| Company Law Reform Bill [Lords] - continued | House of Commons |
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Offence of fraudulent trading Margaret Hodge NC370 To move the following Clause:— ‘(1) If any business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits an offence. (2) This applies whether or not the company has been, or is in the course of being, wound up. (3) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding ten 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 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 a fine not exceeding the statutory maximum (or both).’. Petition by company member Margaret Hodge NC371 To move the following Clause:— ‘(1) A member of a company may apply to the court by petition for an order under this Part on the ground— (a) that the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. (2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company. (3) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, “company” means— (a) a company within the meaning of this Act, or (b) a company that is not such
a company but is a statutory water company within the meaning of the
Petition by Secretary of State Margaret Hodge NC372 To move the following Clause:— ‘(1) This section applies to a company in respect of which— (a) the Secretary of State has
received a report under section 437 of the (b) the Secretary of State has exercised his powers under section 447 or 448 of that Act (powers to require documents and information or to enter and search premises); (c) the Secretary of State or
the Financial Services Authority has exercised his or its powers under
Part 11 of the (d) the Secretary of State has received a report from an investigator appointed by him or the Financial Services Authority under that Part. (2) If it appears to the Secretary of State that in the case of such a company— (a) the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members, or (b) an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, he may apply to the court by petition for an order under this Part. (3) The Secretary of State may do this in addition to, or instead of, presenting a petition for the winding up of the company. (4) In this section, and so
far as applicable for the purposes of this section in the other provisions
of this Part, “company” means any body corporate that is
liable to be wound up under the Powers of the court under this Part Margaret Hodge NC373 To move the following Clause:— ‘(1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of. (2) Without prejudice to the generality of subsection (1), the court’s order may— (a) regulate the conduct of the company’s affairs in the future; (b) require the company— (i) to refrain from doing or continuing an act complained of, or (ii) to do an act that the petitioner has complained it has omitted to do; (c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct; (d) require the company not to make any, or any specified, alterations in its articles without the leave of the court; (e) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company’s capital accordingly.’. Application of rule-making powers Margaret Hodge NC374 To move the following Clause:— ‘The power to make rules under section 411 of the Insolvency Act 1986 or Article 359 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), so far as relating to a winding-up petition, applies for the purposes of a petition under this Part.’. Copy of order affecting company’s articles to be delivered to registrar Margaret Hodge NC375 To move the following Clause:— ‘(1) Where an order of the court under this Part— (a) alters the company’s articles, or (b) gives leave for the company to make any, or any specified, alterations in its articles, the company must deliver a copy of the order to the registrar. (2) It must do so within 14 days from the making of the order or such longer period as the court may allow. (3) 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. (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 not exceeding one-tenth of level 3 on the standard scale.’. Power to strike off company not carrying on business or in operation Margaret Hodge NC376 To move the following Clause:— ‘(1) If the registrar has reasonable cause to believe that a company is not carrying on business or in operation, the registrar may send to the company by post a letter inquiring whether the company is carrying on business or in operation. (2) If the registrar does not within one month of sending the letter receive any answer to it, the registrar must within 14 days after the expiration of that month send to the company by post a registered letter referring to the first letter, and stating— (a) that no answer to it has been received, and (b) that if an answer is not received to the second letter within one month from its date, a notice will be published in the Gazette with a view to striking the company’s name off the register. (3) If the registrar— (a) receives an answer to the effect that the company is not carrying on business or in operation, or (b) does not within one month after sending the second letter receive any answer, the registrar may publish in the Gazette, and send to the company by post, a notice that at the expiration of three months from the date of the notice the name of the company mentioned in it will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved. (4) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register. (5) The registrar must publish notice in the Gazette of the company’s name having been struck off the register. (6) On the publication of the notice in the Gazette the company is dissolved. (7) However— (a) the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and (b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.’. Duty to act in case of company being wound up Margaret Hodge NC377 To move the following Clause:— ‘(1) If, in a case where a company is being wound up— (a) the registrar has reasonable cause to believe— (i) that no liquidator is acting, or (ii) that the affairs of the company are fully wound up, and (b) the returns required to be made by the liquidator have not been made for a period of six consecutive months, the registrar must publish in the Gazette and send to the company or the liquidator (if any) a notice that at the expiration of three months from the date of the notice the name of the company mentioned in it will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved. (2) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register. (3) The registrar must publish notice in the Gazette of the company’s name having been struck off the register. (4) On the publication of the notice in the Gazette the company is dissolved. (5) However— (a) the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and (b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.’. Supplementary provisions as to service of letter or notice Margaret Hodge NC378 To move the following Clause:— ‘(1) A letter or notice to be sent under section (Power to strike off company not carrying on business or in operation) or (Duty to act in case of company being wound up) to a company may be addressed to the company at its registered office or, if no office has been registered, to the care of some officer of the company. (2) If there is no officer of the company whose name and address are known to the registrar, the letter or notice may be sent to each of the persons who subscribed the memorandum (if their addresses are known to the registrar). (3) A notice to be sent to a liquidator under section (Duty to act in case of company being wound up) may be addressed to him at his last known place of business.’. Striking off on application by company Margaret Hodge NC379 To move the following Clause:— ‘(1) On application by a company, the registrar of companies may strike the company’s name off the register. (2) The application— (a) must be made on the company’s behalf by its directors or by a majority of them, and (b) must contain the prescribed information. (3) The registrar may not strike a company off under this section until after the expiration of three months from the publication by the registrar in the Gazette of a notice— (a) stating that the registrar may exercise the power under this section in relation to the company, and (b) inviting any person to show cause why that should not be done. (4) The registrar must publish notice in the Gazette of the company’s name having been struck off. (5) On the publication of the notice in the Gazette the company is dissolved. (6) However— (a) the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and (b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.’. Circumstances in which application not to be made: activities of company Margaret Hodge NC380 To move the following Clause:— ‘(1) An application under section (Striking off on application by company) on behalf of a company must not be made if, at any time in the previous three months, the company has— (a) changed its name, (b) traded or otherwise carried on business, (c) made a disposal for value of property or rights that, immediately before ceasing to trade or otherwise carry on business, it held for the purpose of disposal for gain in the normal course of trading or otherwise carrying on business, or (d) engaged in any other activity, except one which is— (i) necessary or expedient for the purpose of making an application under that section, or deciding whether to do so, (ii) necessary or expedient for the purpose of concluding the affairs of the company, (iii) necessary or expedient for the purpose of complying with any statutory requirement, or (iv) specified by the Secretary of State by order for the purposes of this sub-paragraph. (2) For the purposes of this section, a company is not to be treated as trading or otherwise carrying on business by virtue only of the fact that it makes a payment in respect of a liability incurred in the course of trading or otherwise carrying on business. (3) The Secretary of State may by order amend subsection (1) for the purpose of altering the period in relation to which the doing of the things mentioned in paragraphs (a) to (d) of that subsection is relevant. (4) An order under this section is subject to negative resolution procedure. (5) It is an offence for a person to make an application in contravention of this section. (6) In proceedings for such an offence it is a defence for the accused to prove that he did not know, and could not reasonably have known, of the existence of the facts that led to the contravention. (7) 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.’. Circumstances in which application not to be made: other proceedings not concluded Margaret Hodge NC381 To move the following Clause:— ‘(1) An application under section (Striking off on application by company) on behalf of a company must not be made at a time when— (a) an application to the court under Part (Arrangements and reconstructions) has been made on behalf of the company for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; (b) a voluntary arrangement in
relation to the company has been proposed under Part 1 of the (c) the company is in administration under Part 2 of that Act or Part 3 of that Order; (d) paragraph 44 of Schedule B1 to that Act or paragraph 45 of Schedule B1 to that Order applies (interim moratorium on proceedings where application to the court for an administration order has been made or notice of intention to appoint administrator has been filed); (e) the company is being wound up under Part 4 of that Act or Part 5 of that Order, whether voluntarily or by the court, or a petition under that Part for winding up of the company by the court has been presented and not finally dealt with or withdrawn; (f) there is a receiver or manager of the company’s property; (g) the company’s estate is being administered by a judicial factor. (2) For the purposes of subsection (1)(a), the matter is finally concluded if— (a) the application has been withdrawn, (b) the application has been finally dealt with without a compromise or arrangement being sanctioned by the court, or (c) a compromise or arrangement has been sanctioned by the court and has, together with anything required to be done under any provision made in relation to the matter by order of the court, been fully carried out. (3) For the purposes of subsection (1)(b), the matter is finally concluded if— (a) no meetings are to be summoned
under section 3 of the (b) meetings summoned under that section or Article fail to approve the arrangement with no, or the same, modifications, (c) an arrangement approved by meetings summoned under that section, or in consequence of a direction under section 6(4)(b) of that Act or Article 19(4)(b) of that Order, has been fully implemented, or (d) the court makes an order under section 6(5) of that Act or Article 19(5) of that Order revoking approval given at previous meetings and, if the court gives any directions under section 6(6) of that Act or Article 19(6) of that Order, the company has done whatever it is required to do under those directions. (4) It is an offence for a person to make an application in contravention of this section. (5) In proceedings for such an offence it is a defence for the accused to prove that he did not know, and could not reasonably have known, of the existence of the facts that led to the contravention. (6) 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.’. Copy of application to be given to members, employees, etc Margaret Hodge NC382 To move the following Clause:— ‘(1) A person who makes an application under section (Striking off on application by company) on behalf of a company must secure that, within seven days from the day on which the application is made, a copy of it is given to every person who at any time on that day is— (a) a member of the company, (b) an employee of the company, (c) a creditor of the company, (d) a director of the company, (e) a manager or trustee of any pension fund established for the benefit of employees of the company, or (f) a person of a description specified for the purposes of this paragraph by regulations made by the Secretary of State. Regulations under paragraph (f) are subject to negative resolution procedure. (2) Subsection (1) does not require a copy of the application to be given to a director who is a party to the application. (3) The duty imposed by this section ceases to apply if the application is withdrawn before the end of the period for giving the copy application. (4) A person who fails to perform the duty imposed on him by this section commits an offence. If he does so with the intention of concealing the making of the application from the person concerned, he commits an aggravated offence. (5) In proceedings for an offence under this section it is a defence for the accused to prove that he took all reasonable steps to perform the duty. (6) A person guilty of an offence under this section (other than an aggravated offence) is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (7) A person guilty of an aggravated offence under this section is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding seven 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).’. Copy of application to be given to new members, employees, etc Margaret Hodge NC383 To move the following Clause:— ‘(1) This section applies in relation to any time after the day on which a company makes an application under section (Striking off on application by company) (application for voluntary striking off) and before the day on which the application is finally dealt with or withdrawn. (2) A person who is a director of the company at the end of a day on which a person (other than himself) becomes— (a) a member of the company, (b) an employee of the company, (c) a creditor of the company, (d) a director of the company, (e) a manager or trustee of any pension fund established for the benefit of employees of the company, or (f) a person of a description specified for the purposes of this paragraph by regulations made by the Secretary of State, must secure that a copy of the application is given to that person within seven days from that day. Regulations under paragraph (f) are subject to negative resolution procedure. (3) The duty imposed by this section ceases to apply if the application is finally dealt with or withdrawn before the end of the period for giving the copy application. (4) A person who fails to perform the duty imposed on him by this section commits an offence. If he does so with the intention of concealing the making of the application from the person concerned, he commits an aggravated offence. (5) In proceedings for an offence under this section it is a defence for the accused to prove— (a) that at the time of the failure he was not aware of the fact that the company had made an application under section (Striking off on application by company), or (b) that he took all reasonable steps to perform the duty. (6) A person guilty of an offence under this section (other than an aggravated offence) is liable— (a) on conviction on indictment, to a fine; (b) on summary conviction, to a fine not exceeding the statutory maximum. (7) A person guilty of an aggravated offence under this section is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding seven 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).’. |
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| © Parliamentary copyright 2006 | Prepared: 20 July 2006 |