Company Law Reform Bill [Lords]


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New Clause 204

Release of company’s rights under contract for off-market purchase
‘(1) An agreement by a company to release its rights under a contract approved under section (Authority for off-market purchase) (authorisation of off-market purchase) is void unless the terms of the release agreement are approved in advance in accordance with this section.
(2) The terms of the proposed agreement must be authorised by a special resolution of the company before the agreement is entered into.
(3) That authority may be varied, revoked or from time to time renewed by a special resolution of the company.
(4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed.
(5) The provisions of—
section (Resolution authorising variation: exercise of voting rights) (exercise of voting rights), and
Brought up, and added to the Bill.

New Clause 205

Authority for market purchase
‘(1) A company may only make a market purchase of its own shares if the purchase has first been authorised by a resolution of the company.
(2) That authority—
(a) may be general or limited to the purchase of shares of a particular class or description, and
(b) may be unconditional or subject to conditions.
(3) The authority must—
(a) specify the maximum number of shares authorised to be acquired, and
(b) determine both the maximum and minimum prices that may be paid for the shares.
(4) The authority may be varied, revoked or from time to time renewed by a resolution of the company.
(5) A resolution conferring, varying or renewing authority must specify a date on which it is to expire, which must not be later than 18 months after the date on which the resolution is passed.
(6) A company may make a purchase of its own shares after the expiry of the time limit specified if—
(a) the contract of purchase was concluded before the authority expired, and
(b) the terms of the authority permitted the company to make a contract of purchase that would or might be executed wholly or partly after its expiration.
(7) A resolution to confer or vary authority under this section may determine either or both the maximum and minimum price for purchase by—
(a) specifying a particular sum, or
(b) providing a basis or formula for calculating the amount of the price (but without reference to any person’s discretion or opinion).’.—[Margaret Hodge.]
Brought up, and added to the Bill.

New Clause 206

Copy of contract or memorandum to be available for inspection
‘(1) This section applies where a company has entered into—
(a) a contract approved under section (Authority for off-market purchase) (authorisation of contract for off-market purchase), or
(b) a contract for a purchase authorised under section (Authority for market purchase) (authorisation of market purchase).
(2) The company must keep available for inspection at its registered office—
(a) a copy of the contract, or
(b) if the contract is not in writing, a written memorandum setting out its terms.
Brought up, and added to the Bill.

New Clause 207

Enforcement of right to inspect copy or memorandum
‘(1) If default is made in complying with section (Copy of contract or memorandum to be available for inspection)(2) or (3), or an inspection required under section (Copy of contract or memorandum to be available for inspection)(4) is refused, an offence is committed by every officer of the company who is in default.
(2) 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 and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(3) In the case of refusal of an inspection required under section (Copy of contract or memorandum to be available for inspection)(4) the court may by order compel an immediate inspection.’.—[Margaret Hodge.]
Brought up, and added to the Bill.

New Clause 208

No assignment of company’s right to purchase own shares
‘The rights of a company under a contract authorised under—
(a) section (Authority for off-market purchase) (authority for off-market purchase), or
(b) section (Authority for market purchase) (authority for market purchase)
are not capable of being assigned.’.—[Margaret Hodge.]
Brought up, and added to the Bill.

New Clause 209

Payments apart from purchase price to be made out of distributable profits
‘(1) A payment made by a company in consideration of—
(a) acquiring any right with respect to the purchase of its own shares in pursuance of a contingent purchase contract approved under section (Authority for off-market purchase) (authorisation of off-market purchase),
(b) the variation of any contract approved under that section, or
(c) the release of any of the company’s obligations with respect to the purchase of any of its own shares under a contract—
Brought up, and added to the Bill.

New Clause 210

Treatment of shares purchased
‘Where a limited company makes a purchase of its own shares in accordance with this Chapter, then—
(a) if section (Treasury shares) (treasury shares) applies, the shares may be held and dealt with in accordance with Chapter (Treasury shares) of this Part;
(b) if that section does not apply—
(i) the shares are treated as cancelled, and
(ii) the amount of the company’s issued share capital is diminished accordingly by the nominal value of the shares cancelled.’.—[Margaret Hodge.]
Brought up, read the First time and Second time, and added to the Bill.

New Clause 211

Return to registrar of purchase of own shares
‘(1) Where a company purchases shares under this Chapter, it must deliver a return to the registrar within the period of 28 days beginning with the date on which the shares are delivered to it.
(2) The return must distinguish—
(a) shares in relation to which section (Treasury shares) (treasury shares) applies and shares in relation to which that section does not apply, and
(b) shares in relation to which that section applies—
(i) that are cancelled forthwith (under section (Treasury shares: cancellation) (cancellation of treasury shares)), and
(ii) that are not so cancelled.
(3) The return must state, with respect to shares of each class purchased—
(a) the number and nominal value of the shares, and
(b) the date on which they were delivered to the company.
(4) In the case of a public company the return must also state—
(a) the aggregate amount paid by the company for the shares, and
(b) the maximum and minimum prices paid in respect of shares of each class purchased.
(5) Particulars of shares delivered to the company on different dates and under different contracts may be included in a single return.
In such a case the amount required to be stated under subsection (4)(a) is the aggregate amount paid by the company for all the shares to which the return relates.
Brought up, and added to the Bill.

New Clause 212

Notice to registrar of cancellation of shares
‘(1) If on the purchase by a company of any of its own shares in accordance with this Part—
(a) section (Treasury shares) (treasury shares) does not apply (so that the shares are treated as cancelled), or
(b) that section applies but the shares are cancelled forthwith (under section (Treasury shares: cancellation) (cancellation of treasury shares)),
the company must give notice of cancellation to the registrar, within the period of 28 days beginning with the date on which the shares are delivered to it, specifying the shares cancelled.
(2) The notice must be accompanied by a statement of capital.
(3) The statement of capital must state with respect to the company’s share capital immediately following the cancellation—
(a) the total number of shares of the company,
(b) the aggregate nominal value of those shares,
(c) for each class of shares—
(i) prescribed particulars of the rights attached to the shares,
(ii) the total number of shares of that class, and
(iii) the aggregate nominal value of shares of that class, and
(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).
(4) If default is made in complying 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 and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.’.—[Margaret Hodge.]
Brought up, and added to the Bill.
 
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Prepared 21 July 2006