| Company Law Reform Bill [Lords] - continued | House of Commons |
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Scope of this Chapter Margaret Hodge NC274 To move the following Clause:— ‘In this Chapter— (a) “securities”
means shares, debentures, debenture stock, loan stock, bonds, units
of a collective investment scheme within the meaning of the (b) references to title to securities include any legal or equitable interest in securities; (c) references to a transfer of title include a transfer by way of security; (d) references to transfer without a written instrument include, in relation to bearer securities, transfer without delivery.’. Power to make regulations Margaret Hodge NC275 To move the following Clause:— ‘(1) The power to make regulations under this Chapter is exercisable by the Treasury and the Secretary of State, either jointly or concurrently. (2) References in this Chapter to the authority having power to make regulations shall accordingly be read as references to both or either of them, as the case may require. (3) Regulations under this Chapter are subject to affirmative resolution procedure.’. Provision enabling procedures for evidencing and transferring title Margaret Hodge NC276 To move the following Clause:— ‘(1) Provision may be made by regulations for enabling title to securities to be evidenced and transferred without a written instrument. (2) The regulations may make provision— (a) for procedures for recording and transferring title to securities, and (b) for the regulation of those procedures and the persons responsible for or involved in their operation. (3) The regulations must contain such safeguards as appear to the authority making the regulations appropriate for the protection of investors and for ensuring that competition is not restricted, distorted or prevented. (4) The regulations may, for the purpose of enabling or facilitating the operation of the procedures provided for by the regulations, make provision with respect to the rights and obligations of persons in relation to securities dealt with under the procedures. (5) The regulations may include provision for the purpose of giving effect to— (a) the transmission of title to securities by operation of law; (b) any restriction on the transfer of title to securities arising by virtue of the provisions of any enactment or instrument, court order or agreement; (c) any power conferred by any such provision on a person to deal with securities on behalf of the person entitled. (6) The regulations may make provision with respect to the persons responsible for the operation of the procedures provided for by the regulations— (a) as to the consequences of their insolvency or incapacity, or (b) as to the transfer from them to other persons of their functions in relation to those procedures.’. Provision requiring arrangements to be adopted Margaret Hodge NC277 To move the following Clause:— ‘(1) Regulations under this Chapter may make provision— (a) enabling the members of a company or of any designated class of companies to adopt, by ordinary resolution, arrangements under which title to securities is required to be evidenced and transferred without a written instrument; or (b) requiring companies, or any designated class of companies, to adopt such arrangements. (2) The regulations may make such provision— (a) in respect of all securities issued by a company, or (b) in respect of all securities of a specified description. (3) The arrangements provided for by regulations making such provision as is mentioned in subsection (1) must not be such that a person who, but for the arrangements would be entitled— (a) to have his name entered in the company’s register of members, or (b) to give instructions in respect of any securities, ceases to be so entitled. (4) The regulations may— (a) prohibit the issue of any certificate by the company in respect of the issue or transfer of securities, (b) require the provision by the company to holders of securities of statements (at specified intervals or on specified occasions) of the securities held in their name, and (c) make provision as to the matters of which any such certificate or statement is, or is not, evidence. (5) In this section— (a) references to a designated class of companies are to a class designated in the regulations or by order under section (Provision requiring arrangements to be adopted: order-making powers); and (b) “specified” means specified in the regulations.’. Provision requiring arrangements to be adopted: order-making powers Margaret Hodge NC278 To move the following Clause:— ‘(1) The authority having power to make regulations under this Chapter may by order— (a) designate classes of companies for the purposes of section (Provision requiring arrangements to be adopted) (provision requiring arrangements to be adopted); (b) provide that, in relation to securities of a specified description— (i) in a designated class of companies, or (ii) in a specified company or class of companies, specified provisions of regulations made under this Chapter by virtue of that section either do not apply or apply subject to specified modifications. (2) In subsection (1) “specified” means specified in the order. (3) An order under this section is subject to negative resolution procedure.’. Provision that may be included in regulations Margaret Hodge NC279 To move the following Clause:— ‘Regulations under this Chapter may— (a) modify or exclude any provision of any enactment or instrument, or any rule of law; (b) apply, with such modifications as may be appropriate, the provisions of any enactment or instrument (including provisions creating criminal offences); (c) require the payment of fees, or enable persons to require the payment of fees, of such amounts as may be specified in the regulations or determined in accordance with them; (d) empower the authority making the regulations to delegate to any person willing and able to discharge them any functions of the authority under the regulations.’. Duty to consult Margaret Hodge NC280 To move the following Clause:— ‘Before making— (a) regulations under this Chapter, or (b) any order under section (Provision requiring arrangements to be adopted: order making powers), the authority having power to make regulations under this Chapter must carry out such consultation as appears to it to be appropriate.’. Meaning of “distribution” Margaret Hodge NC281 To move the following Clause:— ‘(1) In this Part “distribution” means every description of distribution of a company’s assets to its members, whether in cash or otherwise, subject to the following exceptions. (2) The following are not distributions for the purposes of this Part— (a) an issue of shares as fully or partly paid bonus shares; (b) the reduction of share capital— (i) by extinguishing or reducing the liability of any of the members on any of the company’s shares in respect of share capital not paid up, or (ii) by paying off paid up share capital; (c) the redemption or purchase of any of the company’s own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealised profits in accordance with Chapter (Redeemable shares) or (Purchase of own shares) of Part (Acquisition by limited company of its own shares); (d) a distribution of assets to members of the company on its winding up.’. Distributions to be made only out of profits available for the purpose Margaret Hodge NC282 To move the following Clause:— ‘(1) A company may only make a distribution out of profits available for the purpose. (2) A company’s profits available for distribution are its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital duly made. (3) Subsection (2) has effect subject to sections (Distributions by investment companies out of accumulated revenue profits) and (Power to extend provisions relating to investment companies) (investment companies etc: distributions out of accumulated revenue profits).’. Net asset restriction on distributions by public companies Margaret Hodge NC283 To move the following Clause:— ‘(1) A public company may only make a distribution— (a) if the amount of its net assets is not less than the aggregate of its called-up share capital and undistributable reserves, and (b) if, and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate. (2) For this purpose a company’s “net assets” means the aggregate of the company’s assets less the aggregate of its liabilities. (3) “Liabilities” here includes— (a) where the relevant accounts are Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 378; (b) where the relevant accounts are IAS accounts, provisions of any kind. (4) A company’s undistributable reserves are— (a) its share premium account; (b) its capital redemption reserve; (c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by capitalisation) exceed its accumulated, unrealised losses (so far as not previously written off in a reduction or reorganisation of capital duly made); (d) any other reserve that the company is prohibited from distributing— (i) by any enactment (other than one contained in this Part), or (ii) by its articles. The reference in paragraph (c) to capitalisation does not include a transfer of profits of the company to its capital redemption reserve. (5) A public company must not include any uncalled share capital as an asset in any accounts relevant for purposes of this section. (6) Subsection (1) has effect subject to sections (Distributions by investment companies out of accumulated revenue profits) and (Power to extend provisions relating to investment companies) (investment companies etc: distributions out of accumulated revenue profits).’. Distributions by investment companies out of accumulated revenue profits Margaret Hodge NC284 To move the following Clause:— ‘(1) An investment company may make a distribution out of its accumulated, realised revenue profits if the following conditions are met. (2) It may make such a distribution only if, and to the extent that, its accumulated, realised revenue profits, so far as not previously utilised by a distribution or capitalisation, exceed its accumulated revenue losses (whether realised or unrealised), so far as not previously written off in a reduction or reorganisation of capital duly made. (3) It may make such a distribution only— (a) if the amount of its assets is at least equal to one and a half times the aggregate of its liabilities, and (b) if, and to the extent that, the distribution does not reduce that amount to less than one and a half times that aggregate. (4) For this purpose a company’s liabilities include— (a) in the case of Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 378; (b) in the case of IAS accounts, provisions of any kind. (5) The following conditions must also be met— (a) the company’s shares must be listed on a recognised UK investment exchange; (b) during the relevant period it must not have— (i) distributed any capital profits otherwise than by way of the redemption or purchase of any of the company’s own shares in accordance with Chapter (Redeemable shares) or (Purchase of own shares) of Part (Acquisition by limited company of its own shares), or (ii) applied any unrealised profits or any capital profits (realised or unrealised) in paying up debentures or amounts unpaid on its issued shares; (c) it must have given notice to the registrar under section (Meaning of “investment company”)(1) (notice of intention to carry on business as an investment company)— (i) before the beginning of the relevant period, or (ii) as soon as reasonably practicable after the date of its incorporation. (6) For the purposes of this section— (a) “recognised UK investment
exchange” means a recognised investment exchange within the meaning
of Part 18 of the (b) the “relevant period” is the period beginning with— (i) the first day of the accounting reference period immediately preceding that in which the proposed distribution is to be made, or (ii) where the distribution is to be made in the company’s first accounting reference period, the first day of that period, and ending with the date of the distribution. (7) The company must not include any uncalled share capital as an asset in any accounts relevant for purposes of this section.’. Meaning of “investment company” Margaret Hodge NC285 To move the following Clause:— ‘(1) In this Part an “investment company” means a public company that— (a) has given notice (which has not been revoked) to the registrar of its intention to carry on business as an investment company, and (b) since the date of that notice has complied with the following requirements. (2) Those requirements are— (a) that the business of the company consists of investing its funds mainly in securities, with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds; (b) that the condition in section (Investment company: condition as to holdings in other companies) is met as regards holdings in other companies; (c) that distribution of the company’s capital profits is prohibited by its articles of association; (d) that the company has not retained, otherwise than in compliance with this Part, in respect of any accounting reference period more than 15% of the income it derives from securities. (3) Subsection (2)(c) does not require an investment company to be prohibited by its articles from redeeming or purchasing its own shares in accordance with Chapter (Redeemable shares) or (Purchase of own shares) of Part (Acquisition by limited company of its own shares) out of its capital profits.) (4) Notice to the registrar under this section may be revoked at any time by the company on giving notice to the registrar that it no longer wishes to be an investment company within the meaning of this section. (5) On giving such a notice, the company ceases to be such a company.’. Investment company: condition as to holdings in other companies Margaret Hodge NC286 To move the following Clause:— ‘(1) The condition referred to in section (Meaning of “investment company”)(2)(b) (requirements to be complied with by investment company) is that none of the company’s holdings in companies (other than those that are for the time being investment companies) represents more than 15% by value of the company’s investments. (2) For this purpose— (a) holdings in companies that— (i) are members of a group (whether or not including the investing company), and (ii) are not for the time being investment companies, are treated as holdings in a single company; and (b) where the investing company is a member of a group, money owed to it by another member of the group— (i) is treated as a security of the latter held by the investing company, and (ii) is accordingly treated as, or as part of, the holding of the investing company in the company owing the money. (3) The condition does not apply— (a) to a holding in a company acquired before 6th April 1965 that on that date represented not more than 25% by value of the investing company’s investments, or (b) to a holding in a company that, when it was acquired, represented not more than 15% of the investing company’s investments, so long as no addition is made to the holding. (4) For the purposes of subsection (3)— (a) “holding” means the shares or securities (whether or one class or more than one class) held in any one company; (b) an addition is made to a holding whenever the investing company acquires shares or securities of that one company, otherwise than by being allotted shares or securities without becoming liable to give any consideration, and if an addition is made to a holding that holding is acquired when the addition or latest addition is made to the holding; and (c) where in connection with a scheme of reconstruction a company issues shares or securities to persons holding shares or securities in a second company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings in the second company, without those persons becoming liable to give any consideration, a holding of the shares or securities in the second company and a corresponding holding of the shares or securities so issued shall be regarded as the same holding. (5) In this section— “company” and “shares” shall be
construed in accordance with sections 99 and 288 of the “group” means a company and all companies that
are its 51% subsidiaries (within the meaning of section 838 of the “scheme of reconstruction” has the same meaning
as in section 136 of the Power to extend provisions relating to investment companies Margaret Hodge NC287 To move the following Clause:— ‘(1) The Secretary of State may by regulations extend the provisions of sections (Distributions by investment companies out of accumulated revenue profits) to (Investment company: condition as to holdings in other companies) (distributions by investment companies out of accumulated profits), with or without modifications, to other companies whose principal business consists of investing their funds in securities, land or other assets with the aim of spreading investment risk and giving their members the benefit of the results of the management of the assets. (2) Regulations under this section are subject to affirmative resolution procedure.’. Justification of distribution by reference to relevant accounts Margaret Hodge NC288 To move the following Clause:— ‘(1) Whether a distribution may be made by a company without contravening this Part, and the amount of a distribution that may be so made, is determined by reference to the following items as stated in the relevant accounts— (a) profits, losses, assets and liabilities; (b) provisions of the following kinds— (i) where the relevant accounts are Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 378; (ii) where the relevant accounts are IAS accounts, provisions of any kind; (c) share capital and reserves (including undistributable reserves). (2) The relevant accounts are the company’s last annual accounts, except that— (a) where the distribution would be found to contravene this Part by reference to the company’s last annual accounts, it may be justified by reference to interim accounts, and (b) where the distribution is proposed to be declared during the company’s first accounting reference period, or before any accounts have been circulated in respect of that period, it may be justified by reference to initial accounts. (3) The requirements of— section (Requirements where last annual accounts used) (as regards the company’s last annual accounts), section (Requirements where interim accounts used) (as regards interim accounts), and section (Requirements where initial accounts used) (as regards initial accounts), must be complied with, as and where applicable. (4) If any applicable requirement of those sections is not complied with, the accounts may not be relied on for the purposes of this Part and the distribution is accordingly treated as contravening this Part.’. |
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