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

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Companys register of charges (No. 2)

Margaret Hodge

NC338

    To move the following Clause:—

      ‘(1) Every company shall keep at its registered office a register of charges and enter in it all charges specifically affecting property of the company, and all floating charges on any property of the company.

      (2) There shall be given in each case a short description of the property charged, the amount of the charge and, except in the case of securities to bearer, the names of the persons entitled to it.

      (3) If an officer of the company knowingly and wilfully authorises or permits the omission of an entry required to be made in pursuance of this section, he commits an offence.

      (4) 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.’.


Right to inspect copies of instruments and companys register

Margaret Hodge

NC339

    To move the following Clause:—

      ‘(1) The copies of instruments creating charges requiring registration under this Chapter with the registrar, and the register of charges kept in pursuance of section (Company’s register of charges (No. 2)), shall be open during business hours (but subject to such reasonable restrictions as the company in general meeting may impose, so that not less than 2 hours in each day be allowed for inspection) to the inspection of any creditor or member of the company without fee.

      (2) The register of charges shall be open to the inspection of any other person on payment of such fee as the company may prescribe.

      (3) If inspection of copies, or of the register, is refused an offence is committed by—

        (a) the company, and

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

      (4) 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 net exceeding one-tenth of level 3 on the standard scale.

      (5) If such a refusal occurs in relation to a company, the court may by order compel an immediate inspection of the copies or register.’.


Power to make provision for effect of registration in special register

Margaret Hodge

NC340

    To move the following Clause:—

      ‘(1) In this section a “special register” means a register, other than the register of charges kept under this Part, in which a charge to which Chapter 1 or Chapter 2 applies is required or authorised to be registered.

      (2) The Secretary of State may by order make provision for facilitating the making of information-sharing arrangements between the person responsible for maintaining a special register (“the responsible person”) and the registrar that meet the requirement in subsection (4).

      “Information-sharing arrangements” are arrangements to share and make use of information held by the registrar or by the responsible person.

      (3) If the Secretary of State is satisfied that appropriate information-sharing arrangements have been made, he may by order provide that—

        (a) the registrar is authorised not to register a charge of a specified description under Chapter 1 or Chapter 2 of this Part,

        (b) a charge of a specified description that is registered in the special register within a specified period is to be treated as if it had been registered (and certified by the registrar as registered) in accordance with the requirements of Chapter 1 or, as the case may be, Chapter 2, and

        (c) the other provisions of Chapter 1 or, as the case may be, Chapter 2 of this Part apply to a charge so treated with specified modifications.

      (4) The information-sharing arrangements must ensure that persons inspecting the register of charges—

        (a) are made aware, in a manner appropriate to the inspection, of the existence of charges in the special register which are treated in accordance with provision so made, and

        (b) are able to obtain information from the special register about any such charge.

      (5) An order under this section may—

        (a) modify any enactment or rule of law which would otherwise restrict or prevent the responsible person from entering into or giving effect to information-sharing arrangements,

        (b) authorise the responsible person to require information to be provided to him for the purposes of the arrangements,

        (c) make provision about—

          (i) the charging by the responsible person of fees in connection with the arrangements and the destination of such fees (including provision modifying any enactment which would otherwise apply in relation to fees payable to the responsible person), and

          (ii) the making of payments under the arrangements by the registrar to the responsible person,

        (d) require the registrar to make copies of the arrangements available to the public (in hard copy or electronic form).

      (6) In this section “specified” means specified in an order under this section.

      (7) A description of charge may be specified, in particular, by reference to one or more of the following—

        (a) the type of company by which it is created,

        (b) the form of charge which it is,

        (c) the description of assets over which it is granted,

        (d) the length of the period between the date of its registration in the special register and the date of its creation.

      (8) Provision may be made under this section relating to registers maintained under the law of a country or territory outside the United Kingdom.

      (9) An order under this section is subject to negative resolution procedure.’.


General power to make amendments to this Part

Margaret Hodge

NC341

    To move the following Clause:—

      ‘(1) The Secretary of State may by regulations under this section—

        (a) amend this Part by altering, adding or repealing provisions,

        (b) make consequential amendments or repeals in this Act or any other enactment (whether passed or made before or after this Act).

      (2) Regulations under this section are subject to affirmative resolution procedure.’.


Scheme of this Part

Margaret Hodge

NC342

    To move the following Clause:—

      ‘(1) The provisions of this Part apply where a compromise or arrangement is proposed—

        (a) between a company and its creditors, or any class of them, or

        (b) between the company and its members, or any class of them.

      (2) The provisions of sections (Court sanction for compromise or arrangement) to (Copy of court order to be annexed to copies of company’s constitution) (court sanction for compromise or arrangement) apply in every case.

      (3) The provisions of section (Powers of court to facilitate reconstruction or amalgamation) (powers of court to facilitate reconstruction or amalgamation) supplement those provisions.

      (4) The provisions mentioned above have effect subject to regulations under section (Power to make provision for mergers and divisions of public companies) (mergers and divisions of public companies) in the circumstances specified in that section.

      (5) In this Part—

      “arrangement” includes a reorganisation of the company’s share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods; and

      “company”—

      (i) in sections (Powers of court to facilitate reconstruction or amalgamation), (Copy of order to be delivered to registrar) and (Power to make provision for mergers and divisions of public companies) means a company within the meaning of this Act, and

      (j) elsewhere in this Part means any company liable to be wound up under the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).’.


Court sanction for compromise or arrangement

Margaret Hodge

NC343

    To move the following Clause:—

      ‘Where a compromise or arrangement is proposed between a company and its creditors, or any class of them, or between the company and its members, or any class of them—

        (a) the company,

        (b) any creditor or member of the company, or

        (c) if the company is being wound up or an administration order is in force in relation it, the liquidator or administrator,

      may apply to the court to sanction the compromise or arrangement.’.


Meeting of creditors or members

Margaret Hodge

NC344

    To move the following Clause:—

      On receiving an application under section (Court sanction for compromise or arrangement) (application to sanction compromise or arrangement with creditors or members) the court may order a meeting of the creditors or class of creditors, or of the members of the company or class of members (as the case may be), to be summoned in such manner as the court directs.’.


Statement to be circulated or made available

Margaret Hodge

NC345

    To move the following Clause:—

      ‘(1) Where a meeting is summoned under section (Meeting of creditors or members)—

        (a) every notice summoning the meeting that is sent to a creditor or member must be accompanied by a statement complying with this section, and

        (b) every notice summoning the meeting that is given by advertisement must either—

          (i) include such a statement, or

          (ii) state where and how creditors or members entitled to attend the meeting may obtain copies of such a statement

      (2) The statement must—

        (a) explain the effect of the compromise or arrangement, and

        (b) in particular, state—

          (i) any material interests of the directors of the company (whether as directors or as members or as creditors of the company or otherwise), and

          (ii) the effect on those interests of the compromise or arrangement, in so far as it is different from the effect on the like interests of other persons.

      (3) Where the compromise or arrangement affects the rights of debenture holders of the company, the statement must give the like explanation as respects the trustees of any deed for securing the issue of the debentures as it is required to give as respects the company’s directors.

      (4) Where a notice given by advertisement states that copies of an explanatory statement can be obtained by creditors or members entitled to attend the meeting, every such creditor or member is entitled, on making application in the manner indicated by the notice, to be provided by the company with a copy of the statement free of charge.

      (5) If a company makes default in complying with any requirement of this section, an offence is committed by—

        (a) the company, and

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

      This is subject to subsection (7) below.

      (6) For this purpose the following are treated as officers of the company—

        (a) a liquidator or administrator of the company, and

        (b) a trustee of a deed for securing the issue of debentures of the company.

      (7) A person is not guilty of an offence under this section if he shows that the default was due to the refusal of a director or trustee for debenture holders to supply the necessary particulars of his interests.

      (8) 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.’.


Duty of directors and trustees to provide information

Margaret Hodge

NC346

    To move the following Clause:—

      ‘(1) It is the duty of—

        (a) any director of the company, and

        (b) any trustee for its debenture holders,

      to give notice to the company of such matters relating to himself as may be necessary for purposes of section (Statement to be circulated or made available) (explanatory statement to be circulated or made available).

      (2) Any person who makes default in complying with this section commits an offence.

      (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.’.


Court order sanctioning compromise or arrangement

Margaret Hodge

NC347

    To move the following Clause:—

      ‘(1) The court may sanction a compromise or arrangement only if, at a meeting summoned under section (Meeting of creditors or members), a majority in number representing 75% in value of the creditors or class of creditors or members or class of members (as the case may be), present and voting either in person or by proxy at the meeting, agree to the compromise or arrangement.

      (2) A compromise or agreement sanctioned by the court is binding on—

        (a) all creditors or the class of creditors or on the members or class of members (as the case may be), and

        (b) the company or, in the case of a company in the course of being wound up, the liquidator and contributories of the company.

      (3) The court’s order has no effect until a copy of it has been delivered to the registrar of companies for registration.’.


Copy of court order to be annexed to copies of companys constitution

Margaret Hodge

NC348

    To move the following Clause:—

      ‘(1) A copy of every order of the court under section (Court order sanctioning compromise or arrangement) (order sanctioning compromise or arrangement with creditors or members) must be annexed to—

        (a) every copy of the company’s articles issued after the order has been made or,

        (b) in the case of a company not having articles of association, of every copy so issued of the instrument constituting the company or defining its constitution.

      (2) If a company makes default in complying with this section 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.’.


Powers of court to facilitate reconstruction or amalgamation

Margaret Hodge

NC349

    To move the following Clause:—

      ‘(1) This section applies where—

        (a) application is made to the court under section (Court sanction for compromise or arrangement) to sanction a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and

        (b) it is shown that—

          (i) the compromise or arrangement is proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies, and

          (ii) under the scheme the whole or any part of the undertaking or the property of any company concerned in the scheme (“a transferor company”) is to be transferred to another company (“the transferee company”).

      (2) The court may, either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision for all or any of the following matters—

        (a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company;

        (b) the allotting or appropriation by the transferee company of any shares, debentures, policies or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person;

        (c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company;

        (d) the dissolution, without winding up, of any transferor company;

        (e) the provision to be made for any persons who, within such time and in such manner as the courts directs, dissent from the compromise or arrangement;

        (f) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation is fully and effectively carried out.

      (3) If an order under this section provides for the transfer of property or liabilities—

        (a) the property is by virtue of the order transferred to, and vests in, the transferee company, and

        (b) the liabilities are, by virtue of the order, transferred to and become liabilities of that company.

      (4) The property (if the order so directs) vests freed from any charge that is by virtue of the compromise or arrangement to cease to have effect.

      (5) In this section—

      “property” includes property, rights and powers of every description; and

      “liabilities” includes duties.’.


Copy of order to be delivered to the registrar

Margaret Hodge

NC350

    To move the following Clause:—

      ‘(1) Where an order is made under section (Powers of court to facilitate reconstruction or amalgamation) (powers of court to facilitate reconstruction or amalgamation), every company in relation to which the order is made must cause a copy of the order to be delivered to the registrar of companies for registration within 7 days after its making.

      (2) 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.

      (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.’.


Power to make provision for mergers and divisions of public companies

Margaret Hodge

NC351

    To move the following Clause:—

      ‘(1) Where—

        (a) a compromise or arrangement is proposed between a public company and any such persons as are mentioned in section (Court sanction for compromise or arrangement) for the purpose of, or in connection with, a scheme for—

          (i) the reconstruction of any company or companies, or

          (ii) the amalgamation of any two or more companies,

        (b) the circumstances are as specified in any of the Cases described below, and

        (c) the consideration for the transfer or each of the transfers envisaged in the Case in question is to be shares in the transferee company or any of the transferee companies receivable by members of the transferor company or transferor companies, with or without any cash payment to members,

      the preceding provisions of this Part have effect, as regards that compromise or arrangement, subject to regulations under this section.

      (2) The Cases are—

      Case 1

      Where under the scheme the undertaking property and liabilities of the company in respect of which the compromise or arrangement in question is proposed are to be transferred to another public company, other than one formed for the purpose of, or in connection with, the scheme.

      Case 2

      Where under the scheme the undertaking, property and liabilities of two or more public companies concerned in the scheme, including the company in respect of which the compromise or arrangement in question is proposed, are to be transferred to a company (whether or not a public company) formed for the purposes of or in connection with the scheme.

      Case 3

      Where under the scheme the undertaking, property and liabilities of the company in respect of which the compromise or arrangement in question is proposed are to be divided among and transferred to two or more companies each of which is either—

        (a) a public company, or

        (b) a company (whether or not a public company) formed for the purposes of, or in connection with, the scheme.

      (3) This section does not apply where the company in respect of which the compromise or arrangement is proposed is being wound up.

      (4) The Secretary of State may by regulations provide that where this section applies the court must not sanction a compromise or arrangement unless the requirements of the regulations have been complied with.

      (5) Without prejudice to the generality of the power conferred by this section, the regulations may make any such provision as was formerly made by section 427A(3) of, and Schedule 15B to, the Companies Act 1985 (c. 6).

      (6) Regulations under this section are subject to affirmative resolution procedure.’.


 
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Prepared: 20 July 2006