sc1902007.423-429

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
423

Company Law Reform Bill–[ [], continued

(a)
sub-divide or consolidate all or any of its share capital in accordance with

section (Sub-division or consolidation of shares), or

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

stock into shares).

(4)
The company may redenominate all or any of its shares in accordance with

section (Redenomination of share capital) and may reduce its share capital in

accordance with section (Reduction of capital in connection with

redenomination) in connection with such a redenomination.

(5)
Nothing in this section affects—

(a)
the power of a company to purchase its own shares, or to redeem shares,

in accordance with Part 19;

(b)
the power of a company to purchase shares in pursuance of an order of

the court under—

(i)
section 98 (application to court to cancel resolution for re-

registration as a private company),

(ii)
section (Application to court to cancel resolution)(6) (powers of

court on objection to redemption or purchase of shares out of

capital),

(iii)
section 534 (remedial order in case of breach of prohibition of

public offers by private company), or

(iv)
Part (Protection of members against unfair prejudice)

(protection of members against unfair prejudice);

(c)
the forfeiture of shares, or the acceptance of shares surrendered in lieu, in

pursuance of the company’s articles, for failure to pay any sum payable

in respect of the shares;

(d)
the cancellation of shares under section (Duty to cancel shares in public

company held by or for the company) (duty to cancel shares held by or

for a public company);

(e)
the power of a company—

(i)
to enter into a compromise or arrangement in accordance with

Part (Arrangements and reconstructions) (arrangements and

reconstructions), or

(ii)
to do anything required to comply with an order of the court on

an application under that Part.’.

Sub-division or consolidation of shares

Margaret Hodge

Added  NC123

To move the following Clause:—

‘(1)
A limited company having a share capital may—

(a)
sub-divide its shares, or any of them, into shares of a smaller nominal

amount than its existing shares, or

(b)
consolidate and divide all or any of its share capital into shares of a larger

nominal amount than its existing shares.

(2)
In any sub-division, consolidation or division of shares under this section, the

proportion between the amount paid and the amount (if any) unpaid on each

S.C.D.  Standing Committee Proceedings: 20th July 2006
424

Company Law Reform Bill–[ [], continued

resulting share must be the same as it was in the case of the share from which that

share is derived.

(3)
A company may exercise a power conferred by this section only if its members

have passed an ordinary resolution authorising it to do so.

(4)
A resolution under subsection (3) may authorise a company—

(a)
to exercise more than one of the powers conferred by this section;

(b)
to exercise a power on more than one occasion;

(c)
to exercise a power at a specified time or in specified circumstances.

(5)
The company’s articles may exclude or restrict the exercise of any power

conferred by this section.’.

Notice to registrar of sub-division or consolidation

Margaret Hodge

Added  NC124

To move the following Clause:—

‘(1)
If a company exercises the power conferred by section (Sub-division or

consolidation of shares) (sub-division or consolidation of shares) it must within

one month after doing so give notice to the registrar, specifying the shares

affected.

(2)
The notice must be accompanied by a statement of capital.

(3)
The statement of capital must state with respect to the company’s share capital

immediately following the exercise of the power—

(a)
the total number of shares of the company,

(b)
the aggregate nominal value of those shares,

(c)
for each class of shares—

(i)
prescribed particulars of the rights attached to the shares,

(ii)
the total number of shares of that class, and

(iii)
the aggregate nominal value of shares of that class, and

(d)
the amount paid up and the amount (if any) unpaid on each share

(whether on account of the nominal value of the share or by way of

premium).

(4)
If default is made in complying with this section, an offence is committed by—

(a)
the company, and

(b)
every officer of the company who is in default.

(5)
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.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
425

Company Law Reform Bill–[ [], continued

Re-conversion of stock into shares

Margaret Hodge

Added  NC125

To move the following Clause:—

‘(1)
A limited company that has converted paid-up shares into stock (before the repeal

by this Act of the power to do so) may re-convert that stock into paid-up shares

of any nominal value.

(2)
A company may exercise the power conferred by this section only if its members

have passed an ordinary resolution authorising it to do so.

(3)
A resolution under subsection (2) may authorise a company to exercise the power

conferred by this section—

(a)
on more than one occasion;

(b)
at a specified time or in specified circumstances.’.

Notice to registrar of re-conversion of stock into shares

Margaret Hodge

Added  NC126

To move the following Clause:—

‘(1)
If a company exercises a power conferred by section (Re-conversion of stock into

shares) (reconversion of stock into shares) it must within one month after doing

so give notice to the registrar, specifying the stock affected.

(2)
The notice must be accompanied by a statement of capital.

(3)
The statement of capital must state with respect to the company’s share capital

immediately following the exercise of the power—

(a)
the total number of shares of the company,

(b)
the aggregate nominal value of those shares,

(c)
for each class of shares—

(i)
prescribed particulars of the rights attached to the shares,

(ii)
the total number of shares of that class, and

(iii)
the aggregate nominal value of shares of that class, and

(d)
the amount paid up and the amount (if any) unpaid on each share

(whether on account of the nominal value of the share or by way of

premium).

(4)
If default is made in complying this section, an offence is committed by—

(a)
the company, and

(b)
every officer of the company who is in default.

(5)
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.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
426

Company Law Reform Bill–[ [], continued

Redenomation of share capital

Margaret Hodge

Added  NC127

To move the following Clause:—

‘(1)
A limited company having a share capital may by ordinary resolution

redenominate its share capital or any class of its share capital.


“Redenominate” means convert shares from having a fixed nominal value in one

currency to having a fixed nominal value in another currency.

(2)
The conversion must be made at an appropriate spot rate of exchange specified in

the resolution.

(3)
The rate must be either—

(a)
a rate prevailing on a day specified in the resolution, or

(b)
a rate determined by taking the average of rates prevailing on each

consecutive day of a period specified in the resolution.


The day or period specified for the purposes of paragraph (a) or (b) must be within

the period of 28 days ending on the day before the resolution is passed.

(4)
A resolution under this section may specify conditions which must be met before

the redenomination takes effect.

(5)
Redenomination in accordance with a resolution under this section takes effect—

(a)
on the day on which the resolution is passed, or

(b)
on such later day as may be determined in accordance with the resolution.

(6)
A resolution under this section lapses if the redenomination for which it provides

has not taken effect at the end of the period of 28 days beginning on the date on

which it is passed.

(7)
A company’s articles may prohibit or restrict the exercise of the power conferred

by this section.’.

Calculation of new nominal values

Margaret Hodge

Added  NC128

To move the following Clause:—

‘
‘For each class of share the new nominal value of each share is calculated as

follows:


Step One


Take the aggregate of the old nominal values of all the shares of that class.


Step Two


Translate that amount into the new currency at the rate of exchange specified in

the resolution.


Step Three


Divide that amount by the number of shares in the class.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
427

Company Law Reform Bill–[ [], continued

Effect of redenomination

Margaret Hodge

Added  NC129

To move the following Clause:—

‘(1)
The redenomination of shares does not affect any rights or obligations of

members under the company’s constitution, or any restrictions affecting members

under the company’s constitution.


In particular, it does not affect entitlement to dividends (including entitlement to

dividends in a particular currency), voting rights or any liability in respect of

amounts unpaid on shares.

(2)
For this purpose the company’s constitution includes the terms on which any

shares of the company are allotted or held.

(3)
Subject to subsection (1), references to the old nominal value of the shares in any

agreement or statement, or in any deed, instrument or document, shall (unless the

context otherwise requires) be read after the resolution takes effect as references

to the new nominal value of the shares.’.

Notice to registrar of redenomination

Margaret Hodge

Added  NC130

To move the following Clause:—

‘(1)
If a limited company having a share capital redenominates any of its share capital,

it must within one month after doing so give notice to the registrar, specifying the

shares redenominated.

(2)
The notice must—

(a)
state the date on which the resolution was passed, and

(b)
be accompanied by a statement of capital.

(3)
The statement of capital must state with respect to the company’s share capital as

redenominated by the resolution—

(a)
the total number of shares of the company,

(b)
the aggregate nominal value of those shares,

(c)
for each class of shares—

(i)
prescribed particulars of the rights attached to the shares,

(ii)
the total number of shares of that class, and

(iii)
the aggregate nominal value of shares of that class, and

(d)
the amount paid up and the amount (if any) unpaid on each share

(whether on account of the nominal value of the share or by way of

premium).

(4)
If default is made in complying with this section, an offence is committed by—

(a)
the company, and

(b)
every officer of the company who is in default.

(5)
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

S.C.D.  Standing Committee Proceedings: 20th July 2006
428

Company Law Reform Bill–[ [], continued

contravention, a daily default fine not exceeding one-tenth of level 3 on the

standard scale.’.

Reduction of capital in connection with redenomination

Margaret Hodge

Added  NC131

To move the following Clause:—

‘(1)
A company that passes a resolution redenominating some or all of its shares may,

for the purpose of adjusting the nominal values of the redenominated shares to

obtain values that are, in the opinion of the company, more suitable, reduce its

share capital under this section.

(2)
A reduction of capital under this section requires a special resolution of the

company.

(3)
Any such resolution must be passed within three months of the resolution

effecting the redenomination.

(4)
The amount by which a company’s share capital is reduced under this section

must not exceed 10% of the nominal value of the company’s allotted share capital

immediately after the reduction.

(5)
A reduction of capital under this section does not extinguish or reduce any

liability in respect of share capital not paid up.

(6)
Nothing in Chapter (Reduction of share capital) of this Part applies to a reduction

of capital under this section.’.

Notice to registrar of reduction of capital in connection with redenomination

Margaret Hodge

Added  Nc132

To move the following Clause:—

‘(1)
A company that passes a resolution under section (Reduction of capital in

connection with redenomination) (reduction of capital in connection with

redenomination) must within 15 days after the resolution is passed give notice to

the registrar stating—

(a)
the date of the resolution, and

(b)
the date of the resolution under section (Redenomination of share

capital) in connection with which it was passed.


This is in addition to the copies of the resolutions themselves that are required to

be delivered to the registrar under Chapter 3 of Part 3.

(2)
The notice must be accompanied by a statement of capital.

(3)
The statement of capital must state with respect to the company’s share capital as

reduced by the resolution—

(a)
the total number of shares of the company,

(b)
the aggregate nominal value of those shares,

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

(c)
for each class of shares—

(i)
prescribed particulars of the rights attached to the shares,

(ii)
the total number of shares of that class, and

(iii)
the aggregate nominal value of shares of that class, and

(d)
the amount paid up and the amount (if any) unpaid on each share

(whether on account of the nominal value of the share or by way of

premium).

(4)
The registrar must register the notice and the statement on receipt.

(5)
The reduction of capital is not effective until those documents are registered.

(6)
The company must also deliver to the registrar, within 15 days after the resolution

is passed, a statement by the directors confirming that the reduction in share

capital is in accordance with section (Reduction of capital in connection with

redenomation)(4) (reduction of capital not to exceed 10% of nominal value of

allotted shares immediately after reduction).

(7)
If default is made in complying with this section, an offence is committed by—

(a)
the company, and

(b)
every officer of the company who is in default.

(8)
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.’.

Redenomination reserve

Margaret Hodge

Added  NC133

To move the following Clause:—

‘(1)
The amount by which a company’s share capital is reduced under section

(Reduction of capital in connection with redenomation) (reduction of capital in

connection with redenomination) must be transferred to a reserve, called “the

redenomination reserve”.

(2)
The redenomination reserve may be applied by the company in paying up shares

to be allotted to members as fully paid bonus shares.

(3)
Subject to that, the provisions of the Companies Acts relating to the reduction of

a company’s share capital apply as if the redenomination reserve were paid-up

share capital of the company.’.

Classes of shares

Margaret Hodge

Added  NC134

To move the following Clause:—

‘(1)
For the purpose of this Chapter shares are of one class if the rights attached to

them are in all respects uniform.