Company Law Reform Bill [HL]

House of Lords

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL]

Company Law Reform Bill [HL]
Part 11 — Derivative claims and proceedings by members
Chapter 2 — Derivative proceedings in Scotland
115

(ii)
ratified by the company after it occurs,
(d)
where the cause of action is an act or omission that has already
occurred, whether the act or omission could be, and in the
circumstances would be likely to be, ratified by the company,
(e)
whether the company has decided not to raise proceedings in respect of
5
the same cause of action or to persist in the proceedings (as the case
may be),
(f)
whether the cause of action is one which the member could pursue in
his own right rather than on behalf of the company.
(3)
In considering whether to grant leave to raise derivative proceedings or an
10
application under section 247, the court shall have particular regard to any
evidence before it as to the views of members of the company who have no
personal interest, direct or indirect, in the matter.
(4)
The Secretary of State may by regulations—
(a)
amend subsection (1) so as to alter or add to the circumstances in which
15
leave or an application is to be refused,
(b)
amend subsection (2) so as to alter or add to the matters that the court
is required to take into account in considering whether to grant leave or
an application.
(5)
Before making any such regulations the Secretary of State shall consult such
20
persons as he considers appropriate.
(6)
Regulations under this section are subject to affirmative resolution procedure.
249
Application by member to be substituted for member pursuing derivative
proceedings
(1)
This section applies where a member of a company (“the claimant”)—
25
(a)
has raised derivative proceedings,
(b)
has continued as derivative proceedings proceedings raised by the
company, or
(c)
has continued derivative proceedings under this section.
(2)
Another member of the company (“the applicant”) may apply to the court to be
30
substituted for the claimant in the action on the ground that—
(a)
the manner in which the proceedings have been commenced or
continued by the claimant amounts to an abuse of the process of the
court,
(b)
the claimant has failed to prosecute the proceedings diligently, and
35
(c)
it is appropriate for the applicant to be substituted for the claimant in
the proceedings.
(3)
If it appears to the court that the application and the evidence produced by the
applicant in support of it do not disclose a prima facie case for granting it, the
court—
40
(a)
must refuse the application, and
(b)
may make any consequential order it considers appropriate.
(4)
If the application is not refused under subsection (3)—
(a)
the applicant must serve the application on the company,
(b)
the court—
45

Company Law Reform Bill [HL]
Part 12 — Company secretaries
116

(i)
may make an order requiring evidence to be produced by the
company, and
(ii)
may adjourn the proceedings on the application to enable the
evidence to be obtained, and
(c)
the company is entitled to take part in the further proceedings on the
5
application.
(5)
On hearing the application, the court may—
(a)
grant the application on such terms as it thinks fit,
(b)
refuse the application, or
(c)
adjourn the proceedings on the application and make such order as to
10
further procedure as it thinks fit.
Part 12
Company secretaries
General
250
Private company not required to have secretary
15
(1)
A private company is not required to have a secretary.
(2)
In the case of a private company—
(a)
anything authorised or required to be given or sent to, or served on, the
company by being sent to its secretary—
(i)
may be given or sent to, or served on, the company itself, and
20
(ii)
if addressed to the secretary shall be treated as addressed to the
company; and
(b)
anything else required or authorised to be done by or to the secretary
of the company may be done by or to—
(i)
a director, or
25
(ii)
a person authorised generally or specifically in that behalf by
the directors.
251
Public company required to have secretary

A public company must have a secretary.
252
Direction requiring public company to appoint secretary
30
(1)
If it appears to the Secretary of State that a public company is in breach of
section 251 (requirement to have secretary), the Secretary of State may give the
company a direction under this section.
(2)
The direction must state that the company appears to be in breach of that
section and specify—
35
(a)
what the company must do in order to comply with the direction, and
(b)
the period within which it must do so.

That period must be not less than one month or more than three months after
the date on which the direction is given.

Company Law Reform Bill [HL]
Part 12 — Company secretaries
117

(3)
The direction must also inform the company of the consequences of failing to
comply.
(4)
Where the company is in breach of section 251 it must comply with the
direction by—
(a)
making the necessary appointment, and
5
(b)
giving notice of it under section 256,

before the end of the period specified in the direction.
(5)
If the company has already made the necessary appointment, it must comply
with the direction by giving notice of it under section 256 before the end of the
period specified in the direction.
10
(6)
If a company fails to comply with a direction under this section, an offence is
committed by—
(a)
the company, and
(b)
every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the company.
15
(7)
A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 5 on the standard scale and, for
continued contravention, a daily default fine not exceeding one-tenth of level
5 on the standard scale.
Provisions applying to secretaries of public companies
20
253
Qualifications of secretaries of public companies
(1)
It is the duty of the directors of a public company to take all reasonable steps
to secure that the secretary (or each joint secretary) of the company—
(a)
is a person who appears to them to have the requisite knowledge and
experience to discharge the functions of secretary of the company, and
25
(b)
has one or more of the following qualifications.
(2)
The qualifications are—
(a)
that he has held the office of secretary of a public company for at least
three of the five years immediately preceding his appointment as
secretary;
30
(b)
that he is a member of any of the bodies specified in subsection (3);
(c)
that he is a barrister, advocate or solicitor called or admitted in any part
of the United Kingdom;
(d)
that he is a person who, by virtue of his holding or having held any
other position or his being a member of any other body, appears to the
35
directors to be capable of discharging the functions of secretary of the
company.
(3)
The bodies referred to in subsection (2)(b) are—
(a)
the Institute of Chartered Accountants in England and Wales;
(b)
the Institute of Chartered Accountants of Scotland;
40
(c)
the Association of Chartered Certified Accountants;
(d)
the Institute of Chartered Accountants in Ireland;
(e)
the Institute of Chartered Secretaries and Administrators;
(f)
the Chartered Institute of Management Accountants;

Company Law Reform Bill [HL]
Part 12 — Company secretaries
118

(g)
the Chartered Institute of Public Finance and Accountancy.
254
Discharge of functions where office vacant or secretary unable to act

Where in the case of a public company the office of secretary is vacant, or there
is for any other reason no secretary capable of acting, anything required or
authorised to be done by or to the secretary may be done—
5
(a)
by or to an assistant or deputy secretary (if any), or
(b)
if there is no assistant or deputy secretary or none capable of acting, by
or to any person authorised generally or specially in that behalf by the
directors.
255
Duty to keep register of secretaries
10
(1)
A public company must keep a register of its secretaries.
(2)
The register—
(a)
must contain the required particulars (see sections 257 to 259) of the
person who is, or persons who are, the secretary or joint secretaries of
the company, and
15
(b)
must be kept available for inspection at the company’s registered office.
(3)
The register must be open to the inspection—
(a)
of any member of the company without charge, and
(b)
of any other person on payment of such fee as may be prescribed.
(4)
If default is made in complying with subsection (1) or (2), or if an inspection
20
required under this section is refused, an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the company.
(5)
A person guilty of an offence under this section is liable on summary
25
conviction to a fine not exceeding level 5 on the standard scale and, for
continued contravention, a daily default fine not exceeding one-tenth of level
5 on the standard scale.
(6)
In the case of a refusal of inspection of the register, the court may by order
compel an immediate inspection of it.
30
256
Duty to notify registrar of changes
(1)
A public company must, within the period of 14 days from the occurrence of—
(a)
any change in its secretary, or
(b)
any change in the particulars contained in its register of secretaries,

give notice to the registrar of the change and of the date on which it occurred.
35
(2)
Notice of a person having become secretary, or one of joint secretaries, of the
company must be accompanied by a consent by that person to act in the
relevant capacity.
(3)
If default is made in complying with this section, an offence is committed by
every officer of the company who is in default.
40

For this purpose a shadow director is treated as an officer of the company.

Company Law Reform Bill [HL]
Part 12 — Company secretaries
119

(4)
A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 5 on the standard scale and, for
continued contravention, a daily default fine not exceeding one-tenth of level
5 on the standard scale.
Supplementary
5
257
Particulars of secretaries to be registered: individuals
(1)
A public company’s register of secretaries must contain the following
particulars in the case of an individual—
(a)
name and any former name;
(b)
address.
10
(2)
For the purposes of this section “name” means a person’s Christian name (or
other forename) and surname, except that in the case of—
(a)
a peer, or
(b)
an individual usually known by a title,

the title may be stated instead of his Christian name (or other forename) and
15
surname or in addition to either or both of them.
(3)
For the purposes of this section a “former name” means a name by which the
individual was formerly known for business purposes.

Where a person is or was formerly known by more than one such name, each
of them must be stated.
20
(4)
It is not necessary for the register to contain particulars of a former name in the
following cases—
(a)
in the case of a peer or an individual normally known by a British title,
where the name is one by which the person was known previous to the
adoption of or succession to the title;
25
(b)
in the case of any person, where the former name—
(i)
was changed or disused before the person attained the age of 18
years, or
(ii)
has been changed or disused for 20 years or more.
(5)
The address required to be stated in the register is a service address.
30

This may be stated to be “The company’s registered office”.
258
Particulars of secretaries to be registered: corporate secretaries and firms
(1)
A public company’s register of secretaries must contain the following
particulars in the case of a body corporate, or a firm that is a legal person under
the law by which it is governed—
35
(a)
corporate or firm name;
(b)
registered or principal office;
(c)
in the case of an EEA company to which the First Company Law
Directive applies, particulars of—
(i)
the register in which the company file mentioned in Article 3 of
40
that Directive is kept (including details of the relevant state),
and
(ii)
the registration number in that register;
(d)
in any other case, particulars of—

Company Law Reform Bill [HL]
Part 13 — Resolutions and meetings
Chapter 1 — General provisions about resolutions
120

(i)
the legal form of the company or firm and the law by which it is
governed, and
(ii)
if applicable, the register in which it is entered (including details
of the state) and its registration number in that register.
(2)
If all the partners in a firm are joint secretaries it is sufficient to state the
5
particulars that would be required if the firm were a legal person and the firm
had been appointed secretary.
259
Particulars of secretaries to be registered: power to make regulations
(1)
The Secretary of State may make provision by regulations amending—
section 257 (particulars of secretaries to be registered: individuals), or
10
section 258 (particulars of secretaries to be registered: corporate
secretaries and firms),

so as to add to or remove items from the particulars required to be contained
in a public company’s register of secretaries.
(2)
Regulations under this section are subject to affirmative resolution procedure.
15
260
Acts done by person in dual capacity

In the case of a public company, a provision requiring or authorising a thing to
be done by or to a director and the secretary of a company is not satisfied by its
being done by or to the same person acting both as director and as, or in place
of, the secretary.
20
Part 13
Resolutions and meetings
Chapter 1
General provisions about resolutions
261
Resolutions
25
(1)
A resolution of the members (or of a class of members) of a private company
must be passed—
(a)
as a written resolution in accordance with Chapter 2 of this Part, or
(b)
at a meeting of the members (to which the provisions of Chapter 3 of
this Part apply).
30
(2)
A resolution of the members (or of a class of members) of a public company
must be passed at a meeting of the members (to which the provisions of
Chapter 3 and, where relevant, Chapter 4 of this Part apply).
(3)
Nothing in this Part affects any enactment or rule of law as to—
(a)
things done otherwise than by passing a resolution,
35
(b)
circumstances in which a resolution is or is not treated as having been
passed, or
(c)
cases in which a person is precluded from alleging that a resolution has
not been duly passed.