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Company Law Reform Bill [HL] (383-388)


Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 23 — Information about interests in a company’s shares

383

 

818     

Entries not to be removed from register

(1)   

Entries in the register kept under section 811 (register of interests disclosed)

must not be deleted except in accordance with—

section 819 (old entries), or

section 820 (incorrect entry relating to third party).

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(2)   

If an entry is deleted in contravention of subsection (1), the company must

restore it as soon as reasonably practicable.

(3)   

If default is made in complying with subsection (1) or (2), an offence is

committed by—

(a)   

the company, and

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(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 contravention of subsection (2), a daily default fine not exceeding

one-tenth of level 3 on the standard scale.

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819     

Removal of entries from register: old entries

   

A company may remove an entry from the register kept under section 811

(register of interests disclosed) if more than six years have elapsed since the

entry was made.

820     

Removal of entries from register: incorrect entry relating to third party

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(1)   

This section applies where in pursuance of an obligation imposed by a notice

under section 802 (notice requiring information about interests in company’s

shares) a person gives to a company the name and address of another person

as being interested in shares in the company.

(2)   

That other person may apply to the company for the removal of the entry from

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the register.

(3)   

If the company is satisfied that the information in pursuance of which the entry

was made is incorrect, it shall remove the entry.

(4)   

If an application under subsection (3) is refused, the applicant may apply to the

court for an order directing the company to remove the entry in question from

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the register.

   

The court may make such an order if it thinks fit.

821     

Adjustment of entry relating to share acquisition agreement

(1)   

If a person who is identified in the register kept by a company under section

811 (register of interests disclosed) as being a party to an agreement to which

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section 828 applies (certain share acquisition agreements) ceases to be a party

to the agreement, he may apply to the company for the inclusion of that

information in the register.

(2)   

If the company is satisfied that he has ceased to be a party to the agreement, it

shall record that information (if not already recorded) in every place where his

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name appears in the register as a party to the agreement.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 23 — Information about interests in a company’s shares

384

 

(3)   

If an application under this section is refused (otherwise than on the ground

that the information has already been recorded), the applicant may apply to the

court for an order directing the company to include the information in question

in the register.

   

The court may make such an order if it thinks fit.

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822     

Duty of company ceasing to be public company

(1)   

If a company ceases to be a public company, it must continue to keep any

register kept under section 811 (register of interests disclosed), and any

associated index, until the end of the period of six years after it ceased to be

such a company.

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(2)   

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.

(3)   

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 in the case

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

level 3 on the standard scale.

Meaning of interest in shares

823     

Interest in shares: general

(1)   

This section applies to determine for the purposes of this Part whether a person

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has an interest in shares.

(2)   

In this Part—

(a)   

a reference to an interest in shares includes an interest of any kind

whatsoever in the shares, and

(b)   

any restraints or restrictions to which the exercise of any right attached

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to the interest is or may be subject shall be disregarded.

(3)   

Where an interest in shares is comprised in property held on trust, every

beneficiary of the trust is treated as having an interest in the shares.

(4)   

A person is treated as having an interest in shares if—

(a)   

he enters into a contract to acquire them, or

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(b)   

not being the registered holder, he is entitled—

(i)   

to exercise any right conferred by the holding of the shares, or

(ii)   

to control the exercise of any such right.

(5)   

For the purposes of subsection (4)(b) a person is entitled to exercise or control

the exercise of a right conferred by the holding of shares if he—

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(a)   

has a right (whether subject to conditions or not) the exercise of which

would make him so entitled, or

(b)   

is under an obligation (whether subject to conditions or not) the

fulfilment of which would make him so entitled.

(6)   

A person is treated as having an interest in shares if—

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(a)   

he has a right to call for delivery of the shares to himself or to his order,

or

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 23 — Information about interests in a company’s shares

385

 

(b)   

he has a right to acquire an interest in shares or is under an obligation

to take an interest in shares.

   

This applies whether the right or obligation is conditional or absolute.

(7)   

Persons having a joint interest are treated as each having that interest.

(8)   

It is immaterial that shares in which a person has an interest are unidentifiable.

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824     

Interest in shares: right to subscribe for shares

(1)   

Section 802 (notice by company requiring information about interests in its

shares) applies in relation to a person who has, or previously had, or is or was

entitled to acquire, a right to subscribe for shares in the company as it applies

in relation to a person who is or was interested in shares in that company.

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(2)   

References in that section to an interest in shares shall be read accordingly.

825     

Interest in shares: family interests

(1)   

For the purposes of this Part a person is taken to be interested in shares in

which—

(a)   

his spouse or civil partner, or

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(b)   

any infant child or step-child of his,

   

is interested.

(2)   

In relation to Scotland “infant” means a person under the age of 18 years.

826     

Interest in shares: corporate interests

(1)   

For the purposes of this Part a person is taken to be interested in shares if a

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body corporate is interested in them and—

(a)   

the body or its directors are accustomed to act in accordance with his

directions or instructions, or

(b)   

he is entitled to exercise or control the exercise of one-third or more of

the voting power at general meetings of the body.

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(2)   

For the purposes of this section a person is treated as entitled to exercise or

control the exercise of voting power if—

(a)   

another body corporate is entitled to exercise or control the exercise of

that voting power, and

(b)   

he is entitled to exercise or control the exercise of one-third or more of

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the voting power at general meetings of that body corporate.

(3)   

For the purposes of this section a person is treated as entitled to exercise or

control the exercise of voting power if—

(a)   

he has a right (whether or not subject to conditions) the exercise of

which would make him so entitled, or

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(b)   

he is under an obligation (whether or not subject to conditions) the

fulfilment of which would make him so entitled.

827     

Interest in shares: agreement to acquire interests in a particular company

(1)   

For the purposes of this Part an interest in shares may arise from an agreement

between two or more persons that includes provision for the acquisition by any

40

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 23 — Information about interests in a company’s shares

386

 

one or more of them of interests in shares of a particular public company (the

“target company” for that agreement).

(2)   

This section applies to such an agreement if—

(a)   

the agreement includes provision imposing obligations or restrictions

on any one or more of the parties to it with respect to their use, retention

5

or disposal of their interests in the shares of the target company

acquired in pursuance of the agreement (whether or not together with

any other interests of theirs in the company’s shares to which the

agreement relates), and

(b)   

an interest in the target company’s shares is in fact acquired by any of

10

the parties in pursuance of the agreement.

(3)   

The reference in subsection (2) to the use of interests in shares in the target

company is to the exercise of any rights or of any control or influence arising

from those interests (including the right to enter into an agreement for the

exercise, or for control of the exercise, of any of those rights by another person).

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(4)   

Once an interest in shares in the target company has been acquired in

pursuance of the agreement, this section continues to apply to the agreement

so long as the agreement continues to include provisions of any description

mentioned in subsection (2).

   

This applies irrespective of—

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(a)   

whether or not any further acquisitions of interests in the company’s

shares take place in pursuance of the agreement;

(b)   

any change in the persons who are for the time being parties to it;

(c)   

any variation of the agreement.

   

References in this subsection to the agreement include any agreement having

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effect (whether directly or indirectly) in substitution for the original

agreement.

(5)   

In this section—

(a)   

“agreement” includes any agreement or arrangement, and

(b)   

references to provisions of an agreement include—

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(i)   

undertakings, expectations or understandings operative under

an arrangement, and

(ii)   

any provision whether express or implied and whether

absolute or not.

   

References elsewhere in this Part to an agreement to which this section applies

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have a corresponding meaning.

(6)   

This section does not apply—

(a)   

to an agreement that is not legally binding unless it involves mutuality

in the undertakings, expectations or understandings of the parties to it;

or

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(b)   

to an agreement to underwrite or sub-underwrite an offer of shares in

a company, provided the agreement is confined to that purpose and

any matters incidental to it.

828     

Extent of obligation in case of share acquisition agreement

(1)   

For the purposes of this Part each party to an agreement to which section 827

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applies is treated as interested in all shares in the target company in which any

other party to the agreement is interested apart from the agreement (whether

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 23 — Information about interests in a company’s shares

387

 

or not the interest of the other party was acquired, or includes any interest that

was acquired, in pursuance of the agreement).

(2)   

For those purposes an interest of a party to such an agreement in shares in the

target company is an interest apart from the agreement if he is interested in

those shares otherwise than by virtue of the application of section 827 (and this

5

section) in relation to the agreement.

(3)   

Accordingly, any such interest of the person (apart from the agreement)

includes for those purposes any interest treated as his under section 825 or 826

(family or corporate interests) or by the application of section 827 (and this

section) in relation to any other agreement with respect to shares in the target

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company to which he is a party.

(4)   

A notification with respect to his interest in shares in the target company made

to the company under this Part by a person who is for the time being a party to

an agreement to which section 827 applies must—

(a)   

state that the person making the notification is a party to such an

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agreement,

(b)   

include the names and (so far as known to him) the addresses of the

other parties to the agreement, identifying them as such, and

(c)   

state whether or not any of the shares to which the notification relates

are shares in which he is interested by virtue of section 827 (and this

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section) and, if so, the number of those shares.

Other supplementary provisions

829     

Information protected from wider disclosure

(1)   

Information in respect of which a company is for the time being entitled to any

exemption conferred by regulations under section 415(3) (information about

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related undertakings to be given in notes to accounts: exemption where

disclosure harmful to company’s business)—

(a)   

must not be included in a report under section 808 (report to members

on outcome of investigation), and

(b)   

must not be made available under section 814 (right to inspect and

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request copy of entries).

(2)   

Where any such information is omitted from a report under section 808, that

fact must be stated in the report.

830     

Reckoning of periods for fulfilling obligations

   

Where the period allowed by any provision of this Part for fulfilling an

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obligation is expressed as a number of days, any day that is not a working day

shall be disregarded in reckoning that period.

831     

Power to make further provision by regulations

(1)   

The Secretary of State may by regulations amend—

(a)   

the definition of shares to which this Part applies (section 801),

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(b)   

the provisions as to notice by a company requiring information about

interests in its shares (section 802), and

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 24 — Distributions
Chapter 1 — Restrictions on when distributions may be made

388

 

(c)   

the provisions as to what is taken to be an interest in shares (sections

823 and 824).

(2)   

The regulations may amend, repeal or replace those provisions and make such

other consequential amendments or repeals of provisions of this Part as appear

to the Secretary of State to be appropriate.

5

(3)   

Regulations under this section are subject to affirmative resolution procedure.

Part 24

Distributions

Chapter 1

Restrictions on when distributions may be made

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Introductory

832     

Meaning of “distribution”

(1)   

In this Part “distribution” means every description of distribution of a

company’s assets to its members, whether in cash or otherwise, subject to the

following exceptions.

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(2)   

The following are not distributions for the purposes of this Part—

(a)   

an issue of shares as fully or partly paid bonus shares;

(b)   

the reduction of share capital—

(i)   

by extinguishing or reducing the liability of any of the members

on any of the company’s shares in respect of share capital not

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paid up, or

(ii)   

by paying off paid up share capital;

(c)   

the redemption or purchase of any of the company’s own shares out of

capital (including the proceeds of any fresh issue of shares) or out of

unrealised profits in accordance with Chapter 3 or 4 of Part 19;

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(d)   

a distribution of assets to members of the company on its winding up.

General rules

833     

Distributions to be made only out of profits available for the purpose

(1)   

A company may only make a distribution out of profits available for the

purpose.

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(2)   

A company’s profits available for distribution are its accumulated, realised

profits, so far as not previously utilised by distribution or capitalisation, less its

accumulated, realised losses, so far as not previously written off in a reduction

or reorganisation of capital duly made.

(3)   

Subsection (2) has effect subject to sections 835 and 838 (investment companies

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etc: distributions out of accumulated revenue profits).

 
 

 
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