The Companies (Northern Ireland) Order 1986 (revoked)

CHAPTER VF3 N.I. MAINTENANCE OF CAPITAL

F3 Order repealed (prosp.) by Companies Act 2006 (c. 46), ss. 1284(2), 1295, 1300(2), Sch. 16 and the repeal being partly in force, as to which see individual Articles (with savings (with adaptations) by Companies Act 2006 (Commencement No. 6, Saving and Commencement Nos. 3 and 5 (Amendment)) Order 2008 (S.I. 2008/674), arts. 2(3), {4}, Sch. 2) and subject to amendments (6.4.2008) by Companies Act 2006 (Consequential Amendments etc) Order 2008 (S.I. 2008/948), arts. 2(2), 3(1)(b)(2), Sch. 1 paras. 135, 147, 148 {Sch. 2 Note 1} (with arts. 6, 11, 12) and subject to amendments (6.4.2008) by S.R. 2008/133, {regs. 2, 3}

Duty of directors on serious loss of capital N.I.

152.—(1) Where the net assets of a public company are half or less of its called-up share capital, the directors shall, not later than 28 days from the earliest day on which that fact is known to a director of the company, duly convene an extraordinary general meeting of the company for a date not later than 56 days from that day for the purpose of considering whether any, and if so what, steps should be taken to deal with the situation.

(2) In paragraph (1), “net assets” means the aggregate of the company's assets less the aggregate of its liabilities ( “liabilities” to include any provision for liabilities or charges within paragraph 88 of Schedule 4).

(3) If there is a failure to convene an extraordinary general meeting as required by paragraph (1), each of the directors of the company who—

(a) knowingly and wilfully authorises or permits the failure, or

(b) after the expiry of the period during which that meeting should have been convened, knowingly and wilfully authorises or permits the failure to continue,

is liable to a fine.

(4) Nothing in this Article authorises the consideration, at a meeting convened in pursuance of paragraph (1), of any matter which could not have been considered at that meeting apart from this Article.

General rule against company acquiring own shares N.I.

153.—(1) Subject to the following provisions, a company limited by shares or limited by guarantee and having a share capital shall not acquire its own shares, whether by purchase, subscription or otherwise.

(2) If a company purports to act in contravention of this Article, the company is liable to a fine, and every officer of the company who is in default is liable to imprisonment or a fine, or both; and[F1 , subject to paragraph (2A),] the purported acquisition is void.

[F1 (2A) Where a company purchases qualifying shares out of distributable profits under Article 172, any contravention by the company of any provision of Article 172B(1) or (2) shall not render the acquisition void under paragraph (2).]

(3) A company limited by shares may acquire any of its own fully paid shares otherwise than for valuable consideration; and paragraph (1) does not apply in relation to—

(a) the redemption or purchase of shares in accordance with Chapter VII,

(b) the acquisition of shares in a reduction of capital duly made,

(c) the purchase of shares in pursuance of an order of the court under Article 16 (alteration of objects), Article 64 (litigated objection to resolution for company to be re-registered as private) or Part XVIII (relief to members unfairly prejudiced), or

(d) the forfeiture of shares, or the acceptance of shares surrendered in lieu, in pursuance of the company's articles, for failure to pay any sum payable in respect of the shares.

F1 SR 2004/275

Acquisition of shares by company's nominee N.I.

154.—(1) Subject to Article 155, where shares are issued to a nominee of a company mentioned in Article 153(1), or are acquired by a nominee of such a company from a third person as partly paid up, then, for all purposes—

(a) the shares are to be treated as held by the nominee on his own account; and

(b) the company is to be regarded as having no beneficial interest in them.

(2) Subject to that Article, if a person is called on to pay any amount for the purpose of paying up, or paying any premium on, any shares in such a company which were issued to him, or which he otherwise acquired, as the company's nominee and he fails to pay that amount within 21 days from being called on to do so, then—

(a) if the shares were issued to him as subscriber to the memorandum by virtue of an undertaking of his in the memorandum, the other subscribers to the memorandum, or

(b) if the shares were otherwise issued to or acquired by him, the directors of the company at the time of the issue or acquisition,

are jointly and severally liable with him to pay that amount.

(3) If in proceedings for the recovery of any such amount from any such subscriber or director under this Article it appears to the court—

(a) that he is or may be liable to pay that amount, but

(b) that he has acted honestly and reasonably and, having regard to all the circumstances of the case, he ought fairly to be excused from liability,

the court may relieve him, either wholly or partly, from his liability on such terms as the court thinks fit.

(4) Where any such subscriber or director has reason to apprehend that a claim will or might be made for the recovery of any such amount from him, he may apply to the court for relief; and the court has the same power to relieve him as it would have had in proceedings for the recovery of that amount.

Exceptions from Article 154 N.I.

155.—(1) Article 154(1) does not apply to shares acquired otherwise than by subscription by a nominee of a public company, where a person acquires shares in the company with financial assistance given to him directly or indirectly by the company for the purpose of or in connection with the acquisition and the company has a beneficial interest in the shares.

(2) Article 154(1) and (2) does not apply—

(a) to shares acquired by a nominee of a company when the company has no beneficial interest in those shares, or

(b) to shares issued in consequence of an application made before 1st July 1983, or transferred in pursuance of an agreement to acquire them made before that date.

(3) Schedule 2 has effect for the interpretation of references in this Article to a company having, or not having, a beneficial interest in shares.

Treatment of shares held by or for public company N.I.

156.—(1) Except as provided by Article 158, the following applies to a public company—

(a) where shares in the company are forfeited, or surrendered to the company in lieu, in pursuance of its articles, for failure to pay any sum payable in respect of the shares;

[F2 (aa) where shares in the company are surrendered to the company in pursuance of section 102C(1)(b) of the Building Societies Act 1986;]

(b) where shares in the company are acquired by it (otherwise than by any of the methods mentioned in Article 153 (3)(a) to (d)) and the company has a beneficial interest in the shares;

(c) where the nominee of the company acquires shares in the company from a third person without financial assistance being given directly or indirectly by the company and the company has a beneficial interest in the shares; or

(d) where a person acquires shares in the company with financial assistance given to him directly or indirectly by the company for the purpose of or in connection with the acquisition, and the company has a beneficial interest in the shares.

Schedule 2 has effect for the interpretation of references in this paragraph to the company having a beneficial interest in shares.

(2) Unless the shares or any interest of the company in them are previously disposed of, the company must, not later than the end of the relevant period from their forfeiture or surrender or, in a case within paragraph (1)(b), (c) or (d), their acquisition—

(a) cancel them and diminish the amount of the share capital by the nominal value of the shares cancelled; and

(b) where the effect of cancelling the shares will be that the nominal value of the company's allotted share capital is brought below the authorised minimum, apply for re-registration as a private company, stating the effect of the cancellation.

(3) For this purpose “the relevant period” is—

(a) 3 years in the case of shares forfeited or surrendered to the company in lieu of forfeiture, or acquired as mentioned in paragraph (1)(b) or (c);

(b) one year in the case of shares acquired as mentioned in paragraph (1)(d).

(4) The company and, in a case within paragraph (1)(c) or (d), the company's nominee or (as the case may be) the other shareholder must not exercise any voting rights in respect of the shares; and any purported exercise of those rights is void.

F2 1997 c. 41

Matters arising out of compliance with Article 156(2) N.I.

157.—(1) The directors may take such steps as are requisite to enable the company to carry out its obligations under Article 156(2) without complying with Articles 145 and 146 (resolution to reduce share capital; application to court for approval).

(2) The steps taken may include the passing of a resolution to alter the company's memorandum so that it no longer states that the company is to be a public company; and the resolution may make such other alterations in the memorandum as are requisite in the circumstances.

Such a resolution is subject to Article 388 (copy to be forwarded to registrar within 15 days).

(3) The application for re-registration required by Article 156(2)(b) must be in the prescribed form and be signed by a director or secretary of the company, and must be delivered to the registrar together with a printed copy of the memorandum and articles of the company as altered by the resolution.

(4) If the registrar is satisfied that the company may be re-registered under Article 156, he shall retain the application and other documents delivered with it and issue the company with a certificate of incorporation appropriate to a company that is not a public company; and—

(a) the company by virtue of the issue of the certificate becomes a private company, and the alterations in the memorandum and articles set out in the resolution take effect accordingly, and

(b) the certificate is conclusive evidence that the requirements of Articles 156 to 158 in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company is a private company.

Further provisions supplementing Articles 156 and 157 N.I.

158.—(1) Where, after shares in a private company—

(a) are forfeited in pursuance of the company's articles or are surrendered to the company in lieu of forfeiture, or

(b) are acquired by the company (otherwise than by such surrender or forfeiture, and otherwise than by any of the methods mentioned in Article 153(3)), the company having a beneficial interest in the shares, or

(c) are acquired by the nominee of a company in the circumstances mentioned in Article 156(1)(c), or

(d) are acquired by any person in the circumstances mentioned in Article 156(1)(d),

the company is re-registered as a public company, Articles 156 and 157, and also Article 159, apply to the company as if it had been a public company at the time of the forfeiture, surrender or acquisition, but with the modification required by paragraph (2).

(2) That modification is to treat any reference to the relevant period from the forfeiture, surrender or acquisition as referring to the relevant period from the re-registration of the company as a public company.

(3) Schedule 2 has effect for the interpretation of the reference in paragraph (1)(b) to the company having a beneficial interest in shares.

(4) Where a public company or a nominee of a public company acquires shares in the company or an interest in such shares, and those shares are or that interest is shown in a balance sheet of the company as an asset, an amount equal to the value of the shares or (as the case may be) the value to the company of its interest in them shall be transferred out of profits available for dividend to a reserve fund and shall not then be available for distribution.

Sanctions for non-compliance N.I.

159.—(1) If a public company required by paragraph (2) of Article 156 to apply to be re-registered as a private company fails to do so before the end of the relevant period referred to in that paragraph, Article 91 (restriction on public offers) applies to it as if it were a private company such as is mentioned in that Article; but, subject to this, the company continues to be treated for the purposes of this Order as a public company until it is so re-registered.

(2) If a company when required to do so by paragraph (2) of Article 156 (including that paragraph as applied by Article 158(1)) fails to cancel any shares in accordance with sub-paragraph (a) of that paragraph or to make an application for re-registration in accordance with sub-paragraph (b) of that paragraph, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.

Charges of public companies on own shares N.I.

160.—(1) A lien or other charge of a public company on its own shares (whether taken expressly or otherwise), except a charge permitted by any of the following paragraphs, is void.

This is subject to Article 8 of the Consequential Provisions Order (saving for charges of old public companies on their own shares).

(2) In the case of any description of company, a charge on its own shares is permitted if the shares are not fully paid and the charge is for any amount payable in respect of the shares.

(3) In the case of a company whose ordinary business—

(a) includes the lending of money, or

(b) consists of the provision of credit or the bailment of goods under a hire purchase agreement, or both,

a charge of the company on its own shares is permitted (whether the shares are fully paid or not) if it arises in connection with a transaction entered into by the company in the ordinary course of its business.

(4) In the case of a company which is re-registered or is registered under Article 629 as a public company, a charge on its own shares is permitted if the charge was in existence immediately before the company's application for re-registration or (as the case may be) registration.

This paragraph does not apply in the case of such a company as is referred to in Article 8(3) of the Consequential Provisions Order (old public company remaining such after 31st December 1984 not having applied to be re-registered as a public company).