sc1902007.493-499

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
493

Company Law Reform Bill–[ [], continued

(d)
whether the information will be disclosed to any other person, and if so—

(i)
where that person is an individual, his name and address,

(ii)
where that person is an organisation, the name and address of an

individual responsible for receiving the information on its

behalf, and

(iii)
the purpose for which the information is to be used by that

person.

(5)
For the purposes of this section a register is “duly closed” if it is closed in

accordance with provision contained—

(a)
in the articles or in the debentures,

(b)
in the case of debenture stock in the stock certificates, or

(c)
in the trust deed or other document securing the debentures or debenture

stock.


The total period for which a register is closed in any year must not exceed 30

days.

(6)
References in this section to a register of debenture holders include a duplicate—

(a)
of a register of debenture holders that is kept outside the United

Kingdom, or

(b)
of any part of such a register.’.

Register of debenture holders: response to request for inspection or copy

Margaret Hodge

Added  nc249

To move the following Clause:—

‘(1)
Where a company receives a request under section (Register of debenture

holders: right to inspect and require copy) (register of debenture holders: right to

inspect and require copy), it must within five working days either—

(a)
comply with the request, or

(b)
apply to the court.

(2)
If it applies to the court it must notify the person making the request.

(3)
If on an application under this section the court is satisfied that the inspection or

copy is not sought for a proper purpose—

(a)
it shall direct the company not to comply with the request, and

(b)
it may further order that the company’s costs (in Scotland, expenses) on

the application be paid in whole or in part by the person who made the

request, even if he is not a party to the application.

(4)
If the court makes such a direction and it appears to the court that the company is

or may be subject to other requests made for a similar purpose (whether made by

the same person or different persons), it may direct that the company is not to

comply with any such request.


The order must contain such provision as appears to the court appropriate to

identify the requests to which it applies.

(5)
If on an application under this section the court does not direct the company not

to comply with the request, the company must comply with the request

S.C.D.  Standing Committee Proceedings: 20th July 2006
494

Company Law Reform Bill–[ [], continued

immediately upon the court giving its decision or, as the case may be, the

proceedings being discontinued.’.

Register of debenture holders: refusal of inspection or default in providing copy

Margaret Hodge

Added  NC250

To move the following Clause:—

‘(1)
If an inspection required under section (Register of debenture holders: right to

inspect and require copy) (register of debenture holders: right to inspect and

require copy) is refused or default is made in providing a copy required under that

section, otherwise than in accordance with an order of the court, an offence is

committed by—

(a)
the company, and

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

(2)
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.

(3)
In the case of any such refusal or default the court may by order compel an

immediate inspection or, as the case may be, direct that the copy required be sent

to the person requesting it.’.

Register of debenture holders: offences in connection with request for or disclosure of

information

Margaret Hodge

Added  nc251

To move the following Clause:—

‘(1)
It is an offence for a person knowingly or recklessly to make in a request under

section (Register of debenture holders: right to inspect and require copy)

(register of debenture holders: right to inspect and require copy) a statement that

is misleading, false or deceptive in a material particular.

(2)
It is an offence for a person in possession of information obtained by exercise of

either of the rights conferred by that section—

(a)
to do anything that results in the information being disclosed to another

person, or

(b)
to fail to do anything with the result that the information is disclosed to

another person,


knowing or having reason to suspect that person may use the information for a

purpose that is not a proper purpose.

(3)
A person guilty of an offence under this section is liable—

(a)
on conviction on indictment, to imprisonment for a term not exceeding

two years or a fine (or both);

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

(b)
on summary conviction—

(i)
in England and Wales, to imprisonment for a term not exceeding

twelve months or to a fine not exceeding the statutory maximum

(or both);

(ii)
in Scotland or Northern Ireland, to imprisonment for a term not

exceeding six months, or to a fine not exceeding the statutory

maximum (or both).’.

Time limit for claims arising from entry in register

Margaret Hodge

Added  nc252

To move the following Clause:—

‘(1)
Liability incurred by a company—

(a)
from the making or deletion of an entry in the register of debenture

holders, or

(b)
from a failure to make or delete any such entry,


is not enforceable more than ten years after the date on which the entry was made

or deleted or, as the case may be, the failure first occurred.

(2)
This is without prejudice to any lesser period of limitation (and, in Scotland, to

any rule that the obligation giving rise to the liability prescribes before the expiry

of that period).’.

Right of debenture holder to copy of deed

Margaret Hodge

Added  NC253

To move the following Clause:—

‘(1)
Any holder of debentures of a company is entitled, on request and on payment of

such fee as may be prescribed, to be provided with a copy of any trust deed for

securing the debentures.

(2)
If default is made in complying with this section, an offence is committed by

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.

(4)
In the case of any such default the court may direct that the copy required be sent

to the person requiring it.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
496

Company Law Reform Bill–[ [], continued

Liability of trustees of debentures

Margaret Hodge

Added  nc254

To move the following Clause:—

‘(1)
Any provision contained in—

(a)
a trust deed for securing an issue of debentures, or

(b)
any contract with the holders of debentures secured by a trust deed,


is void in so far as it would have the effect of exempting a trustee of the deed from,

or indemnifying him against, liability for breach of trust where he fails to show

the degree of care and diligence required of him as trustee, having regard to the

provisions of the trust deed conferring on him any powers, authorities or

discretions.

(2)
Subsection (1) does not invalidate—

(a)
a release otherwise validly given in respect of anything done or omitted

to be done by a trustee before the giving of the release;

(b)
any provision enabling such a release to be given—

(i)
on being agreed to by a majority of not less than 75% in value of

the debenture holders present and voting in person or, where

proxies are permitted, by proxy at a meeting summoned for the

purpose, and

(ii)
either with respect to specific acts or omissions or on the trustee

dying or ceasing to act.

(3)
This section is subject to section (Liability of trustees of debentures: saving for

certain older provisions) (saving for certain older provisions).’.

Liability of trustees of debentures: saving for certain older provisions

Margaret Hodge

Added  nc255

To move the following Clause:—

‘(1)
Section (Liability of trustees of debentures) (liability of trustees of debentures)

does not operate—

(a)
to invalidate any provision in force on the relevant date so long as any

person—

(i)
then entitled to the benefit of the provision, or

(ii)
afterwards given the benefit of the provision under subsection

(3) below,


remains a trustee of the deed in question, or

(b)
to deprive any person of any exemption or right to be indemnified in

respect of anything done or omitted to be done by him while any such

provision was in force.

(2)
The relevant date for this purpose is—

(a)
1st July 1948 in a case where section 192 of the Companies Act 1985

(c. 6) applied immediately before the commencement of this section;

(b)
1st July 1961 in a case where Article 201 of the Companies (Northern

Ireland) Order 1986 then applied.

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

(3)
While any trustee of a trust deed remains entitled to the benefit of a provision

saved by subsection (1) above the benefit of that provision may be given either—

(a)
to all trustees of the deed, present and future, or

(b)
to any named trustees or proposed trustees of it,


by a resolution passed by a majority of not less than 75% in value of the debenture

holders present in person or, where proxies are permitted, by proxy at a meeting

summoned for the purpose.

(4)
A meeting for that purpose must be summoned in accordance with the provisions

of the deed or, if the deed makes no provision for summoning meetings, in a

manner approved by the court.’.

Power to re-issue redeemed debentures

Margaret Hodge

Added  NC256

To move the following Clause:—

‘(1)
Where a company has redeemed debentures previously issued, then unless—

(a)
provision to the contrary (express or implied) is contained in the

company’s articles or in any contract made by the company, or

(b)
the company has, by passing a resolution to that effect or by some other

act, manifested its intention that the debentures shall be cancelled,


the company may re-issue the debentures, either by re-issuing the same

debentures or by issuing new debentures in their place.


This subsection is deemed always to have had effect.

(2)
On a re-issue of redeemed debentures the person entitled to the debentures has

(and is deemed always to have had) the same priorities as if the debentures had

never been redeemed.

(3)
The re-issue of a debenture or the issue of another debenture in its place under this

section is treated as the issue of a new debenture for the purposes of stamp duty.


It is not so treated for the purposes of any provision limiting the amount or

number of debentures to be issued.

(4)
A person lending money on the security of a debenture re-issued under this

section which appears to be duly stamped may give the debenture in evidence in

any proceedings for enforcing his security without payment of the stamp duty or

any penalty in respect of it, unless he had notice (or, but for his negligence, might

have discovered) that the debenture was not duly stamped.


In that case the company is liable to pay the proper stamp duty and penalty.’.

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

Deposit of debentures to secure advances

Margaret Hodge

Added  nc257

To move the following Clause:—

‘Where a company has deposited any of its debentures to secure advances from

time to time on current account or otherwise, the debentures are not treated as

redeemed by reason only of the company’s account having ceased to be in debit

while the debentures remained so deposited.’.

Priorities where debentures secured by floating charge

Margaret Hodge

Added  nc258

To move the following Clause:—

‘(1)
This section applies where debentures of a company registered in England and

Wales or Northern Ireland are secured by a charge that, as created, was a floating

charge.

(2)
If possession is taken by or on behalf of the holders of the debentures of any

property comprised in or subject to the charge, and the company is not at that time

in the course of being wound up, the company’s preferential debts shall be paid

out of assets coming to the hands of the persons taking possession in priority to

any claims for principal or interest in respect of the debentures.

(3)
“Preferential debts” means the categories of debts listed in Schedule 6 to the

Insolvency Act 1986 (c. 45) or Schedule 4 to the Insolvency (Northern Ireland)

Order 1989 (S.I. 1989/2405 (N.I. 19)).


For the purposes of that Schedule “the relevant date” is the date of possession

being taken as mentioned in subsection (2).

(4)
Payments under this section shall be recouped, as far as may be, out of the assets

of the company available for payment of general creditors.’.

Share certificate to be evidence of title

Margaret Hodge

Added  nc259

To move the following Clause:—

‘(1)
In the case of a company registered in England and Wales or Northern Ireland, a

certificate under the common seal of the company specifying any shares held by

a member is prima facie evidence of his title to the shares.

(2)
In the case of a company registered in Scotland—

(a)
a certificate under the common seal of the company specifying any shares

held by a member, or

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

(b)
a certificate specifying any shares held by a member and subscribed by

the company in accordance with the Requirements of Writing (Scotland)

Act 1995 (c. 7),


is sufficient evidence, unless the contrary is shown, of his title to the shares.’.

Duty of company as to issue of certificates etc on allotment

Margaret Hodge

Added  nc260

To move the following Clause:—

‘(1)
A company must, within two months after the allotment of any of its shares,

debentures or debenture stock, complete and have ready for delivery—

(a)
the certificates of the shares allotted,

(b)
the debentures allotted, or

(c)
the certificates of the debenture stock allotted.

(2)
Subsection (1) does not apply—

(a)
if the conditions of issue of the shares, debentures or debenture stock

provide otherwise,

(b)
in the case of allotment to a financial institution (see section (Issue of

certificates etc: allotment or transfer to financial institution)), or

(c)
in the case of an allotment of shares if, following the allotment, the

company has issued a share warrant in respect of the shares (see section

(Issue and effect of share warrant to bearer)).

(3)
If default is made in complying with subsection (1) an offence is committed by

every officer of the company who is in default.

(4)
A person guilty of an offence under subsection (2) 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.’.

Registration of transfer

Margaret Hodge

Added  nc261

To move the following Clause:—

‘(1)
A company may not register a transfer of shares in or debentures of the company

unless—

(a)
a proper instrument of transfer has been delivered to it, or

(b)
the transfer—

(i)
is an exempt transfer within the Stock Transfer Act 1982 (c. 41),

or