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

back to previous text

The independence requirement

Margaret Hodge

NC414

    To move the following Clause:—

      ‘(1) A person meets the independence requirement for the purposes of section (Valuation by qualified independent person) only if—

        (a) he is not—

          (i) an officer or employee of the company, or

          (ii) a partner or employee of such a person, or a partnership of which such a person is a partner;

        (b) he is not—

          (i) an officer or employee of an associated undertaking of the company, or

          (ii) a partner or employee of such a person, or a partnership of which such a person is a partner; and

        (c) there does not exist between—

          (i) the person or an associate of his, and

          (ii) the company or an associated undertaking of the company,

        a connection of any such description as may be specified by regulations made by the Secretary of State.

      (2) An auditor of the company is not regarded as an officer or employee of the company for this purpose.

      (3) In this section—

      “associated undertaking” means—

      (o) a parent undertaking or subsidiary undertaking of the company, or

      (p) a subsidiary undertaking of a parent undertaking of the company; and

      “associate” has the meaning given by section (Meaning of “associate”).

      (4) Regulations under this section are subject to negative resolution procedure.’.


Meaning of associate

Margaret Hodge

NC415

    To move the following Clause:—

      ‘(1) This section defines “associate” for the purposes of section (The independence requirement) (valuation: independence requirement).

      (2) In relation to an individual, “associate” means—

        (a) that individual’s spouse or civil partner or minor child or step-child,

        (b) any body corporate of which that individual is a director, and

        (c) any employee or partner of that individual.

      (3) In relation to a body corporate, “associate” means—

        (a) any body corporate of which that body is a director,

        (b) any body corporate in the same group as that body, and

        (c) any employee or partner of that body or of any body corporate in the same group.

      (4) In relation to a partnership that is a legal person under the law by which it is governed, “associate” means—

        (a) any body corporate of which that partnership is a director,

        (b) any employee of or partner in that partnership, and

        (c) any person who is an associate of a partner in that partnership.

      (5) In relation to a partnership that is not a legal person under the law by which it is governed, “associate” means any person who is an associate of any of the partners.

      (6) In this section, in relation to a limited liability partnership, for “director” read “member”.’.


Valuer entitled to full disclosure

Margaret Hodge

NC416

    To move the following Clause:—

      ‘(1) A person carrying out a valuation or making a report with respect to any consideration proposed to be accepted or given by a company, is entitled to require from the officers of the company such information and explanation as he thinks necessary to enable him to—

        (a) carry out the valuation or make the report, and

        (b) provide any note required by section (Non-cash consideration for shares: requirements as to valuation and report)(3) or (Agreement for transfer of non-cash asset: requirements as to valution and report)(3) (note required where valuation carried out by another person).

      (2) A person who knowingly or recklessly makes a statement to which this subsection applies that is misleading, false or deceptive in a material particular commits an offence.

      (3) Subsection (2) applies to a statement—

        (a) made (whether orally or in writing) to a person carrying out a valuation or making a report, and

        (b) conveying or purporting to convey any information or explanation which that person requires, or is entitled to require, under subsection (1).

      (4) A person guilty of an offence under subsection (2) 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).’.


Meaning of subsidiary etc

Margaret Hodge

NC417

    To move the following Clause:—

      ‘(1) A company is a “subsidiary” of another company, its “holding company”, if that other company—

        (a) hold a majority of the voting rights in it, or

        (b) is a member of it and has the right to appoint or remove a majority of its board of directors, or

        (c) is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it,

      or if it is a subsidiary of a company that is itself a subsidiary of that other company.

      (2) A company is a “wholly-owned subsidiary” of another company if it has no members except that other and that other’s wholly-owned subsidiaries or persons acting on behalf of that other or its wholly-owned subsidiaries.

      (3) Schedule 1 contains provisions explaining expressions used in this section and otherwise supplementing this section.

      (4) In this section and that Schedule “company” includes any body corporate.’.


Meaning of subsidiary etc: power to amend

Margaret Hodge

NC418

    To move the following Clause:—

      ‘(1) The Secretary of State may by regulations amend the provisions of section (Meaning of “subsidiary” etc) (meaning of “subsidiary” etc) and Schedule (Meaning of “subsidiary” etc: supplementary provisions) (meaning of “subsidiary” etc: supplementary provisions) so as to alter the meaning of the expressions “subsidiary”, “holding company” or “wholly-owned subsidiary”.

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

      (3) Any amendment made by regulations under this section does not apply for the purposes of enactments outside the Companies Acts unless the regulations so provide.

      (4) So much of section 23(3) of the Interpretation Act 1978 (c. 30) as applies section 17(2)(a) of that Act (effect of repeal and re-enactment) to deeds, instruments and documents other than enactments does not apply in relation to any repeal and re-enactment effected by regulations under this section.’.


Meaning of banking company and banking group

Margaret Hodge

NC419

    To move the following Clause:—

      ‘(1) This section defines “banking company” and “banking group” for the purposes of the Companies Acts.

      (2) “Banking company” means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to accept deposits, other than—

        (a) a person who is not a company, and

        (b) a person who has such permission only for the purpose of carrying on another regulated activity in accordance with permission under that Part.

      (3) The definition in subsection (2) must be read with section 22 of that Act, any relevant order under that section and Schedule 2 to that Act.

      (4) References to a banking group are to a group where the parent company is a banking company or where—

        (a) the parent company’s principal subsidiary undertakings are wholly or mainly credit institutions, and

        (b) the parent company does not itself carry on any material business apart from the acquisition, management and disposal of interests in subsidiary undertakings.

      “Group” here means a parent undertaking and its subsidiary undertakings.

      (5) For the purposes of subsection (4)—

        (a) a parent company’s principal subsidiary undertakings are the subsidiary undertakings of the company whose results or financial position would principally affect the figures shown in the group accounts, and

        (b) the management of interests in subsidiary undertakings includes the provision of services to such undertakings.’.


Meaning of insurance company and related expressions

Margaret Hodge

NC420

    To move the following Clause:—

      ‘(1) This section defines “insurance company”, “authorised insurance company”, “insurance group” and “insurance market activity” for the purposes of the Companies Acts.

      (2) An “authorised insurance company” means a person (whether incorporated or not) who has permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to effect or carry out contracts of insurance.

      (3) An “insurance company” means—

        (a) an authorised insurance company, or

        (b) any other person (whether incorporated or not) who—

          (i) carries on insurance market activity, or

          (ii) may effect or carry out contracts of insurance under which the benefits provided by that person are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle.

      (4) Neither expression includes a friendly society within the meaning of the Friendly Societies Act 1992 (c. 40).

      (5) References to an insurance group are to a group where the parent company is an insurance company or where—

        (a) the parent company’s principal subsidiary undertakings are wholly or mainly insurance companies, and

        (b) the parent company does not itself carry on any material business apart from the acquisition, management and disposal of interests in subsidiary undertakings.

      “Group” here means a parent undertaking and its subsidiary undertakings.

      (6) For the purposes of subsection (5)—

        (a) a parent company’s principal subsidiary undertakings are the subsidiary undertakings of the company whose results or financial position would principally affect the figures shown in the group accounts, and

        (b) the management of interests in subsidiary undertakings includes the provision of services to such undertakings.

      (7) “Insurance market activity” has the meaning given in section 316(3) of the Financial Services and Markets Act 2000 (c. 8).

      (8) References in this section to contracts of insurance and to the effecting or carrying out of such contracts must be read with section 22 of that Act, any relevant order under that section and Schedule 2 to that Act.’.


Employees share scheme

Margaret Hodge

NC421

    To move the following Clause:—

      ‘For the purposes of the Companies Acts an employees’ share scheme is a scheme for encouraging or facilitating the holding of shares in or debentures of a company by or for the benefit of—

        (a) the bona fide employees or former employees of—

          (i) the company,

          (ii) any subsidiary of the company, or

          (iii) the company’s holding company or any subsidiary of the company’s holding company, or

        (b) the spouses, civil partners, surviving spouses, surviving civil partners, or minor children or step-children of such employees or former employees.’.


Meaning of prescribed

Margaret Hodge

NC422

    To move the following Clause:—

      ‘In the Companies Acts “prescribed” means prescribed (by order or by regulations) by the Secretary of State.’.


Persons subject to foreign restrictions

Margaret Hodge

NC423

    To move the following Clause:—

      ‘(1) This section defines what is meant by references in this Part to a person being subject to foreign restrictions.

      (2) A person is subject to foreign restrictions if under the law of a country or territory outside the United Kingdom—

        (a) he is, by reason of misconduct or unfitness, disqualified to any extent from acting in connection with the affairs of a company,

        (b) he is, by reason of misconduct or unfitness, required—

          (i) to obtain permission from a court or other authority, or

          (ii) to meet any other condition,

        before acting in connection with the affairs of a company,

        (c) he has, by reason of misconduct or unfitness, given undertakings to a court or other authority of a country or territory outside the United Kingdom—

          (i) not to act in connection with the affairs of a company, or

          (ii) restricting the extent to which, or the way in which, he may do so.

      (3) The references in subsection (2) to acting in connection with the affairs of a company are to doing any of the following—

        (a) being a director of a company,

        (b) acting as receiver of a company’s property, or

        (c) being concerned or taking part in the promotion, formation or management of a company.

      (4) In this section—

        (a) “company” means a company incorporated or formed under the law of the country or territory in question, and

        (b) in relation to such a company—

      “director” means the holder of an office corresponding to that of director of a UK company; and

      “receiver” includes any corresponding officer under the law of that country or territory.’.


Meaning of the court and UK company

Margaret Hodge

NC424

    To move the following Clause:—

      ‘In this Part—

      “the court” means—

      (q) in England and Wales, the High Court or a county court;

      (r) in Scotland, the Court of Session or the sheriff court;

      (s) in Northern Ireland, the High Court;

      “UK company” means a body corporate that—

      (t) is a company as defined in section 1 of this Act, or

      (u) is registered under the Companies Acts by virtue of section 694 (bodies not formed under Companies Acts but authorised to register).’.


Disqualification of persons subject to foreign restrictions

Margaret Hodge

NC425

    To move the following Clause:—

      ‘(1) The Secretary of State may make provision by regulations disqualifying a person subject to foreign restrictions from—

        (a) being a director of a UK company,

        (b) acting as receiver of a UK company’s property, or

        (c) in any way, whether directly or indirectly, being concerned or taking part in the promotion, formation or management of a UK company.

      (2) The regulations may provide that a person subject to foreign restrictions—

        (a) is disqualified automatically by virtue of the regulations, or

        (b) may be disqualified by order of the court on the application of the Secretary of State.

      (3) The regulations may provide that the Secretary of State may accept an undertaking (a “disqualification undertaking”) from a person subject to foreign restrictions that he will not do anything which would be in breach of a disqualification under subsection (1).

      (4) In this Part—

        (a) a “person disqualified under this Part” is a person—

          (i) disqualified as mentioned in subsection (2)(a) or (b), or

          (ii) who has given and is subject to a disqualification undertaking;

        (b) references to a breach of a disqualification include a breach of a disqualification undertaking.

      (5) The regulations may provide for applications to the court by persons disqualified under this Part for permission to act in a way which would otherwise be in breach of the disqualification.

      (6) The regulations must provide that a person ceases to be disqualified under this Part on his ceasing to be subject to foreign restrictions.

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


Disqualification regulations: supplementary

Margaret Hodge

NC426

    To move the following Clause:—

      ‘(1) Regulations under section (Disqualification of persons subject to foreign restrictions) may make different provision for different cases and may in particular distinguish between cases by reference to—

        (a) the conduct on the basis of which the person became subject to foreign restrictions;

        (b) the nature of the foreign restrictions;

        (c) the country or territory under whose law the foreign restrictions were imposed.

      (2) Regulations under section (Disqualification of persons subject to foreign restrictions)(2)(b) or (5) (provision for applications to the court)—

        (a) must specify the grounds on which an application may be made;

        (b) may specify factors to which the court shall have regard in determining an application.

      (3) The regulations may, in particular, require the court to have regard to the following factors—

        (a) whether the conduct on the basis of which the person became subject to foreign restrictions would, if done in relation to a UK company, have led a court to make a disqualification order on an application under the Company Directors Disqualification Act 1986 (c. 46) or the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4));

        (b) in a case in which the conduct on the basis of which the person became subject to foreign restrictions would not be unlawful if done in relation to a UK company, the fact that the person acted unlawfully under foreign law;

        (c) whether the person’s activities in relation to UK companies began after he became subject to foreign restrictions;

        (d) whether the person’s activities (or proposed activities) in relation to UK companies are undertaken (or are proposed to be undertaken) outside the United Kingdom.

      (4) Regulations under section (Disqualification of persons subject to foreign restrictions)(3) (provision as to undertakings given to the Secretary of State) may include provision allowing the Secretary of State, in determining whether to accept an undertaking, to take into account matters other than criminal convictions notwithstanding that the person may be criminally liable in respect of those matters.

      (5) Regulations under section (Disqualification of persons subject to foreign restrictions)(5) (provision for application to court for permission to act) may include provision—

        (a) entitling the Secretary of State to be represented at the hearing of the application, and

        (b) as to the giving of evidence or the calling of witnesses by the Secretary of State at the hearing of the application.’.


Offence of breach of disqualification

Margaret Hodge

NC427

    To move the following Clause:—

      ‘(1) Regulations under section (Disqualification of persons subject to foreign restrictions) may provide that a person disqualified under this Part who acts in breach of the disqualification commits an offence.

      (2) The regulations may provide that a person guilty of such an offence 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).

      (3) In relation to an offence committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (c. 44), for “twelve months” in subsection (2)(b)(i) substitute “six months”.’.


 
previous Section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search Page enquiries ordering index

© Parliamentary copyright 2006
Prepared: 20 July 2006