Company Law Reform Bill [Lords]


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New Clause 223

Public notice of proposed payment
‘(1) Within the week immediately following the date of the resolution under section (Payment to be approved by special resolution) the company must cause to be published in the Gazette a notice—
(a) stating that the company has approved a payment out of capital for the purpose of acquiring its own shares by redemption or purchase or both (as the case may be),
(b) specifying—
(i) the amount of the permissible capital payment for the shares in question, and
(ii) the date of the resolution,
(c) stating that the directors’ statement and auditor’s report required by section (Directors’ statement and auditor’s report) are available for inspection at the company’s registered office, and
(d) stating that any creditor of the company may at any time within the five weeks immediately following the date of the resolution apply to the court under section (Application to court to cancel resolution) for an order preventing the payment.
(2) Within the week immediately following the date of the resolution the company must also either—
(a) cause a notice to the same effect as that required by subsection (1) to be published in an appropriate national newspaper, or
(b) give notice in writing to that effect to each of its creditors.
(3) “An appropriate national newspaper” means a newspaper circulating throughout the part of the United Kingdom in which the company is registered.
(4) Not later than the day on which the company—
(a) first publishes the notice required by subsection (1), or
(b) if earlier, first publishes or gives the notice required by subsection (2),
the company must deliver to the registrar a copy of the directors’ statement and auditor’s report required by section (Directors’ statement and auditor’s report).’.—[Margaret Hodge.]
Brought up, and added to the Bill.

New Clause 224

Directors’ statement and auditor’s report to be available for inspection
‘(1) The directors’ statement and auditor’s report must be kept available for inspection at the company’s registered office throughout the period—
(a) beginning with the day on which the company—
(i) first publishes the notice required by section (Public notice of proposed payment)(1), or
(ii) if earlier, first publishes or gives the notice required by section (Public notice of proposed payment)(2), and
(b) ending five weeks after the date of the resolution for payment out of capital.
(2) They must be open to the inspection of any member or creditor of the company without charge.
(3) If an inspection under subsection (2) is refused, an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
Brought up, and added to the Bill.

New Clause 225

Application to court to cancel resolution
‘(1) Where a private company passes a special resolution approving a payment out of capital for the redemption or purchase of any of its shares—
(a) any member of the company (other than one who consented to or voted in favour of the resolution), and
(b) any creditor of the company,
may apply to the court for the cancellation of the resolution.
(2) The application—
(a) must be made within five weeks after the passing of the resolution, and
(b) may be made on behalf of the persons entitled to make it by such one or more of their number as they may appoint in writing for the purpose.
(3) On an application under this section the court may if it thinks fit—
(a) adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court—
(i) for the purchase of the interests of dissentient members, or
(ii) for the protection of dissentient creditors, and
(b) give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement.
(4) Subject to that, the court must make an order either cancelling or confirming the resolution, and may do so on such terms and conditions as it thinks fit.
(5) If the court confirms the resolution, it may by order alter or extend any date or period of time specified—
(a) in the resolution, or
(b) in any provision of this Chapter applying to the redemption or purchase to which the resolution relates.
(6) The court’s order may, if the court thinks fit—
(a) provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company’s capital, and
(b) make any alteration in the company’s articles that may be required in consequence of that provision.
(7) The court’s order may, if the court thinks fit, require the company not to make any, or any specified, amendments of its articles without the leave of the court.’.—[Margaret Hodge.]
Brought up, and added to the Bill.

New Clause 226

Notice to registrar of court application or order
‘(1) On making an application under section (Application to court to cancel resolution) (application to court to cancel resolution) the applicants, or the person making the application on their behalf, must immediately give notice to the registrar.
(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.

New Clause 227

When payment out of capital to be made
‘(1) The payment out of capital must be made—
(a) no earlier than five weeks after the date on which the resolution under section (Payment to be approved by special resolution) is passed, and
(b) no more than seven weeks after that date.
(2) This is subject to any exercise of the court’s powers under section (Application to court to cancel resolution)(5) (power to alter or extend time where resolution confirmed after objection).’.—[Margaret Hodge.]
Brought up, and added to the Bill.

New Clause 228

Treasury shares
‘(1) This section applies where—
(a) a limited company makes a purchase of its own shares in accordance with Chapter (Purchase of own shares),
(b) the purchase is made out of distributable profits, and
(c) the shares are qualifying shares.
(2) For this purpose “qualifying shares” means shares that—
(a) are included in the official list in accordance with the provisions of Part 6 of the Financial Services and Markets Act 2000 (c. 8),
(b) are traded on the market known as the Alternative Investment Market established under the rules of London Stock Exchange plc,
(c) are officially listed in an EEA State, or
(d) are traded on a regulated market.
In paragraph (a) “the official list” has the meaning given in section 103(1) of the Financial Services and Markets Act 2000 (c.8).
(3) Where this section applies the company may—
(a) hold the shares (or any of them), or
(b) deal with any of them, at any time, in accordance with section (Treasury shares: disposal) or (Treasury shares: cancellation).
(4) Where shares are held by the company, the company must be entered in its register of members as the member holding the shares.
Brought up, and added to the Bill.

New Clause 229

Treasury shares: maximum holdings
‘(1) Where a company has shares of only one class, the aggregate nominal value of shares held as treasury shares must not at any time exceed 10% of the nominal value of the issued share capital of the company at that time.
(2) Where the share capital of a company is divided into shares of different classes, the aggregate nominal value of the shares of any class held as treasury shares must not at any time exceed 10% of the nominal value of the issued share capital of the shares of that class at that time.
(3) If subsection (1) or (2) is contravened by a company, the company must dispose of or cancel the excess shares, in accordance with section (Treasury shares: disposal), before the end of the period of twelve months beginning with the date on which that contravention occurs.
The “excess shares” means such number of the shares held by the company as treasury shares at the time in question as resulted in the limit being exceeded.
(4) Where a company purchases qualifying shares out of distributable profits in accordance with section (Treasury shares), a contravention by the company of subsection (1) or (2) above does not render the acquisition void under section (General rule against limited company acquiring its own shares) (general rule against limited company acquiring its own shares).’.—[Margaret Hodge.]
Brought up, and added to the Bill.

New Clause 230

Treasury shares: exercise of rights
‘(1) This section applies where shares are held by a company as treasury shares.
(2) The company must not exercise any right in respect of the treasury shares, and any purported exercise of such a right is void.
This applies, in particular, to any right to attend or vote at meetings.
(3) No divided may be paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of the treasury shares.
(4) Nothing in this section prevents—
(a) an allotment of shares as fully paid bonus shares in respect of the treasury shares, or
(b) the payment of any amount payable on the redemption of the treasury shares (if they are redeemable shares).
(5) Shares allotted as fully paid bonus shares in respect of the treasury shares are treated as if purchased by the company, at the time they were allotted, in circumstances in which section (Treasury shares)(1) (treasury shares) applied.’.—[Margaret Hodge.]
Brought up, and added to the Bill.
 
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©Parliamentary copyright 2006
Prepared 21 July 2006