Company Law Reform Bill [HL] (156-162)

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL] (156-162)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 14 — Resolutions and meetings
Chapter 4 — Public companies: additional requirements for AGMs
156

344
Public companies: notice of AGM
(1)
A notice calling an annual general meeting of a public company must state that
the meeting is an annual general meeting.
(2)
An annual general meeting may be called by shorter notice than that required
by section 314(2) or by the company’s articles (as the case may be), if all the
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members entitled to attend and vote at the meeting agree to the shorter notice.
345
Public companies: members’ power to require circulation of resolutions for
AGMs
(1)
The members of a public company may require the company to give, to
members of the company entitled to receive notice of the next annual general
10
meeting, notice of a resolution which may properly be moved and is intended
to be moved at that meeting.
(2)
A resolution may properly be moved at an annual general meeting unless—
(a)
it would, if passed, be ineffective (whether by reason of inconsistency
with any enactment or the company’s constitution or otherwise),
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(b)
it is defamatory of any person, or
(c)
it is frivolous or vexatious.
(3)
A company is required to give notice of a resolution once it has received
requests that it do so from—
(a)
members representing at least 5% of the total voting rights of all the
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members who have a right to vote on the resolution at the annual
general meeting to which the requests relate (excluding any voting
rights attached to any shares in the company held as treasury shares),
or
(b)
at least 100 members who have a right to vote on the resolution at the
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annual general meeting to which the requests relate and hold shares in
the company on which there has been paid up an average sum, per
member, of at least £100.
(4)
A request—
(a)
may be in hard copy form or in electronic form,
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(b)
must identify the resolution of which notice is to be given,
(c)
must be authenticated by the person or persons making it, and
(d)
must be received by the company not later than—
(i)
6 weeks before the annual general meeting to which the
requests relate, or
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(ii)
if later, the time at which notice is given of that meeting.
346
Public companies: company’s duty to circulate members’ resolutions for
AGMs
(1)
A company that is required under section 345 to give notice of a resolution
must send a copy of it to each member of the company entitled to receive notice
40
of the annual general meeting—
(a)
in the same manner as notice of the meeting, and
(b)
at the same time as, or as soon as reasonably practicable after, it gives
notice of the meeting.

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Chapter 5 — Additional requirements for quoted companies
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(2)
Subsection (1) has effect subject to section 347(2) (deposit or tender of sum in
respect of expenses of circulation).
(3)
The business which may be dealt with at an annual general meeting includes a
resolution of which notice is given in accordance with this section.
(4)
In the event of default in complying with this section, an offence is committed
5
by every officer of the company who is in default.
(5)
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.
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347
Public companies: expenses of circulating members’ resolutions for AGM
(1)
The expenses of the company in complying with section 346 need not be paid
by the members who requested the circulation of the resolution if requests
sufficient to require the company to circulate it are received before the end of
the financial year preceding the meeting.
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(2)
Otherwise—
(a)
the expenses of the company in complying with that section must be
paid by the members who requested the circulation of the resolution
unless the company resolves otherwise, and
(b)
unless the company has previously so resolved, it is not bound to
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comply with that section unless there is deposited with or tendered to
it, not later than—
(i)
six weeks before the annual general meeting to which the
requests relate, or
(ii)
if later, the time at which notice is given of that meeting,
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a sum reasonably sufficient to meet its expenses in complying with that
section.
Chapter 5
Additional requirements for quoted companies
Website publication of poll results
30
348
Results of poll to be made available on website
(1)
Where a poll is taken at a general meeting of a quoted company, the company
must ensure that the following information is made available on a website—
(a)
the date of the meeting,
(b)
the text of the resolution or, as the case may be, a description of the
35
subject matter of the poll,
(c)
the number of votes cast in favour, and
(d)
the number of votes cast against.
(2)
The provisions of section 360 (requirements as to website availability) apply.

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Chapter 5 — Additional requirements for quoted companies
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(3)
In the event of default in complying with this section (or with the requirements
of section 360 as it applies for the purposes of this section), an offence is
committed by every officer of the company who is in default.
(4)
A person guilty of an offence under subsection (3) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.
5
(5)
Failure to comply with this section (or the requirements of section 360) does not
affect the validity of—
(a)
the poll, or
(b)
the resolution or other business (if passed or agreed to) to which the
poll relates.
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(6)
This section only applies to polls taken after this section comes into force.
Independent report on poll
349
Members’ power to require independent report on poll
(1)
The members of a quoted company may require the directors to obtain an
independent report on any poll taken, or to be taken, at a general meeting of
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the company.
(2)
The directors are required to obtain an independent report if they receive
requests to do so from—
(a)
members representing not less than 5% of the total voting rights of all
the members who have a right to vote on the matter to which the poll
20
relates (excluding any voting rights attached to any shares in the
company held as treasury shares), or
(b)
not less than 100 members who have a right to vote on the matter to
which the poll relates and hold shares in the company on which there
has been paid up an average sum, per member, of not less than £100.
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(3)
Where the requests relate to more than one poll, subsection (2) must be
satisfied in relation to each of them.
(4)
A request—
(a)
may be in hard copy form or in electronic form,
(b)
must identify the poll or polls to which it relates,
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(c)
must be authenticated by the person or persons making it, and
(d)
must be received by the company not later than one week after the date
on which the poll is taken.
350
Appointment of independent assessor
(1)
Directors who are required under section 349 to obtain an independent report
35
on a poll or polls must appoint a person they consider to be appropriate (an
“independent assessor”) to prepare a report for the company on it or them.
(2)
The appointment must be made within one week after the company being
required to obtain the report.
(3)
The directors must not appoint a person who—
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(a)
does not meet the independence requirement in section 351, or

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(b)
has another role in relation to any poll on which he is to report
(including, in particular, a role in connection with collecting or
counting votes or with the appointment of proxies).
(4)
In the event of default in complying with this section, an offence is committed
by every officer of the company who is in default.
5
(5)
A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 5 on the standard scale.
(6)
If at the meeting no poll on which a report is required is taken—
(a)
the directors are not required to obtain a report from the independent
assessor, and
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(b)
his appointment ceases (but without prejudice to any right to be paid
for work done before the appointment ceased).
351
Independence requirement
(1)
A person may not be appointed as an independent assessor—
(a)
if he is—
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(i)
an officer or employee of the company, or
(ii)
a partner or employee of such a person, or a partnership of
which such a person is a partner;
(b)
if he is—
(i)
an officer or employee of an associated undertaking of the
20
company, or
(ii)
a partner or employee of such a person, or a partnership of
which such a person is a partner;
(c)
if there exists between—
(i)
the person or an associate of his, and
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(ii)
the company or an associated undertaking of the company,

a connection of any such description as may be specified by regulations
made by the Secretary of State.
(2)
An auditor of the company is not regarded as an officer or employee of the
company for this purpose.
30
(3)
In this section—
“associated undertaking” means—
(a)
a parent undertaking or subsidiary undertaking of the
company, or
(b)
a subsidiary undertaking of a parent undertaking of the
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company; and
“associate” has the meaning given by section 352.
(4)
Regulations under this section are subject to negative resolution procedure.
352
Meaning of “associate”
(1)
This section defines “associate” for the purposes of section 351 (independence
40
requirement).
(2)
In relation to an individual, “associate” means—
(a)
that individual’s spouse or civil partner or minor child or step-child,

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(b)
any body corporate of which that individual is a director, and
(c)
any employee or partner of that individual.
(3)
In relation to a body corporate, “associate” means—
(a)
any body corporate of which that body is a director,
(b)
any body corporate in the same group as that body, and
5
(c)
any employee or partner of that body or of any body corporate in the
same group.
(4)
In relation to a partnership that is a legal person under the law by which it is
governed, “associate” means—
(a)
any body corporate of which that partnership is a director,
10
(b)
any employee of or partner in that partnership, and
(c)
any person who is an associate of a partner in that partnership.
(5)
In relation to a partnership that is not a legal person under the law by which it
is governed, “associate” means any person who is an associate of any of the
partners.
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(6)
In this section, in relation to a limited liability partnership, for “director” read
“member”.
353
Effect of appointment of a partnership
(1)
This section applies where a partnership that is not a legal person under the
law by which it is governed is appointed as an independent assessor.
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(2)
Unless a contrary intention appears, the appointment is of the partnership as
such and not of the partners.
(3)
Where the partnership ceases, the appointment is to be treated as extending
to—
(a)
any partnership that succeeds to the practice of that partnership, or
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(b)
any other person who succeeds to that practice having previously
carried it on in partnership.
(4)
For the purposes of subsection (3)—
(a)
a partnership is regarded as succeeding to the practice of another
partnership only if the members of the successor partnership are
30
substantially the same as those of the former partnership, and
(b)
a partnership or other person is regarded as succeeding to the practice
of a partnership only if it or he succeeds to the whole or substantially
the whole of the business of the former partnership.
(5)
Where the partnership ceases and the appointment is not treated under
35
subsection (3) as extending to any partnership or other person, the
appointment may with the consent of the company be treated as extending to
a partnership, or other person, who succeeds to—
(a)
the business of the former partnership, or
(b)
such part of it as is agreed by the company is to be treated as comprising
40
the appointment.
354
The independent assessor’s report
(1)
The report of the independent assessor must state his opinion whether—

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(a)
the procedures adopted in connection with the poll or polls were
adequate;
(b)
the votes cast (including proxy votes) were fairly and accurately
recorded and counted;
(c)
the validity of members’ appointments of proxies was fairly assessed;
5
(d)
the notice of the meeting complied with section 332 (notice of meeting
to contain statement of rights to appoint proxy);
(e)
section 333 (company-sponsored invitations to appoint proxies) was
complied with in relation to the meeting.
(2)
The report must give his reasons for the opinions stated.
10
(3)
If he is unable to form an opinion on any of those matters, the report must
record that fact and state the reasons for it.
(4)
The report must state the name of the independent assessor.
355
Rights of independent assessor: right to attend meeting etc
(1)
Where an independent assessor has been appointed to report on a poll, he is
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entitled to attend—
(a)
the meeting at which the poll may be taken, and
(b)
any subsequent proceedings in connection with the poll.
(2)
He is also entitled to be provided by the company with a copy of—
(a)
the notice of the meeting, and
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(b)
any other communication provided by the company in connection with
the meeting to persons who have a right to vote on the matter to which
the poll relates.
(3)
The rights conferred by this section are only to be exercised to the extent that
the independent assessor considers necessary for the preparation of his report.
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(4)
If the independent assessor is a firm, the right under subsection (1) to attend
the meeting and any subsequent proceedings in connection with the poll is
exercisable by an individual authorised by the firm in writing to act as its
representative for that purpose.
356
Rights of independent assessor: right to information
30
(1)
The independent assessor is entitled to access to the company’s records
relating to—
(a)
any poll on which he is to report;
(b)
the meeting at which the poll or polls may be, or were, taken.
(2)
The independent assessor may require anyone who at any material time was—
35
(a)
a director or secretary of the company,
(b)
an employee of the company,
(c)
a person holding or accountable for any of the company’s records,
(d)
a member of the company, or
(e)
an agent of the company,
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to provide him with information or explanations for the purpose of preparing
his report.

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(3)
For this purpose “agent” includes the company’s bankers, solicitors and
auditor.
(4)
A statement made by a person in response to a requirement under this section
may not be used in evidence against him in criminal proceedings except
proceedings for an offence under section 357 (offences relating to provision of
5
information).
(5)
A person is not required by this section to disclose information in respect of
which a claim to legal professional privilege (in Scotland, to confidentiality of
communications) could be maintained in legal proceedings.
357
Offences relating to provision of information
10
(1)
A person who fails to comply with a requirement under section 356 without
delay commits an offence unless it was not reasonably practicable for him to
provide the required information or explanation.
(2)
A person guilty of an offence under subsection (1) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.
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(3)
A person commits an offence who knowingly or recklessly makes to an
independent assessor a statement (oral or written) that—
(a)
conveys or purports to convey any information or explanations which
the independent assessor requires, or is entitled to require, under
section 356, and
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(b)
is misleading, false or deceptive in a material particular.
(4)
A person guilty of an offence under subsection (3) 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—
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(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
30
maximum (or both).
(5)
Nothing in this section affects any right of an auditor to apply for an injunction
(in Scotland, an interdict or an order for specific performance) to enforce any
of his rights under section 355 or 356.
358
Information to be made available on website
35
(1)
Where an independent assessor has been appointed to report on a poll, the
company must ensure that the following information is made available on a
website—
(a)
the fact of his appointment,
(b)
his identity,
40
(c)
the text of the resolution or, as the case may be, a description of the
subject matter of the poll to which his appointment relates, and
(d)
a copy of a report by him which complies with section 354.
(2)
The provisions of section 360 (requirements as to website availability) apply.