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Session 2005 - 06
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Company Law Reform Bill [HL] (304-308)


Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 18 — A company’s share capital
Chapter 8 — Alteration of share capital

304

 

   

Translate that amount into the new currency at the rate of exchange specified

in the resolution.

   

Step Three

   

Divide that amount by the number of shares in the class.

638     

Effect of redenomination

5

(1)   

The redenomination of shares does not affect any rights or obligations of

members under the company’s constitution, or any restrictions affecting

members under the company’s constitution.

   

In particular, it does not affect entitlement to dividends (including entitlement

to dividends in a particular currency), voting rights or any liability in respect

10

of amounts unpaid on shares.

(2)   

For this purpose the company’s constitution includes the terms on which any

shares of the company are allotted or held.

(3)   

Subject to subsection (1), references to the old nominal value of the shares in

any agreement or statement, or in any deed, instrument or document, shall

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(unless the context otherwise requires) be read after the resolution takes effect

as references to the new nominal value of the shares.

639     

Notice to registrar of redenomination

(1)   

If a limited company having a share capital redenominates any of its share

capital, it must within one month after doing so give notice to the registrar,

20

specifying the shares redenominated.

(2)   

The notice must—

(a)   

state the date on which the resolution was passed, and

(b)   

be accompanied by a statement of capital.

(3)   

The statement of capital must state with respect to the company’s share capital

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as redenominated by the resolution—

(a)   

the total number of shares of the company,

(b)   

the aggregate nominal value of those shares,

(c)   

for each class of shares—

(i)   

prescribed particulars of the rights attached to the shares,

30

(ii)   

the total number of shares of that class, and

(iii)   

the aggregate nominal value of shares of that class, and

(d)   

the amount paid up and the amount (if any) unpaid on each share

(whether on account of the nominal value of the share or by way of

premium).

35

(4)   

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.

(5)   

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

40

continued contravention, a daily default fine not exceeding one-tenth of level

3 on the standard scale.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 18 — A company’s share capital
Chapter 8 — Alteration of share capital

305

 

640     

Reduction of capital in connection with redenomination

(1)   

A limited company that passes a resolution redenominating some or all of its

shares may, for the purpose of adjusting the nominal values of the

redenominated shares to obtain values that are, in the opinion of the company,

more suitable, reduce its share capital under this section.

5

(2)   

A reduction of capital under this section requires a special resolution of the

company.

(3)   

Any such resolution must be passed within three months of the resolution

effecting the redenomination.

(4)   

The amount by which a company’s share capital is reduced under this section

10

must not exceed 10% of the nominal value of the company’s allotted share

capital immediately after the reduction.

(5)   

A reduction of capital under this section does not extinguish or reduce any

liability in respect of share capital not paid up.

(6)   

Nothing in Chapter 10 of this Part applies to a reduction of capital under this

15

section.

641     

Notice to registrar of reduction of capital in connection with redenomination

(1)   

A company that passes a resolution under section 640 (reduction of capital in

connection with redenomination) must within 15 days after the resolution is

passed give notice to the registrar stating—

20

(a)   

the date of the resolution, and

(b)   

the date of the resolution under section 636 in connection with which it

was passed.

   

This is in addition to the copies of the resolutions themselves that are required

to be delivered to the registrar under Chapter 3 of Part 3.

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(2)   

The notice must be accompanied by a statement of capital.

(3)   

The statement of capital must state with respect to the company’s share capital

as reduced by the resolution—

(a)   

the total number of shares of the company,

(b)   

the aggregate nominal value of those shares,

30

(c)   

for each class of shares—

(i)   

prescribed particulars of the rights attached to the shares,

(ii)   

the total number of shares of that class, and

(iii)   

the aggregate nominal value of shares of that class, and

(d)   

the amount paid up and the amount (if any) unpaid on each share

35

(whether on account of the nominal value of the share or by way of

premium).

(4)   

The registrar must register the notice and the statement on receipt.

(5)   

The reduction of capital is not effective until those documents are registered.

(6)   

The company must also deliver to the registrar, within 15 days after the

40

resolution is passed, a statement by the directors confirming that the reduction

in share capital is in accordance with section 640(4) (reduction of capital not to

exceed 10% of nominal value of allotted shares immediately after reduction).

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 18 — A company’s share capital
Chapter 9 — Classes of share and class rights

306

 

(7)   

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.

(8)   

A person guilty of an offence under this section is liable—

(a)   

on conviction on indictment to a fine, and

5

(b)   

on summary conviction to a fine not exceeding the statutory maximum.

642     

Redenomination reserve

(1)   

The amount by which a company’s share capital is reduced under section 640

(reduction of capital in connection with redenomination) must be transferred

to a reserve, called “the redenomination reserve”.

10

(2)   

The redenomination reserve may be applied by the company in paying up

shares to be allotted to members as fully paid bonus shares.

(3)   

Subject to that, the provisions of the Companies Acts relating to the reduction

of a company’s share capital apply as if the redenomination reserve were paid-

up share capital of the company.

15

Chapter 9

Classes of share and class rights

Introductory

643     

Classes of shares

(1)   

For the purpose of this Chapter shares are of one class if the rights attached to

20

them are in all respects uniform.

(2)   

For this purpose the rights attached to shares are not regarded as different from

those attached to other shares by reason only that they do not carry the same

rights to dividends in the twelve months immediately following their

allotment.

25

Variation of class rights

644     

Variation of class rights: companies having a share capital

(1)   

This section is concerned with the variation of the rights attached to a class of

shares in a company having a share capital.

(2)   

Rights attached to a class of a company’s shares may be varied if, and only if,

30

the holders of shares of that class consent to the variation in accordance with

this section.

(3)   

This is without prejudice to any other restrictions on the variation of the rights.

(4)   

The consent required for the purposes of this section on the part of the holders

of a class of a company’s shares is—

35

(a)   

consent in writing from the holders of at least three-quarters in nominal

value of the issued shares of that class (excluding any shares held as

treasury shares), or

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 18 — A company’s share capital
Chapter 9 — Classes of share and class rights

307

 

(b)   

a special resolution passed at a separate general meeting of the holders

of that class sanctioning the variation.

(5)   

Any amendment of a provision contained in a company’s articles for the

variation of the rights attached to a class of shares, or the insertion of any such

provision into the articles, is itself to be treated as a variation of those rights.

5

(6)   

In this section, and (except where the context otherwise requires) in any

provision in a company’s articles for the variation of the rights attached to a

class of shares, references to the variation of those rights include references to

their abrogation.

645     

Variation of class rights: companies without a share capital

10

(1)   

This section is concerned with the variation of the rights of a class of members

of a company where the company does not have a share capital.

(2)   

Rights of a class of members may be varied if, and only if, the members of that

class consent to the variation in accordance with this section.

(3)   

This is without prejudice to any other restrictions on the variation of the rights.

15

(4)   

The consent required for the purposes of this section on the part of the

members of a class is—

(a)   

consent in writing from at least three-quarters of the members of the

class, or

(b)   

a special resolution passed at a separate general meeting of the

20

members of that class sanctioning the variation.

(5)   

Any amendment of a provision contained in a company’s articles for the

variation of the rights of a class of members, or the insertion of any such

provision into the articles, is itself to be treated as a variation of those rights.

(6)   

In this section, and (except where the context otherwise requires) in any

25

provision in a company’s articles for the variation of the rights of a class of

members, references to the variation of those rights include references to their

abrogation.

646     

Variation of class rights: saving for court’s powers under other provisions

Nothing in section 644 or 645 (variation of class rights) affects the power of the

30

court under—

section 98 (application to cancel resolution for public company to be re-

registered as private),

Part 27 (arrangements and reconstructions), or

Part 30 (protection of members against unfair prejudice).

35

647     

Right to object to variation: companies having a share capital

(1)   

This section applies where the rights attached to any class of shares in a

company are varied under section 644 (variation of class rights: companies

having a share capital).

(2)   

The holders of not less in the aggregate than 15% of the issued shares of the

40

class in question (being persons who did not consent to or vote in favour of the

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 18 — A company’s share capital
Chapter 9 — Classes of share and class rights

308

 

resolution for the variation) may apply to the court to have the variation

cancelled.

   

For this purpose any of the company’s share capital held as treasury shares is

disregarded.

(3)   

If such an application is made, the variation has no effect unless and until it is

5

confirmed by the court.

(4)   

Application to the court—

(a)   

must be made within 21 days after the date on which the consent was

given or the resolution was passed (as the case may be), and

(b)   

may be made on behalf of the shareholders entitled to make the

10

application by such one or more of their number as they may appoint

in writing for the purpose.

(5)   

The court, after hearing the applicant and any other persons who apply to the

court to be heard and appear to the court to be interested in the application,

may, if satisfied having regard to all the circumstances of the case that the

15

variation would unfairly prejudice the shareholders of the class represented by

the applicant, disallow the variation, and shall if not satisfied confirm it.

   

The decision of the court on any such application is final.

(6)   

References in this section to the variation of the rights of holders of a class of

shares include references to their abrogation.

20

648     

Right to object to variation: companies without a share capital

(1)   

This section applies where the rights of any class of members of a company are

varied under section 645 (variation of class rights: companies without a share

capital).

(2)   

Members amounting to not less than 15% of the members of the class in

25

question (being persons who did not consent to or vote in favour of the

resolution for the variation) may apply to the court to have the variation

cancelled.

(3)   

If such an application is made, the variation has no effect unless and until it is

confirmed by the court.

30

(4)   

Application to the court must be made within 21 days after the date on which

the consent was given or the resolution was passed (as the case may be) and

may be made on behalf of the members entitled to make the application by

such one or more of their number as they may appoint in writing for the

purpose.

35

(5)   

The court, after hearing the applicant and any other persons who apply to the

court to be heard and appear to the court to be interested in the application,

may, if satisfied having regard to all the circumstances of the case that the

variation would unfairly prejudice the members of the class represented by the

applicant, disallow the variation, and shall if not satisfied confirm it.

40

   

The decision of the court on any such application is final.

(6)   

References in this section to the variation of the rights of a class of members

include references to their abrogation.

 
 

 
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Revised 28 July 2006