sc1902007.500-506

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
500

Company Law Reform Bill–[ [], continued

(ii)
is in accordance with regulations under Chapter (Evidencing and

transfer of title to securities without written instrument) of this

Part.


This applies notwithstanding anything in the company’s articles.

(2)
Subsection (1) does not affect any power of the company to register as

shareholder or debenture holder a person to whom the right to any shares in or

debentures of the company has been transmitted by operation of law.’.

Procedure on transfer being lodged

Margaret Hodge

Added  nc262

To move the following Clause:—

‘(1)
When a transfer of shares in or debentures of a company has been lodged with the

company, the company must either—

(a)
register the transfer, or

(b)
give the transferee notice of refusal to register the transfer, together with

its reasons for the refusal,


as soon as practicable and in any event within two months after the date on which

the transfer is lodged with it.

(2)
If the company refuses to register the transfer, it must provide the transferee with

such further information about the reasons for the refusal as the transferee may

reasonably request.


This does not include copies of minutes of meetings of directors.

(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 3 on the

standard scale.

(5)
This section does not apply—

(a)
in relation to a transfer of shares if the company has issued a share

warrant in respect of the shares (see section (Issue and effect of share

warrant to bearer));

(b)
in relation to the transmission of shares or debentures by operation of

law.’.

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

Transfer of shares on application of transferor

Margaret Hodge

Added  nc263

To move the following Clause:—

‘On the application of the transferor of any share or interest in a company, the

company shall enter in its register of members the name of the transferee in the

same manner and subject to the same conditions as if the application for the entry

were made by the transferee.’.

Execution of share transfer by personal representative

Margaret Hodge

Added  nc264

To move the following Clause:—

‘An instrument of transfer of the share or other interest of a deceased member of

a company—

(a)
may be made by his personal representative although the personal

representative is not himself a member of the company, and

(b)
is as effective as if the personal representative had been such a member

at the time of the execution of the instrument.’.

Evidence of grant of probate etc

Margaret Hodge

Added  nc265

To move the following Clause:—

‘(1)
The production to a company of any document that is by law sufficient evidence

of the grant of—

(a)
probate of the will of a deceased person,

(b)
letters of administration of the estate of a deceased person, or

(c)
confirmation as executor of a deceased person,


shall be accepted by the company as sufficient evidence of the grant.

(2)
This has effect notwithstanding anything in the company’s articles.’.

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

Certification of instrument of transfer

Margaret Hodge

Added  nc266

To move the following Clause:—

‘(1)
The certification by a company of an instrument of transfer of any shares in, or

debentures of, the company is to be taken as a representation by the company to

any person acting on the faith of the certification that there have been produced

to the company such documents as on their face show a prima facie title to the

shares or debentures in the transferor named in the instrument.

(2)
The certification is not to be taken as a representation that the transferor has any

title to the shares or debentures.

(3)
Where a person acts on the faith of a false certification by a company made

negligently, the company is under the same liability to him as if the certification

had been made fraudulently.

(4)
For the purposes of this section—

(a)
an instrument of transfer is certificated if it bears the words “certificate

lodged” (or words to the like effect);

(b)
the certification of an instrument of transfer is made by a company if—

(i)
the person issuing the instrument is a person authorised to issue

certificated instruments of transfer on the company’s behalf, and

(ii)
the certification is signed by a person authorised to certificate

transfers on the company’s behalf or by an officer or employee

either of the company or of a body corporate so authorised;

(c)
a certification is treated as signed by a person if—

(i)
it purports to be authenticated by his signature or initials

(whether handwritten or not), and

(ii)
it is not shown that the signature or initials was or were placed

there neither by himself nor by a person authorised to use the

signature or initials for the purpose of certificating transfers on

the company’s behalf.’.

Duty of company as to issue of certificates etc on transfer

Margaret Hodge

Added  nc267

To move the following Clause:—

‘(1)
A company must, within two months after the date on which a transfer of any of

its shares, debentures or debenture stock is lodged with the company, complete

and have ready for delivery—

(a)
the certificates of the shares transferred,

(b)
the debentures transferred, or

(c)
the certificates of the debenture stock transferred.

(2)
For this purpose a “transfer” means—

(a)
a transfer duly stamped and otherwise valid, or

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

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


but does not include a transfer that the company is for any reason entitled to refuse

to register and does not register.

(3)
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 a transfer to a financial institution (see section (Issue of

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

(c)
in the case of a transfer of shares if, following the transfer, the company

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

effect of share warrant to bearer)).

(4)
Subsection (1) has effect subject to section (Issue of certificates etc: cases within

the Stock Transfer Act 1982) (cases where the Stock Transfer Act 1982 (c. 41)

applies).

(5)
If default is made in complying with subsection (1) an offence is committed by

every officer of the company who is in default.

(6)
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.’.

Issue of certificates etc: cases within the Stock Transfer Act 1982

Margaret Hodge

Added  nc268

To move the following Clause:—

‘(1)
Section (Duty of company as to issue of certificates etc on transfer)(1) (duty of

company as to issue of certificates etc on transfer) does not apply in the case of a

transfer to a person where, by virtue of regulations under section 3 of the Stock

Transfer Act 1982 (c. 41), he is not entitled to a certificate or other document of

or evidencing title in respect of the securities transferred.

(2)
But if in such a case the transferee—

(a)
subsequently becomes entitled to such a certificate or other document by

virtue of any provision of those regulations, and

(b)
gives notice in writing of that fact to the company,


section (Duty of company as to issue of certificates etc on transfer) (duty to

company as to issue of certificates etc) has effect as if the reference in subsection

(1) of that section to the date of the lodging of the transfer were a reference to the

date of the notice.’.

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

Issue of certificates etc: allotment or transfer to financial institution

Margaret Hodge

Added  nc269

To move the following Clause:—

‘(1)
A company—

(a)
of which shares or debentures are alloted to a financial institution,

(b)
of which debenture stock is allotted to a financial institution, or

(c)
with which a transfer for transferring shares, debentures or debenture

stock to a financial institution is lodged,


is not required in consequence of that allotment or transfer to comply with section

(Duty of company as to issue of certificates etc on allotment)(1) or (Duty of

company as to issue of certificates etc on transfer)(1) (duty of company as to

issue of certificates etc).

(2)
A “financial institution” means—

(a)
a recognised clearing house acting in relation to a recognised investment

exchange, or

(b)
a nominee of—

(i)
a recognised clearing house acting in that way, or

(ii)
a recognised investment exchange,


designated for the purposes of this section in the rules of the recognised

investment exchange in question.

(3)
Expressions used in subsection (2) have the same meaning as in Part 18 of the

Financial Services and Markets Act 2000 (c. 8).’.

Issue and effect of share warrant to bearer

Margaret Hodge

Added  nc270

To move the following Clause:—

‘(1)
A company limited by shares may, if so authorised by its articles, issue with

respect to any fully paid shares a warrant (a “share warrant”) stating that the

bearer of the warrant is entitled to the shares specified in it.

(2)
A share warrant issued under the company’s common seal or (in the case of a

company registered in Scotland) subscribed in accordance with the Requirements

of Writing (Scotland) Act 1995 (c. 7) entitles the bearer to the shares specified in

it and the shares may be transferred by delivery of the warrant.

(3)
A company that issues a share warrant may, if so authorised by its articles,

provide (by coupons or otherwise) for the payment of the future dividends on the

shares included in the warrant.’.

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

Duty of company as to issue of certificates on surrender of share warrant

Margaret Hodge

Added  nc271

To move the following Clause:—

‘(1)
A company must, within two months of the surrender of a share warrant for

cancellation, complete and have ready for delivery the certificates of the shares

specified in the warrant.

(2)
Subsection (1) does not apply if the company’s articles provide otherwise.

(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 (3) 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.’.

Offences in connection with share warrants (Scotland)

Margaret Hodge

Added  nc272

To move the following Clause:—

‘(1)
If in Scotland a person—

(a)
with intent to defraud, forges or alters, or offers, utters, disposes of, or

puts off, knowing the same to be forged or altered, any share warrant or

coupon, or any document purporting to be a share warrant or coupon

issued in pursuance of this Act, or

(b)
by means of any such forged or altered share warrant, coupon or

document—

(i)
demands or endeavours to obtain or receive any share or interest

in a company under this Act, or

(ii)
demands or endeavours to receive any dividend or money

payment in respect of any such share or interest,


knowing the warrant, coupon or document to be forged or altered,


he commits an offence.

(2)
If in Scotland a person without lawful authority or excuse (of which proof lies on

him)—

(a)
engraves or makes on any plate, wood, stone, or other material, any share

warrant or coupon purporting to be—

(i)
a share warrant or coupon issued or made by any particular

company in pursuance of this Act, or

(ii)
a blank share warrant or coupon so issued or made, or

(iii)
a part of such a share warrant or coupon, or

(b)
uses any such plate, wood, stone, or other material, for the making or

printing of any such share warrant or coupon, or of any such blank share

warrant or coupon or of any part of such a share warrant or coupon, or

(c)
knowingly has in his custody or possession any such plate, wood, stone,

or other material,

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


he commits an offence.

(3)
A person guilty of an offence under subsection (1) is liable on summary

conviction to imprisonment for a term not exceeding six months or to a fine not

exceeding level 5 on the standard scale (or both).

(4)
A person guilty of an offence under subsection (2) is liable—

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

seven years or a fine (or both);

(b)
on summary conviction, to imprisonment for a term not exceeding six

months or a fine not exceeding the statutory maximum (or both).’.

Issue of certificates etc: court order to make good default

Margaret Hodge

Added  nc273

To move the following Clause:—

‘(1)
If a company on which a notice has been served requiring it to make good any

default in complying with—

(a)
section (Duty of company as to issue of certificates etc on allotment)(1)

(duty of company as to issue of certificates etc on allotment),

(b)
section (Duty of company as to issue of certificates etc on transfer)(1)

(duty of company as to issue of certificates etc on transfer), or

(c)
section (Duty of company as to issue of certificates etc on surrender of

share warrant)(1) (duty of company as to issue of certificates etc on

surrender of share warrant),


fails to make good the default within ten days after service of the notice, the

person entitled to have the certificates or the debentures delivered to him may

apply to the court.

(2)
The court may on such an application make an order directing the company and

any officer of it to make good the default within such time as may be specified in

the order.

(3)
The order may provide that all costs (in Scotland, expenses) of and incidental to

the application are to be borne by the company or by an officer of it responsible

for the default.’.

Scope of this Chapter

Margaret Hodge

Added  nc274

To move the following Clause:—

‘In this Chapter—

(a)
“securities” means shares, debentures, debenture stock, loan stock,

bonds, units of a collective investment scheme within the meaning of the

Financial Services and Markets Act 2000 (c. 8) and other securities of

any description;