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Company Law Reform Bill [HL] (544-547)


Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 40 — Company directors: foreign disqualification etc

544

 

1145    

Access to constitutional documents of RTE and RTM companies

(1)   

The Secretary of State may by order—

(a)   

amend Chapter 1 of Part 1 of the Leasehold Reform, Housing and

Urban Development Act 1993 (c. 28) for the purpose of facilitating

access to the provisions of the articles or any other constitutional

5

document of RTE companies;

(b)   

amend Chapter 1 of Part 2 of the Commonhold and Leasehold Reform

Act 2002 (c. 15) (leasehold reform) for the purpose of facilitating access

to the provisions of the articles or any other constitutional document of

RTM companies.

10

(2)   

References in subsection (1) to provisions of a company’s articles or any other

constitutional document include any provisions included in those documents

by virtue of any enactment.

(3)   

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

(4)   

In this section—

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“RTE companies” has the same meaning as in Chapter 1 of Part 1 of the

Leasehold Reform, Housing and Urban Development Act 1993;

“RTM companies” has the same meaning as in Chapter 1 of Part 2 of the

Commonhold and Leasehold Reform Act 2002.

Part 40

20

Company directors: foreign disqualification etc

Introductory

1146    

Persons subject to foreign restrictions

(1)   

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

subject to foreign restrictions.

25

(2)   

A person is subject to foreign restrictions if under the law of a country or

territory outside the United Kingdom—

(a)   

he is, by reason of misconduct or unfitness, disqualified to any extent

from acting in connection with the affairs of a company,

(b)   

he is, by reason of misconduct or unfitness, required—

30

(i)   

to obtain permission from a court or other authority, or

(ii)   

to meet any other condition,

   

before acting in connection with the affairs of a company,

(c)   

he has, by reason of misconduct or unfitness, given undertakings to a

court or other authority of a country or territory outside the United

35

Kingdom—

(i)   

not to act in connection with the affairs of a company, or

(ii)   

restricting the extent to which, or the way in which, he may do

so.

(3)   

The references in subsection (2) to acting in connection with the affairs of a

40

company are to doing any of the following—

(a)   

being a director of a company,

(b)   

acting as receiver of a company’s property, or

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 40 — Company directors: foreign disqualification etc

545

 

(c)   

being concerned or taking part in the promotion, formation or

management of a company.

(4)   

In this section—

(a)   

“company” means a company incorporated or formed under the law of

the country or territory in question, and

5

(b)   

in relation to such a company—

“director” means the holder of an office corresponding to that of

director of a UK company; and

“receiver” includes any corresponding officer under the law of

that country or territory.

10

1147    

Meaning of “the court” and “UK company”

In this Part—

“the court” means—

(a)   

in England and Wales, the High Court or a county court;

(b)   

in Scotland, the Court of Session or the sheriff court;

15

(c)   

in Northern Ireland, the High Court;

“UK company” means a body corporate that—

(a)   

is a company as defined in section 1 of this Act, or

(b)   

is registered under the Companies Acts by virtue of section 1006

(bodies not formed under Companies Acts but authorised to

20

register).

Power to disqualify

1148    

Disqualification of persons subject to foreign restrictions

(1)   

The Secretary of State may make provision by regulations disqualifying a

person subject to foreign restrictions from—

25

(a)   

being a director of a UK company,

(b)   

acting as receiver of a UK company’s property, or

(c)   

in any way, whether directly or indirectly, being concerned or taking

part in the promotion, formation or management of a UK company.

(2)   

The regulations may provide that a person subject to foreign restrictions—

30

(a)   

is disqualified automatically by virtue of the regulations, or

(b)   

may be disqualified by order of the court on the application of the

Secretary of State.

(3)   

The regulations may provide that the Secretary of State may accept an

undertaking (a “disqualification undertaking”) from a person subject to foreign

35

restrictions that he will not do anything which would be in breach of a

disqualification under subsection (1).

(4)   

In this Part—

(a)   

a “person disqualified under this Part” is a person—

(i)   

disqualified as mentioned in subsection (2)(a) or (b), or

40

(ii)   

who has given and is subject to a disqualification undertaking;

(b)   

references to a breach of a disqualification include a breach of a

disqualification undertaking.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 40 — Company directors: foreign disqualification etc

546

 

(5)   

The regulations may provide for applications to the court by persons

disqualified under this Part for permission to act in a way which would

otherwise be in breach of the disqualification.

(6)   

The regulations must provide that a person ceases to be disqualified under this

Part on his ceasing to be subject to foreign restrictions.

5

(7)   

Regulations under this section are subject to affirmative resolution procedure.

1149    

Disqualification regulations: supplementary

(1)   

Regulations under section 1148 may make different provision for different

cases and may in particular distinguish between cases by reference to—

(a)   

the conduct on the basis of which the person became subject to foreign

10

restrictions;

(b)   

the nature of the foreign restrictions;

(c)   

the country or territory under whose law the foreign restrictions were

imposed.

(2)   

Regulations under section 1148(2)(b) or (5) (provision for applications to the

15

court)—

(a)   

must specify the grounds on which an application may be made;

(b)   

may specify factors to which the court shall have regard in determining

an application.

(3)   

The regulations may, in particular, require the court to have regard to the

20

following factors—

(a)   

whether the conduct on the basis of which the person became subject to

foreign restrictions would, if done in relation to a UK company, have

led a court to make a disqualification order on an application under the

Company Directors Disqualification Act 1986 (c. 46) or the Company

25

Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/

3150 (N.I. 4));

(b)   

in a case in which the conduct on the basis of which the person became

subject to foreign restrictions would not be unlawful if done in relation

to a UK company, the fact that the person acted unlawfully under

30

foreign law;

(c)   

whether the person’s activities in relation to UK companies began after

he became subject to foreign restrictions;

(d)   

whether the person’s activities (or proposed activities) in relation to UK

companies are undertaken (or are proposed to be undertaken) outside

35

the United Kingdom.

(4)   

Regulations under section 1148(3) (provision as to undertakings given to the

Secretary of State) may include provision allowing the Secretary of State, in

determining whether to accept an undertaking, to take into account matters

other than criminal convictions notwithstanding that the person may be

40

criminally liable in respect of those matters.

(5)   

Regulations under section 1148(5) (provision for application to court for

permission to act) may include provision—

(a)   

entitling the Secretary of State to be represented at the hearing of the

application, and

45

(b)   

as to the giving of evidence or the calling of witnesses by the Secretary

of State at the hearing of the application.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 40 — Company directors: foreign disqualification etc

547

 

1150    

Offence of breach of disqualification

(1)   

Regulations under section 1148 may provide that a person disqualified under

this Part who acts in breach of the disqualification commits an offence.

(2)   

The regulations may provide that a person guilty of such an offence is liable—

(a)   

on conviction on indictment, to imprisonment for a term not exceeding

5

two years or a fine (or both);

(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);

10

(ii)   

in Scotland or Northern Ireland, to imprisonment for a term not

exceeding six months, or to a fine not exceeding the statutory

maximum (or both).

(3)   

In relation to an offence committed before the commencement of section 154(1)

of the Criminal Justice Act 2003 (c. 44), for “twelve months” in subsection

15

(2)(b)(i) substitute “six months”.

Power to make persons liable for company’s debts

1151    

Personal liability for debts of company

(1)   

The Secretary of State may provide by regulations that a person who, at a time

when he is subject to foreign restrictions—

20

(a)   

is a director of a UK company, or

(b)   

is involved in the management of a UK company,

   

is personally responsible for all debts and other liabilities of the company

incurred during that time.

(2)   

A person who is personally responsible by virtue of this section for debts and

25

other liabilities of a company is jointly and severally liable in respect of those

debts and liabilities with—

(a)   

the company, and

(b)   

any other person who (whether by virtue of this section or otherwise)

is so liable.

30

(3)   

For the purposes of this section a person is involved in the management of a

company if he is concerned, whether directly or indirectly, or takes part, in the

management of the company.

(4)   

The regulations may make different provision for different cases and may in

particular distinguish between cases by reference to—

35

(a)   

the conduct on the basis of which the person became subject to foreign

restrictions;

(b)   

the nature of the foreign restrictions;

(c)   

the country or territory under whose law the foreign restrictions were

imposed.

40

(5)   

Regulations under this section are subject to affirmative resolution procedure.

 
 

 
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