lending of money in the ordinary course of the company’s business; (b) the provision by the company, in good faith in the interests of the company, of financial assistance for the purposes of an employees’ share scheme; (c) the provision of financial assistance by a company or any of its subsidiaries for the purposes of or in connection with anything done by the company, or a company in the same group, for the purpose of enabling or facilitating transactions in shares in the first-mentioned company between, and involving the acquisition of beneficial ownership of those share by— (i) bona fide employees or former employees of that company or of another company in the same group, or (ii) spouses or civil partners, widows, widowers or surviving civil partners, or minor children or step-children of any such employees or former employees; (d) the making by a company of loans to persons (other than directors) employed in good faith by the company with a view to enabling those persons to acquire fully paid shares in the company or its holding company to be held by them by way of beneficial ownership. (3) The references in this section to “net assets” are to the amount by which the aggregate of the company’s assets exceeds the aggregate of its liabilities. (4) For this purpose— (a) the amount of both assets and liabilities shall be taken to be as stated in the company’s accounting records immediately before the financial assistance is given, and (b) “liabilities” includes any amount retained as reasonably necessary for the purpose of providing for a liability the nature of which is clearly defined and that is either likely to be incurred or certain to be incurred but uncertain as to amount or as to the date on which it will arise. (5) For the purposes of subsection (2)(c) a company is in the same group as another company if it is a holding company or subsidiary of that company or a subsidiary of a holding company of that company.’. |
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| © Parliamentary copyright 2006 | Prepared: 20 July 2006 |