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Company Law Reform Bill [HL] (117-120)


Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 9 — Supplementary provisions

117

 

Records of meetings of directors

248     

Minutes of directors’ meetings

(1)   

Every company must cause minutes of all proceedings at meetings of its

directors to be recorded.

(2)   

The records must be kept for at least ten years from the date of the meeting.

5

(3)   

If a company fails to comply with this section, an offence is committed by 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

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3 on the standard scale.

249     

Minutes as evidence

(1)   

Minutes recorded in accordance with section 248, if purporting to be

authenticated by the chairman of the meeting or by the chairman of the next

directors’ meeting, are evidence (in Scotland, sufficient evidence) of the

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proceedings at the meeting.

(2)   

Where minutes have been made in accordance with that section of the

proceedings of a meeting of directors, then, until the contrary is proved—

(a)   

the meeting is deemed duly held and convened,

(b)   

all proceedings at the meeting are deemed to have duly taken place,

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and

(c)   

all appointments at the meeting are deemed valid.

Meaning of "director" and "shadow director"

250     

“Director”

   

In the Companies Acts “director” includes any person occupying the position

25

of director, by whatever name called.

251     

“Shadow director”

(1)   

In the Companies Acts “shadow director”, in relation to a company, means a

person in accordance with whose directions or instructions the directors of the

company are accustomed to act.

30

(2)   

A person is not to be regarded as a shadow director by reason only that the

directors act on advice given by him in a professional capacity.

(3)   

A body corporate is not to be regarded as a shadow director of any of its

subsidiary companies for the purposes of—

Chapter 2 (general duties of directors),

35

Chapter 4 (transactions requiring members’ approval), or

Chapter 6 (contract with sole member who is also a director),

   

by reason only that the directors of the subsidiary are accustomed to act in

accordance with its directions or instructions.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 9 — Supplementary provisions

118

 

Other definitions

252     

Persons connected with a director

(1)   

This section defines what is meant by references in this Part to a person being

“connected” with a director of a company (or a director being “connected” with

a person).

5

(2)   

The following persons (and only those persons) are connected with a director

of a company—

(a)   

members of the director’s family (see section 253);

(b)   

a body corporate with which the director is connected (as defined in

section 254);

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(c)   

a person acting in his capacity as trustee of a trust—

(i)   

the beneficiaries of which include the director or a person who

by virtue of paragraph (a) or (b) is connected with him, or

(ii)   

the terms of which confer a power on the trustees that may be

exercised for the benefit of the director or any such person,

15

   

other than a trust for the purposes of an employees’ share scheme or a

pension scheme;

(d)   

a person acting in his capacity as partner—

(i)   

of the director, or

(ii)   

of a person who, by virtue of paragraph (a), (b) or (c), is

20

connected with that director;

(e)   

a firm that is a legal person under the law by which it is governed and

in which—

(i)   

the director is a partner,

(ii)   

a partner is a person who, by virtue of paragraph (a), (b) or (c)

25

is connected with the director, or

(iii)   

a partner is a firm in which the director is a partner or in which

there is a partner who, by virtue of paragraph (a), (b) or (c), is

connected with the director.

(3)   

References in this Part to a person connected with a director of a company do

30

not include a person who is himself a director of the company.

253     

Members of a director’s family

(1)   

This section defines what is meant by references in this Part to members of a

director’s family.

(2)   

For the purposes of this Part the members of a director’s family are—

35

(a)   

the director’s spouse or civil partner;

(b)   

any other person (whether of a different sex or the same sex) with

whom the director lives as partner in an enduring family relationship;

(c)   

the director’s children or step-children;

(d)   

any children or step-children of a person within paragraph (b) (and

40

who are not children or step-children of the director) who live with the

director and have not attained the age of 18;

(e)   

the director’s parents.

(3)   

Subsection (2)(b) does not apply if the other person is the director’s

grandparent or grandchild, sister, brother, aunt or uncle, or nephew or niece.

45

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 9 — Supplementary provisions

119

 

254     

Director “connected with” a body corporate

(1)   

This section defines what is meant by references in this Part to a director being

“connected with” a body corporate.

(2)   

A director is connected with a body corporate if, but only if, he and the persons

connected with him together—

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(a)   

are interested in shares comprised in the equity share capital of that

body corporate of a nominal value equal to at least 20% of that share

capital, or

(b)   

are entitled to exercise or control the exercise of more than 20% of the

voting power at any general meeting of that body.

10

(3)   

The rules set out in Schedule 1 (references to interest in shares or debentures)

apply for the purposes of this section.

(4)   

References in this section to voting power the exercise of which is controlled by

a director include voting power whose exercise is controlled by a body

corporate controlled by him.

15

(5)   

Shares in a company held as treasury shares, and any voting rights attached to

such shares, are disregarded for the purposes of this section.

(6)   

For the avoidance of circularity in the application of section 252 (meaning of

“connected person”) —

(a)   

a body corporate with which a director is connected is not treated for

20

the purposes of this section as connected with him unless it is also

connected with him by virtue of subsection (2)(c) or (d) of that section

(connection as trustee or partner); and

(b)   

a trustee of a trust the beneficiaries of which include (or may include) a

body corporate with which a director is connected is not treated for the

25

purposes of this section as connected with a director by reason only of

that fact.

255     

Director “controlling” a body corporate

(1)   

This section defines what is meant by references in this Part to a director

“controlling” a body corporate.

30

(2)   

A director of a company is taken to control a body corporate if, but only if—

(a)   

he or any person connected with him—

(i)   

is interested in any part of the equity share capital of that body,

or

(ii)   

is entitled to exercise or control the exercise of any part of the

35

voting power at any general meeting of that body, and

(b)   

he, the persons connected with him and the other directors of that

company, together—

(i)   

are interested in more than 50% of that share capital, or

(ii)   

are entitled to exercise or control the exercise of more than 50%

40

of that voting power.

(3)   

The rules set out in Schedule 1 (references to interest in shares or debentures)

apply for the purposes of this section.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 9 — Supplementary provisions

120

 

(4)   

References in this section to voting power the exercise of which is controlled by

a director include voting power whose exercise is controlled by a body

corporate controlled by him.

(5)   

Shares in a company held as treasury shares, and any voting rights attached to

such shares, are disregarded for the purposes of this section.

5

(6)   

For the avoidance of circularity in the application of section 252 (meaning of

“connected person”)—

(a)   

a body corporate with which a director is connected is not treated for

the purposes of this section as connected with him unless it is also

connected with him by virtue of subsection (2)(c) or (d) of that section

10

(connection as trustee or partner); and

(b)   

a trustee of a trust the beneficiaries of which include (or may include) a

body corporate with which a director is connected is not treated for the

purposes of this section as connected with a director by reason only of

that fact.

15

256     

Associated bodies corporate

(1)   

For the purposes of this Part bodies corporate are associated if one is a

subsidiary of the other or both are subsidiaries of the same body corporate.

(2)   

References to an “associated company” have a corresponding meaning.

257     

References to company’s constitution

20

(1)   

References in this Part to a company’s constitution include—

(a)   

any resolution or other decision come to in accordance with the

constitution, and

(b)   

any decision by the members of the company, or a class of members,

that is treated by virtue of any enactment or rule of law as equivalent to

25

a decision by the company.

(2)   

This is in addition to the matters mentioned in section 17 (general provision as

to matters contained in company’s constitution).

General

258     

Power to increase financial limits

30

(1)   

The Secretary of State may by order substitute for any sum of money specified

in this Part a larger sum specified in the order.

(2)   

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

(3)   

An order does not have effect in relation to anything done or not done before

it comes into force.

35

   

Accordingly, proceedings in respect of any liability incurred before that time

may be continued or instituted as if the order had not been made.

 
 

 
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Revised 28 July 2006