Company Law Reform Bill [HL] (533-536)

House of Commons

Session 2005 - 06
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Company Law Reform Bill [HL] (533-536)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 37 — Companies: supplementary provisions
533

1119
Valuer entitled to full disclosure
(1)
A person carrying out a valuation or making a report with respect to any
consideration proposed to be accepted or given by a company, is entitled to
require from the officers of the company such information and explanation as
he thinks necessary to enable him to—
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(a)
carry out the valuation or make the report, and
(b)
provide any note required by section 610(3) or 614(3) (note required
where valuation carried out by another person).
(2)
A person who knowingly or recklessly makes a statement to which this
subsection applies that is misleading, false or deceptive in a material particular
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commits an offence.
(3)
Subsection (2) applies to a statement—
(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
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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);
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(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
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exceeding six months, or to a fine not exceeding the statutory
maximum (or both).
Notice of appointment of certain officers
1120
Duty to notify registrar of certain appointments etc
(1)
Notice must be given to the registrar of the appointment in relation to a
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company of—
(a)
a judicial factor (in Scotland),
(b)
a receiver and manager appointed under section 18 of the Charities Act
1993 (c. 10), or
(c)
a manager appointed under section 47 of the Companies (Audit,
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Investigations and Community Enterprise) Act 2004 (c. 27).
(2)
The notice must be given—
(a)
in the case of appointment of a judicial factor, by the judicial factor;
(b)
in the case of appointment of a receiver and manager under section 18
of the Charities Act 1993, by the Charity Commission;
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(c)
in the case of appointment of a manager under section 47 of the
Companies (Audit, Investigations and Community Enterprise) Act
2004, by the Regulator of Community Interest Companies.
(3)
The notice must specify an address at which service of documents (including
legal process) may be effected on the person appointed.
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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 37 — Companies: supplementary provisions
534


Notice of a change in the address for service may be given to the registrar by
the person appointed.
(4)
Where notice has been given under this section of the appointment of a person,
notice must also be given to the registrar of the termination of the appointment.

This notice must be given by the person specified in subsection (2).
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1121
Offence of failure to give notice
(1)
If a judicial factor fails to give notice of his appointment in accordance with
section 1120 within the period of 14 days after the appointment he commits an
offence.
(2)
A person guilty of an offence under this section is liable on summary
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conviction to a fine not exceeding level 5 on the standard scale and, for
continued contravention, a daily default fine not exceeding one-tenth of level
5 on the standard scale.
Courts and legal proceedings
1122
Meaning of “the court”
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(1)
Except as otherwise provided, in the Companies Acts “the court” means—
(a)
in England and Wales, the High Court or (subject to subsection (3)) a
county court;
(b)
in Scotland, the Court of Session or the sheriff court;
(c)
in Northern Ireland, the High Court.
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(2)
The provisions of the Companies Acts conferring jurisdiction on “the court” as
defined above have effect subject to any enactment or rule of law relating to the
allocation of jurisdiction or distribution of business between courts in any part
of the United Kingdom.
(3)
The Lord Chancellor may, with the concurrence of the Lord Chief Justice, by
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order—
(a)
exclude a county court from having jurisdiction under the Companies
Acts, and
(b)
for the purposes of that jurisdiction attach that court’s district, or any
part of it, to another county court.
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(4)
The Lord Chief Justice may nominate a judicial office holder (as defined in
section 109(4) of the Constitutional Reform Act 2005 (c. 4)) to exercise his
functions under subsection (3).
1123
Power of court to grant relief in certain cases
(1)
If in proceedings for negligence, default, breach of duty or breach of trust
35
against—
(a)
an officer of a company, or
(b)
a person employed by a company as auditor (whether he is or is not an
officer of the company),

it appears to the court hearing the case that the officer or person is or may be
40
liable but that he acted honestly and reasonably, and that having regard to all
the circumstances of the case (including those connected with his

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 38 — Companies: interpretation
535

appointment) he ought fairly to be excused, the court may relieve him, either
wholly or in part, from his liability on such terms as it thinks fit.
(2)
If any such officer or person has reason to apprehend that a claim will or might
be made against him in respect of negligence, default, breach of duty or breach
of trust—
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(a)
he may apply to the court for relief, and
(b)
the court has the same power to relieve him as it would have had if it
had been a court before which proceedings against him for negligence,
default, breach of duty or breach of trust had been brought.
(3)
Where the directors of a company take advantage of the exemption conferred
10
by section 490 (small charities: independent examiner’s report in lieu of audit)
this section, as it has effect in England and Wales and Northern Ireland, applies
in relation to a person appointed as independent examiner as it applies in
relation to a person appointed to act as auditor.
(4)
Where a case to which subsection (1) applies is being tried by a judge with a
15
jury, the judge, after hearing the evidence, may, if he is satisfied that the
defendant (in Scotland, the defender) ought in pursuance of that subsection to
be relieved either in whole or in part from the liability sought to be enforced
against him, withdraw the case from the jury and forthwith direct judgment to
be entered for the defendant (in Scotland, grant decree of absolvitor) on such
20
terms as to costs (in Scotland, expenses) or otherwise as the judge may think
proper.
Part 38
Companies: interpretation
Meaning of "subsidiary" and related expressions
25
1124
Meaning of “subsidiary” etc
(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
30
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.
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(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 7 contains provisions explaining expressions used in this section and
otherwise supplementing this section.
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(4)
In this section and that Schedule “company” includes any body corporate.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 38 — Companies: interpretation
536

1125
Meaning of “subsidiary” etc: power to amend
(1)
The Secretary of State may by regulations amend the provisions of section 1124
(meaning of “subsidiary” etc) and Schedule 7 (meaning of “subsidiary” etc:
supplementary provisions) so as to alter the meaning of the expressions
“subsidiary”, “holding company” or “wholly-owned subsidiary”.
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(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
10
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 "undertaking" and related expressions
1126
Meaning of “undertaking” and related expressions
15
(1)
In the Companies Acts “undertaking” means—
(a)
a body corporate or partnership, or
(b)
an unincorporated association carrying on a trade or business, with or
without a view to profit.
(2)
In the Companies Acts references to shares—
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(a)
in relation to an undertaking with capital but no share capital, are to
rights to share in the capital of the undertaking; and
(b)
in relation to an undertaking without capital, are to interests—
(i)
conferring any right to share in the profits or liability to
contribute to the losses of the undertaking, or
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(ii)
giving rise to an obligation to contribute to the debts or
expenses of the undertaking in the event of a winding up.
(3)
Other expressions appropriate to companies shall be construed, in relation to
an undertaking which is not a company, as references to the corresponding
persons, officers, documents or organs, as the case may be, appropriate to
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undertakings of that description.

This is subject to provision in any specific context providing for the translation
of such expressions.
(4)
References in the Companies Acts to “fellow subsidiary undertakings” are to
undertakings which are subsidiary undertakings of the same parent
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undertaking but are not parent undertakings or subsidiary undertakings of
each other.
(5)
In the Companies Acts “group undertaking”, in relation to an undertaking,
means an undertaking which is—
(a)
a parent undertaking or subsidiary undertaking of that undertaking, or
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(b)
a subsidiary undertaking of any parent undertaking of that
undertaking.