Company Law Reform Bill [HL] (73-78)

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

Company Law Reform Bill [HL] (73-78)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 1 — Appointment and removal of directors
73

159
Existing under-age directors
(1)
This section applies where—
(a)
a person appointed a director of a company before section 157
(minimum age for appointment as director) comes into force has not
attained the age of 16 when that section comes into force, or
5
(b)
the office of director of a company is held by a corporation sole, or
otherwise by virtue of another office, and the person appointed to that
other office has not attained the age of 16 years when that section comes
into force,

and the case is not one excepted from that section by regulations under section
10
158.
(2)
That person ceases to be a director on section 157 coming into force.
(3)
The company must make the necessary consequential alteration in its register
of directors but need not give notice to the registrar of the change.
(4)
If it appears to the registrar (from other information) that a person has ceased
15
by virtue of this section to be a director of a company, the registrar shall note
that fact on the register.
160
Appointment of directors of public company to be voted on individually
(1)
At a general meeting of a public company a motion for the appointment of two
or more persons as directors of the company by a single resolution must not be
20
made unless a resolution that it should be so made has first been agreed to by
the meeting without any vote being given against it.
(2)
A resolution moved in contravention of this section is void, whether or not its
being so moved was objected to at the time.

But where a resolution so moved is passed, no provision for the automatic
25
reappointment of retiring directors in default of another appointment applies.
(3)
For the purposes of this section a motion for approving a person’s
appointment, or for nominating a person for appointment, is treated as a
motion for his appointment.
(4)
Nothing in this section applies to a resolution amending the company’s
30
articles.
161
Validity of acts of directors
(1)
The acts of a person acting as a director are valid notwithstanding that it is
afterwards discovered—
(a)
that there was a defect in his appointment;
35
(b)
that he was disqualified from holding office;
(c)
that he had ceased to hold office;
(d)
that he was not entitled to vote on the matter in question.
(2)
This applies even if the resolution for his appointment is void under section
160 (appointment of directors of public company to be voted on individually).
40

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 1 — Appointment and removal of directors
74

Register of directors, etc
162
Register of directors
(1)
Every company must keep a register of its directors.
(2)
The register—
(a)
must contain the required particulars (see sections 163, 164 and 166) of
5
each person who is a director of the company, and
(b)
must be kept available for inspection at the company’s registered office.
(3)
The register must be open to the inspection—
(a)
of any member of the company without charge, and
(b)
of any other person on payment of such fee as may be prescribed.
10
(4)
If default is made in complying with subsection (1) or (2), or if an inspection
required under this section is refused, 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
15
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.
(6)
In the case of a refusal of inspection of the register, the court may by order
compel an immediate inspection of it.
20
163
Particulars of directors to be registered: individuals
(1)
A company’s register of directors must contain the following particulars in the
case of an individual—
(a)
name and any former name;
(b)
a service address;
25
(c)
the country or state (or part of the United Kingdom) in which he is
usually resident;
(d)
nationality;
(e)
business occupation (if any);
(f)
date of birth.
30
(2)
For the purposes of this section “name” means a person’s Christian name (or
other forename) and surname, except that in the case of—
(a)
a peer, or
(b)
an individual usually known by a title,

the title may be stated instead of his Christian name (or other forename) and
35
surname or in addition to either or both of them.
(3)
For the purposes of this section a “former name” means a name by which the
individual was formerly known for business purposes.

Where a person is or was formerly known by more than one such name, each
of them must be stated.
40
(4)
It is not necessary for the register to contain particulars of a former name in the
following cases—

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 1 — Appointment and removal of directors
75

(a)
in the case of a peer or an individual normally known by a British title,
where the name is one by which the person was known previous to the
adoption of or succession to the title;
(b)
in the case of any person, where the former name—
(i)
was changed or disused before the person attained the age of 16
5
years, or
(ii)
has been changed or disused for 20 years or more.
(5)
A person’s service address may be stated to be “The company’s registered
office”.
164
Particulars of directors to be registered: corporate directors and firms
10

A company’s register of directors must contain the following particulars in the
case of a body corporate, or a firm that is a legal person under the law by which
it is governed—
(a)
corporate or firm name;
(b)
registered or principal office;
15
(c)
in the case of an EEA company to which the First Company Law
Directive applies, particulars of—
(i)
the register in which the company file mentioned in Article 3 of
that Directive is kept (including details of the relevant state),
and
20
(ii)
the registration number in that register;
(d)
in any other case, particulars of—
(i)
the legal form of the company or firm and the law by which it is
governed, and
(ii)
if applicable, the register in which it is entered (including details
25
of the state) and its registration number in that register.
165
Register of directors’ residential addresses
(1)
Every company must keep a register of directors’ residential addresses.
(2)
The register must state the usual residential address of each of the company’s
directors.
30
(3)
If a director’s usual residential address is the same as his service address (as
stated in the company’s register of directors), the register of directors’
residential addresses need only contain an entry to that effect.

This does not apply if his service address is stated to be “The company’s
registered office”.
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 5 on the standard scale and, for
40
continued contravention, a daily default fine not exceeding one-tenth of level
5 on the standard scale.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 1 — Appointment and removal of directors
76

(6)
This section applies only to directors who are individuals, not where the
director is a body corporate or a firm that is a legal person under the law by
which it is governed.
166
Particulars of directors to be registered: power to make regulations
(1)
The Secretary of State may make provision by regulations amending—
5
section 163 (particulars of directors to be registered: individuals),
section 164 (particulars of directors to be registered: corporate directors
and firms), or
section 165 (register of directors’ residential addresses),

so as to add to or remove items from the particulars required to be contained
10
in a company’s register of directors or register of directors’ residential
addresses.
(2)
Regulations under this section are subject to affirmative resolution procedure.
167
Duty to notify registrar of changes
(1)
A company must, within the period of 14 days from the occurrence of—
15
(a)
any change in its directors, or
(b)
any change in the particulars contained in its register of directors or its
register of directors’ residential addresses,

give notice to the registrar of the change and of the date on which it occurred.
(2)
Notice of a person having become a director of the company must—
20
(a)
contain a statement of the particulars of the new director that are
required to be included in the company’s register of directors and its
register of directors’ residential addresses, and
(b)
be accompanied by a consent, by that person, to act in that capacity.
(3)
Where—
25
(a)
a company gives notice of a change of a director’s service address as
stated in the company’s register of directors, and
(b)
the notice is not accompanied by notice of any resulting change in the
particulars contained in the company’s register of directors’ residential
addresses,
30

the notice must be accompanied by a statement that no such change is
required.
(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.
35

For this purpose a shadow director is treated as an officer of the company.
(5)
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 on the standard scale.
40
168
Application of provisions to shadow directors
A shadow director is treated as a director for the purposes of—
sections 162 to 164 (register of directors), and

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 1 — Appointment and removal of directors
77

section 165 (register of directors’ residential addresses),
but not for the purposes of section 167 (duty to notify registrar).
Removal
169
Resolution to remove director
(1)
A company may by ordinary resolution at a meeting remove a director before
5
the expiration of his period of office, notwithstanding anything in any
agreement between it and him.
(2)
Special notice is required of a resolution to remove a director under this section
or to appoint somebody instead of a director so removed at the meeting at
which he is removed.
10
(3)
A vacancy created by the removal of a director under this section, if not filled
at the meeting at which he is removed, may be filled as a casual vacancy.
(4)
A person appointed director in place of a person removed under this section is
treated, for the purpose of determining the time at which he or any other
director is to retire, as if he had become director on the day on which the person
15
in whose place he is appointed was last appointed a director.
(5)
This section is not to be taken—
(a)
as depriving a person removed under it of compensation or damages
payable to him in respect of the termination of his appointment as
director or of any appointment terminating with that as director, or
20
(b)
as derogating from any power to remove a director that may exist apart
from this section.
170
Director’s right to protest against removal
(1)
On receipt of notice of an intended resolution to remove a director under
section 169, the company must forthwith send a copy of the notice to the
25
director concerned.
(2)
The director (whether or not a member of the company) is entitled to be heard
on the resolution at the meeting.
(3)
Where notice is given of an intended resolution to remove a director under that
section, and the director concerned makes with respect to it representations in
30
writing to the company (not exceeding a reasonable length) and requests their
notification to members of the company, the company shall, unless the
representations are received by it too late for it to do so—
(a)
in any notice of the resolution given to members of the company state
the fact of the representations having been made; and
35
(b)
send a copy of the representations to every member of the company to
whom notice of the meeting is sent (whether before or after receipt of
the representations by the company).
(4)
If a copy of the representations is not sent as required by subsection (3) because
received too late or because of the company's default, the director may
40
(without prejudice to his right to be heard orally) require that the
representations shall be read out at the meeting.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 10 — A company’s directors
Chapter 2 — General duties of directors
78

(5)
Copies of the representations need not be sent out and the representations need
not be read out at the meeting if, on the application either of the company or of
any other person who claims to be aggrieved, the court is satisfied that the
rights conferred by this section are being abused.
(6)
The court may order the company's costs (in Scotland, expenses) on an
5
application under subsection (5) to be paid in whole or in part by the director,
notwithstanding that he is not a party to the application.
Chapter 2
General duties of directors
Introductory
10
171
Scope and nature of general duties
(1)
The general duties specified in sections 172 to 178 are owed by a director of a
company to the company.
(2)
A person who ceases to be a director continues to be subject—
(a)
to the duty in section 176 (duty to avoid conflicts of interest) as regards
15
the exploitation of any property, information or opportunity of which
he became aware at a time when he was a director, and
(b)
to the duty in section 177 (duty not to accept benefits from third parties)
as regards things done or omitted by him before he ceased to be a
director.
20

To that extent those duties apply to a former director as to a director, subject to
any necessary adaptations.
(3)
The general duties are based on certain common law rules and equitable
principles as they apply in relation to directors and have effect in place of those
rules and principles as regards the duties owed to a company by a director.
25
(4)
The general duties shall be interpreted and applied in the same way as
common law rules or equitable principles, and regard shall be had to the
corresponding common law rules and equitable principles in interpreting and
applying the general duties.
(5)
The general duties apply to shadow directors where, and to the extent that, the
30
corresponding common law rules or equitable principles so apply.
The general duties
172
Duty to act within powers

A director of a company must—
(a)
act in accordance with the company’s constitution, and
35
(b)
only exercise powers for the purposes for which they are conferred.