| Company Law Reform Bill [Lords] - continued | House of Commons |
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Definitions for this Chapter Margaret Hodge NC187 To move the following Clause:— ‘(1) In this Chapter— “distributable profits”, in relation to the giving of any financial assistance— (g) means those profits out of which the company could lawfully make a distribution equal in value to that assistance, and (h) includes, in a case where the financial assistance consists of or includes, or is treated as arising in consequence of, the sale, transfer or other disposition of a non-cash asset, any profit that, if the company were to make a distribution of that character would be available for that purpose in accordance with section (Distributions in kind: determination of amount); and “distribution” has the same meaning as in Part (Distributions) (distributions) (see section (Meaning of “distribution”)). (2) In this Chapter— (a) a reference to a person incurring a liability includes his changing his financial position by making an agreement or arrangement (whether enforceable or unenforceable, and whether made on his own account or with any other person) or by any other means, and (b) a reference to a company giving financial assistance for the purposes of reducing or discharging a liability incurred by a person for the purpose of the acquisition of shares includes its giving such assistance for the purpose of wholly or partly restoring his financial position to what it was before the acquisition took place.’. Power of limited company to issue redeemable shares Margaret Hodge NC188 To move the following Clause:— ‘(1) A limited company having a share capital may issue shares that are to be redeemed or are liable to be redeemed at the option of the company or the shareholder (“redeemable shares”), subject to the following provisions. (2) The articles of a private limited company may exclude or restrict the issue of redeemable shares. (3) A public limited company may only issue redeemable shares if it is authorised to do so by its articles. (4) No redeemable shares may be issued at a time when there are no issued shares of the company that are not redeemable.’. Terms and manner of redemption Margaret Hodge NC189 To move the following Clause:— ‘(1) The directors of a limited company may determine the terms, conditions and manner of redemption of shares if they are authorised to do so— (a) by the company’s articles, or (b) by a resolution of the company. (2) A resolution under subsection (1)(b) may be an ordinary resolution, even though it amends the company’s articles. (3) Where the directors are authorised under subsection (1) to determine the terms, conditions and manner of redemption of shares— (a) they must do so before the shares are allotted, and (b) any obligation of the company to state in a statement of capital the rights attached to the shares extends to the terms, conditions and manner of redemption. (4) Where the directors are not so authorised, the terms, conditions and manner of redemption of any redeemable shares must be stated in the company’s articles.’. Payment for redeemable shares Margaret Hodge NC190 To move the following Clause:— ‘(1) Redeemable shares in a limited company may not be redeemed unless they are fully paid. (2) The terms of redemption of shares in a limited company may provide that the amount payable on redemption may, by agreement between the company and the holder of the shares, be paid on a date later than the redemption date. (3) Unless redeemed in accordance with provision authorised by subsection (2), the shares must be paid for on redemption.’. Financing of redemption Margaret Hodge NC191 To move the following Clause:— ‘(1) A private limited company may redeem redeemable shares out of capital in accordance with Chapter (Redemption or purchase by private company out of capital) of this Part. (2) Subject to that, redeemable shares in a limited company may only be redeemed out of— (a) distributable profits of the company, or (b) the proceeds of a fresh issue of shares made for the purposes of the redemption. (3) Any premium payable on redemption of shares in a limited company must be paid out of distributable profits of the company, subject to the following provision. (4) If the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to— (a) the aggregate of the premiums received by the company on the issue of the shares redeemed, or (b) the current amount of the company’s share premium account (including any sum transferred to that account in respect of premiums on the new shares), whichever is the less. (5) The amount of the company’s share premium account is reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made under subsection (3). (6) This section is subject to section (Effect of company’s failure to redeem or purchase)(4) (terms of redemption enforceable in a winding up).’. Redeemed shares treated as cancelled Margaret Hodge NC192 To move the following Clause:— ‘Where shares in a limited company are redeemed— (a) the shares are treated as cancelled, and (b) the amount of the company’s issued share capital is diminished accordingly by the nominal value of the shares redeemed.’. Notice to registrar of redemption Margaret Hodge NC193 To move the following Clause:— ‘(1) If a limited company redeems any redeemable shares it must within one month after doing so give notice to the registrar, specifying the shares redeemed. (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 redemption— (a) the total number of shares of the company, (b) the aggregate nominal value of those shares, (c) for each class of 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.’. Power of limited company to purchase own shares Margaret Hodge NC194 To move the following Clause:— ‘(1) A limited company having a share capital may purchase its own shares (including any redeemable shares), subject to— (a) the following provisions of this Chapter, and (b) any restriction or prohibition in the company’s articles. (2) A limited company may not purchase its own shares if as a result of the purchase there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares.’. Payment for purchase of own shares Margaret Hodge NC195 To move the following Clause:— ‘(1) A limited company may not purchase its own shares unless they are fully paid. (2) Where a limited company purchases its own shares, the shares must be paid for on purchase.’. Financing of purchase of own shares Margaret Hodge NC196 To move the following Clause:— ‘(1) A private limited company may purchase its own shares out of capital in accordance with Chapter (Redemption or purchase by private company out of capital) of this Part. (2) Subject to that— (a) a limited company may only purchase its own shares out of— (i) distributable profits of the company, or (ii) the proceeds of a fresh issue of shares made for the purpose of financing the purchase, and (b) any premium payable on the purchase by a limited company of its own shares must be paid out of distributable profits of the company, subject to subsection (3). (3) If the shares to be purchased were issued at a premium, any premium payable on their purchase by the company may be paid out of the proceeds of a fresh issue of shares made for the purpose of financing the purchase, up to an amount equal to— (a) the aggregate of the premiums received by the company on the issue of the shares purchased, or (b) the current amount of the company’s share premium account (including any sum transferred to that account in respect of premiums on the new shares), whichever is the less. (4) The amount of the company’s share premium account is reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made under subsection (3). (5) This section has effect subject to section (Effect of company’s failure to redeem or purchase)(4) (terms of purchase enforceable in a winding up).’. Authority for purchase of own shares Margaret Hodge NC197 To move the following Clause:— ‘(1) A limited company may only purchase its own shares— (a) by an off-market purchase, in pursuance of a contract approved in advance in accordance with section (Authority for off-market purchase); (b) by a market purchase, authorised in accordance with section (Authority for market purchase). (2) A purchase is “off-market” if the shares either— (a) are purchased otherwise than on a recognised investment exchange, or (b) are purchased on a recognised investment exchange but are not subject to a marketing arrangement on the exchange. (3) For this purpose a company’s shares are subject to a marketing arrangement on a recognised investment exchange if— (a) they are listed under Part
6 of the (b) the company has been afforded facilities for dealings in the shares to take place on the exchange— (i) without prior permission for individual transactions from the authority governing that investment exchange, and (ii) without limit as to the time during which those facilities are to be available. (4) A purchase is a “market purchase” if it is made on a recognised investment exchange and is not an off-market purchase by virtue of subsection (2)(b). (5) In this section “recognised
investment exchange” means a recognised investment exchange (within
the meaning of Part 18 of the Authority for off-market purchase Margaret Hodge NC198 To move the following Clause:— ‘(1) A company may only make an off-market purchase of its own shares in pursuance of a contract approved in advance in accordance with this section. (2) Either— (a) the terms of the proposed contract must be authorised by special resolution of the company before the contract is entered into, or (b) the purchase must be in pursuance of a contingent purchase contract authorised by special resolution of the company before it was entered into. (3) A “contingent purchase contract” means a contract, entered into by the company and relating to shares in the company, that does not amount to a contract to purchase the shares but under which the company may (subject to any conditions) become entitled or obliged to purchase the shares. (4) The authority conferred by a resolution under this section may be varied, revoked or from time to time renewed by a special resolution of the company. (5) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed. (6) A resolution conferring, varying, revoking or renewing authority under this section is subject to— section (Resolution authorising off-market purchase: exercise of voting rights) (exercise of voting rights), and section Resolution authorising off-market purchase: disclosure of details of contract) (disclosure of details of contract).’. Resolution authorising off-market purchase: exercise of voting rights Margaret Hodge NC199 To move the following Clause:— ‘(1) This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section (Authority for off-market purchase) (authority for off-market purchase of own shares). (2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member. (3) Where the resolution is proposed at a meeting of the company, it is not effective if— (a) any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution, and (b) the resolution would not have been passed if he had not done so. (4) For this purpose— (a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll; (b) notwithstanding anything in the company’s articles, any member of the company may demand a poll on that question; (c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.’. Resolution authorising off-market purchase: disclosure of details of contract Margaret Hodge NC200 To move the following Clause:— ‘(1) This section applies in relation to a resolution to confer, vary, revoke or renew authority for the purposes of section (Authority for off-market purchase) (authority for off-market purchase of own shares). (2) A copy of the proposed contract (if it is in writing) or a memorandum setting out its terms (if it is not) must be made available to members— (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him; (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both— (i) at the company’s registered office for not less than 15 days ending with the date of the meeting, and (ii) at the meeting itself. (3) A memorandum of contract terms so made available must include the names of the members holding shares to which the contract relates. (4) A copy of the contract so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the contract itself. (5) The resolution is not validly passed if the requirements of this section are not complied with.’. Variation of contract for off-market purchase Margaret Hodge NC201 To move the following Clause:— ‘(1) A company may only agree to a variation of a contract authorised under section (Authority for off-market purchase) (authority for off-market purchase) if the variation is approved in advance in accordance with this section. (2) The terms of the variation must be authorised by a special resolution of the company before it is agreed to. (3) That authority may be varied, revoked or from time to time renewed by a special resolution of the company. (4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed. (5) A resolution conferring, varying, revoking or renewing authority under this section is subject to— section (Resolution authorising variation: exercise of voting rights) (exercise of voting rights), and section (Resolution authorising variation: disclosure of details of variation) (disclosure of details of variation).’. Resolution authorising variation: exercise of voting rights Margaret Hodge NC202 To move the following Clause:— ‘(1) This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section (Variation of contract for off-market purchase) (variation of contract for off-market purchase of own shares). (2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member. (3) Where the resolution is proposed at a meeting of the company, it is not effective if— (a) any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution, and (b) the resolution would not have been passed if he had not done so. (4) For this purpose— (a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll; (b) notwithstanding anything in the company’s articles, any member of the company may demand a poll on that question; and (c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.’. Resolution authorising variation: disclosure of details of variation Margaret Hodge NC203 To move the following Clause:— ‘(1) This section applies in relation to a resolution under section (Variation of contract for off-market purchase) (variation of contract for off-market purchase of own shares). (2) A copy of the proposed variation (if it is in writing) or a written memorandum giving details of the proposed variation (if it is not) must be made available to members— (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him; (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both— (i) at the company’s registered office for not less than 15 days ending with the date of the meeting, and (ii) at the meeting itself. (3) There must also be made available as mentioned in subsection (2) a copy of the original contract or, as the case may be, a memorandum of its terms, together with any variations previously made. (4) A memorandum of the proposed variation so made available must include the names of the members holding shares to which the variation relates. (5) A copy of the proposed variation so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the variation itself. (6) The resolution is not validly passed if the requirements of this section are not complied with.’. Release of company’s rights under contract for off-market purchase Margaret Hodge NC204 To move the following Clause:— ‘(1) An agreement by a company to release its rights under a contract approved under section (Authority for off-market purchase) (authorisation of off-market purchase) is void unless the terms of the release agreement are approved in advance in accordance with this section. (2) The terms of the proposed agreement must be authorised by a special resolution of the company before the agreement is entered into. (3) That authority may be varied, revoked or from time to time renewed by a special resolution of the company. (4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed. (5) The provisions of— section (Resolution authorising variation: exercise of voting rights) (exercise of voting rights), and section (Resolution authorising variation: disclosure of details of variation) (disclosure of details of variation), apply to a resolution authorising a proposed release agreement as they apply to a resolution authorising a proposed variation.’. |
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| © Parliamentary copyright 2006 | Prepared: 20 July 2006 |