sc1902007.542-548

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
542

Company Law Reform Bill–[ [], continued

(b)
that on other grounds it is just and equitable to grant relief.

(2)
The court may, on the application of the company or a person interested, and on

such terms and conditions as seem to the court just and expedient, order that the

period allowed for registration shall be extended or, as the case may be, that the

omission or mis-statement shall be rectified.’.

Consequence of failure to register charges created by a company (No. 2)

Margaret Hodge

Added  nc336

To move the following Clause:—

‘(1)
If a company creates a charge to which section (Charges created by a company

(No. 2)) applies, the charge is void (so far as any security on the company’s

property or any part of it is conferred by the charge) against—

(a)
the liquidator of the company,

(b)
an administrator of the company, and

(c)
any creditor of the company


unless that section is complied with.

(2)
Subsection (1) is without prejudice to any contract or obligation for repayment of

the money secured by the charge; and when a charge becomes void under this

section the money secured by it immediately becomes payable.’.

Companies to keep copies of instruments creating charges (No. 2)

Margaret Hodge

Added  nc337

To move the following Clause:—

‘(1)
Every company shall cause a copy of every instrument creating a charge requiring

registration under this Chapter to be kept at the company’s registered office.

(2)
In the case of a series of uniform debentures, a copy of one debenture of the series

is sufficient.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
543

Company Law Reform Bill–[ [], continued

Company’s register of charges (No. 2)

Margaret Hodge

Added  nc338

To move the following Clause:—

‘(1)
Every company shall keep at its registered office a register of charges and enter

in it all charges specifically affecting property of the company, and all floating

charges on any property of the company.

(2)
There shall be given in each case a short description of the property charged, the

amount of the charge and, except in the case of securities to bearer, the names of

the persons entitled to it.

(3)
If an officer of the company knowingly and wilfully authorises or permits the

omission of an entry required to be made in pursuance of this section, he commits

an offence.

(4)
A person guilty of an offence under this section is liable—

(a)
on conviction on indictment, to a fine;

(b)
on summary conviction, to a fine not exceeding the statutory maximum.’.

Right to inspect copies of instruments and company’s register

Margaret Hodge

Added  nc339

To move the following Clause:—

‘(1)
The copies of instruments creating charges requiring registration under this

Chapter with the registrar, and the register of charges kept in pursuance of section

(Company’s register of charges (No. 2)), shall be open during business hours (but

subject to such reasonable restrictions as the company in general meeting may

impose, so that not less than 2 hours in each day be allowed for inspection) to the

inspection of any creditor or member of the company without fee.

(2)
The register of charges shall be open to the inspection of any other person on

payment of such fee as the company may prescribe.

(3)
If inspection of copies, or of the register, is refused 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 net exceeding one-tenth of level 3 on the

standard scale.

(5)
If such a refusal occurs in relation to a company, the court may by order compel

an immediate inspection of the copies or register.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
544

Company Law Reform Bill–[ [], continued

Power to make provision for effect of registration in special register

Margaret Hodge

Added  nc340

To move the following Clause:—

‘(1)
In this section a “special register” means a register, other than the register of

charges kept under this Part, in which a charge to which Chapter 1 or Chapter 2

applies is required or authorised to be registered.

(2)
The Secretary of State may by order make provision for facilitating the making

of information-sharing arrangements between the person responsible for

maintaining a special register (“the responsible person”) and the registrar that

meet the requirement in subsection (4).


“Information-sharing arrangements” are arrangements to share and make use of

information held by the registrar or by the responsible person.

(3)
If the Secretary of State is satisfied that appropriate information-sharing

arrangements have been made, he may by order provide that—

(a)
the registrar is authorised not to register a charge of a specified

description under Chapter 1 or Chapter 2 of this Part,

(b)
a charge of a specified description that is registered in the special register

within a specified period is to be treated as if it had been registered (and

certified by the registrar as registered) in accordance with the

requirements of Chapter 1 or, as the case may be, Chapter 2, and

(c)
the other provisions of Chapter 1 or, as the case may be, Chapter 2 of this

Part apply to a charge so treated with specified modifications.

(4)
The information-sharing arrangements must ensure that persons inspecting the

register of charges—

(a)
are made aware, in a manner appropriate to the inspection, of the

existence of charges in the special register which are treated in

accordance with provision so made, and

(b)
are able to obtain information from the special register about any such

charge.

(5)
An order under this section may—

(a)
modify any enactment or rule of law which would otherwise restrict or

prevent the responsible person from entering into or giving effect to

information-sharing arrangements,

(b)
authorise the responsible person to require information to be provided to

him for the purposes of the arrangements,

(c)
make provision about—

(i)
the charging by the responsible person of fees in connection with

the arrangements and the destination of such fees (including

provision modifying any enactment which would otherwise

apply in relation to fees payable to the responsible person), and

(ii)
the making of payments under the arrangements by the registrar

to the responsible person,

(d)
require the registrar to make copies of the arrangements available to the

public (in hard copy or electronic form).

(6)
In this section “specified” means specified in an order under this section.

(7)
A description of charge may be specified, in particular, by reference to one or

more of the following—

(a)
the type of company by which it is created,

(b)
the form of charge which it is,

(c)
the description of assets over which it is granted,

S.C.D.  Standing Committee Proceedings: 20th July 2006
545

Company Law Reform Bill–[ [], continued

(d)
the length of the period between the date of its registration in the special

register and the date of its creation.

(8)
Provision may be made under this section relating to registers maintained under

the law of a country or territory outside the United Kingdom.

(9)
An order under this section is subject to negative resolution procedure.’.

General power to make amendments to this Part

Margaret Hodge

Added  nc341

To move the following Clause:—

‘(1)
The Secretary of State may by regulations under this section—

(a)
amend this Part by altering, adding or repealing provisions,

(b)
make consequential amendments or repeals in this Act or any other

enactment (whether passed or made before or after this Act).

(2)
Regulations under this section are subject to affirmative resolution procedure.’.

Scheme of this Part

Margaret Hodge

Added  nc342

To move the following Clause:—

‘(1)
The provisions of this Part apply where a compromise or arrangement is

proposed—

(a)
between a company and its creditors, or any class of them, or

(b)
between the company and its members, or any class of them.

(2)
The provisions of sections (Court sanction for compromise or arrangement) to

(Copy of court order to be annexed to copies of company’s constitution) (court

sanction for compromise or arrangement) apply in every case.

(3)
The provisions of section (Powers of court to facilitate reconstruction or

amalgamation) (powers of court to facilitate reconstruction or amalgamation)

supplement those provisions.

(4)
The provisions mentioned above have effect subject to regulations under section

(Power to make provision for mergers and divisions of public companies)

(mergers and divisions of public companies) in the circumstances specified in that

section.

(5)
In this Part—

“arrangement” includes a reorganisation of the company’s share capital by

the consolidation of shares of different classes or by the division of shares

into shares of different classes, or by both of those methods; and

“company”—

(i)
in sections (Powers of court to facilitate reconstruction or

amalgamation), (Copy of order to be delivered to registrar) and

S.C.D.  Standing Committee Proceedings: 20th July 2006
546

Company Law Reform Bill–[ [], continued

(Power to make provision for mergers and divisions of public

companies) means a company within the meaning of this Act,

and

(j)
elsewhere in this Part means any company liable to be wound up

under the Insolvency Act 1986 (c. 45) or the Insolvency

(Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).’.

Court sanction for compromise or arrangement

Margaret Hodge

Added  nc343

To move the following Clause:—

‘Where a compromise or arrangement is proposed between a company and its

creditors, or any class of them, or between the company and its members, or any

class of them—

(a)
the company,

(b)
any creditor or member of the company, or

(c)
if the company is being wound up or an administration order is in force

in relation it, the liquidator or administrator,

may apply to the court to sanction the compromise or arrangement.’.

Meeting of creditors or members

Margaret Hodge

Added  nc344

To move the following Clause:—

On receiving an application under section (Court sanction for compromise or

arrangement) (application to sanction compromise or arrangement with creditors

or members) the court may order a meeting of the creditors or class of creditors,

or of the members of the company or class of members (as the case may be), to

be summoned in such manner as the court directs.’.

Statement to be circulated or made available

Margaret Hodge

Added  nc345

To move the following Clause:—

‘(1)
Where a meeting is summoned under section (Meeting of creditors or

members)—

S.C.D.  Standing Committee Proceedings: 20th July 2006
547

Company Law Reform Bill–[ [], continued

(a)
every notice summoning the meeting that is sent to a creditor or member

must be accompanied by a statement complying with this section, and

(b)
every notice summoning the meeting that is given by advertisement must

either—

(i)
include such a statement, or

(ii)
state where and how creditors or members entitled to attend the

meeting may obtain copies of such a statement

(2)
The statement must—

(a)
explain the effect of the compromise or arrangement, and

(b)
in particular, state—

(i)
any material interests of the directors of the company (whether

as directors or as members or as creditors of the company or

otherwise), and

(ii)
the effect on those interests of the compromise or arrangement,

in so far as it is different from the effect on the like interests of

other persons.

(3)
Where the compromise or arrangement affects the rights of debenture holders of

the company, the statement must give the like explanation as respects the trustees

of any deed for securing the issue of the debentures as it is required to give as

respects the company’s directors.

(4)
Where a notice given by advertisement states that copies of an explanatory

statement can be obtained by creditors or members entitled to attend the meeting,

every such creditor or member is entitled, on making application in the manner

indicated by the notice, to be provided by the company with a copy of the

statement free of charge.

(5)
If a company makes default in complying with any requirement of this section,

an offence is committed by—

(a)
the company, and

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


This is subject to subsection (7) below.

(6)
For this purpose the following are treated as officers of the company—

(a)
a liquidator or administrator of the company, and

(b)
a trustee of a deed for securing the issue of debentures of the company.

(7)
A person is not guilty of an offence under this section if he shows that the default

was due to the refusal of a director or trustee for debenture holders to supply the

necessary particulars of his interests.

(8)
A person guilty of an offence under this section is liable—

(a)
on conviction on indictment, to a fine;

(b)
on summary conviction, to a fine not exceeding the statutory maximum.’.

Duty of directors and trustees to provide information

Margaret Hodge

Added  nc346

To move the following Clause:—

‘(1)
It is the duty of—

(a)
any director of the company, and

S.C.D.  Standing Committee Proceedings: 20th July 2006
548

Company Law Reform Bill–[ [], continued

(b)
any trustee for its debenture holders,


to give notice to the company of such matters relating to himself as may be

necessary for purposes of section (Statement to be circulated or made available)

(explanatory statement to be circulated or made available).

(2)
Any person who makes default in complying with this section commits an

offence.

(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.’.

Court order sanctioning compromise or arrangement

Margaret Hodge

Added  nc347

To move the following Clause:—

‘(1)
The court may sanction a compromise or arrangement only if, at a meeting

summoned under section (Meeting of creditors or members), a majority in

number representing 75% in value of the creditors or class of creditors or

members or class of members (as the case may be), present and voting either in

person or by proxy at the meeting, agree to the compromise or arrangement.

(2)
A compromise or agreement sanctioned by the court is binding on—

(a)
all creditors or the class of creditors or on the members or class of

members (as the case may be), and

(b)
the company or, in the case of a company in the course of being wound

up, the liquidator and contributories of the company.

(3)
The court’s order has no effect until a copy of it has been delivered to the registrar

of companies for registration.’.

Copy of court order to be annexed to copies of company’s constitution

Margaret Hodge

Added  nc348

To move the following Clause:—

‘(1)
A copy of every order of the court under section (Court order sanctioning

compromise or arrangement) (order sanctioning compromise or arrangement

with creditors or members) must be annexed to—

(a)
every copy of the company’s articles issued after the order has been made

or,

(b)
in the case of a company not having articles of association, of every copy

so issued of the instrument constituting the company or defining its

constitution.

(2)
If a company makes default in complying with this section an offence is

committed by—

(a)
the company, and