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

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Experts report: valuation by another person

Mr Secretary Darling

NC51

    To move the following Clause:—

      ‘(1) Where it appears to an expert—

        (a) that a valuation is reasonably necessary to enable him to draw up his report, and

        (b) that it is reasonable for that valuation, or part of it, to be made by (or for him to accept a valuation made by) another person who—

          (i) appears to him to have the requisite knowledge and experience to make the valuation or that part of it, and

          (ii) meets the independence requirement in section (Experts and valuers: independence requirement),

      he may arrange for or accept such a valuation, together with a report which will enable him to make his own report under section (Expert’s report (merger)) or (Expert’s report (division)).

      (2) Where any valuation is made by a person other than the expert himself, the latter’s report must state that fact and must also—

        (a) state the former’s name and what knowledge and experience he has to carry out the valuation, and

        (b) describe so much of the undertaking, property and liabilities as was valued by the other person, and the method used to value them, and specify the date of the valuation.’.


Experts and valuers: independence requirement

Mr Secretary Darling

NC52

    To move the following Clause:—

      ‘(1) A person meets the independence requirement for the purposes of section (Expert’s report (merger)) or (Expert’s report (division)) (expert’s report) or section (Expert’s report: valuation by another person) (valuation by another person) only if—

        (a) he is not—

          (i) an officer or employee of any of the companies concerned in the scheme, or

          (ii) a partner or employee of such a person, or a partnership of which such a person is a partner;

        (b) he is not—

          (i) an officer or employee of an associated undertaking of any of the companies concerned in the scheme, or

          (ii) a partner or employee of such a person, or a partnership of which such a person is a partner; and

        (c) there does not exist between—

          (i) the person or an associate of his, and

          (ii) any of the companies concerned in the scheme or an associated undertaking of such a company,

        a connection of any such description as may be specified by regulations made by the Secretary of State.

      (2) An auditor of a company is not regarded as an officer or employee of the company for this purpose.

      (3) For the purposes of this section—

        (a) the “companies concerned in the scheme” means every transferor and existing transferee company;

        (b) “associated undertaking”, in relation to a company, means—

          (i) a parent undertaking or subsidiary undertaking of the company, or

          (ii) a subsidiary undertaking of a parent undertaking of the company; and

        (c) “associate” has the meaning given by section (Experts and valuers: meaning of “associate”).

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


Experts and valuers: meaning of associate

Mr Secretary Darling

NC53

    To move the following Clause:—

      ‘(1) This section defines “associate” for the purposes of section (Experts and valuers: independence requirement) (experts and valuers: independence requirement).

      (2) In relation to an individual, “associate” means—

        (a) that individual’s spouse or civil partner or minor child or step-child,

        (b) any body corporate of which that individual is a director, and

        (c) any employee or partner of that individual.

      (3) In relation to a body corporate, “associate” means—

        (a) any body corporate of which that body is a director,

        (b) any body corporate in the same group as that body, and

        (c) any employee or partner of that body or of any body corporate in the same group.

      (4) In relation to a partnership that is a legal person under the law by which it is governed, “associate” means—

        (a) any body corporate of which that partnership is a director,

        (b) any employee of or partner in that partnership, and

        (c) any person who is an associate of a partner in that partnership.

      (5) In relation to a partnership that is not a legal person under the law by which it is governed, “associate” means any person who is an associate of any of the partners.

      (6) In this section, in relation to a limited liability partnership, for “director” read “member”.’.


Power of court to summon meeting of members or creditors of existing transferee company

Mr Secretary Darling

NC54

    To move the following Clause:—

      ‘(1) The court may order a meeting of—

        (a) the members of an existing transferee company, or any class of them, or

        (b) the creditors of an existing transferee company, or any class of them,

      to be summoned in such manner as the court directs.

      (2) An application for such an order may be made by—

        (a) the company concerned,

        (b) a member or creditor of the company, or

        (c) if an administration order is in force in relation to the company, the administrator.’.


Court to fix date for transfer of undertaking etc of transferor company

Mr Secretary Darling

NC55

    To move the following Clause:—

      ‘(1) Where the court sanctions the compromise or arrangement, it must—

        (a) in the order sanctioning the compromise or arrangement, or

        (b) in a subsequent order under section 906 (powers of court to facilitate reconstruction or amalgamation),

      fix a date on which the transfer (or transfers) to the transferee company (or transferee companies) of the undertaking, property and liabilities of the transferor company is (or are) to take place.

      (2) Any such order that provides for the dissolution of the transferor company must fix the same date for the dissolution.

      (3) If it is necessary for the transferor company to take steps to ensure that the undertaking, property and liabilities are fully transferred, the court must fix a date, not later than six months after the date fixed under subsection (1), by which such steps must be taken.

      (4) In that case, the court may postpone the dissolution of the transferor company until that date.

      (5) The court may postpone or further postpone the date fixed under subsection (3) if it is satisfied that the steps mentioned cannot be completed by the date (or latest date) fixed under that subsection.’.


Liability of transferee companies for each others defaults

Mr Secretary Darling

NC56

    To move the following Clause:—

      ‘(1) In the case of a division, each transferee company is jointly and severally liable for any liability transferred to any other transferee company under the scheme to the extent that the other company has made default in satisfying that liability.

      This is subject to the following provisions.

      (2) If a majority in number representing 75% in value of the creditors or any class of creditors of the transferor company, present and voting either in person or by proxy at a meeting summoned for the purposes of agreeing to the scheme, so agree, subsection (1) does not apply in relation to the liabilities owed to the creditors or that class of creditors.

      (3) A transferee company is not liable under this section for an amount greater than the net value transferred to it under the scheme.

      The “net value transferred” is the value at the time of the transfer of the property transferred to it under the scheme less the amount at that date of the liabilities so transferred.’.


Meaning of liabilities and property

Mr Secretary Darling

NC57

    To move the following Clause:—

      ‘In this Part—

      “liabilities” includes duties;

      “property” includes property, rights and powers of every description.’.


Consequences of order imposing restrictions

Mr Secretary Darling

NC58

    To move the following Clause:—

      ‘(1) The effect of an order under section 803 that shares are subject to restrictions is as follows—

        (a) any transfer of the shares is void;

        (b) no voting rights are exercisable in respect of the shares;

        (c) no further shares may be issued in right of the shares or in pursuance of an offer made to their holder;

        (d) except in a liquidation, no payment may be made of sums due from the company on the shares, whether in respect of capital or otherwise.

      (2) Where shares are subject to the restriction in subsection (1)(a), an agreement to transfer the shares is void.

      This does not apply to an agreement to transfer the shares on the making of an order under section (Removal of restrictions) made by virtue of subsection (3)(b) (removal of restrictions in case of court-approved transfer).

      (3) Where shares are subject to the restriction in subsection (1)(c) or (d), an agreement to transfer any right to be issued with other shares in right of those shares, or to receive any payment on them (otherwise than in a liquidation), is void.

      This does not apply to an agreement to transfer any such right on the making of an order under section (Removal of restrictions) made by virtue of subsection (3)(b) (removal of restrictions in case of court-approved transfer).

      (4) The provisions of this section are subject—

        (a) to any directions under section 803(2) or section (Relaxation of restrictions) (3) (directions for protection of third parties), and

        (b) in the case of an interim order under section 803(3), to the terms of the order.’.


Penalty for attempted evasion of restrictions

Mr Secretary Darling

NC59

    To move the following Clause:—

      ‘(1) This section applies where shares are subject to restrictions by virtue of an order under section 803.

      (2) A person commits an offence if he—

        (a) exercises or purports to exercise any right—

          (i) to dispose of shares that to his knowledge, are for the time being subject to restrictions, or

          (ii) to dispose of any right to be issued with any such shares, or

        (b) votes in respect of any such shares (whether as holder or proxy), or appoints a proxy to vote in respect of them, or

        (c) being the holder of any such shares, fails to notify of their being subject to those restrictions a person whom he does not know to be aware of that fact but does know to be entitled (apart from the restrictions) to vote in respect of those shares whether as holder or as proxy, or

        (d) being the holder of any such shares, or being entitled to a right to be issued with other shares in right of them, or to receive any payment on them (otherwise than in a liquidation), enters into an agreement which is void under section (Consequences of order imposing restrictions)(2) or (3).

      (3) If shares in a company are issued in contravention of the restrictions, an offence is committed by—

        (a) the company, and

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

      (4) A person guilty of an offence under this section is liable—

        (a) on conviction on indictment, to a fine;

        (b) on summary conviction, to a fine not exceeding the statutory maximum.

      (5) The provisions of this section are subject—

        (a) to any directions under—

      section 803(2) (directions for protection of third parties), or

      section (Relaxation of restrictions) or (Removal of restrictions) (relaxation or removal of restrictons), and

        (b) in the case of an interim order under section 803(3), to the terms of the order.’.


Relaxation of restrictions

Mr Secretary Darling

NC60

    To move the following Clause:—

      ‘(1) An application may be made to the court on the ground that an order directing that shares shall be subject to restrictions unfairly affects the rights of third parties in respect of the shares.

      (2) An application for an order under this section may be made by the company or by any person aggrieved.

      (3) If the court is satisfied that the application is well-founded, it may, for the purpose of protecting the rights of third parties in respect of the shares, and subject to such terms as it thinks fit, direct that such acts by such persons or descriptions of persons and for such purposes as may be set out in the order do not constitute a breach of the restrictions.’.


Removal of restrictions

Mr Secretary Darling

NC61

    To move the following Clause:—

      ‘(1) An application may be made to the court for an order directing that the shares shall cease to be subject to restrictions.

      (2) An application for an order under this section may be made by the company or by any person aggrieved.

      (3) The court must not make an order under this section unless—

        (a) it is satisfied that the relevant facts about the shares have been disclosed to the company and no unfair advantage has accrued to any person as a result of the earlier failure to make that disclosure, or

        (b) the shares are to be transferred for valuable consideration and the court approves the transfer.

      (4) An order under this section made by virtue of subsection (3)(b) may continue, in whole or in part, the restrictions mentioned in section (Consequences of order imposing restrictions)(1)(c) and (d) (restrictions on issue of further shares or making of payments) so far as they relate to a right acquired or offer made before the transfer.

      (5) Where any restrictions continue in force under subsection (4)—

        (a) an application may be made under this section for an order directing that the shares shall cease to be subject to those restrictions, and

        (b) subsection (3) does not apply in relation to the making of such an order.’.


Order for sale of shares

Mr Secretary Darling

NC62

    To move the following Clause:—

      ‘(1) The court may order that the shares subject to restrictions be sold, subject to the court’s approval as to the sale.

      (2) An application for an order under subsection (1) may only be made by the company.

      (3) Where the court has made an order under this section, it may make such further order relating to the sale or transfer of the shares as it thinks fit.

      (4) An application for an order under subsection (3) may be made—

        (a) by the company,

        (b) by the person appointed by or in pursuance of the order to effect the sale, or

        (c) by any person interested in the shares.

      (5) On making an order under subsection (1) or (3) the court may order that the applicant’s costs (in Scotland, expenses) be paid out of the proceeds of sale.’.


Application of proceeds of sale under court order

Mr Secretary Darling

NC63

    To move the following Clause:—

      ‘(1) Where shares are sold in pursuance of an order of the court under section (Order for sale of shares), the proceeds of the sale, less the costs of the sale, must be paid into court for the benefit of the persons who are beneficially interested in the shares.

      (2) A person who is beneficially interested in the shares may apply to the court for the whole or part of those proceeds to be paid to him.

      (3) On such an application the court shall order the payment to the applicant of—

        (a) the whole of the proceeds of sale together with any interest on them, or

        (b) if another person had a beneficial interest in the shares at the time of their sale, such proportion of the proceeds and interest as the value of the applicant’s interest in the shares bears to the total value of the shares.

      This is subject to the following qualification.

      (4) If the court has ordered under section (Order for sale of shares)(5) that the costs (in Scotland, expenses) of an applicant under that section are to be paid out of the proceeds of sale, the applicant is entitled to payment of his costs (or expenses) out of those proceeds before any person interested in the shares receives any part of those proceeds.’.


Registrars requirements as to certification or verification

Mr Secretary Darling

NC64

    To move the following Clause:—

      ‘(1) Where a document required or authorised to be delivered to the registrar under any enactment is required—

        (a) to be certified as an accurate translation or transliteration, or

        (b) to be certified as a correct copy or verified,

      the registrar may impose requirements as to the person, or description of person, by whom the certificate or verification is to be given.

      (2) The power conferred by section 1034 (registrar’s requirements as to form, authentication and manner of delivery) is exercisable in relation to the certificate or verification as if it were a separate document.

      (3) Requirements imposed under this section must not be inconsistent with requirements imposed by any enactment with respect to the certification or verification of the document concerned.’.


Meaning of UK-registered company

Mr Secretary Darling

NC65

    To move the following Clause:—

      ‘In the Companies Acts “UK-registered company” means a company registered under this Act.

      The expression does not include an overseas company that has registered particulars under section 1012.’.


Application of Part 27

Mr Secretary Darling

NC66

    To move the following Clause:—

      ‘(1) The provisions of this Part apply where a compromise or arrangement is proposed between a company and—

        (a) its creditors, or any class of them, or

        (b) its members, or any class of them.

      (2) In this Part—

      “arrangement” includes a reorganisation of the company’s share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods; and

      “company”—

      (a) in section (Powers of court to facilitate reconstruction or amalgamation) (powers of court to facilitate reconstruction or amalgamation) means a company within the meaning of this Act, and

      (b) elsewhere in this Part means any company liable to be wound up under the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

      (3) The provisions of this Part have effect subject to Part (Mergers and divisions of public companies) (mergers and divisions of public companies) where that Part applies (see sections (Application of Part 27A) and (Relationship of this Part with Part 27)).’.


Court order for holding of meeting

Mr Secretary Darling

NC67

    To move the following Clause:—

      ‘(1) The court may, on an application under this section, order a meeting of the creditors or class of creditors, or of the members of the company or class of members (as the case may be), to be summoned in such manner as the court directs.

      (2) An application under this section may be made by—

        (a) the company,

        (b) any creditor or member of the company, or

        (c) if the company is being wound up or an administration order is in force in relation to it, the liquidator or administrator.’.


 
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Prepared: 18 October 2006