sc1902007.374-380

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
374

Company Law Reform Bill–[ [], continued

(2)
This section applies to an act that—

(a)
does not require approval under a listed provision of Chapter 4

of Part 10 of the Company Law Reform Act 2006 (transactions

with directors) by the members of the company, but

(b)
would require such approval but for an exemption in the

provision in question that disapplies the need for approval on the

part of the members of a body corporate which is a wholly-

owned subsidiary of another body corporate.

(3)
The reference to a listed provision is a reference to a provision listed in

section 66(2) above.

(4)
If a company acts in contravention of this section, the exemption referred

to in subsection (2)(b) shall be treated as of no effect in relation to the

act.”.’.

Qualifying pension scheme indemnity provision

Margaret Hodge

Added  nc29

To move the following Clause:—

‘(1)
Section 216(2) (voidness of provisions for indemnifying directors) does not apply

to qualifying pension scheme indemnity provision.

(2)
Pension scheme indemnity provision means provision indemnifying a director of

a company that is a trustee of an occupational pension scheme against liability

incurred in connection with the company’s activities as trustee of the scheme.


Such provision is qualifying pension scheme indemnity provision if the following

requirements are met.

(3)
The provision must not provide any indemnity against—

(a)
any liability of the director to pay—

(i)
a fine imposed in criminal proceedings, or

(ii)
a sum payable to a regulatory authority by way of a penalty in

respect of non-compliance with any requirement of a regulatory

nature (however arising); or

(b)
any liability incurred by the director in defending criminal proceedings

in which he is convicted.

(4)
The reference in subsection (3)(b) to a conviction is to the final decision in the

proceedings.

(5)
For this purpose—

(a)
a conviction becomes final—

(i)
if not appealed against, at the end of the period for bringing an

appeal, or

(ii)
if appealed against, at the time when the appeal (or any further

appeal) is disposed of; and

(b)
an appeal is disposed of—

(i)
if it is determined and the period for bringing any further appeal

has ended, or

(ii)
if it is abandoned or otherwise ceases to have effect.

S.C.D.  Standing Committee Proceedings: 20th July 2006
375

Company Law Reform Bill–[ [], continued

(6)
In this section “occupational pension scheme” means an occupational pension

scheme as defined in section 150(5) of the Finance Act 2004 (c. 12) that is

established under a trust.’.

Effect of provisions of articles as to enjoyment or exercise of members’ rights

Margaret Hodge

Added  nc36

To move the following Clause:—

‘(1)
This section applies where provision is made by a company’s articles enabling a

member to nominate another person or persons as entitled to enjoy or exercise all

or any specified rights of the member in relation to the company.

(2)
So far as is necessary to give effect to that provision, anything required or

authorised by any provision of the Companies Acts to be done by or in relation to

the member shall instead be done, or (as the case may be) may instead be done,

by or in relation to the nominated person (or each of them) as if he were a member

of the company.

(3)
This applies, in particular, to the rights conferred by—

(a)
sections 274 and 276 (right to be sent proposed written resolution);

(b)
section 275 (right to require circulation of written resolution);

(c)
section 286 (right to require directors to call general meeting);

(d)
section 293 (right to notice of general meetings);

(e)
section 297 (right to require circulation of a statement);

(f)
section 307 (right to appoint proxy to act at meeting);

(g)
section 321 (right to require circulation of resolution for AGM of public

company); and

(h)
section 405 (right to be sent a copy of annual accounts and reports).

(4)
This section and any such provision as is mentioned in subsection (1)—

(a)
do not confer rights enforceable against the company by anyone other

than the member, and

(b)
do not affect the requirements for an effective transfer or other

disposition of the whole or part of a member’s interest in the company.’.

Traded companies: nomination of person to enjoy information rights

Margaret Hodge

Added  NC37

To move the following Clause:—

‘(1)
This section applies to a company whose shares are admitted to trading on a

regulated market.

(2)
A member of such a company who holds shares on behalf of another person may

nominate that person to enjoy information rights.

(3)
“Information rights” means—

S.C.D.  Standing Committee Proceedings: 20th July 2006
376

Company Law Reform Bill–[ [], continued

(a)
the right to receive a copy of all communications that the company sends

to its members generally or to any class of its members that includes the

person making the nomination, and

(b)
the rights conferred by—

(i)
section 415 or 416 (right to require copies of accounts and

reports), and

(ii)
section 797 (right to require hard copy version of document or

information provided in another form).

(4)
A company need not act on a nomination purporting to relate to certain

information rights only.’.

Information rights: form in which copies to be provided

Margaret Hodge

Added  NC38

To move the following Clause:—

‘(1)
This section applies as regards the form in which copies are to be provided to a

person nominated under section (Traded companies: nomination of person to

enjoy information rights) (nomination of person to enjoy information rights).

(2)
If the person to be nominated wishes to receive hard copy communications, he

must—

(a)
request the person making the nomination to notify the company of that

fact, and

(b)
provide an address to which such copies may be sent.


This must be done before the nomination is made.

(3)
If having received such a request the person making the nomination—

(a)
notifies the company that the nominated person wishes to receive hard

copy communications, and

(b)
provides the company with that address,


the right of the nominated person is to receive hard copy communications

accordingly.

(4)
This is subject to the provisions of Parts 3 and 4 of Schedule 7 (communications

by traded company) under which the company may take steps to enable it to

communicate in electronic form or by means of a website.

(5)
If no such notification is given (or no address is provided), the nominated person

is taken to have agreed that documents or information may be sent or supplied to

him by the company by means of a website.

(6)
That agreement—

(a)
may be revoked by the nominated person, and

(b)
does not affect his right under section 797 to require a hard copy version

of a document or information provided in any other form.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
377

Company Law Reform Bill–[ [], continued

Termination or suspension of nomination

Margaret Hodge

Added  NC39

To move the following Clause:—

‘(1)
The following provisions have effect in relation to a nomination under section

(Traded companies: nomination of person to enjoy information rights)

(nomination of person to enjoy information rights).

(2)
The nomination may be terminated at the request of the member or of the

nominated person.

(3)
The nomination ceases to have effect on the occurrence in relation of the member

or the nominated person of any of the following—

(a)
in the case of an individual, death or bankruptcy;

(b)
in the case of a body corporate, dissolution or the making of an order for

the winding up of the body otherwise than for the purposes of

reconstruction.

(4)
In subsection (3)—

(a)
the reference to bankruptcy includes—

(i)
the sequestration of a person’s estate, and

(ii)
a person’s estate being the subject of a protected trust deed

(within the meaning of the Bankruptcy (Scotland) Act 1985

(c. 66)); and

(b)
the reference to the making of an order for winding up is to—

(i)
the making of such an order under the Insolvency Act 1986

(c. 45) or the Insolvency (Northern Ireland) Order 1989

(S.I. 1989/2405 (N.I. 19)), or

(ii)
any corresponding proceeding under the law of a country or

territory outside the United Kingdom.

(5)
The effect of any nominations made by a member is suspended at any time when

there are more nominated persons than the member has shares in the company.

(6)
Where—

(a)
the member holds different classes of shares with different information

rights, and

(b)
there are more nominated persons than he has shares conferring a

particular right,


the effect of any nominations made by him is suspended to the extent that they

confer that right.

(7)
Where the company—

(a)
enquires of a nominated person whether he wishes to retain information

rights, and

(b)
does not receive a response within the period of 28 days beginning with

the date on which the company’s enquiry was sent,


the nomination ceases to have effect at the end of that period.


Such an enquiry is not to be made of a person more than once in any twelve-

month period.

(8)
The termination or suspension of a nomination means that the company is not

required to act on it.

S.C.D.  Standing Committee Proceedings: 20th July 2006
378

Company Law Reform Bill–[ [], continued


It does not prevent the company from continuing to do so, to such extent or for

such period as it thinks fit.’.

Information as to possible rights in relation to voting

Margaret Hodge

Added  Nc40

To move the following Clause:—

‘(1)
This section applies where a company sends a copy of a notice of a meeting to a

person nominated under section (Traded companies: nomination of person to

enjoy information rights) (nomination of person to enjoy information rights)

(2)
The copy of the notice must be accompanied by a statement that—

(a)
he may have a right under an agreement between him and the member by

whom he was nominated to be appointed, or to have someone else

appointed, as a proxy for the meeting, or

(b)
if he has no such right or does not wish to exercise it, he may have a right

under such an agreement to give instructions to the member as to the

exercise of voting rights.

(3)
Section 308 (notice of meeting to contain statement of member’s rights in relation

to appointment of proxy) does not apply to the copy, and the company must

either—

(a)
omit the notice required by that section, or

(b)
include it but state that it does not apply to the nominated person.’.

Information rights: status of rights

Margaret Hodge

Added  NC41

To move the following Clause:—

‘(1)
This section has effect as regards the rights conferred by a nomination under

section (Traded companies: nomination of person to enjoy information rights)

(nomination of person to enjoy information rights).

(2)
Enjoyment by the nominated person of the rights conferred by the nomination is

enforceable against the company by the member as if they were rights conferred

by the company’s articles.

(3)
Any enactment, and any provision of the company’s articles, having effect in

relation to communications with members has a corresponding effect (subject to

any necessary adaptations) in relation to communications with the nominated

person.

(4)
In particular—

(a)
where under any enactment, or any provision of the company’s articles,

the members of a company entitled to receive a document or information

are determined as at a date or time before it is sent or supplied, the

company need not send or supply it to a nominated person—

S.C.D.  Standing Committee Proceedings: 20th July 2006
379

Company Law Reform Bill–[ [], continued

(i)
whose nomination was received by the company after that date

or time, or

(ii)
if that date or time falls in a period of suspension of his

nomination; and

(b)
where under any enactment, or any provision of the company’s articles,

the right of a member to receive a document or information depends on

the company having a current address for him, the same applies to any

person nominated by him.

(5)
The rights conferred by the nomination—

(a)
are in addition to the rights of the member himself, and

(b)
do not affect any rights exercisable by virtue of any such provision as is

mentioned in section (Effect of provisions of articles as to enjoyment or

exercise of members’ rights) (provisions of company’s articles as to

enjoyment or exercise of members’ rights).

(6)
A failure to give effect to the rights conferred by the nomination does not affect

the validity of anything done by or on behalf of the company.

(7)
References in this section to the rights conferred by the nomination are to—

(a)
the rights referred to in section (Traded companies: nomination of person

to enjoy information rights)(3) (information rights), and

(b)
where applicable, the rights conferred by section (Information rights:

form in which copies to be provided)(3) (right to hard copy

communications) and section (Information as to possible rights in

relation to voting) (information as to possible voting rights).’.

Information rights: power to amend

Margaret Hodge

Added  NC42

To move the following Clause:—

‘(1)
The Secretary of State may by regulations amend the provisions of sections

(Traded companies: nomination of persons to enjoy information rights) to

(Information rights: status of rights) (information rights) so as to—

(a)
extend or restrict the classes of companies to which section (Traded

companies: nomination of persons to enjoy information rights) applies,

(b)
make other provision as to the circumstances in which a nomination may

be made under that section, or

(c)
extend or restrict the the rights conferred by such a nomination.

(2)
The regulations may make such consequential modifications of any other

provisions of this Part, or of any other enactment, as appear to the Secretary of

State to be necessary.

(3)
Regulations under this section are subject to affirmative resolution procedure.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
380

Company Law Reform Bill–[ [], continued

Exercise of rights where shares held on behalf of others: exercise in different ways

Margaret Hodge

Added  NC43

To move the following Clause:—

‘(1)
Where a person holds shares in a company on behalf of more than one person—

(a)
rights attached to the shares, and

(b)
rights under any enactment exercisable by the person holding the shares,


need not all be exercised, and if exercised, need not all be exercised in the same

way.

(2)
A member who exercises such rights but does not exercise all his rights, must

inform the company to what extent he is exercising the rights.

(3)
A member who exercises such rights in different ways must inform the company

of the ways in which he is exercising them and to what extent they are exercised

in each way.

(4)
If a member exercises such rights without informing the company—

(a)
that he is not exercising all his rights, or

(b)
that he is exercising his rights in different ways,


the company is entitled to assume that he is exercising all his rights and is

exercising them in the same way.’.

Exercise of rights where shares held on behalf of others: members’ requests

Margaret Hodge

Added  NC44

To move the following Clause:—

‘(1)
This section applies for the purposes of—

(a)
section 297 (power to require circulation of statement),

(b)
section 321 (public companies: power to require circulation of resolution

for AGM),

(c)
section 325 (power to require independent report on poll), and

(d)
section 517 (power to require website publication of audit concerns).

(2)
A company is required to act under any of those sections if it receives a request

in relation to which the following conditions are met—

(a)
it is made by at least 100 persons;

(b)
it is authenticated by all the persons making it;

(c)
in the case of any of those persons who is not a member of the company,

it is accompanied by a statement—

(i)
of the full name and address of a person (“the member”) who is

a member of the company and holds shares on behalf of that

person,

(ii)
that the member is holding those shares on behalf of that person

in the course of a business,

(iii)
of the number of shares in the company that the member holds

on behalf of that person,

(iv)
of the total amount paid up on those shares,