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Protection of Shareholders Bill

Protection of Shareholders Bill






Make provision for each public company to establish a shareholders’

committee; to make provision about the membership, functions and operation

of the committee; and for connected purposes.  

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and

consent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the authority of the same, as follows:—


Establishment of a shareholders’ committee


The Companies Act 2006 (c. 46) shall be amended as follows.


After Part 10 insert—

“Part 10A

Shareholders’ Committee



Shareholders’ Committee


Every public company shall, at each general meeting of the company at

which accounts are laid in accordance with section 437 (public

companies: laying of accounts and reports before general meeting),

appoint a Shareholders’ Committee (to be known as a “Shareholders’


Committee”) of not more than six and not fewer than three persons to

hold office until the conclusion of the next general meeting at which the

requirements of section 437 are complied with, unless the private

shareholders vote at the general meeting not to have such a committee

appointed until the next such meeting.



The Shareholders’ Committee shall be constituted subject to the

provisions of this section in accordance with Schedule 5A of this Act.


The function of the committee is to encourage and enable regular,

systematic and, where necessary, urgent communication and

consultation on a confidential basis between the directors and the


members of the company on matters of concern to them as members.


Bill 76                                                                                                 



Protection of Shareholders Bill




The Shareholders’ Committee shall be elected as to secure adequate

and independent representation for members generally and for private

shareholders in particular, and the members of the committee shall be

nominated for election and elected solely by other private shareholders

and not by the directors, or by persons on their behalf or connected


with them.


Elections under subsection (4) shall be held in accordance with any

guidance that the Secretary of State may issue.


For the purposes of this section “private shareholder” means a

shareholder who is the beneficial owner of the shares registered in his


name, and this shall be taken to include investors whose shares are held

by another person on their behalf, and any member who holds shares

on behalf of another person shall, on the request of that person, confirm

to the company the beneficial interest of that person in writing.


The directors shall nominate a director or directors to attend but not


vote at meetings of the Shareholders’ Committee.


The director or directors nominated under subsection (7) shall, as soon

as practicable, transmit reports (including minority reports) prepared

by or on behalf of the Shareholders’ Committee, to the directors.


The auditors, accountant, the secretary (or where applicable, joint


secretaries) and the solicitor to the company, individually or jointly,

shall forthwith refer to the Shareholders’ Committee any matter of

which they became aware in that capacity which is a breach, or a

wilfully intended breach, of the criminal law, of obligations under

legislation, including this Act, or of fiduciary relationships owed to the


company or to its members being a matter of concern to members of the

company as members.


The company shall make available to the Shareholders’ Committee the

means to communicate with shareholders on relevant matters with the

same regularity and on the same basis as the directors.



The company shall provide, upon request by the Shareholders’

Committee, its company secretary, or a suitably qualified substitute, to

act as secretary to the committee.


The company shall the cost of reasonable administrative expenses

incurred by the Shareholders’ Committee.”



In section 416 (contents of directors’ report: general) after subsection (3)



The report must include reference to matters arising from time to time

in and in connection with the Shareholders’ Committee.”


After Schedule 5 insert the following Schedule—


“Schedule 5A

Proceedings of Shareholders’ Committee


The committee shall meet at such times as it may from time to time

appoint and, failing such appointment, at least once a quarter; and


Protection of Shareholders Bill



any member of the committee may also call a meeting of the

committee as and when he thinks necessary.


The committee may act by a majority of its members present at a

meeting, but shall not act unless a majority of the committee are

present and the committee shall elect a chairman from among its




A member of the committee may resign by notice in writing signed

by him and delivered to the secretary of the company.


If a member of the committee becomes bankrupt or compounds or

arranges with his creditors or is absent from five consecutive


meetings of the committee without leave of the committee his office

thereupon becomes vacant.

5     (1)  

On a vacancy occurring in the committee the secretary of the

company shall forthwith summon a meeting of the committee to fill

the vacancy; and the meeting may, by resolution, appoint another


member to fill the vacancy until the next meeting under section



The continuing members of the committee, if not fewer than two,

may act notwithstanding any vacancy in the committee.”


Citation and commencement



This Act may be cited as the Protection of Shareholders Act 2009.


This Act shall come into force six months after the date on which it is passed.



Protection of Shareholders Bill




To Make provision for each public company to establish a shareholders’

committee; to make provision about the membership, functions and operation

of the committee; and for connected purposes.  


Presented by Mr William Cash


supported by Mr Frank Field.


Ordered, by The House of Commons,


to be Printed, 17 March 2009.


© Parliamentary copyright House of Commons 2009


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Bill 76(xxxxxx)54/4



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Revised 18 March 2009