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| | Meaning of payment in cash |
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| To move the following Clause:— |
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| | ‘(1) | The following provisions have effect for the purposes of the Companies Acts. |
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| | (2) | A share in a company is deemed paid up (as to its nominal value or any premium |
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| | on it) in cash, or allotted for cash, if the consideration received for the allotment |
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| | (a) | cash received by the company, |
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| | (b) | a cheque reeived by the company in good faith that the directors have no |
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| | reason for suspecting will not be paid, |
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| | (c) | a release of a liability of the company for a liquidated sum, or |
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| | (d) | an undertaking to pay cash to the company at a future date. |
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| | (3) | In relation to the allotment or payment up of shares in a company— |
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| | (a) | the payment of cash to a person other than the company, or |
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| | (b) | an undertaking to pay cash to a person other than the company, |
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| | | counts as consideration other than cash. |
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| | | This does not apply for the purposes of Chapter (allotment of equity securities: |
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| | existing shareholders’ right of pre-emption) (allotment of equity securities: |
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| | existing shareholders’ right of pre-emption). |
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| | (4) | For the purpose of determining whether a share is or is to be allotted for cash, or |
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| | paid up in cash, “cash includes foreign currency.’. |
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| | Public companies: shares taken by subscribers of memorandum |
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| To move the following Clause:— |
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| | ‘Shares taken by a subscriber to the memorandum of a public company in |
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| | pursuance of an undertaking of his in the memorandum, and any premium on the |
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| | shares, must be paid up in cash.’. |
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| | Public companies: must not accept undertaking to do work or perform services |
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| To move the following Clause:— |
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| | ‘(1) | A public company must not accept at any time, in payment up of its shares or any |
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| | premium on them, an undertaking given by any person that he or another should |
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| | do work or perform services for the company or any other person. |
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| | (2) | If a public company accepts such an undertaking in payment up of its shares or |
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| | any premium on them, the holder of the shares when they or the premium are |
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| | treated as paid up (in whole or in part) by the undertaking is liable— |
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| | (a) | to pay the company in respect of those shares an amount equal to their |
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| | nominal value, together with the whole of any premium or, if the case so |
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| | requires, such proportion of that amount as is treated as paid up by the |
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| | (b) | to pay interest at the appropriate rate on the amount payable under |
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| | (3) | The reference in subsection (2) to the holder of shares includes a person who has |
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| | (a) | to be included in the company’s register of members in respect of those |
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| | (b) | to have an instrument of transfer of them executed in his favour.’. |
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| | Public companies: shares must be at least one-quarter paid up |
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| To move the following Clause:— |
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| | ‘(1) | A public company must not allot a share except as paid up at least as to one- |
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| | quarter of its nominal value and the whole of any premium on it. |
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| | (2) | This does not apply to shares allotted in pursuance of an employees’ share |
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| | (3) | If a company allots a share in contravention of this section— |
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| | (a) | the share is to be treated as if one-quarter of its nominal value, together |
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| | with the whole of any premium on it, had been received, and |
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| | (b) | the allottee is liable to pay the company the minimum amount which |
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| | should have been received in respect of the share under subsection (1) |
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| | (less the value of any consideration actually applied in payment up, to |
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| | any extent, of the share and any premium on it), with interest at the |
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| | (4) | Subsection (3) does not apply to the allotment of bonus shares, unless the allottee |
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| | knew or ought to have known the shares were allotted in contravention of this |
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| | Public companies: payment by long-term undertaking |
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| To move the following Clause:— |
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| | ‘(1) | A public company must not allot shares as fully or partly paid up (as to their |
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| | nominal value or any premium on them) otherwise than in cash if the |
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| | consideration for the allotment is or includes an undertaking which is to be, or |
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| | may be, performed more than five years after the date of the allotment. |
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| | (2) | If a company allots shares in contravention of subsection (1), the allottee is liable |
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| | to pay the company an amount equal to the aggregate of their nominal value and |
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| | the whole of any premium (or, if the case so requires, so much of that aggregate |
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| | as is treated as paid up by the undertaking), with interest at the appropriate rate. |
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| | (3) | Where a contract for the allotment of shares does not contravene subsection (1), |
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| | any variation of the contract that has the effect that the contract would have |
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| | contravened the subsection, if the terms of the contract as varied had been its |
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| | | This applies also to the variation by a public company of the terms of a contract |
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| | entered into before the company was re-registered as a public company. |
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| | (a) | a public company allots shares for a consideration which consists of or |
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| | includes (in accordance with subsection (1)) an undertaking that is to be |
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| | performed within five years of the allotment, and |
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| | (b) | the undertaking is not performed within the period allowed by the |
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| | contract for the allotment of the shares, |
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| | | the allottee is liable to pay the company, at the end of the period so allowed, an |
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| | amount equal to the aggregate of the nominal value of the shares and the whole |
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| | of any premium (or, if the case so requires, so much of that aggregate as is treated |
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| | as paid up by the undertaking), with interest at the appropriate rate. |
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| | (5) | References in this section to a contract for the allotment of shares include an |
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| | ancillary contract relating to payment in respect of them.’. |
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| | Liability of subsequent holders of shares |
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| To move the following Clause:— |
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| | ‘(1) | If a person becomes a holder of shares in respect of which— |
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| | (a) | there has been a contravention of any provision of this Chapter, and |
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| | (b) | by virtue of that contravention another is liable to pay any amount under |
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| | the provision contravened, |
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| | that person is also liable to pay that amount (jointly and severally with any other |
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| | person so liable), subject as follows. |
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| | (2) | A person otherwise liable under subsection (1) is exempted from that liability if |
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| | (a) | he is a purchaser for value and, at the time of the purchase, he did not |
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| | have actual notice of the contravention concerned, or |
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| | (b) | he derived title to the shares (directly or indirectly) from a person who |
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| | became a holder of them after the contravention and was not liable under |
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| | (3) | References in this section to a holder, in relation to shares in a company, include |
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| | any person who has an unconditional right— |
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| | (a) | to be included in the company’s register of members in respect of those |
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| | (b) | to have an instrument of transfer of the shares executed in his favour. |
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| | (4) | This section applies in relation to a failure to carry out a term of a contract as |
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| | mentioned in section (Public companies: payment by long-term undertaking)(4) |
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| | (public companies: payment by long-term undertaking) as they apply in relation |
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| | to a contravention of a provision of this Chapter.’. |
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| | Power of court to grant relief |
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| To move the following Clause:— |
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| | ‘(1) | This section applies in relation to liability under— |
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| | section (Public companies: must not accept undertaking to do work or |
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| | perform services)(2) (liability of allottee in case of breach by public |
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| | company: of prohibition on accepting undertaking to do work or perform |
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| | section (Public companies: payment by long-term undertaking)(2) or (4) |
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| | (liability of allottee in case of breach by public company of prohibition |
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| | on payment by long-term undertaking), or |
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| | section (Liability of subsequent holders of shares) (liability of subsequent |
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| | holders of shares) as it applies in relation to a contravention of those |
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| | (a) | is subject to any such liability to a company in relation to payment in |
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| | respect of shares in the company, or |
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| | (b) | is subject to any such liability to a company by virtue of an undertaking |
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| | given to it in, or in connection with, payment for shares in the company, |
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| | may apply to the court to be exempted in whole or in part from the liability. |
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| | (3) | In the case of a liability within subsection (2)(a), the court may exempt the |
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| | applicant from the liability only if and to the extent that it appears to the court just |
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| | and equitable to do so having regard to— |
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| | (a) | whether the applicant has paid, or is liable to pay, any amount in respect |
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| | (i) | any other liability arising in relation to those shares under any |
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| | provision of this Chapter, or |
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| | (ii) | any liability arising by virtue of any undertaking given in or in |
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| | connection with payment for those shares; |
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| | (b) | whether any person other than the applicant has paid or is likely to pay, |
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| | whether in pursuance of any order of the court or otherwise, any such |
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| | (c) | whether the applicant or any other person— |
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| | (i) | has performed in whole or in part, or is likely so to perform any |
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| | (ii) | has done or is likely to do any other thing in payment or part |
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| | (4) | In the case of a liability within subsection (2)(b), the court may exempt the |
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| | applicant from the liability only if and to the extent that it appears to the court just |
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| | and equitable to do so having regard to— |
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| | (a) | whether the applicant has paid or is liable to pay any amount in respect |
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| | of liability arising in relation to the shares under any provision of this |
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| | (b) | whether any person other than the applicant has paid or is likely to pay, |
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| | whether in pursuance of any order of the court or otherwise, any such |
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| | (5) | In determining whether it should exempt the applicant in whole or in part from |
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| | any liability, the court must have regard to the following overriding principles— |
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| | (a) | a company that has allotted shares should receive money or money’s |
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| | worth at least equal in value to the aggregate of the nominal value of |
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| | those shares and the whole of any premium or, if the case so requires, so |
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| | much of that aggregate as is treated as paid up; |
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| | (b) | subject to that, where a company would, if the court did not grant the |
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| | exemption, have more than one remedy against a particular person, it |
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| | should be for the company to decide which remedy it should remain |
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| | (6) | If a person brings proceedings against another (“the contributor”) for a |
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| | contribution in respect of liability to a company arising under any provision of |
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| | this Chapter and it appears to the court that the contributor is liable to make such |
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| | a contribution, the court may, if and to the extent that it appears to it, just and |
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| | equitable to do so having regard to the respective culpability (in respect of the |
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| | liability to the company) of the contributor and the person bringing the |
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| | (a) | exempt the contributor in whole or in part from his liability to make such |
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| | (b) | order the contributor to make a larger contribution than, but for this |
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| | subsection, he would be liable to make.’. |
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| | Penalty for contravention of this Chapter |
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| To move the following Clause:— |
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| | ‘(1) | If a company contravenes any of the provisions of this Chapter, an offence is |
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| | (b) | every officer of the company who is in default. |
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| | (2) | A person guilty of an offence under this section is liable— |
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| | (a) | on conviction on indictment, to a fine; |
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| | (b) | on summary conviction, to a fine not exceeding the statutory maximum.’. |
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| | Enforceability of undertakings to do work etc |
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| To move the following Clause:— |
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| | ‘(1) | An undertaking given by any person, in or in connection with payment for shares |
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| | in a company, to do work or perform services or to do any other thing, if it is |
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| | enforceable by the company apart from this Chapter, is so enforceable |
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| | notwithstanding that there has been a contravention in relation to it of a provision |
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| | (2) | This is without prejudice to section (Power of court to grant relief) (power of |
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| | court to grant relief etc in respect of liabilities).’. |
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| | The appropriate rate of interest |
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| To move the following Clause:— |
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| | ‘(1) | For the purposes of this Chapter the “appropriate rate” of interest is 5% per annum |
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| | or such other rate as may be specified by order made by the Secretary of State. |
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| | (2) | An order under this section is subject to negative resolution procedure.’. |
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| | Public company: valuation of non-cash consideration for shares |
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| To move the following Clause:— |
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| | ‘(1) | A public company must not allot shares as fully or partly paid up (as to their |
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| | nominal value or any premium on them) otherwise than in cash unless— |
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| | (a) | the consideration for the allotment has been independently valued in |
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| | accordance with the provisions of this Chapter, |
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| | (b) | the valuer’s report has been made to the company during the six months |
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| | immediately preceding the allotment of the shares, and |
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| | (c) | a copy of the report has been sent to the proposed allottee. |
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| | (2) | For this purpose the application of an amount standing to the credit of— |
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| | (a) | any of a company’s reserve accounts, or |
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| | (b) | its profit and loss account, |
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| | | in paying up (to any extent) shares allotted to members of the company, or |
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| | premiums on shares so allotted, does not count as consideration for the allotment. |
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| | (3) | If a company allots shares in contravention of subsection (1) and either— |
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| | (a) | the allottee has not received the valuer’s report required to be sent to him, |
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| | (b) | there has been some other contravention of the requirements of this |
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| | Chapter that the allottee knew or ought to have known amounted to a |
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| | | the allottee is liable to pay the company an amount equal to the aggregate of the |
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| | nominal value of the shares and the whole of any premium (or, if the case so |
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| | requires, so much of that aggregate as is treated as paid up by the consideration), |
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| | with interest at the appropriate rate. |
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| | (4) | This section has effect subject to— |
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| | section (exception to valuation requirement: arrangement with another |
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| | company) (exception to valuation requirement: arrangement with another |
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| | section (exception to valuation requirement: merger) (exception to |
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| | valuation requirement: merger).’. |
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| | Exception to valuation requirement: arrangement with another company |
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| To move the following Clause:— |
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| | ‘(1) | Section (Public company: valuation of non-cash consideration for shares) |
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| | (valuation of non-cash consideration) does not apply to the allotment of shares by |
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| | a company (“company A”) in connection with an arrangement to which this |
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| | (2) | This section applies to an arrangement for the allotment of shares in company A |
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| | on terms that the whole or part of the consideration for the shares allotted is to be |
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| | (a) | the transfer to that company, or |
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| | | of all or some of the shares, or of all or some of the shares of a particular class, in |
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| | another company (“company B”). |
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| | (3) | It is immaterial whether the arrangement provides for the issue to company A of |
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| | shares, or shares of any particular class, in company B. |
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| | (4) | This section applies to an arrangement only if under the arrangement it is open to |
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| | all the holders of the shares in company B (or, where the arrangement applies only |
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| | to shares of a particular class, to all the holders of shares of that class) to take part |
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| | (5) | In determining whether that is the case, the following shall be disregarded— |
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| | (a) | shares held by or by a nominee of company A; |
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| | (b) | shares held by or by a nominee of a company which is— |
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| | (i) | the holding company, or a subsidiary, of company A, or |
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| | (ii) | a subsidiary of such a holding company; |
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| | (c) | shares held as treasury shares by company B. |
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| | (a) | “arrangement” means any agreement, scheme or arrangement (including |
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| | an arrangement sanctioned in accordance with— |
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| | (i) | Part (Arrangements and reconstructions) (arrangements and |
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