rs2181910.929-935

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

Report Stage Proceedings: 19th October 2006
929

Companies Bill–[ [], continued

members of transferee company not required (merger)) (circumstances in which

meetings of members not required).’.

Directors’ explanatory report (merger)

Mr Secretary Darling

Added  nc24

To move the following Clause:—

‘(1)
The directors of each of the merging companies must draw up and adopt a report.

(2)
The report must consist of—

(a)
the statement required by section 902 (statement explaining effect of

compromise or arrangement), and

(b)
insofar as that statement does not deal with the following matters, a

further statement—

(i)
setting out the legal and economic grounds for the draft terms,

and in particular for the share exchange ratio, and

(ii)
specifying any special valuation difficulties.

(3)
The requirement in this section is subject to section (Circumstances in which

certain particulars and reports not required (merger)) (circumstances in which

reports not required).’.

Expert’s report (merger)

Mr Secretary Darling

Added  nc25

To move the following Clause:—

‘(1)
An expert’s report must be drawn up on behalf of each of the merging companies.

(2)
The report required is a written report on the draft terms to the members of the

company.

(3)
The court may on the joint application of all the merging companies approve the

appointment of a joint expert to draw up a single report on behalf of all those

companies.


If no such appointment is made, there must be a separate expert’s report to the

members of each merging company drawn up by a separate expert appointed on

behalf of that company.

(4)
The expert must be a person who—

(a)
is eligible for appointment as a statutory auditor (see section 1176), and

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

independence requirement).

(5)
The expert’s report must—

(a)
indicate the method or methods used to arrive at the share exchange ratio;

(b)
give an opinion as to whether the method or methods used are reasonable

in all the circumstances of the case, indicate the values arrived at using

Report Stage Proceedings: 19th October 2006
930

Companies Bill–[ [], continued

each such method and (if there is more than one method) give an opinion

on the relative importance attributed to such methods in arriving at the

value decided on;

(c)
describe any special valuation difficulties that have arisen;

(d)
state whether in the expert’s opinion the share exchange ratio is

reasonable; and

(e)
in the case of a valuation made by a person other than himself (see section

(Expert’s report: valuation by another person)), state that it appeared to

him reasonable to arrange for it to be so made or to accept a valuation so

made.

(6)
The expert (or each of them) has—

(a)
the right of access to all such documents of all the merging companies,

and

(b)
the right to require from the companies’ officers all such information,


as he thinks necessary for the purposes of making his report.

(7)
The requirement in this section is subject to section (Circumstances in which

certain particulars and reports not required (merger)) (circumstances in which

reports not required).’.

Supplementary accounting statement (merger)

Mr Secretary Darling

Added  nc26

To move the following Clause:—

‘(1)
If the last annual accounts of any of the merging companies relates to a financial

year ending more than seven months before the first meeting of the company

summoned for the purposes of approving the scheme, the directors of that

company must prepare a supplementary accounting statement.

(2)
That statement must consist of—

(a)
a balance sheet dealing with the state of affairs of the company as at a

date not more than three months before the draft terms were adopted by

the directors, and

(b)
where the company would be required under section 405 to prepare group

accounts if that date were the last day of a financial year, a consolidated

balance sheet dealing with the state of affairs of the company and the

undertakings that would be included in such a consolidation.

(3)
The requirements of this Act (and where relevant Article 4 of the IAS Regulation)

as to the balance sheet forming part of a company’s annual accounts, and the

matters to be included in notes to it, apply to the balance sheet required for an

accounting statement under this section, with such modifications as are necessary

by reason of its being prepared otherwise than as at the last day of a financial year.

(4)
The provisions of section 420 as to the approval and signing of accounts apply to

the balance sheet required for an accounting statement under this section.’.

Report Stage Proceedings: 19th October 2006
931

Companies Bill–[ [], continued

Inspection of documents (merger)

Mr Secretary Darling

Added  nc27

To move the following Clause:—

‘(1)
The members of each of the merging companies must be able, during the period

specified below—

(a)
to inspect at the registered office of that company copies of the

documents listed below relating to that company and every other merging

company, and

(b)
to obtain copies of those documents or any part of them on request free

of charge.

(2)
The period referred to above is the period—

(a)
beginning one month before, and

(b)
ending on the date of,


the first meeting of the members, or any class of members, of the company for the

purposes of approving the scheme.

(3)
The documents referred to above are—

(a)
the draft terms;

(b)
the directors’ explanatory report;

(c)
the expert’s report;

(d)
the company’s annual accounts and reports for the last three financial

years ending on or before the first meeting of the members, or any class

of members, of the company summoned for the purposes of approving

the scheme; and

(e)
any supplementary accounting statement required by section

(Supplementary accounting statement (merger)).

(4)
The requirements of subsection (3)(b) and (c) are subject to section

(Circumstances in which certain particulars and reports not required (merger))

(circumstances in which reports not required).’.

Approval of articles of new transferee company (merger)

Mr Secretary Darling

Added  nc28

To move the following Clause:—

‘In the case of a merger by formation of a new company, the articles of the

transferee company, or a draft of them, must be approved by ordinary resolution

of the transferor company or, as the case may be, each of the transferor

companies.’.

Report Stage Proceedings: 19th October 2006
932

Companies Bill–[ [], continued

Protection of holders of securities to which special rights attached (merger)

Mr Secretary Darling

Added  nc29

To move the following Clause:—

‘(1)
The scheme must provide that where any securities of a transferor company

(other than shares) to which special rights are attached are held by a person

otherwise than as a member or creditor of the company, that person is to receive

rights in the transferee company of equivalent value.

(2)
Subsection (1) does not apply if—

(a)
the holder has agreed otherwise, or

(b)
the holder is, or under the scheme is to be, entitled to have the securities

purchased by the transferee company on terms that the court considers

reasonable.’.

No allotment of shares to transferor company or its nominee (merger)

Mr Secretary Darling

Added  nc30

To move the following Clause:—

‘The scheme must not provide for shares in the transferee company to be allotted

to a transferor company (or its nominee) in respect of shares in the transferor

company held by it (or its nominee).’.

Circumstances in which certain particulars and reports not required (merger)

Mr Secretary Darling

Added  nc31

To move the following Clause:—

‘(1)
This section applies in the case of a merger by absorption where all of the relevant

securities of the transferor company (or, if there is more than one transferor

company, of each of them) are held by or on behalf of the transferee company.

(2)
The draft terms of the scheme need not give the particulars mentioned in section

(Draft terms of scheme (merger)) (2)(b), (c) or (d) (particulars relating to

allotment of shares to members of transferor company).

(3)
Section 902 (explanatory statement to be circulated or made available) does not

apply.

(4)
The requirements of the following sections do not apply—

section (Directors’ explanatory report (merger)) (directors’ explanatory

report),

section (Expert’s report (merger)) (expert’s report).

Report Stage Proceedings: 19th October 2006
933

Companies Bill–[ [], continued

(5)
The requirements of section (Inspection of documents (merger)) (inspection of

documents) so far as relating to any document required to be drawn up under the

provisions mentioned in subsection (3) above do not apply.

(6)
In this section “relevant securities”, in relation to a company, means shares or

other securities carrying the right to vote at general meetings of the company.’.

Circumstances in which meeting of members of transferee company not required (merger)

Mr Secretary Darling

Added  nc32

To move the following Clause:—

‘(1)
This section applies in the case of a merger by absorption where 90% or more (but

not all) of the relevant securities of the transferor company (or, if there is more

than one transferor company, of each of them) are held by or on behalf of the

transferee company.

(2)
It is not necessary for the scheme to be approved at a meeting of the members, or

any class of members, of the transferee company if the court is satisfied that the

following conditions have been complied with.

(3)
The first condition is that publication of notice of receipt of the draft terms by the

registrar took place in respect of the transferee company at least one month before

the date of the first meeting of members, or any class of members, of the

transferor company summoned for the purpose of agreeing to the scheme.

(4)
The second condition is that the members of the transferee company were able

during the period beginning one month before, and ending on, that date—

(a)
to inspect at the registered office of the transferee company copies of the

documents listed in section (Inspection of documents (merger))(3)(a), (d)

and (e) relating to that company and the transferor company (or, if there

is more than one transferor company, each of them), and

(b)
to obtain copies of those documents or any part of them on request free

of charge.

(5)
The third condition is that—

(a)
one or more members of the transferee company, who together held not

less than 5% of the paid-up capital of the company which carried the right

to vote at general meetings of the company (excluding any shares in the

company held as treasury shares) would have been able, during that

period, to require a meeting of each class of members to be called for the

purpose of deciding whether or not to agree to the scheme, and

(b)
no such requirement was made.

(6)
In this section “relevant securities”, in relation to a company, means shares or

other securities carrying the right to vote at general meetings of the company.’.

Report Stage Proceedings: 19th October 2006
934

Companies Bill–[ [], continued

Circumstances in which no meetings required (merger)

Mr Secretary Darling

Added  nc33

To move the following Clause:—

‘(1)
This section applies in the case of a merger by absorption where all of the relevant

securities of the transferor company (or, if there is more than one transferor

company, of each of them) are held by or on behalf of the transferee company.

(2)
It is not necessary for the scheme to be approved at a meeting of the members, or

any class of members, of any of the merging companies if the court is satisfied

that the following conditions have been complied with.

(3)
The first condition is that publication of notice of receipt of the draft terms by the

registrar took place in respect of all the merging companies at least one month

before the date of the court’s order.

(4)
The second condition is that the members of the transferee company were able

during the period beginning one month before, and ending on, that date—

(a)
to inspect at the registered office of that company copies of the

documents listed in section (Inspection of documents (merger))(3)

relating to that company and the transferor company (or, if there is more

than one transferor company, each of them), and

(b)
to obtain copies of those documents or any part of them on request free

of charge.

(5)
The third condition is that—

(a)
one or more members of the transferee company, who together held not

less than 5% of the paid-up capital of the company which carried the right

to vote at general meetings of the company (excluding any shares in the

company held as treasury shares) would have been able, during that

period, to require a meeting of each class of members to be called for the

purpose of deciding whether or not to agree to the scheme, and

(b)
no such requirement was made.

(6)
In this section “relevant securities”, in relation to a company, means shares or

other securities carrying the right to vote at general meetings of the company.’.

Other circumstances in which meeting of members of transferee company not required

(merger)

Mr Secretary Darling

Added  nc34

To move the following Clause:—

‘(1)
In the case of any merger by absorption, it is not necessary for the scheme to be

approved by the members of the transferee company if the court is satisfied that

the following conditions have been complied with.

(2)
The first condition is that publication of notice of receipt of the draft terms by the

registrar took place in respect of that company at least one month before the date

of the first meeting of members, or any class of members, of the transferor

company (or, if there is more than one transferor company, any of them)

summoned for the purposes of agreeing to the scheme.

Report Stage Proceedings: 19th October 2006
935

Companies Bill–[ [], continued

(3)
The second condition is that the members of that company were able during the

period beginning one month before, and ending on, the date of any such

meeting—

(a)
to inspect at the registered office of that company copies of the

documents specified in section (Inspection of documents (merger))(3)

relating to that company and the transferor company (or, if there is more

than one transferor company, each of them), and

(b)
to obtain copies of those documents or any part of them on request free

of charge.

(4)
The third condition is that—

(a)
one or more members of that company, who together held not less than

5% of the paid-up capital of the company which carried the right to vote

at general meetings of the company (excluding any shares in the

company held as treasury shares) would have been able, during that

period, to require a meeting of each class of members to be called for the

purpose of deciding whether or not to agree to the scheme, and

(b)
no such requirement was made.’.

Divisions and companies involved in a division

Mr Secretary Darling

Added  nc35

To move the following Clause:—

‘(1)
The scheme involves a division where under the scheme the undertaking,

property and liabilities of the company in respect of which the compromise or

arrangement is proposed are to be divided among and transferred to two or more

companies each of which is either—

(a)
an existing public company, or

(b)
a new company (whether or not a public company).

(2)
References in this Part to the companies involved in the division are to the

transferor company and any existing transferee companies.’.

Draft terms of scheme (division)

Mr Secretary Darling

Added  nc36

To move the following Clause:—

‘(1)
A draft of the proposed terms of the scheme must be drawn up and adopted by the

directors of each of the companies involved in the division.

(2)
The draft terms must give particulars of at least the following matters—

(a)
in respect of the transferor company and each transferee company—

(i)
its name,

(ii)
the address of its registered office, and