sc1902007.598-604

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

S.C.D.  Standing Committee Proceedings: 20th July 2006
598

Company Law Reform Bill–[ [], continued

(a)
made (whether orally or in writing) to a person carrying out a valuation

or making a report, and

(b)
conveying or purporting to convey any information or explanation which

that person requires, or is entitled to require, under subsection (1).

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

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

two 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).’.

Meaning of “subsidiary” etc

Margaret Hodge

Added  nc417

To move the following Clause:—

‘(1)
A company is a “subsidiary” of another company, its “holding company”, if that

other company—

(a)
hold a majority of the voting rights in it, or

(b)
is a member of it and has the right to appoint or remove a majority of its

board of directors, or

(c)
is a member of it and controls alone, pursuant to an agreement with other

members, a majority of the voting rights in it,


or if it is a subsidiary of a company that is itself a subsidiary of that other

company.

(2)
A company is a “wholly-owned subsidiary” of another company if it has no

members except that other and that other’s wholly-owned subsidiaries or persons

acting on behalf of that other or its wholly-owned subsidiaries.

(3)
Schedule 1 contains provisions explaining expressions used in this section and

otherwise supplementing this section.

(4)
In this section and that Schedule “company” includes any body corporate.’.

Meaning of “subsidiary” etc: power to amend

Margaret Hodge

Added  nc418

To move the following Clause:—

‘(1)
The Secretary of State may by regulations amend the provisions of section

(Meaning of “subsidiary” etc) (meaning of “subsidiary” etc) and Schedule

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

(Meaning of “subsidiary” etc: supplementary provisions) (meaning of

“subsidiary” etc: supplementary provisions) so as to alter the meaning of the

expressions “subsidiary”, “holding company” or “wholly-owned subsidiary”.

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

(3)
Any amendment made by regulations under this section does not apply for the

purposes of enactments outside the Companies Acts unless the regulations so

provide.

(4)
So much of section 23(3) of the Interpretation Act 1978 (c. 30) as applies section

17(2)(a) of that Act (effect of repeal and re-enactment) to deeds, instruments and

documents other than enactments does not apply in relation to any repeal and re-

enactment effected by regulations under this section.’.

Meaning of “banking company” and “banking group”

Margaret Hodge

Added  nc419

To move the following Clause:—

‘(1)
This section defines “banking company” and “banking group” for the purposes of

the Companies Acts.

(2)
“Banking company” means a person who has permission under Part 4 of the

Financial Services and Markets Act 2000 (c. 8) to accept deposits, other than—

(a)
a person who is not a company, and

(b)
a person who has such permission only for the purpose of carrying on

another regulated activity in accordance with permission under that Part.

(3)
The definition in subsection (2) must be read with section 22 of that Act, any

relevant order under that section and Schedule 2 to that Act.

(4)
References to a banking group are to a group where the parent company is a

banking company or where—

(a)
the parent company’s principal subsidiary undertakings are wholly or

mainly credit institutions, and

(b)
the parent company does not itself carry on any material business apart

from the acquisition, management and disposal of interests in subsidiary

undertakings.


“Group” here means a parent undertaking and its subsidiary undertakings.

(5)
For the purposes of subsection (4)—

(a)
a parent company’s principal subsidiary undertakings are the subsidiary

undertakings of the company whose results or financial position would

principally affect the figures shown in the group accounts, and

(b)
the management of interests in subsidiary undertakings includes the

provision of services to such undertakings.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
600

Company Law Reform Bill–[ [], continued

Meaning of “insurance company” and related expressions

Margaret Hodge

Added  nc420

To move the following Clause:—

‘(1)
This section defines “insurance company”, “authorised insurance company”,

“insurance group” and “insurance market activity” for the purposes of the

Companies Acts.

(2)
An “authorised insurance company” means a person (whether incorporated or

not) who has permission under Part 4 of the Financial Services and Markets Act

2000 (c. 8) to effect or carry out contracts of insurance.

(3)
An “insurance company” means—

(a)
an authorised insurance company, or

(b)
any other person (whether incorporated or not) who—

(i)
carries on insurance market activity, or

(ii)
may effect or carry out contracts of insurance under which the

benefits provided by that person are exclusively or primarily

benefits in kind in the event of accident to or breakdown of a

vehicle.

(4)
Neither expression includes a friendly society within the meaning of the Friendly

Societies Act 1992 (c. 40).

(5)
References to an insurance group are to a group where the parent company is an

insurance company or where—

(a)
the parent company’s principal subsidiary undertakings are wholly or

mainly insurance companies, and

(b)
the parent company does not itself carry on any material business apart

from the acquisition, management and disposal of interests in subsidiary

undertakings.


“Group” here means a parent undertaking and its subsidiary undertakings.

(6)
For the purposes of subsection (5)—

(a)
a parent company’s principal subsidiary undertakings are the subsidiary

undertakings of the company whose results or financial position would

principally affect the figures shown in the group accounts, and

(b)
the management of interests in subsidiary undertakings includes the

provision of services to such undertakings.

(7)
“Insurance market activity” has the meaning given in section 316(3) of the

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

(8)
References in this section to contracts of insurance and to the effecting or carrying

out of such contracts must be read with section 22 of that Act, any relevant order

under that section and Schedule 2 to that Act.’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
601

Company Law Reform Bill–[ [], continued

“Employees’ share scheme”

Margaret Hodge

Added  nc421

To move the following Clause:—

‘For the purposes of the Companies Acts an employees’ share scheme is a scheme

for encouraging or facilitating the holding of shares in or debentures of a

company by or for the benefit of—

(a)
the bona fide employees or former employees of—

(i)
the company,

(ii)
any subsidiary of the company, or

(iii)
the company’s holding company or any subsidiary of the

company’s holding company, or

(b)
the spouses, civil partners, surviving spouses, surviving civil partners, or

minor children or step-children of such employees or former

employees.’.

Meaning of “prescribed”

Margaret Hodge

Added  nc422

To move the following Clause:—

‘In the Companies Acts “prescribed” means prescribed (by order or by

regulations) by the Secretary of State.’.

Persons subject to foreign restrictions

Margaret Hodge

Added  nc423

To move the following Clause:—

‘(1)
This section defines what is meant by references in this Part to a person being

subject to foreign restrictions.

(2)
A person is subject to foreign restrictions if under the law of a country or territory

outside the United Kingdom—

(a)
he is, by reason of misconduct or unfitness, disqualified to any extent

from acting in connection with the affairs of a company,

(b)
he is, by reason of misconduct or unfitness, required—

(i)
to obtain permission from a court or other authority, or

(ii)
to meet any other condition,


before acting in connection with the affairs of a company,

S.C.D.  Standing Committee Proceedings: 20th July 2006
602

Company Law Reform Bill–[ [], continued

(c)
he has, by reason of misconduct or unfitness, given undertakings to a

court or other authority of a country or territory outside the United

Kingdom—

(i)
not to act in connection with the affairs of a company, or

(ii)
restricting the extent to which, or the way in which, he may do

so.

(3)
The references in subsection (2) to acting in connection with the affairs of a

company are to doing any of the following—

(a)
being a director of a company,

(b)
acting as receiver of a company’s property, or

(c)
being concerned or taking part in the promotion, formation or

management of a company.

(4)
In this section—

(a)
“company” means a company incorporated or formed under the law of

the country or territory in question, and

(b)
in relation to such a company—

“director” means the holder of an office corresponding to that of

director of a UK company; and

“receiver” includes any corresponding officer under the law of that

country or territory.’.

Meaning of “the court” and “UK company”

Margaret Hodge

Added  nc424

To move the following Clause:—

‘In this Part—

“the court” means—

(q)
in England and Wales, the High Court or a county court;

(r)
in Scotland, the Court of Session or the sheriff court;

(s)
in Northern Ireland, the High Court;

“UK company” means a body corporate that—

(t)
is a company as defined in section 1 of this Act, or

(u)
is registered under the Companies Acts by virtue of section 694

(bodies not formed under Companies Acts but authorised to

register).’.

S.C.D.  Standing Committee Proceedings: 20th July 2006
603

Company Law Reform Bill–[ [], continued

Disqualification of persons subject to foreign restrictions

Margaret Hodge

Added  nc425

To move the following Clause:—

‘(1)
The Secretary of State may make provision by regulations disqualifying a person

subject to foreign restrictions from—

(a)
being a director of a UK company,

(b)
acting as receiver of a UK company’s property, or

(c)
in any way, whether directly or indirectly, being concerned or taking part

in the promotion, formation or management of a UK company.

(2)
The regulations may provide that a person subject to foreign restrictions—

(a)
is disqualified automatically by virtue of the regulations, or

(b)
may be disqualified by order of the court on the application of the

Secretary of State.

(3)
The regulations may provide that the Secretary of State may accept an

undertaking (a “disqualification undertaking”) from a person subject to foreign

restrictions that he will not do anything which would be in breach of a

disqualification under subsection (1).

(4)
In this Part—

(a)
a “person disqualified under this Part” is a person—

(i)
disqualified as mentioned in subsection (2)(a) or (b), or

(ii)
who has given and is subject to a disqualification undertaking;

(b)
references to a breach of a disqualification include a breach of a

disqualification undertaking.

(5)
The regulations may provide for applications to the court by persons disqualified

under this Part for permission to act in a way which would otherwise be in breach

of the disqualification.

(6)
The regulations must provide that a person ceases to be disqualified under this

Part on his ceasing to be subject to foreign restrictions.

(7)
Regulations under this section are subject to affirmative resolution procedure.’.

Disqualification regulations: supplementary

Margaret Hodge

Added  nc426

To move the following Clause:—

‘(1)
Regulations under section (Disqualification of persons subject to foreign

restrictions) may make different provision for different cases and may in

particular distinguish between cases by reference to—

(a)
the conduct on the basis of which the person became subject to foreign

restrictions;

(b)
the nature of the foreign restrictions;

(c)
the country or territory under whose law the foreign restrictions were

imposed.

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

(2)
Regulations under section (Disqualification of persons subject to foreign

restrictions)(2)(b) or (5) (provision for applications to the court)—

(a)
must specify the grounds on which an application may be made;

(b)
may specify factors to which the court shall have regard in determining

an application.

(3)
The regulations may, in particular, require the court to have regard to the

following factors—

(a)
whether the conduct on the basis of which the person became subject to

foreign restrictions would, if done in relation to a UK company, have led

a court to make a disqualification order on an application under the

Company Directors Disqualification Act 1986 (c. 46) or the Company

Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/

3150 (N.I. 4));

(b)
in a case in which the conduct on the basis of which the person became

subject to foreign restrictions would not be unlawful if done in relation to

a UK company, the fact that the person acted unlawfully under foreign

law;

(c)
whether the person’s activities in relation to UK companies began after

he became subject to foreign restrictions;

(d)
whether the person’s activities (or proposed activities) in relation to UK

companies are undertaken (or are proposed to be undertaken) outside the

United Kingdom.

(4)
Regulations under section (Disqualification of persons subject to foreign

restrictions)(3) (provision as to undertakings given to the Secretary of State) may

include provision allowing the Secretary of State, in determining whether to

accept an undertaking, to take into account matters other than criminal

convictions notwithstanding that the person may be criminally liable in respect of

those matters.

(5)
Regulations under section (Disqualification of persons subject to foreign

restrictions)(5) (provision for application to court for permission to act) may

include provision—

(a)
entitling the Secretary of State to be represented at the hearing of the

application, and

(b)
as to the giving of evidence or the calling of witnesses by the Secretary

of State at the hearing of the application.’.

Offence of breach of disqualification

Margaret Hodge

Added  nc427

To move the following Clause:—

‘(1)
Regulations under section (Disqualification of persons subject to foreign

restrictions) may provide that a person disqualified under this Part who acts in

breach of the disqualification commits an offence.

(2)
The regulations may provide that a person guilty of such an offence is liable—

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

two years or a fine (or both);

(b)
on summary conviction—