sc1902007.570-576

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
570

Company Law Reform Bill–[ [], continued

(i)
to refrain from doing or continuing an act complained of, or

(ii)
to do an act that the petitioner has complained it has omitted to

do;

(c)
authorise civil proceedings to be brought in the name and on behalf of the

company by such person or persons and on such terms as the court may

direct;

(d)
require the company not to make any, or any specified, alterations in its

articles without the leave of the court;

(e)
provide for the purchase of the shares of any members of the company by

other members or by the company itself and, in the case of a purchase by

the company itself, the reduction of the company’s capital accordingly.’.

Application of rule-making powers

Margaret Hodge

Added  nc374

To move the following Clause:—

‘The power to make rules under section 411 of the Insolvency Act 1986 or Article

359 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)),

so far as relating to a winding-up petition, applies for the purposes of a petition

under this Part.’.

Copy of order affecting company’s articles to be delivered to registrar

Margaret Hodge

Added  nc375

To move the following Clause:—

‘(1)
Where an order of the court under this Part—

(a)
alters the company’s articles, or

(b)
gives leave for the company to make any, or any specified, alterations in

its articles,


the company must deliver a copy of the order to the registrar.

(2)
It must do so within 14 days from the making of the order or such longer period

as the court may allow.

(3)
If a company makes default in complying 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

S.C.D.  Standing Committee Proceedings: 20th July 2006
571

Company Law Reform Bill–[ [], continued

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

standard scale.’.

Power to strike off company not carrying on business or in operation

Margaret Hodge

Added  nc376

To move the following Clause:—

‘(1)
If the registrar has reasonable cause to believe that a company is not carrying on

business or in operation, the registrar may send to the company by post a letter

inquiring whether the company is carrying on business or in operation.

(2)
If the registrar does not within one month of sending the letter receive any answer

to it, the registrar must within 14 days after the expiration of that month send to

the company by post a registered letter referring to the first letter, and stating—

(a)
that no answer to it has been received, and

(b)
that if an answer is not received to the second letter within one month

from its date, a notice will be published in the Gazette with a view to

striking the company’s name off the register.

(3)
If the registrar—

(a)
receives an answer to the effect that the company is not carrying on

business or in operation, or

(b)
does not within one month after sending the second letter receive any

answer,


the registrar may publish in the Gazette, and send to the company by post, a notice

that at the expiration of three months from the date of the notice the name of the

company mentioned in it will, unless cause is shown to the contrary, be struck off

the register and the company will be dissolved.

(4)
At the expiration of the time mentioned in the notice the registrar may, unless

cause to the contrary is previously shown by the company, strike its name off the

register.

(5)
The registrar must publish notice in the Gazette of the company’s name having

been struck off the register.

(6)
On the publication of the notice in the Gazette the company is dissolved.

(7)
However—

(a)
the liability (if any) of every director, managing officer and member of

the company continues and may be enforced as if the company had not

been dissolved, and

(b)
nothing in this section affects the power of the court to wind up a

company the name of which has been struck off the register.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
572

Company Law Reform Bill–[ [], continued

Duty to act in case of company being wound up

Margaret Hodge

Added  nc377

To move the following Clause:—

‘(1)
If, in a case where a company is being wound up—

(a)
the registrar has reasonable cause to believe—

(i)
that no liquidator is acting, or

(ii)
that the affairs of the company are fully wound up, and

(b)
the returns required to be made by the liquidator have not been made for

a period of six consecutive months,


the registrar must publish in the Gazette and send to the company or the liquidator

(if any) a notice that at the expiration of three months from the date of the notice

the name of the company mentioned in it will, unless cause is shown to the

contrary, be struck off the register and the company will be dissolved.

(2)
At the expiration of the time mentioned in the notice the registrar may, unless

cause to the contrary is previously shown by the company, strike its name off the

register.

(3)
The registrar must publish notice in the Gazette of the company’s name having

been struck off the register.

(4)
On the publication of the notice in the Gazette the company is dissolved.

(5)
However—

(a)
the liability (if any) of every director, managing officer and member of

the company continues and may be enforced as if the company had not

been dissolved, and

(b)
nothing in this section affects the power of the court to wind up a

company the name of which has been struck off the register.’.

Supplementary provisions as to service of letter or notice

Margaret Hodge

Added  nc378

To move the following Clause:—

‘(1)
A letter or notice to be sent under section (Power to strike off company not

carrying on business or in operation) or (Duty to act in case of company being

wound up) to a company may be addressed to the company at its registered office

or, if no office has been registered, to the care of some officer of the company.

(2)
If there is no officer of the company whose name and address are known to the

registrar, the letter or notice may be sent to each of the persons who subscribed

the memorandum (if their addresses are known to the registrar).

(3)
A notice to be sent to a liquidator under section (Duty to act in case of company

being wound up) may be addressed to him at his last known place of business.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
573

Company Law Reform Bill–[ [], continued

Striking off on application by company

Margaret Hodge

Added  Nc379

To move the following Clause:—

‘(1)
On application by a company, the registrar of companies may strike the

company’s name off the register.

(2)
The application—

(a)
must be made on the company’s behalf by its directors or by a majority

of them, and

(b)
must contain the prescribed information.

(3)
The registrar may not strike a company off under this section until after the

expiration of three months from the publication by the registrar in the Gazette of

a notice—

(a)
stating that the registrar may exercise the power under this section in

relation to the company, and

(b)
inviting any person to show cause why that should not be done.

(4)
The registrar must publish notice in the Gazette of the company’s name having

been struck off.

(5)
On the publication of the notice in the Gazette the company is dissolved.

(6)
However—

(a)
the liability (if any) of every director, managing officer and member of

the company continues and may be enforced as if the company had not

been dissolved, and

(b)
nothing in this section affects the power of the court to wind up a

company the name of which has been struck off the register.’.

Circumstances in which application not to be made: activities of company

Margaret Hodge

Added  nc380

To move the following Clause:—

‘(1)
An application under section (Striking off on application by company) on behalf

of a company must not be made if, at any time in the previous three months, the

company has—

(a)
changed its name,

(b)
traded or otherwise carried on business,

(c)
made a disposal for value of property or rights that, immediately before

ceasing to trade or otherwise carry on business, it held for the purpose of

disposal for gain in the normal course of trading or otherwise carrying on

business, or

(d)
engaged in any other activity, except one which is—

(i)
necessary or expedient for the purpose of making an application

under that section, or deciding whether to do so,

(ii)
necessary or expedient for the purpose of concluding the affairs

of the company,

S.C.D.  Standing Committee Proceedings: 20th July 2006
574

Company Law Reform Bill–[ [], continued

(iii)
necessary or expedient for the purpose of complying with any

statutory requirement, or

(iv)
specified by the Secretary of State by order for the purposes of

this sub-paragraph.

(2)
For the purposes of this section, a company is not to be treated as trading or

otherwise carrying on business by virtue only of the fact that it makes a payment

in respect of a liability incurred in the course of trading or otherwise carrying on

business.

(3)
The Secretary of State may by order amend subsection (1) for the purpose of

altering the period in relation to which the doing of the things mentioned in

paragraphs (a) to (d) of that subsection is relevant.

(4)
An order under this section is subject to negative resolution procedure.

(5)
It is an offence for a person to make an application in contravention of this

section.

(6)
In proceedings for such an offence it is a defence for the accused to prove that he

did not know, and could not reasonably have known, of the existence of the facts

that led to the contravention.

(7)
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.’.

Circumstances in which application not to be made: other proceedings not concluded

Margaret Hodge

Added  nc381

To move the following Clause:—

‘(1)
An application under section (Striking off on application by company) on behalf

of a company must not be made at a time when—

(a)
an application to the court under Part (Arrangements and

reconstructions) has been made on behalf of the company for the

sanctioning of a compromise or arrangement and the matter has not been

finally concluded;

(b)
a voluntary arrangement in relation to the company has been proposed

under Part 1 of the Insolvency Act 1986 (c. 45) or Part 2 of the Insolvency

(Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) and the matter

has not been finally concluded;

(c)
the company is in administration under Part 2 of that Act or Part 3 of that

Order;

(d)
paragraph 44 of Schedule B1 to that Act or paragraph 45 of Schedule B1

to that Order applies (interim moratorium on proceedings where

application to the court for an administration order has been made or

notice of intention to appoint administrator has been filed);

(e)
the company is being wound up under Part 4 of that Act or Part 5 of that

Order, whether voluntarily or by the court, or a petition under that Part

for winding up of the company by the court has been presented and not

finally dealt with or withdrawn;

(f)
there is a receiver or manager of the company’s property;

(g)
the company’s estate is being administered by a judicial factor.

S.C.D.  Standing Committee Proceedings: 20th July 2006
575

Company Law Reform Bill–[ [], continued

(2)
For the purposes of subsection (1)(a), the matter is finally concluded if—

(a)
the application has been withdrawn,

(b)
the application has been finally dealt with without a compromise or

arrangement being sanctioned by the court, or

(c)
a compromise or arrangement has been sanctioned by the court and has,

together with anything required to be done under any provision made in

relation to the matter by order of the court, been fully carried out.

(3)
For the purposes of subsection (1)(b), the matter is finally concluded if—

(a)
no meetings are to be summoned under section 3 of the Insolvency Act

1986 (c. 45) or Article 16 of the Insolvency (Northern Ireland) Order

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

(b)
meetings summoned under that section or Article fail to approve the

arrangement with no, or the same, modifications,

(c)
an arrangement approved by meetings summoned under that section, or

in consequence of a direction under section 6(4)(b) of that Act or Article

19(4)(b) of that Order, has been fully implemented, or

(d)
the court makes an order under section 6(5) of that Act or Article 19(5)

of that Order revoking approval given at previous meetings and, if the

court gives any directions under section 6(6) of that Act or Article 19(6)

of that Order, the company has done whatever it is required to do under

those directions.

(4)
It is an offence for a person to make an application in contravention of this

section.

(5)
In proceedings for such an offence it is a defence for the accused to prove that he

did not know, and could not reasonably have known, of the existence of the facts

that led to the contravention.

(6)
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.’.

Copy of application to be given to members, employees, etc

Margaret Hodge

Added  nc382

To move the following Clause:—

‘(1)
A person who makes an application under section (Striking off on application by

company) on behalf of a company must secure that, within seven days from the

day on which the application is made, a copy of it is given to every person who

at any time on that day is—

(a)
a member of the company,

(b)
an employee of the company,

(c)
a creditor of the company,

(d)
a director of the company,

(e)
a manager or trustee of any pension fund established for the benefit of

employees of the company, or

(f)
a person of a description specified for the purposes of this paragraph by

regulations made by the Secretary of State.

S.C.D.  Standing Committee Proceedings: 20th July 2006
576

Company Law Reform Bill–[ [], continued


Regulations under paragraph (f) are subject to negative resolution procedure.

(2)
Subsection (1) does not require a copy of the application to be given to a director

who is a party to the application.

(3)
The duty imposed by this section ceases to apply if the application is withdrawn

before the end of the period for giving the copy application.

(4)
A person who fails to perform the duty imposed on him by this section commits

an offence.


If he does so with the intention of concealing the making of the application from

the person concerned, he commits an aggravated offence.

(5)
In proceedings for an offence under this section it is a defence for the accused to

prove that he took all reasonable steps to perform the duty.

(6)
A person guilty of an offence under this section (other than an aggravated

offence) is liable—

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

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

(7)
A person guilty of an aggravated offence under this section 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—

(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).’.

Copy of application to be given to new members, employees, etc

Margaret Hodge

Added  nc383

To move the following Clause:—

‘(1)
This section applies in relation to any time after the day on which a company

makes an application under section (Striking off on application by company)

(application for voluntary striking off) and before the day on which the

application is finally dealt with or withdrawn.

(2)
A person who is a director of the company at the end of a day on which a person

(other than himself) becomes—

(a)
a member of the company,

(b)
an employee of the company,

(c)
a creditor of the company,

(d)
a director of the company,

(e)
a manager or trustee of any pension fund established for the benefit of

employees of the company, or

(f)
a person of a description specified for the purposes of this paragraph by

regulations made by the Secretary of State,


must secure that a copy of the application is given to that person within seven

days from that day.