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

430

 

Company Law Reform Bill[ [], continued

 
 

(2)    

For this purpose the rights attached to shares are not regarded as different from

 

those attached to other shares by reason only that they do not carry the same rights

 

to dividends in the twelve months immediately following their allotment.’.

 


 

Variation of class rights: companies having a share capital

 

Margaret Hodge

 

Added  NC135

 

To move the following Clause:—

 

‘(1)    

This section is concerned with the variation of the rights attached to a class of

 

shares in a company having a share capital.

 

(2)    

Rights attached to a class of a company’s shares may be varied if, and only if, the

 

holders of shares of that class consent to the variation in accordance with this

 

section.

 

(3)    

This is without prejudice to any other restrictions on the variation of the rights.

 

(4)    

The consent required for the purposes of this section on the part of the holders of

 

a class of a company’s shares is—

 

(a)    

consent in writing from the holders of at least three-quarters in nominal

 

value of the issued shares of that class (excluding any shares held as

 

treasury shares), or

 

(b)    

a special resolution passed at a separate general meeting of the holders of

 

that class sanctioning the variation.

 

(5)    

Any amendment of a provision contained in a company’s articles for the variation

 

of the rights attached to a class of shares, or the insertion of any such provision

 

into the articles, is itself to be treated as a variation of those rights.

 

(6)    

In this section, and (except where the context otherwise requires) in any provision

 

in a company’s articles for the variation of the rights attached to a class of shares,

 

references to the variation of those rights include references to their abrogation.’.

 


 

Variation of class rights: companies without a share capital

 

Margaret Hodge

 

Added  NC136

 

To move the following Clause:—

 

‘(1)    

This section is concerned with the variation of the rights of a class of members of

 

a company where the company does not have a share capital.

 

(2)    

Rights of a class of members may be varied if, and only if, the members of that

 

class consent to the variation in accordance with this section.

 

(3)    

This is without prejudice to any other restrictions on the variation of the rights.

 

(4)    

The consent required for the purposes of this section on the part of the members

 

of a class is—

 

(a)    

consent in writing from at least three-quarters of the members of the

 

class, or


 
 

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

431

 

Company Law Reform Bill[ [], continued

 
 

(b)    

a special resolution passed at a separate general meeting of the members

 

of that class sanctioning the variation.

 

(5)    

Any amendment of a provision contained in a company’s articles for the variation

 

of the rights of a class of members, or the insertion of any such provision into the

 

articles, is itself to be treated as a variation of those rights.

 

(6)    

In this section, and (except where the context otherwise requires) in any provision

 

in a company’s articles for the variation of the rights of a class of members,

 

references to the variation of those rights include references to their abrogation.’.

 


 

Variation of class rights: saving for court’s powers under other provisions

 

Margaret Hodge

 

Added  NC137

 

To move the following Clause:—

 

‘Nothing in section (Variation of class rights: companies having a share capital)

 

or (Variation of class rights: companies without a share capital) (variation of

 

class rights) affects the power of the court under—

 

section 98 (application to cancel resolution for public company to be re-

 

registered as private);

 

Part (Arrangements and reconstructions) (arangements and

 

reconstructions);

 

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

 

members against unfair prejudice).’.

 


 

Right to object to variation: companies having a share capital

 

Margaret Hodge

 

Added  NC138

 

To move the following Clause:—

 

‘(1)    

This section applies where the rights attached to any class of shares in a company

 

are varied under section (Variation of class rights: companies having a share

 

capital) (variation of class rights: companies having a share capital).

 

(2)    

The holders of not less in the aggregate than 15% of the issued shares of the class

 

in question (being persons who did not consent to or vote in favour of the

 

resolution for the variation) may apply to the court to have the variation

 

cancelled.

 

    

For this purpose any of the company’s share capital held as treasury shares is

 

disregarded.

 

(3)    

If such an application is made, the variation has no effect unless and until it is

 

confirmed by the court.

 

(4)    

Application to the court—

 

(a)    

must be made within 21 days after the date on which the consent was

 

given or the resolution was passed (as the case may be), and


 
 

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

432

 

Company Law Reform Bill[ [], continued

 
 

(b)    

may be made on behalf of the shareholders entitled to make the

 

application by such one or more of their number as they may appoint in

 

writing for the purpose.

 

(5)    

The court, after hearing the applicant and any other persons who apply to the

 

court to be heard and appear to the court to be interested in the application, may,

 

if satisfied having regard to all the circumstances of the case that the variation

 

would unfairly prejudice the shareholders of the class represented by the

 

applicant, disallow the variation, and shall if not satisfied confirm it.

 

    

The decision of the court on any such application is final.

 

(6)    

References in this section to the variation of the rights of holders of a class of

 

shares include references to their abrogation.’.

 


 

Right to object to variation: companies without a share capital

 

Margaret Hodge

 

Added  NC139

 

To move the following Clause:—

 

‘(1)    

This section applies where the rights of any class of members of a company are

 

varied under section (Variation of class rights: companies without a share

 

capital) (variation of class rights: companies without a share capital).

 

(2)    

Members amounting to not less than 15% of the members of the class in question

 

(being persons who did not consent to or vote in favour of the resolution for the

 

variation) may apply to the court to have the variation cancelled.

 

(3)    

If such an application is made, the variation has no effect unless and until it is

 

confirmed by the court.

 

(4)    

Application to the court must be made within 21 days after the date on which the

 

consent was given or the resolution was passed (as the case may be) and may be

 

made on behalf of the members entitled to make the application by such one or

 

more of their number as they may appoint in writing for the purpose.

 

(5)    

The court, after hearing the applicant and any other persons who apply to the

 

court to be heard and appear to the court to be interested in the application, may,

 

if satisfied having regard to all the circumstances of the case that the variation

 

would unfairly prejudice the members of the class represented by the applicant,

 

disallow the variation, and shall if not satisfied confirm it.

 

    

The decision of the court on any such application is final.

 

(6)    

References in this section to the variation of the rights of a class of members

 

include references to their abrogation.’.

 


 

Copy of court order to be forwarded to the registrar

 

Margaret Hodge

 

Added  NC140

 

To move the following Clause:—

 

‘(1)    

The company must within 15 days after the making of an order by the court on an

 

application under section (Right to object to variation: companies having a share


 
 

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433

 

Company Law Reform Bill[ [], continued

 
 

capital) or (Right to object to variation: companies without a share capital)

 

(objection to variation of class rights) forward a copy of the order to the registrar.

 

(2)    

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.

 

(3)    

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.’.

 


 

Notice of name or other designation of class of shares

 

Margaret Hodge

 

Added  NC141

 

To move the following Clause:—

 

‘(1)    

Where a company assigns a name or other designation, or a new name or other

 

designation, to any class of its shares, it must within one month from doing so

 

deliver to the registrar a notice giving particulars of the name or designation so

 

assigned.

 

(2)    

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.

 

(3)    

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.’.

 


 

Notice of particulars of variation of rights attached to shares

 

Margaret Hodge

 

Added  Nc142

 

To move the following Clause:—

 

‘(1)    

Where the rights attached to any shares of a company are varied, the company

 

must within one month from the date on which the variation is made deliver to

 

the registrar a notice giving particulars of the variation.

 

(2)    

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.

 

(3)    

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            

434

 

Company Law Reform Bill[ [], continued

 
 

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

 

standard scale.’.

 


 

Notice of new class of members

 

Margaret Hodge

 

Added  NC143

 

To move the following Clause:—

 

‘(1)    

If a company not having a share capital creates a new class of members, the

 

company must within one month from the date on which the new class is created

 

deliver to the registrar a notice containing particulars of the rights attached to that

 

class.

 

(2)    

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.

 

(3)    

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.’.

 


 

Notice of name or other designation of class of members

 

Margaret Hodge

 

Added  NC144

 

To move the following Clause:—

 

‘(1)    

Where a company not having a share capital assigns a name or other designation,

 

or a new name or other designation, to any class of its members, it must within

 

one month from doing so deliver to the registrar a notice giving particulars of the

 

name or designation so assigned.

 

(2)    

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.

 

(3)    

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            

435

 

Company Law Reform Bill[ [], continued

 
 

Notice of particulars of variation of class rights

 

Margaret Hodge

 

Added  NC145

 

To move the following Clause:—

 

‘(1)    

If the rights of any class of members of a company not having a share capital are

 

varied, the company must within one month from the date on which the variation

 

is made deliver to the registrar a statement containing particulars of the variation.

 

(2)    

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.

 

(3)    

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.’.

 


 

Circumstances in which a company may reduce its share capital

 

Margaret Hodge

 

Added  NC146

 

To move the following Clause:—

 

‘(1)    

A limited company having a share capital may reduce its share capital—

 

(a)    

in the case of a private company limited by shares, by special resolution

 

supported by a solvency statement (see sections (Reduction of capital

 

supported by solvency statement) to (Registration of resolution and

 

supporting documents));

 

(b)    

in any case, by special resolution confirmed by the court (see sections

 

(Application to court for order of confirmation) to (Expedited procedure

 

for re-registration as a private company)).

 

(2)    

A company may not reduce its capital under subsection (1)(a) if as a result of the

 

reduction there would no longer be any member of the company holding shares

 

other than redeemable shares.

 

(3)    

Subject to that, a company may reduce its share capital under this section in any

 

way.

 

(4)    

In particular, a company may—

 

(a)    

extinguish or reduce the liability on any of its shares in respect of share

 

capital not paid up, or

 

(b)    

either with or without extinguishing or reducing liability on any of its

 

shares—

 

(i)    

cancel any paid-up share capital that is lost or unrepresented by

 

available assets, or

 

(ii)    

pay off any paid-up share capital in excess of the company’s

 

wants.

 

(5)    

A special resolution under this section may not provide for a reduction of share

 

capital to take effect later than the date on which the resolution has effect in

 

accordance with this Chapter.


 
 

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Company Law Reform Bill[ [], continued

 
 

(6)    

This Chapter (apart from subsection (5) above) has effect subject to any provision

 

of the company’s articles restricting or prohibiting the reduction of the company’s

 

share capital.’.

 


 

Reduction of capital supported by solvency statement

 

Margaret Hodge

 

Added  NC147

 

To move the following Clause:—

 

‘(1)    

A resolution for reducing share capital of a private company limited by shares is

 

supported by a solvency statement if—

 

(a)    

the directors of the company make a statement of the solvency of the

 

company in accordance with section (Solvency statement) (a “solvency

 

statement”) not more than 15 days before the date on which the resolution

 

is passed, and

 

(b)    

the resolution and solvency statement are registered in accordance with

 

section (Registration of resolution and supporting documents).

 

(2)    

Where the resolution is proposed as a written resolution, a copy of the solvency

 

statement must be sent or submitted to every eligible member at or before the time

 

at which the proposed resolution is sent or submitted to him.

 

(3)    

Where the resolution is proposed at a general meeting, a copy of the solvency

 

statement must be made available for inspection by members of the company

 

throughout that meeting.

 

(4)    

The validity of a resolution is not affected by a failure to comply with subsection

 

(2) or (3).’.

 


 

Solvency statement

 

Margaret Hodge

 

Added  NC148

 

To move the following Clause:—

 

‘(1)    

A solvency statement is a statement that each of the directors—

 

(a)    

has formed the opinion, as regards the company’s situation at the date of

 

the statement, that there is no ground on which the company could then

 

be found to be unable to pay (or otherwise discharge) its debts; and

 

(b)    

has also formed the opinion—

 

(i)    

if it is intended to commence the winding up of the company

 

within twelve months of that date, that the company will be able

 

to pay (or otherwise discharge) its debts in full within twelve

 

months of the commencement of the winding up; or

 

(ii)    

in any other case, that the company will be able to pay (or

 

otherwise discharge) its debts as they fall due during the year

 

immediately following that date.


 
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