sc1902007.381-387

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
381

Company Law Reform Bill–[ [], continued

(v)
that those shares are not held on behalf of anyone else or, if they

are, that the other person or persons are not among the other

persons making the request,

(vi)
that some or all of those shares confer voting rights that are

relevant for the purposes of making a request under the section

in question, and

(vii)
that the person has the right to instruct the member how to

exercise those rights;

(d)
in the case of any of those persons who is a member of the company, it is

accompanied by a statement—

(i)
that he holds shares otherwise than on behalf of another person,

or

(ii)
that he holds shares on behalf of one or more other persons but

those persons are not among the other persons making the

request;

(e)
it is accompanied by such evidence as the company may reasonably

require of the matters mentioned in paragraph (c) and (d);

(f)
the total amount of the sums paid up on—

(i)
shares held as mentioned in paragraph (c), and

(ii)
shares held as mentioned in paragraph (d),


divided by the number of persons making the request, is not less than

£100;

(g)
the request complies with any other requirements of the section in

question as to contents, timing and otherwise.’.

Shares

Margaret Hodge

Added  NC45

To move the following Clause:—

‘(1)
In the Companies Acts “share”, in relation to a company, means share in the

company’s share capital.

(2)
A company’s shares may no longer be converted into stock.

(3)
Stock created before the commencement of this Part may be reconverted into

shares in accordance with section (Re-conversion of stock into shares).

(4)
In the Companies Acts—

(a)
references to shares include stock except where a distinction between

share and stock is express or implied, and

(b)
references to a number of shares include an amount of stock where the

context admits of the reference to shares being read as including stock.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
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Company Law Reform Bill–[ [], continued

Nature of shares

Margaret Hodge

Added  NC46

To move the following Clause:—

The shares or other interest of a member in a company are personal property (or,

in Scotland, moveable property) and are not in the nature of real estate (or

heritage).’.

Nominal value of shares

Margaret Hodge

Added  NC47

To move the following Clause:—

‘(1)
Shares in a limited company having a share capital must each have a fixed

nominal value.

(2)
An allotment of a share that does not have a fixed nominal value is void.

(3)
Shares in a limited company having a share capital may be denominated in any

currency, and different classes of shares may be denominated in different

currencies.

(4)
If a company purports to allot shares in contravention of this section, an offence

is committed by every officer of the company who is in default.

(5)
A person guilty of an offence under this section is liable—

(a)
on conviction on indictment, to a fine, and

(b)
on summary conviction, to a fine not exceeding the statutory maximum.’.

Numbering of shares

Margaret Hodge

Added  NC48

To move the following Clause:—

‘(1)
Each share in a company having a share capital must be distinguished by its

appropriate number, except in the following circumstances.

(2)
If at any time—

(a)
all the issued shares in a company are fully paid up and rank pari passu

for all purposes, or

(b)
all the issued shares of a particular class in a company are fully paid up

and rank pari passu for all purposes,

S.C.D.  Standing Committee Proceedings: 20th July 2006
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Company Law Reform Bill–[ [], continued


none of those shares need thereafter have a distinguishing number so long as it

remains fully paid up and ranks pari passu for all purposes with all shares of the

same class for the time being issued and fully paid up.’.

Transferability of shares

Margaret Hodge

Added  NC49

To move the following Clause:—

‘(1)
The shares or other interest of any member in a company are transferable in

accordance with the company’s articles.

(2)
This is subject to—

(a)
the Stock Transfer Act 1963 (c. 18) or the Stock Transfer Act (Northern

Ireland) 1963 (c.24 (N.I.)) (which enables securities of certain

descriptions to be transferred by a simplified process), and

(b)
regulations under Chapter (Evidencing and transferring title to securities

without written instrument) of Part (Certification and transfer of

securities) of this Act (which enable title to securities to be evidenced and

transferred without a written instrument).

(3)
See Part 21 of this Act generally as regards share transfers.’.

Companies having a share capital

Margaret Hodge

Added  NC50

To move the following Clause:—

References in the Companies Acts to a company having a share capital are to a

company that has power under its constitution to issue shares.’.

Issued and allotted share capital

Margaret Hodge

Added  NC51

To move the following Clause:—

‘(1)
References in the Companies Acts—

(a)
to “issued share capital” are to shares of a company that have been issued;

(b)
to “allotted share capital” are to shares of a company that have been

allotted.

S.C.D.  Standing Committee Proceedings: 20th July 2006
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Company Law Reform Bill–[ [], continued

(2)
References in the Companies Acts to issued or allotted shares, or to issued or

allotted share capital, include shares taken on the formation of the company by

the subscribers to the company’s memorandum.’.

Called-up share capital

Margaret Hodge

Added  NC52

To move the following Clause:—

In the Companies Acts—

“called-up share capital”, in relation to a company, means so much of its

share capital as equals the aggregate amount of the calls made on its

shares (whether or not those calls have been paid), together with—

(a)
any share capital paid up without being called, and

(b)
any share capital to be paid on a specified future date under the

articles, the terms of allotment of the relevant shares or any other

arrangements for payment of those shares; and

“uncalled share capital” is to be construed accordingly.’.

Equity share capital

Margaret Hodge

Added  NC53

To move the following Clause:—

In the Companies Acts “equity share capital”, in relation to a company, means its

issued share capital excluding any part of that capital that does not carry any right

(either as respects dividends or as respects capital) to participate beyond a

specified amount in a distribution.’.

Exercise by directors of power to allot shares etc

Margaret Hodge

Added  NC54

To move the following Clause:—

‘(1)
The directors of a company must not exercise any power of the company—

(a)
to allot shares in the company, or

(b)
to grant rights to subscribe for, or to convert any security into, shares in

the company,

S.C.D.  Standing Committee Proceedings: 20th July 2006
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Company Law Reform Bill–[ [], continued


except in accordance with section (Power of directors to allot shares etc: private

company with only one class of shares) (private company with single class of

shares) or section (Power of directors to allot shares etc: authorisation by

company) (authorisation by company).

(2)
Subsection (1) does not apply—

(a)
to the allotment of shares in pursuance of an employees’ share scheme, or

(b)
to the grant of a right to subscribe for, or to convert any security into,

shares so allotted.

(3)
If this section applies in relation to the grant of a right to subscribe for, or to

convert any security into, shares, it does not apply in relation to the allotment of

shares pursuant to that right.

(4)
A director who knowingly contravenes, or permits or authorises a contravention

of, this section commits an offence.

(5)
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.

(6)
Nothing in this section affects the validity of an allotment or other transaction.’.

Power of directors to allot shares etc: private company with only one class of shares

Margaret Hodge

Added  NC55

To move the following Clause:—

Where a private company has only one class of shares, the directors may exercise

any power of the company—

(a)
to allot shares of that class, or

(b)
to grant rights to subscribe for or to convert any security into such shares,

except to the extent that they are prohibited from doing so by the company’s

articles.’.

Power of directors to allot shares etc: authorisation by company

Margaret Hodge

Added  NC56

To move the following Clause:—

‘(1)
The directors of a company may exercise a power of the company—

(a)
to allot shares in the company, or

(b)
to grant rights to subscribe for or to convert any security into shares in the

company,


if they are authorised to do so by the company’s articles or by resolution of the

company.

(2)
Authorisation may be given for a particular exercise of the power or for its

exercise generally, and may be unconditional or subject to conditions.

S.C.D.  Standing Committee Proceedings: 20th July 2006
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Company Law Reform Bill–[ [], continued

(3)
Authorisation must—

(a)
state the maximum amount of shares that may be allotted under it, and

(b)
specify the date on which it will expire, which must be not more than five

years from—

(i)
in the case of authorisation contained in the company’s articles

at the time of its original incorporation, the date of that

incorporation;

(ii)
in any other case, the date on which the resolution is passed by

virtue of which the authorisation is given.

(4)
Authorisation may—

(a)
be renewed or further renewed by resolution of the company for a further

period not exceeding five years, and

(b)
be revoked or varied at any time by resolution of the company.

(5)
A resolution renewing authorisation must—

(a)
state (or restate) the maximum amount of shares that may be allotted

under the authorisation or, as the case may be, the amount remaining to

be allotted under it, and

(b)
specify the date on which the renewed authorisation will expire.

(6)
In relation to rights to subscribe for or to convert any security into shares in the

company, references in this section to the maximum amount of shares that may

be allotted under the authorisation are to the maximum amount of shares that may

be allotted pursuant to the rights.

(7)
The directors may allot shares, or grant rights to subscribe for or to convert any

security into shares, after authorisation has expired if—

(a)
the shares are allotted, or the rights are granted, in pursuance of an offer

or agreement made by the company before the authorisation expired, and

(b)
the authorisation allowed the company to make an offer or agreement

which would or might require shares to be allotted, or rights to be

granted, after the authorisation had expired.

(8)
A resolution of a company to give, vary, revoke or renew authorisation under this

section may be an ordinary resolution, even though it amends the company’s

articles.’.

General prohibition of commissions, discounts and allowances

Margaret Hodge

Added  NC57

To move the following Clause:—

‘(1)
Except as permitted by section (permitted commission) (permitted commission),

a company must not apply any of its shares or capital money, either directly or

indirectly, in payment of any commission, discount or allowance to any person in

consideration of his—

(a)
subscribing or agreeing to subscribe (whether absolutely or

conditionally) for shares in the company, or

(b)
procuring or agreeing to procure subscriptions (whether absolute or

conditional) for shares in the company.

(2)
It is immaterial how the shares or money are so applied, whether by being added

to the purchase money of property acquired by the company or to the contract

S.C.D.  Standing Committee Proceedings: 20th July 2006
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Company Law Reform Bill–[ [], continued

price of work to be executed for the company, or being paid out of the nominal

purchase money or contract price, or otherwise.

(3)
Nothing in this section affects the payment of such brokerage as has previously

been lawful.’.

Permitted commission

Margaret Hodge

Added  NC58

To move the following Clause:—

‘(1)
A company may, if the following conditions are satisfied, pay a commission to a

person in consideration of his subscribing or agreeing to subscribe (whether

absolutely or conditionally) for shares in the company, or procuring or agreeing

to procure subscriptions (whether absolute or conditional) for shares in the

company,

(2)
The conditions are—

(a)
the payment of the commission is authorised by the company’s articles;

(b)
the commission paid or agreed to be paid does not exceed—

(i)
10% of the price at which the shares are issued, or

(ii)
the amount or rate authorised by the articles,


whichever is the less.

(3)
A vendor to, or promoter of, or other person who receives payment in money or

shares from, a company may apply any part of the money or shares so received in

payment of any commission the payment of which directly by the company

would be permitted by this section.’.

Registration of allotment

Margaret Hodge

Added  NC59

To move the following Clause:—

‘(1)
A company must register an allotment of shares as soon as practicable and in any

event within two months after the date of the allotment.

(2)
This does not apply if the company has issued a share warrant in respect of the

shares (see section (Issue and effect of share warrant to bearer).

(3)
If a company fails to comply 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 2 on the

standard scale.