House of Commons - Amendments

Company Law Reform Bill [Lords] *- continued*	House of Commons

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Documents to be incorporated in or accompany copies of articles issued by company

Mr Secretary Darling

NC77

To move the following Clause:—

‘(1) Every copy of a company’s articles issued by the company must be accompanied by—

(a) a copy of any resolution or agreement relating to the company to which Chapter 3 applies (resolutions and agreements affecting a company’s constitution),

(b) where the company has been required to give notice to the registrar under section 35(2) (notice where company’s constitution altered by enactment), a statement that the enactment in question alters the effect of the company’s constitution,

(d) a copy of any order required to be sent to the registrar under section 36(2)(a) (order of court or other authority altering company’s constitution).

(2) This does not require the articles to be accompanied by a copy of a document or by a statement if—

(a) the effect of the resolution, agreement, enactment or order (as the case may be) on the company’s constitution has been incorporated into the articles by amendment, or

(b) the resolution, agreement, enactment or order (as the case may be) is not for the time being in force.

(3) If the company fails to comply with this section, an offence is committed by 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 for each occasion on which copies are issued, or, as the case may be, requested.

(5) For the purposes of this section, a liquidator of the company is treated as an officer of it.’.

Resolutions to be forwarded to registrar

Mr Secretary Darling

NC78

To move the following Clause:—

‘Chapter 3 of Part 3 (resolutions affecting a company’s constitution) applies to a resolution passed by virtue of regulations under Chapter 2 of Part 22.’.

Obligations of company with respect to articles etc

Mr Secretary Darling

NC79

To move the following Clause:—

‘(1) This section applies—

(a) to any order under section (Court sanction for compromise or arrangement) (order sanctioning compromise or arrangement), and

(b) to any order under section (Powers of court to facilitate reconstruction or amalgamation) (order facilitating reconstruction or amalgamation) that alters the company’s constitution.

(2) If the order amends—

(a) the company’s articles, or

(b) any resolution or agreement to which Chapter 3 of Part 3 applies (resolution or agreement affecting a company’s constitution),

the copy of the order delivered to the registrar by the company under section (Court sanction for compromise or arrangement)(4) or section (Powers of court to facilitate reconstruction or amalgamation)(6) must be accompanied by a copy of the company’s articles, or the resolution or agreement in question, as amended.

(3) Every copy of the company’s articles issued by the company after the order is made must be accompanied by a copy of the order, unless the effect of the order has been incorporated into the articles by amendment.

(4) In this section—

(a) references to the effect of the order include the effect of the compromise or arrangement to which the order relates; and

(b) in the case of a company not having articles, references to its articles shall be read as references to the instrument constituting the company or defining its constitution.

(5) If a company makes default in complying with this section an offence is committed by—

(a) the company, and

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

(6) 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.’.

Supplementary provisions where company’s constitution altered

Mr Secretary Darling

NC80

To move the following Clause:—

‘(1) This section applies where an order under Part 30 alters a company’s constitution.

(2) If the order amends—

(a) a company’s articles, or

(b) any resolution or agreement to which Chapter 3 of Part 3 applies (resolution or agreement affecting a company’s constitution),

the copy of the order delivered to the registrar by the company under section 965 must be accompanied by a copy of the company’s articles, or the resolution or agreement in question, as amended.

(3) Every copy of a company’s articles issued by the company after the order is made must be accompanied by a copy of the order, unless the effect of the order has been incorporated into the articles by amendment.

(4) If a company makes default 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 3 on the standard scale.’.

Power to accept documents not meeting requirements for proper delivery

Mr Secretary Darling

NC84

To move the following Clause:—

‘(1) The registrar may accept (and register) a document that does not comply with the requirements for proper delivery.

(2) A document accepted by the registrar under this section is treated as received by the registrar for the purposes of section 1043 (public notice of receipt of certain documents).

(3) No objection may be taken to the legal consequences of a document’s being accepted (or registered) by the registrar under this section on the ground that the requirements for proper delivery were not met.

(4) The acceptance of a document by the registrar under this section does not affect—

(a) the continuing obligation to comply with the requirements for proper delivery, or

(b) subject as follows, any liability for failure to comply with those requirements.

(5) For the purposes of—

(a) section 461 (civil penalty for failure to file accounts and reports), and

(b) any enactment imposing a daily default fine for failure to deliver the document,

the period after the document is accepted does not count as a period during which there is default in complying with the requirements for proper delivery.

(6) But if, subsequently—

(a) the registrar issues a notice under section 1060(4) in respect of the document (notice of administrative removal from the register), and

(b) the requirements for proper delivery are not complied with before the end of the period of 14 days after the issue of that notice,

any subsequent period of default does count for the purposes of those provisions.’.

Documents containing unnecessary material

Mr Secretary Darling

NC85

To move the following Clause:—

‘(1) This section applies where a document delivered to the registrar contains unnecessary material.

(2) “Unnecessary material” means material that—

(a) is not necessary in order to comply with an obligation under any enactment, and

(b) is not specifically authorised to be delivered to the registrar.

(3) For this purpose an obligation to deliver a document of a particular description, or conforming to certain requirements, is regarded as not extending to anything that is not needed for a document of that description or, as the case may be, conforming to those requirements.

(4) If the unnecessary material cannot readily be separated from the rest of the document, the document is treated as not meeting the requirements for proper delivery.

(5) If the unnecessary material can readily be separated from the rest of the document, the registrar may register the document either—

(a) with the omission of the unnecessary material, or

(b) as delivered.’.

Treatment of reserve arising from reduction of capital

Mr Secretary Darling

NC87

To move the following Clause:—

‘(1) A reserve arising from the reduction of a company’s share capital is not distributable, subject to any provision made by order under this section.

(2) The Secretary of State may by order specify cases in which—

(a) the prohibition in subsection (1) does not apply, and

(b) the reserve is to be treated for the purposes of Part 24 (distributions) as a realised profit.

(3) An order under this section is subject to affirmative resolution procedure.’.

Company charges

Mr Secretary Darling

NC88A

To move the following Clause:—

‘(1) The Secretary of State may by regulations make provision about the registration of specified charges over property in the United Kingdom of a registered overseas company.

(2) The power in subsection (1) includes power to make provision about—

(a) a registered overseas company that—

(i) has particulars registered in more than one part of the United Kingdom,

(ii) has property in more than one part of the United Kingdom,

(b) the circumstances in which property is to be regarded, for the purposes of the regulations, as being, or not being, in the United Kingdom or in a particular part of the United Kingdom,

(d) the consequences of a failure to register a charge in accordance with the regulations,

(e) the circumstances in which a registered overseas company ceases to be subject to the regulations.

(3) The regulations may for this purpose apply, with or without modifications, any of the provisions of Part 26.

(4) The regulations may modify any reference in an enactment to Part 26, or to a particular provision of that Part, so as to include a reference to the regulations or to a specified provision of the regulations.

(5) Regulations under this section are subject to negative resolution procedure.

(6) In this section—

“registered overseas company” means an overseas company that has registered particulars under section 1012(1), and

“specified” means specified in the regulations.’.

The authorised minimum

Mr Secretary Darling

NC92

To move the following Clause:—

‘(1) “The authorised minimum”, in relation to the nominal value of a public company’s allotted share capital is—

(a) £50,000, or

(b) the prescribed euro equivalent.

(2) The Secretary of State may by order prescribe the amount in euros that is for the time being to be treated as equivalent to the sterling amount of the authorised minimum.

(3) This power may be exercised from time to time as appears to the Secretary of State to be appropriate.

(4) The amount prescribed shall be determined by applying an appropriate spot rate of exchange to the sterling amount and rounding to the nearest 100 euros.

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

(6) This section has effect subject to any exercise of the power conferred by section (Power to alter authorised minimum) (power to alter authorised minimum).’.

Power to alter authorised minimum

Mr Secretary Darling

NC93

To move the following Clause:—

‘(1) The Secretary of State may by order—

(a) alter the sterling amount of the authorised minimum, and

(b) make a corresponding alteration of the prescribed euro equivalent.

(2) The amount of the prescribed euro equivalent shall be determined by applying an appropriate spot rate of exchange to the sterling amount and rounding to the nearest 100 euros.

(3) An order under this section that increases the authorised minimum may—

(a) require a public company having an allotted share capital of which the nominal value is less than the amount specified in the order to—

(i) increase that value to not less than that amount, or

(ii) re-register as a private company;

(b) make provision in connection with any such requirement for any of the matters for which provision is made by this Act relating to—

(i) a company’s registration, re-registration or change of name,

(ii) payment for shares comprised in a company’s share capital, and

(iii) offers to the public of shares in or debentures of a company,

including provision as to the consequences (in criminal law or otherwise) of a failure to comply with any requirement of the order;

(4) An order under this section is subject to affirmative resolution procedure.’.

Authorised minimum: application of initial requirement

Mr Secretary Darling

NC94

To move the following Clause:—

‘(1) The initial requirement for a public company to have allotted share capital of a nominal value not less than the authorised minimum, that is—

(a) the requirement in section 774(2) for the issue of a trading certificate, or

(b) the requirement in section 91(1)(a) for re-registration as a public company,

must be met either by reference to allotted share capital denominated in sterling or by reference to allotted share capital denominated in euros (but not partly in one and partly in the other).

(2) Whether the requirement is met is determined in the first case by reference to the sterling amount and in the second case by reference to the prescribed euro equivalent.

(3) No account is to be taken of any allotted share capital of the company denominated in a currency other than sterling or, as the case may be, euros.

(4) If the company could meet the requirement either by reference to share capital denominated in sterling or by reference to share capital denominated in euros, it must elect in its application for a trading certificate or, as the case may be, for re-registration as a public company which is to be the currency by reference to which the matter is determined.’.

Authorised minimum: application where shares denominated in different currencies etc

Mr Secretary Darling

NC95

To move the following Clause:—

‘(1) The Secretary of State may make provision by regulations as to the application of the authorised minimum in relation to a public company that—

(a) has shares denominated in more than one currency,

(b) redenominates the whole or part of its allotted share capital, or

(2) The regulations may make provision as to the currencies, exchange rates and dates by reference to which it is to be determined whether the nominal value of the company’s allotted share capital is less than the authorised minimum.

(3) The regulations may provide that where—

(a) a company has redenominated the whole or part of its alloted share capital, and

(b) the effect of the redenomination is that the nominal value of the company’s allotted share capital is less than the authorised minimum,

the company must re-register as a private company.

(4) Regulations under subsection (3) may make provision corresponding to any provision made by sections 677 to 680 (re-registration as private company in consequence of cancellation of shares).

(5) Any regulations under this section have effect subject to section (Authorised minimum: application of initial requirement) (authorised minimum: application of initial requirement).

(6) Regulations under this section are subject to negative resolution procedure.’.

Company contracts and execution of documents by companies

Mr Secretary Darling

NC96

To move the following Clause:—

‘(1) The Secretary of State may make provision by regulations applying sections 43 to 53 (formalities of doing business and other matters) to overseas companies, subject to such exceptions, adaptions or modifications as may be specified in the regulations.

(2) Regulations under this section are subject to negative resolution procedure.’.

“Non-cash asset”

Mr Secretary Darling

NC98

* To move the following Clause:—

‘(1) In the Companies Acts “non-cash asset” means any property or interest in property, other than cash.

For this purpose “cash” includes foreign currency.

(2) A reference to the transfer or acquisition of a non-cash asset includes—

(a) the creation or extinction of an estate or interest in, or a right over, any property, and

(b) the discharge of a liability of any person, other than a liability for a liquidated sum.’.

Notice to registrar of existence of restriction on amendment of articles

Mr Secretary Darling

NC99

* To move the following Clause:—

‘(1) Where a company’s articles—

(a) on formation contain provision for entrenchment,

(b) are amended so as to include such provision, or

(c) are altered by order of a court or other authority so as to restrict or exclude the power of the company to amend its articles,

the company must give notice of that fact to the registrar.

(2) Where a company’s articles—

(a) are amended so as to remove provision for entrenchment, or

(b) are altered by order of a court or other authority—

(i) so as to remove such provision, or

(ii) so as to remove any other restriction on, or any exclusion of, the power of the company to amend its articles,

the company must give notice of that fact to the registrar.’.

Statement of compliance where amendment of articles restricted

Mr Secretary Darling

NC100

* To move the following Clause:—

‘(1) This section applies where a company’s articles are subject—

(a) to provision for entrenchment, or

(b) to an order of a court or other authority restricting or excluding the company’s power to amend the articles.

(2) If the company—

(a) amends its articles, and

(b) is required to send to the registrar a document making or evidencing the amendment,

the company must deliver with that document a statement of compliance.

(3) The statement of compliance required is a statement certifying that the amendment has been made in accordance with the company’s articles and, where relevant, any applicable order of a court or other authority.

(4) The registrar may rely on the statement of compliance as sufficient evidence of the matters stated in it.’.

Civil actions and foreign subsidiaries

John Battle
Mr Mike Weir

NC3

To move the following Clause:—

‘(1) For the purposes of this section—

“parent jurisdiction” means the jurisdiction within the United Kingdom in which the parent company is incorporated or (as the case may be) registered;

“relevant claim” means any claim by any natural person against a relevant subsidiary in respect of personal injury suffered by the claimant outside the United Kingdom;

“relevant parent” means any body corporate incorporated in the United Kingdom or incorporated outside of the United Kingdom but required to register a branch or place of business in the United Kingdom;

“relevant subsidiary” means a subsidiary wherever incorporated of a relevant parent.

(2) The courts of the parent jurisdiction shall have jurisdiction to determine whether a parent company and its relevant subsidiary shall be jointly and severally liable in respect of any relevant claim pursuant to subsection (3) below.

(3) In the event that any relevant subsidiary is held liable (whether under this section or otherwise and whether in the courts of the United Kingdom or otherwise) in respect of any relevant claim, any parent company will be jointly and severally liable with that relevant subsidiary in respect of that claim if—

(a) the parent company—

(i) was aware or ought reasonably to have been aware of the conduct by the relevant subsidiary which gave rise to the relevant claim;

(ii) could reasonably foresee that such conduct would give rise to the type of damage which is the subject matter of that claim; and

(iii) except where a relevant subsidiary is held strictly liable for the consequences of any escape or emission (in which case this paragraph shall not apply), had sufficient opportunity and time in which to take reasonable steps to prevent the loss or injury which is the subject of the relevant claim, but failed to do so; and

(b) the conduct of the relevant subsidiary which gave rise to the relevant claim would have given rise to some liability (of any kind) on the part of the parent company to that claimant if the parent company had undertaken that conduct itself.’.

Prepared: 17 October 2006