rs2181910.943-949

House of Commons

Session 2005 - 06
Internet Publications
Other Bills before Parliament

Report Stage Proceedings: 19th October 2006
943

Companies Bill–[ [], continued

Agreement to dispense with reports etc (division)

Mr Secretary Darling

Added  nc49

To move the following Clause:—

‘(1)
If all members holding shares in, and all persons holding other securities of, the

companies involved in the division, being shares or securities that carry a right to

vote in general meetings of the company in question, so agree, the following

requirements do not apply.

(2)
The requirements that may be dispensed with under this section are—

(a)
the requirements of—

(i)
section (Directors’ explanatory report (division)) (directors’

explanatory report),

(ii)
section (Expert’s report (division)) (expert’s report),

(iii)
section (Supplementary accounting statement (division))

(supplementary accounting statement), and

(iv)
section (Report on material changes of assets of transferor

company (division)) (report on material changes in assets of

transferor company); and

(b)
the requirements of section (Inspection of documents (division))

(inspection of documents) so far as relating to any document required to

be drawn up under the provisions mentioned in paragraph (a)(i), (ii) or

(iii) above.

(3)
For the purposes of this section—

(a)
the members, or holders of other securities, of a company, and

(b)
whether shares or other securities carry a right to vote in general meetings

of the company,


are determined as at the date of the application to the court under section 900.’.

Power of court to exclude certain requirements (division)

Mr Secretary Darling

Added  nc50

To move the following Clause:—

‘(1)
In the case of a division, the court may by order direct that—

(a)
in relation to any company involved in the division, the requirements

of—

(i)
section (Publication of draft terms (division)) (publication of

draft terms), and

(ii)
section (Inspection of documents (division)) (inspection of

documents),


do not apply, and

(b)
in relation to an existing transferee company, section (Circumstances in

which meeting of members of transferee company not required

(division)) (circumstances in which meeting of members of transferee

company not required) has effect with the omission of the first and

second conditions specified in that section,

Report Stage Proceedings: 19th October 2006
944

Companies Bill–[ [], continued


if the court is satisfied that the following conditions will be fulfilled in relation to

that company.

(2)
The first condition is that the members of that company will have received, or will

have been able to obtain free of charge, copies of the documents listed in section

(Inspection of documents (division))—

(a)
in time to examine them before the date of the first meeting of the

members, or any class of members, of that company summoned for the

purposes of agreeing to the scheme, or

(b)
in the case of an existing transferee company where in the circumstances

described in section (Circumstances in which meeting of members of

transferee company not required (division)) no meeting is held, in time

to require a meeting as mentioned in subsection (4) of that section.

(3)
The second condition is that the creditors of that company will have received or

will have been able to obtain free of charge copies of the draft terms in time to

examine them—

(a)
before the date of the first meeting of the members, or any class of

members, of the company summoned for the purposes of agreeing to the

scheme, or

(b)
in the circumstances mentioned in subsection (2)(b) above, at the same

time as the members of the company.

(4)
The third condition is that no prejudice would be caused to the members or

creditors of the transferor company or any transferee company by making the

order in question.’.

Expert’s report: valuation by another person

Mr Secretary Darling

Added  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

Report Stage Proceedings: 19th October 2006
945

Companies Bill–[ [], continued

(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

Added  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.’.

Report Stage Proceedings: 19th October 2006
946

Companies Bill–[ [], continued

Experts and valuers: meaning of “associate”

Mr Secretary Darling

Added  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

Added  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.’.

Report Stage Proceedings: 19th October 2006
947

Companies Bill–[ [], continued

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

Mr Secretary Darling

Added  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 other’s defaults

Mr Secretary Darling

Added  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.’.

Report Stage Proceedings: 19th October 2006
948

Companies Bill–[ [], continued

Meaning of “liabilities” and “property”

Mr Secretary Darling

Added  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

Added  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.’.

Report Stage Proceedings: 19th October 2006
949

Companies Bill–[ [], continued

Penalty for attempted evasion of restrictions

Mr Secretary Darling

Added  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

Added  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.