sc1902007.549-555

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

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

(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.’.

Powers of court to facilitate reconstruction or amalgamation

Margaret Hodge

Added  nc349

To move the following Clause:—

‘(1)
This section applies where—

(a)
application is made to the court under section (Court sanction for

compromise or arrangement) to sanction a compromise or arrangement

proposed between a company and any such persons as are mentioned in

that section, and

(b)
it is shown that—

(i)
the compromise or arrangement is proposed for the purposes of,

or in connection with, a scheme for the reconstruction of any

company or companies, or the amalgamation of any two or more

companies, and

(ii)
under the scheme the whole or any part of the undertaking or the

property of any company concerned in the scheme (“a transferor

company”) is to be transferred to another company (“the

transferee company”).

(2)
The court may, either by the order sanctioning the compromise or arrangement or

by any subsequent order, make provision for all or any of the following matters—

(a)
the transfer to the transferee company of the whole or any part of the

undertaking and of the property or liabilities of any transferor company;

(b)
the allotting or appropriation by the transferee company of any shares,

debentures, policies or other like interests in that company which under

the compromise or arrangement are to be allotted or appropriated by that

company to or for any person;

(c)
the continuation by or against the transferee company of any legal

proceedings pending by or against any transferor company;

(d)
the dissolution, without winding up, of any transferor company;

(e)
the provision to be made for any persons who, within such time and in

such manner as the courts directs, dissent from the compromise or

arrangement;

(f)
such incidental, consequential and supplemental matters as are necessary

to secure that the reconstruction or amalgamation is fully and effectively

carried out.

(3)
If an order under this section provides for the transfer of property or liabilities—

(a)
the property is by virtue of the order transferred to, and vests in, the

transferee company, and

(b)
the liabilities are, by virtue of the order, transferred to and become

liabilities of that company.

(4)
The property (if the order so directs) vests freed from any charge that is by virtue

of the compromise or arrangement to cease to have effect.

(5)
In this section—

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Company Law Reform Bill–[ [], continued

“property” includes property, rights and powers of every description; and

“liabilities” includes duties.’.

Copy of order to be delivered to the registrar

Margaret Hodge

Added  nc350

To move the following Clause:—

‘(1)
Where an order is made under section (Powers of court to facilitate

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

amalgamation), every company in relation to which the order is made must cause

a copy of the order to be delivered to the registrar of companies for registration

within 7 days after its making.

(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.’.

Power to make provision for mergers and divisions of public companies

Margaret Hodge

Added  nc351

To move the following Clause:—

‘(1)
Where—

(a)
a compromise or arrangement is proposed between a public company and

any such persons as are mentioned in section (Court sanction for

compromise or arrangement) for the purpose of, or in connection with, a

scheme for—

(i)
the reconstruction of any company or companies, or

(ii)
the amalgamation of any two or more companies,

(b)
the circumstances are as specified in any of the Cases described below,

and

(c)
the consideration for the transfer or each of the transfers envisaged in the

Case in question is to be shares in the transferee company or any of the

transferee companies receivable by members of the transferor company

or transferor companies, with or without any cash payment to members,


the preceding provisions of this Part have effect, as regards that compromise or

arrangement, subject to regulations under this section.

(2)
The Cases are—

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

Case 1


Where under the scheme the undertaking property and liabilities of the company

in respect of which the compromise or arrangement in question is proposed are to

be transferred to another public company, other than one formed for the purpose

of, or in connection with, the scheme.

Case 2


Where under the scheme the undertaking, property and liabilities of two or more

public companies concerned in the scheme, including the company in respect of

which the compromise or arrangement in question is proposed, are to be

transferred to a company (whether or not a public company) formed for the

purposes of or in connection with the scheme.

Case 3


Where under the scheme the undertaking, property and liabilities of the company

in respect of which the compromise or arrangement in question is proposed are to

be divided among and transferred to two or more companies each of which is

either—

(a)
a public company, or

(b)
a company (whether or not a public company) formed for the purposes

of, or in connection with, the scheme.

(3)
This section does not apply where the company in respect of which the

compromise or arrangement is proposed is being wound up.

(4)
The Secretary of State may by regulations provide that where this section applies

the court must not sanction a compromise or arrangement unless the requirements

of the regulations have been complied with.

(5)
Without prejudice to the generality of the power conferred by this section, the

regulations may make any such provision as was formerly made by section

427A(3) of, and Schedule 15B to, the Companies Act 1985 (c. 6).

(6)
Regulations under this section are subject to affirmative resolution procedure.’.

Meaning of “takeover offer”

Margaret Hodge

Added  NC352

To move the following Clause:—

‘(1)
For the purposes of this Chapter an offer to acquire shares in a company is a

“takeover offer” if the following two conditions are satisfied in relation to the

offer.

(2)
The first condition is that it is an offer to acquire—

(a)
all the shares in a company, or

(b)
where there is more than one class of shares in a company, all the shares

of one or more classes,


other than shares that at the date of the offer are already held by the offeror.


Section (Shares already held by the offeror etc) contains provision supplementing

this subsection.

(3)
The second condition is that the terms of the offer are the same—

(a)
in relation to all the shares to which the offer relates, or

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Company Law Reform Bill–[ [], continued

(b)
where the shares to which the offer relates include shares of different

classes, in relation to all the shares of each class.


Section (Cases where offer treated as being on same terms) contains provision

treating this condition as satisfied in certain circumstances.

(4)
In subsections (1) to (3) “shares” means shares, other than relevant treasury

shares, that have been allotted on the date of the offer (but see subsection (5)).

(5)
A takeover offer may include among the shares to which it relates—

(a)
all or any shares that are allotted after the date of the offer but before a

specified date;

(b)
all or any relevant treasury shares that cease to be held as treasury shares

before a specified date;

(c)
all or any other relevant treasury shares.

(6)
In this section—

“relevant treasury shares” means shares that—

(k)
are held by the company as treasury shares on the date of the

offer, or

(l)
become shares held by the company as treasury shares after that

date but before a specified date;

“specified date” means a date specified in or determined in accordance with

the terms of the offer.

(7)
Where the terms of an offer make provision for their revision and for acceptances

on the previous terms to be treated as acceptances on the revised terms, then, if

the terms of the offer are revised in accordance with that provision—

(a)
the revision is not to be regarded for the purposes of this Chapter as the

making of a fresh offer, and

(b)
references in this Chapter to the date of the offer are accordingly to be

read as references to the date of the original offer.’.

Shares already held by the offeror etc

Margaret Hodge

Added  nc353

To move the following Clause:—

‘(1)
The reference in section (Meaning of “takeover offer”)(2) to shares already held

by the offeror includes a reference to shares that he has contracted to acquire,

whether unconditionally or subject to conditions being met.


This is subject to subsection (2).

(2)
The reference in section (Meaning of “takeover offer”)(2) to shares already held

by the offeror does not include a reference to shares that are the subject of a

contract—

(a)
intended to secure that the holder of the shares will accept the offer when

it is made, and

(b)
entered into—

(i)
by deed and for no consideration,

(ii)
for consideration of negligible value, or

(iii)
for consideration consisting of a promise by the offeror to make

the offer.

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Company Law Reform Bill–[ [], continued

(3)
In relation to Scotland, this section applies as if the words “by deed and” in

subsection (2)(b)(i) were omitted.

(4)
The condition in section (Meaning of “takeover offer”)(2) is treated as satisfied

where—

(a)
the offer does not extend to shares that associates of the offeror hold or

have contracted to acquire (whether unconditionally or subject to

conditions being met), and

(b)
the condition would be satisfied if the offer did extend to those shares.


(For further provision about such shares, see section (Shares to which an offer

relates)(2)).’.

Cases where offer treated as being on same terms

Margaret Hodge

Added  nc354

To move the following Clause:—

‘(1)
The condition in section (Meaning of “takeover offer”)(3) (terms of offer to be

the same for all shares or all shares of particular classes) is treated as satisfied

where subsection (2) or (3) below applies.

(2)
This subsection applies where—

(a)
shares carry an entitlement to a particular dividend which other shares of

the same class, by reason of being allotted later, do not carry,

(b)
there is a difference in the value of consideration offered for the shares

allotted earlier as against that offered for those allotted later,

(c)
that difference merely reflects the difference in entitlement to the

dividend, and

(d)
the condition in section (Meaning of “takeover offer”)(3) would be

satisfied but for that difference.

(3)
This subsection applies where—

(a)
the law of a country or territory outside the United Kingdom—

(i)
precludes an offer of consideration in the form, or any of the

forms, specified in the terms of the offer (“the specified form”),

or

(ii)
precludes it except after compliance by the offeror with

conditions with which he is unable to comply or which he

regards as unduly onerous,

(b)
the persons to whom an offer of consideration in the specified form is

precluded are able to receive consideration in another form that is of

substantially equivalent value, and

(c)
the condition in section (Meaning of “takeover offer”)(3) would be

satisfied but for the fact that an offer of consideration in the specified

form to those persons is precluded.’.

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Company Law Reform Bill–[ [], continued

Shares to which an offer relates

Margaret Hodge

Added  nc355

To move the following Clause:—

‘(1)
Where a takeover offer is made and, during the period beginning with the date of

the offer and ending when the offer can no longer be accepted, the offeror—

(a)
acquires or unconditionally contracts to acquire any of the shares to

which the offer relates, but

(b)
does not do so by virtue of acceptances of the offer,


those shares are treated for the purposes of this Chapter as excluded from those

to which the offer relates.

(2)
For the purposes of this Chapter shares that an associate of the offeror holds or

has contracted to acquire, whether at the date of the offer or subsequently, are not

treated as shares to which the offer relates, even if the offer extends to such

shares.


In this subsection “contracted” means contracted unconditionally or subject to

conditions being met.

(3)
This section is subject to section (Right of offeror to buy out minority

shareholder)(8) and (9).’.

Effect of impossibility etc of communicating or accepting offer

Margaret Hodge

Added  nc356

To move the following Clause:—

‘(1)
Where there are holders of shares in a company to whom an offer to acquire

shares in the company is not communicated, that does not prevent the offer from

being a takeover offer for the purposes of this Chapter if—

(a)
those shareholders have no registered address in the United Kingdom,

(b)
the offer was not communicated to those shareholders in order not to

contravene the law of a country or territory outside the United Kingdom,

and

(c)
either—

(i)
the offer is published in the Gazette, or

(ii)
the offer can be inspected, or a copy of it obtained, at a place in

an EEA State or on a website, and a notice is published in the

Gazette specifying the address of that place or website.

(2)
Where an offer is made to acquire shares in a company and there are persons for

whom, by reason of the law of a country or territory outside the United Kingdom,

it is impossible to accept the offer, or more difficult to do so, that does not prevent

the offer from being a takeover offer for the purposes of this Chapter.

(3)
It is not to be inferred—

(a)
that an offer which is not communicated to every holder of shares in the

company cannot be a takeover offer for the purposes of this Chapter

unless the requirements of paragraphs (a) to (c) of subsection (1) are met,

or

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Company Law Reform Bill–[ [], continued

(b)
that an offer which is impossible, or more difficult, for certain persons to

accept cannot be a takeover offer for those purposes unless the reason for

the impossibility or difficulty is the one mentioned in subsection (2).’.

Right of offeror to buy out minority shareholder

Margaret Hodge

Added  nc357

To move the following Clause:—

‘(1)
Subsection (2) applies in a case where a takeover offer does not relate to shares

of different classes.

(2)
If the offeror has, by virtue of acceptances of the offer, acquired or

unconditionally contracted to acquire—

(a)
not less than 90% in value of the shares to which the offer relates, and

(b)
in a case where the shares to which the offer relates are voting shares, not

less than 90% of the voting rights carried by those shares,


he may give notice to the holder of any shares to which the offer relates which the

offeror has not acquired or unconditionally contracted to acquire that he desires

to acquire those shares.

(3)
Subsection (4) applies in a case where a takeover offer relates to shares of

different classes.

(4)
If the offeror has, by virtue of acceptances of the offer, acquired or

unconditionally contracted to acquire—

(a)
not less than 90% in value of the shares of any class to which the offer

relates, and

(b)
in a case where the shares of that class are voting shares, not less than

90% of the voting rights carried by those shares,


he may give notice to the holder of any shares of that class to which the offer

relates which the offeror has not acquired or unconditionally contracted to acquire

that he desires to acquire those shares.

(5)
In the case of a takeover offer which includes among the shares to which it

relates—

(a)
shares that are allotted after the date of the offer, or

(b)
relevant treasury shares (within the meaning of section (Meaning of

“takeover offer”)) that cease to be held as treasury shares after the date

of the offer,


the offeror’s entitlement to give a notice under subsection (2) or (4) on any

particular date shall be determined as if the shares to which the offer relates did

not include any allotted, or ceasing to be held as treasury shares, on or after that

date.

(6)
Subsection (7) applies where—

(a)
the requirements for the giving of a notice under subsection (2) or (4) are

satisfied, and

(b)
there are shares in the company which the offeror, or an associate of his,

has contracted to acquire subject to conditions being met, and in relation

to which the contract has not become unconditional.

(7)
The offeror’s entitlement to give a notice under subsection (2) or (4) shall be

determined as if—