Company Law Reform Bill [HL] (66-72)

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL] (66-72)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 9 — Exercise of members’ rights
66

Information rights
146
Traded companies: nomination of persons to enjoy information rights
(1)
This section applies to a company whose shares are admitted to trading on a
regulated market.
(2)
A member of such a company who holds shares on behalf of another person
5
may nominate that person to enjoy information rights.
(3)
“Information rights” means—
(a)
the right to receive a copy of all communications that the company
sends to its members generally or to any class of its members that
includes the person making the nomination, and
10
(b)
the rights conferred by—
(i)
section 439 or 440 (right to require copies of accounts and
reports), and
(ii)
section 1111 (right to require hard copy version of document or
information provided in another form).
15
(4)
A company need not act on a nomination purporting to relate to certain
information rights only.
147
Information rights: form in which copies to be provided
(1)
This section applies as regards the form in which copies are to be provided to
a person nominated under section 146 (nomination of person to enjoy
20
information rights).
(2)
If the person to be nominated wishes to receive hard copy communications, he
must—
(a)
request the person making the nomination to notify the company of
that fact, and
25
(b)
provide an address to which such copies may be sent.

This must be done before the nomination is made.
(3)
If having received such a request the person making the nomination—
(a)
notifies the company that the nominated person wishes to receive hard
copy communications, and
30
(b)
provides the company with that address,

the right of the nominated person is to receive hard copy communications
accordingly.
(4)
This is subject to the provisions of Parts 3 and 4 of Schedule 6 (communications
by traded company) under which the company may take steps to enable it to
35
communicate in electronic form or by means of a website.
(5)
If no such notification is given (or no address is provided), the nominated
person is taken to have agreed that documents or information may be sent or
supplied to him by the company by means of a website.
(6)
That agreement—
40
(a)
may be revoked by the nominated person, and
(b)
does not affect his right under section 1111 to require a hard copy
version of a document or information provided in any other form.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 9 — Exercise of members’ rights
67

148
Termination or suspension of nomination
(1)
The following provisions have effect in relation to a nomination under section
146 (nomination of person to enjoy information rights).
(2)
The nomination may be terminated at the request of the member or of the
nominated person.
5
(3)
The nomination ceases to have effect on the occurrence in relation of the
member or the nominated person of any of the following—
(a)
in the case of an individual, death or bankruptcy;
(b)
in the case of a body corporate, dissolution or the making of an order
for the winding up of the body otherwise than for the purposes of
10
reconstruction.
(4)
In subsection (3)—
(a)
the reference to bankruptcy includes—
(i)
the sequestration of a person’s estate, and
(ii)
a person’s estate being the subject of a protected trust deed
15
(within the meaning of the Bankruptcy (Scotland) Act 1985
(c. 66)); and
(b)
the reference to the making of an order for winding up is to—
(i)
the making of such an order under the Insolvency Act 1986
(c. 45) or the Insolvency (Northern Ireland) Order 1989
20
(S.I. 1989/2405 (N.I. 19)), or
(ii)
any corresponding proceeding under the law of a country or
territory outside the United Kingdom.
(5)
The effect of any nominations made by a member is suspended at any time
when there are more nominated persons than the member has shares in the
25
company.
(6)
Where—
(a)
the member holds different classes of shares with different information
rights, and
(b)
there are more nominated persons than he has shares conferring a
30
particular right,

the effect of any nominations made by him is suspended to the extent that they
confer that right.
(7)
Where the company—
(a)
enquires of a nominated person whether he wishes to retain
35
information rights, and
(b)
does not receive a response within the period of 28 days beginning with
the date on which the company’s enquiry was sent,

the nomination ceases to have effect at the end of that period.

Such an enquiry is not to be made of a person more than once in any twelve-
40
month period.
(8)
The termination or suspension of a nomination means that the company is not
required to act on it.

It does not prevent the company from continuing to do so, to such extent or for
such period as it thinks fit.
45

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 9 — Exercise of members’ rights
68

149
Information as to possible rights in relation to voting
(1)
This section applies where a company sends a copy of a notice of a meeting to
a person nominated under section 146 (nomination of person to enjoy
information rights)
(2)
The copy of the notice must be accompanied by a statement that—
5
(a)
he may have a right under an agreement between him and the member
by whom he was nominated to be appointed, or to have someone else
appointed, as a proxy for the meeting, or
(b)
if he has no such right or does not wish to exercise it, he may have a
right under such an agreement to give instructions to the member as to
10
the exercise of voting rights.
(3)
Section 332 (notice of meeting to contain statement of member’s rights in
relation to appointment of proxy) does not apply to the copy, and the company
must either—
(a)
omit the notice required by that section, or
15
(b)
include it but state that it does not apply to the nominated person.
150
Information rights: status of rights
(1)
This section has effect as regards the rights conferred by a nomination under
section 146 (nomination of person to enjoy information rights).
(2)
Enjoyment by the nominated person of the rights conferred by the nomination
20
is enforceable against the company by the member as if they were rights
conferred by the company’s articles.
(3)
Any enactment, and any provision of the company’s articles, having effect in
relation to communications with members has a corresponding effect (subject
to any necessary adaptations) in relation to communications with the
25
nominated person.
(4)
In particular—
(a)
where under any enactment, or any provision of the company’s
articles, the members of a company entitled to receive a document or
information are determined as at a date or time before it is sent or
30
supplied, the company need not send or supply it to a nominated
person—
(i)
whose nomination was received by the company after that date
or time, or
(ii)
if that date or time falls in a period of suspension of his
35
nomination; and
(b)
where under any enactment, or any provision of the company’s
articles, the right of a member to receive a document or information
depends on the company having a current address for him, the same
applies to any person nominated by him.
40
(5)
The rights conferred by the nomination—
(a)
are in addition to the rights of the member himself, and
(b)
do not affect any rights exercisable by virtue of any such provision as is
mentioned in section 145 (provisions of company’s articles as to
enjoyment or exercise of members’ rights).
45

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 9 — Exercise of members’ rights
69

(6)
A failure to give effect to the rights conferred by the nomination does not affect
the validity of anything done by or on behalf of the company.
(7)
References in this section to the rights conferred by the nomination are to—
(a)
the rights referred to in section 146(3) (information rights), and
(b)
where applicable, the rights conferred by section 147(3) (right to hard
5
copy communications) and section 149 (information as to possible
voting rights).
151
Information rights: power to amend
(1)
The Secretary of State may by regulations amend the provisions of sections 146
to 150 (information rights) so as to—
10
(a)
extend or restrict the classes of companies to which section 146 applies,
(b)
make other provision as to the circumstances in which a nomination
may be made under that section, or
(c)
extend or restrict the rights conferred by such a nomination.
(2)
The regulations may make such consequential modifications of any other
15
provisions of this Part, or of any other enactment, as appear to the Secretary of
State to be necessary.
(3)
Regulations under this section are subject to affirmative resolution procedure.
Exercise of rights where shares held on behalf of others
152
Exercise of rights where shares held on behalf of others: exercise in different
20
ways
(1)
Where a member holds shares in a company on behalf of more than one
person—
(a)
rights attached to the shares, and
(b)
rights under any enactment exercisable by virtue of holding the shares,
25

need not all be exercised, and if exercised, need not all be exercised in the same
way.
(2)
A member who exercises such rights but does not exercise all his rights, must
inform the company to what extent he is exercising the rights.
(3)
A member who exercises such rights in different ways must inform the
30
company of the ways in which he is exercising them and to what extent they
are exercised in each way.
(4)
If a member exercises such rights without informing the company—
(a)
that he is not exercising all his rights, or
(b)
that he is exercising his rights in different ways,
35

the company is entitled to assume that he is exercising all his rights and is
exercising them in the same way.
153
Exercise of rights where shares held on behalf of others: members’ requests
(1)
This section applies for the purposes of—
(a)
section 321 (power to require circulation of statement),
40

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 9 — Exercise of members’ rights
70

(b)
section 345 (public companies: power to require circulation of
resolution for AGM),
(c)
section 349 (power to require independent report on poll), and
(d)
section 541 (power to require website publication of audit concerns).
(2)
A company is required to act under any of those sections if it receives a request
5
in relation to which the following conditions are met—
(a)
it is made by at least 100 persons;
(b)
it is authenticated by all the persons making it;
(c)
in the case of any of those persons who is not a member of the company,
it is accompanied by a statement—
10
(i)
of the full name and address of a person (“the member”) who is
a member of the company and holds shares on behalf of that
person,
(ii)
that the member is holding those shares on behalf of that person
in the course of a business,
15
(iii)
of the number of shares in the company that the member holds
on behalf of that person,
(iv)
of the total amount paid up on those shares,
(v)
that those shares are not held on behalf of anyone else or, if they
are, that the other person or persons are not among the other
20
persons making the request,
(vi)
that some or all of those shares confer voting rights that are
relevant for the purposes of making a request under the section
in question, and
(vii)
that the person has the right to instruct the member how to
25
exercise those rights;
(d)
in the case of any of those persons who is a member of the company, it
is accompanied by a statement—
(i)
that he holds shares otherwise than on behalf of another person,
or
30
(ii)
that he holds shares on behalf of one or more other persons but
those persons are not among the other persons making the
request;
(e)
it is accompanied by such evidence as the company may reasonably
require of the matters mentioned in paragraph (c) and (d);
35
(f)
the total amount of the sums paid up on—
(i)
shares held as mentioned in paragraph (c), and
(ii)
shares held as mentioned in paragraph (d),

divided by the number of persons making the request, is not less than
£100;
40
(g)
the request complies with any other requirements of the section in
question as to contents, timing and otherwise.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 1 — Appointment and removal of directors
71

Part 10
A company’s directors
Chapter 1
Appointment and removal of directors
Requirement to have directors
5
154
Companies required to have directors
(1)
A private company must have at least one director.
(2)
A public company must have at least two directors.
155
Companies required to have at least one director who is a natural person
(1)
A company must have at least one director who is a natural person.
10
(2)
This requirement is met if the office of director is held by a natural person as a
corporation sole or otherwise by virtue of an office.
156
Direction requiring company to make appointment
(1)
If it appears to the Secretary of State that a company is in breach of—
section 154 (requirements as to number of directors), or
15
section 155 (requirement to have at least one director who is a natural
person),

the Secretary of State may give the company a direction under this section.
(2)
The direction must specify—
(a)
the statutory requirement the company appears to be in breach of,
20
(b)
what the company must do in order to comply with the direction, and
(c)
the period within which it must do so.

That period must be not less than one month or more than three months after
the date on which the direction is given.
(3)
The direction must also inform the company of the consequences of failing to
25
comply.
(4)
Where the company is in breach of section 154 or 155 it must comply with the
direction by—
(a)
making the necessary appointment or appointments, and
(b)
giving notice of them under section 167,
30

before the end of the period specified in the direction.
(5)
If the company has already made the necessary appointment or appointments
(or so far as it has done so), it must comply with the direction by giving notice
of them under section 167 before the end of the period specified in the
direction.
35
(6)
If a company fails to comply with a direction under this section, an offence is
committed by—
(a)
the company, and

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 1 — Appointment and removal of directors
72

(b)
every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the company.
(7)
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 and, for
continued contravention, a daily default fine not exceeding one-tenth of level
5
5 on the standard scale.
Appointment
157
Minimum age for appointment as director
(1)
A person may not be appointed a director of a company unless he has attained
the age of 16 years.
10
(2)
This does not affect the validity of an appointment that is not to take effect until
the person appointed attains that age.
(3)
Where the office of director of a company is held by a corporation sole, or
otherwise by virtue of another office, the appointment to that other office of a
person who has not attained the age of 16 years is not effective also to make
15
him a director of the company until he attains the age of 16 years.
(4)
An appointment made in contravention of this section is void.
(5)
Nothing in this section affects any liability of a person under any provision of
the Companies Acts if he—
(a)
purports to act as director or
20
(b)
acts as a shadow director,

although he could not, by virtue of this section, be validly appointed as a
director.
(6)
This section has effect subject to section 158 (power to provide for exceptions
from minimum age requirement).
25
158
Power to provide for exceptions from minimum age requirement
(1)
The Secretary of State may make provision by regulations for cases in which a
person who has not attained the age of 16 years may be appointed a director of
a company.
(2)
The regulations must specify the circumstances in which, and any conditions
30
subject to which, the appointment may be made.
(3)
If the specified circumstances cease to obtain, or any specified conditions cease
to be met, a person who was appointed by virtue of the regulations and who
has not since attained the age of 16 years ceases to hold office.
(4)
The regulations may make different provision for different parts of the United
35
Kingdom.

This is without prejudice to the general power to make different provision for
different cases.
(5)
Regulations under this section are subject to negative resolution procedure.