- Latest available (Revised)
- Point in Time (13/02/2004)
- Original (As enacted)
Version Superseded: 01/10/2007
Point in time view as at 13/02/2004.
Companies Act 1985,
Part XA is up to date with all changes known to be in force on or before 15 August 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
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Modifications etc. (not altering text)
C1Pt. XA (ss. 347A-347K) applied (16.2.2001) by S.I. 1985/680, Sch. (as inserted (16.2.2001) by S.I. 2001/86, reg. 2)
(1)This Part has effect for controlling—
(a)contributions and other donations made by companies to registered parties and other EU political organisations; and
(b)EU political expenditure incurred by companies.
(2)The following provisions have effect for the purposes of this Part, but subsections (4) and (7) have effect subject to section 347B.
(3)“Director” includes shadow director.
(4)“Donation”, in relation to an organisation, means anything that would constitute a donation for the purposes of Part IV of the Political Parties, Elections and Referendums Act 2000 in accordance with sections 50 to 52 of that Act (references in those sections to a registered party being read as applying equally to an organisation which is not such a party); and—
(a)subsections (3) to (8) of section 50 of that Act shall apply, with any necessary modifications, for the purpose of determining whether something is a donation to an organisation for the purposes of this Part as they apply for the purpose of determining whether something is a donation to a registered party for the purposes of Part IV of that Act; and
(b)section 53 of that Act shall similarly apply for the purpose of determining, for the purposes of this Part, the value of any donation.
(5)“EU political expenditure”, in relation to a company, means any expenditure incurred by the company—
(a)in respect of the preparation, publication or dissemination of any advertising or any other promotional or publicity material—
(i)of whatever nature, and
(ii)however published or otherwise disseminated,
which, at the time of publication or dissemination, is capable of being reasonably regarded as intended to affect public support for any EU political organisation, or
(b)in respect of any activities on the part of the company such as are mentioned in subsection (7)(b) or (c).
(6)“EU political organisation” means—
(a)a registered party; or
(b)any other organisation to which subsection (7) applies.
(7)This subsection applies to an organisation if—
(a)it is a political party which carries on, or proposes to carry on, activities for the purpose of or in connection with the participation of the party in any election or elections to public office held in a member State other than the United Kingdom;
(b)it carries on, or proposes to carry on, activities which are capable of being reasonably regarded as intended to affect public support for—
(i)any registered party,
(ii)any other political party within paragraph (a), or
(iii)independent candidates at any election or elections of the kind mentioned in that paragraph; or
(c)it carries on, or proposes to carry on, activities which are capable of being reasonably regarded as intended to influence voters in relation to any national or regional referendum held under the law of any member State.
(8)“Organisation” includes any body corporate and any combination of persons or other unincorporated association.
(9)“Registered party” means a party registered under Part II of the Political Parties, Elections and Referendums Act 2000.
(10)“The relevant time”, in relation to any donation or expenditure made or incurred by a company or subsidiary undertaking, means—
(a)the time when the donation or expenditure is made or incurred; or
(b)if earlier, the time when any contract is entered into by the company or undertaking in pursuance of which the donation or expenditure is made or incurred.
(11)“Subsidiary undertaking” has the same meaning as in Part VII.
Textual Amendments
F1Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
(1)Section 347A(4) does not extend to a subscription paid to an EU trade association for membership of the association, and accordingly such a payment is not a donation to the association for the purposes of this Part.
(2)In subsection (1)—
“EU trade association” means any organisation formed for the purpose of furthering the trade interests—
of its members, or
of persons represented by its members,
which carries on its activities wholly or mainly in one or more of the member States;
“subscription”, in relation to a trade association, does not include any payment to the association to the extent that it is made for the purpose of financing any particular activity of the association.
(3)Section 347A(7) does not apply to any all-party parliamentary group composed of members of one or both of the Houses of Parliament (or of such members and other persons), and accordingly any such group is not an EU political organisation for the purposes of this Part.
(4)For the purposes of this Part—
(a)a company does not need to be authorised as mentioned in section 347C(1) or section 347D(2) or (3), and
(b)a subsidiary undertaking does not need to be authorised as mentioned in section 347E(2),
in connection with any donation or donations to any EU political organisation or organisations made in a particular qualifying period, except to the extent (if any) that the amount or aggregate amount of any such donation or donations made in that period exceeds £5,000.
(5)The restrictions imposed by sections 347C(1), 347D(2) and (3) and 347E(2) accordingly have effect subject to subsection (4); and, where a resolution is passed for the purposes of any of those provisions, any amount of donations in relation to which, by virtue of subsection (4), no authorisation is needed shall accordingly not count towards the sum specified in the resolution.
(6)In subsection (4) “qualifying period” means—
(a)the period of 12 months beginning with the relevant date for the company or (in the case of a subsidiary undertaking) the parent company; and
(b)each succeeding period of twelve months.
(7)For the purposes of subsection (6) the relevant date for a company is—
(a)if an annual general meeting of the company is held within the period of 12 months beginning with the date of the coming into force of this section, the date of that meeting; and
(b)otherwise, the date immediately following the end of that period.
(8)For the purposes of this Part—
(a)a company does not need to be authorised as mentioned in section 347C(1) or section 347D(2) or (3), and
(b)a subsidiary undertaking does not need to be authorised as mentioned in section 347E(2),
in connection with any EU political expenditure in relation to which an exemption is conferred on the company or (as the case may be) subsidiary undertaking by virtue of an order made by the Secretary of State by statutory instrument.
(9)The restrictions imposed by sections 347C(1), 347D(2) and (3) and 347E(2) accordingly have effect subject to subsection (8); and, where a resolution is passed for the purposes of any of those provisions, any amount of EU political expenditure in relation to which, by virtue of subsection (8), no authorisation is needed shall accordingly not count towards the sum specified in the resolution.
(10)An order under subsection (8) may confer an exemption for the purposes of that subsection in relation to—
(a)companies or subsidiary undertakings of any description or category specified in the order, or
(b)expenditure of any description or category so specified (whether framed by reference to goods, services or other matters in respect of which such expenditure is incurred or otherwise),
or both.
(11)An order shall not be made under subsection (8) unless a draft of the statutory instrument containing the order has been laid before and approved by each House of Parliament.
Textual Amendments
F2Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
(1)A company must not—
(a)make any donation to any registered party or to any other EU political organisation, or
(b)incur any EU political expenditure,
unless the donation or expenditure is authorised by virtue of an approval resolution passed by the company in general meeting before the relevant time.
This subsection has effect subject to section 347D(3).
(2)For the purposes of this section an approval resolution is a qualifying resolution which authorises the company to do either (or both) of the following, namely—
(a)make donations to EU political organisations not exceeding in total a sum specified in the resolution, or
(b)incur EU political expenditure not exceeding in total a sum so specified,
during the requisite period beginning with the date of the resolution.
(3)In subsection (2)—
(a)“qualifying resolution” means an ordinary resolution or, if the directors so determine or the articles so require—
(i)a special resolution, or
(ii)a resolution passed by any percentage of the members greater than that required for an ordinary resolution;
(b)“the requisite period” means four years or such shorter period as the directors may determine or the articles may require;
and the directors may make a determination for the purposes of paragraph (a) or (b) above except where any provision of the articles operates to prevent them from doing so.
(4)The resolution must be expressed in general terms conforming with subsection (2), and accordingly may not purport to authorise particular donations or expenditure.
(5)Where a company makes any donation or incurs any expenditure in contravention of subsection (1), no ratification or other approval made or given by the company or its members after the relevant time is capable of operating to nullify that contravention.
(6)Nothing in this section enables a company to be authorised to do anything that it could not lawfully do apart from this section.
Textual Amendments
F3Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
Modifications etc. (not altering text)
C2S. 347C(1) restricted (16.2.2001) by S.I. 2001/445, art. 2
(1)This section applies where a company is a subsidiary of another company (“the holding company”).
(2)Where the subsidiary is not a wholly-owned subsidiary of the holding company—
(a)it must not make any donation or incur any expenditure to which subsection (1) of section 347C applies unless the donation or expenditure is authorised by virtue of a subsidiary approval resolution passed by the holding company in general meeting before the relevant time; and
(b)this requirement applies in addition to that imposed by that subsection.
(3)Where the subsidiary is a wholly-owned subsidiary of the holding company—
(a)it must not make any donation or incur any expenditure to which subsection (1) of section 347C applies unless the donation or expenditure is authorised by virtue of a subsidiary approval resolution passed by the holding company in general meeting before the relevant time; and
(b)this requirement applies in place of that imposed by that subsection.
(4)For the purposes of this section a subsidiary approval resolution is a qualifying resolution of the holding company which authorises the subsidiary to do either (or both) of the following, namely—
(a)make donations to EU political organisations not exceeding in total a sum specified in the resolution, or
(b)incur EU political expenditure not exceeding in total a sum so specified,
during the requisite period beginning with the date of the resolution.
(5)Subsection (3) of section 347C shall apply for the purposes of subsection (4) above as it applies for the purposes of subsection (2) of that section.
(6)The resolution must be expressed in general terms conforming with subsection (4), and accordingly may not purport to authorise particular donations or expenditure.
(7)The resolution may not relate to donations or expenditure by more than one subsidiary.
(8)Where a subsidiary makes any donation or incurs any expenditure in contravention of subsection (2) or (3), no ratification or other approval made or given by the holding company or its members after the relevant time is capable of operating to nullify that contravention.
(9)Nothing in this section enables a company to be authorised to do anything that it could not lawfully do apart from this section.
Textual Amendments
F4Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
Modifications etc. (not altering text)
C3S. 347D(2)(3) restricted (16.2.2001) by S.I. 2001/445, art. 2
(1)This section applies where a company (“the parent company”) has a subsidiary undertaking which is incorporated or otherwise established outside Great Britain.
(2)The parent company shall take all such steps as are reasonably open to it to secure that the subsidiary undertaking does not make any donation or incur any expenditure to which subsection (1) of section 347C applies except to the extent that the donation or expenditure is authorised by virtue of a subsidiary approval resolution passed by the parent company in general meeting before the relevant time.
(3)For the purposes of this section a subsidiary approval resolution is a qualifying resolution of the parent company which authorises the subsidiary undertaking to do either (or both) of the following, namely—
(a)make donations to EU political organisations not exceeding in total a sum specified in the resolution, or
(b)incur EU political expenditure not exceeding in total a sum so specified,
during the requisite period beginning with the date of the resolution.
(4)Subsection (3) of section 347C shall apply for the purposes of subsection (3) above as it applies for the purposes of subsection (2) of that section.
(5)The resolution must be expressed in general terms conforming with subsection (3), and accordingly may not purport to authorise particular donations or expenditure.
(6)The resolution may not relate to donations or expenditure by more than one subsidiary undertaking.
(7)Where a subsidiary undertaking makes any donation or incurs any expenditure which (to any extent) is not authorised as mentioned in subsection (2), no ratification or other approval made or given by the parent company or its members after the relevant time is capable of operating to authorise that donation or expenditure.
Textual Amendments
F5Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
Modifications etc. (not altering text)
C4S. 347E(2) restricted (16.2.2001) by S.I. 2001/445, art. 2
(1)This section applies where a company has made any donation or incurred any expenditure in contravention of any of the provisions of sections 347C and 347D.
(2)Every person who was a director of the company at the relevant time is liable to pay the company—
(a)the amount of the donation or expenditure made or incurred in contravention of the provisions in question; and
(b)damages in respect of any loss or damage sustained by the company as a result of the donation or expenditure having been made or incurred in contravention of those provisions.
(3)Every such person is also liable to pay the company interest on the amount mentioned in subsection (2)(a) in respect of the period—
(a)beginning with the date when the donation or expenditure was made or incurred, and
(b)ending with the date when that amount is paid to the company by any such person;
and such interest shall be payable at such rate as the Secretary of State may prescribe by regulations.
(4)Where two or more persons are subject to a particular liability arising by virtue of any provision of this section, each of those persons is jointly and severally liable.
(5)Where only part of any donation or expenditure was made or incurred in contravention of any of the provisions of sections 347C and 347D, this section applies only to so much of it as was so made or incurred.
(6)Where—
(a)this section applies as mentioned in subsection (1), and
(b)the company in question is a subsidiary of another company (“the holding company”),
then (subject to subsection (7)) subsections (2) to (5) shall, in connection with the donation or expenditure made or incurred by the subsidiary, apply in relation to the holding company as they apply in relation to the subsidiary.
(7)Those subsections do not apply in relation to the holding company if—
(a)the subsidiary is not a wholly-owned subsidiary of the holding company; and
(b)the donation or expenditure was authorised by such a resolution of the holding company as is mentioned in section 347D(2)(a).
(8)Nothing in section 727 shall apply in relation to any liability of any person arising under this section.
Textual Amendments
F6Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
(1)This section applies where—
(a)a company (“the parent company”) has a subsidiary undertaking falling within subsection (1) of section 347E;
(b)the subsidiary undertaking has made any donation or incurred any expenditure to which subsection (1) of section 347C applies; and
(c)the parent company has, in relation to that donation or expenditure, failed to discharge its duty under subsection (2) of section 347E to take all such steps as are mentioned in that subsection.
(2)Subsections (2) to (4) of section 347F shall, in connection with the donation or expenditure made or incurred by the subsidiary undertaking, apply in relation to the holding company as if—
(a)it were a company falling within subsection (1) of that section, and
(b)the donation or expenditure had been made or incurred by it in contravention of section 347C or 347D.
(3)Where only part of the donation or expenditure was not authorised as mentioned in section 347E(2), those subsections shall so apply only to that part of it.
(4)Section 347F(8) applies to any liability of any person arising under section 347F by virtue of this section.
Textual Amendments
F7Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
(1)Where proceedings are brought against a director or former director of a company in respect of any liability arising under section 347F(2)(a) in connection with a donation or expenditure made or incurred by the company, it shall be a defence for that person to show that—
(a)the unauthorised amount has been repaid to the company, together with any interest on that amount due under section 347F(3);
(b)that repayment has been approved by the company in general meeting; and
(c)in the notice of the relevant resolution submitted to that meeting full disclosure was made—
(i)of the circumstances in which the donation or expenditure was made or incurred in contravention of section 347C or 347D, and
(ii)of the circumstances in which, and the person or persons by whom, the repayment was made.
(2)Where proceedings are brought against a director or former director of a holding company in respect of any liability arising under section 347F(2)(a) in connection with a donation or expenditure made or incurred by a subsidiary of the company, it shall be a defence for that person to show that—
(a)the unauthorised amount has been repaid either to the subsidiary or to the holding company, together with any interest on that amount due under section 347F(3);
(b)that repayment has been approved—
(i)(if made to the subsidiary) by both the subsidiary and the holding company in general meeting, or
(ii)(if made to the holding company) by the holding company in general meeting; and
(c)in the notice of the relevant resolution submitted to each of those meetings or (as the case may be) to that meeting, full disclosure was made—
(i)of the circumstances in which the donation or expenditure was made in contravention of section 347D, and
(ii)of the circumstances in which, and the person or persons by whom, the repayment was made.
(3)If the subsidiary is a wholly-owned subsidiary of the holding company, it is not necessary for the purposes of subsection (2) to show (where the repayment was made to the subsidiary) that the repayment has been approved by the subsidiary, and paragraphs (b) and (c) of that subsection shall apply accordingly.
(4)Where proceedings are brought against a director or former director of a holding company in respect of any liability arising under section 347F(2)(a) in connection with a donation or expenditure made or incurred by a subsidiary of the company which is not a wholly-owned subsidiary, then (subject to subsection (5)) it shall be a defence for that person to show that—
(a)proceedings have been instituted by the subsidiary against all or any of its directors in respect of the unauthorised amount; and
(b)those proceedings are being pursued with due diligence by the subsidiary.
(5)A person may not avail himself of the defence provided by subsection (4) except with the leave of the court; and on an application for leave under this subsection the court may make such order as it thinks fit, including an order adjourning, or sanctioning the continuation of, the proceedings against the applicant on such terms and conditions as it thinks fit.
(6)Where proceedings are brought against a director or former director of a company in respect of any liability arising under section 347F(2)(a) (as applied by virtue of section 347G) in connection with a donation or expenditure made or incurred by a subsidiary undertaking of the company, it shall be a defence for that person to show that—
(a)the unauthorised amount has been repaid to the subsidiary undertaking, together with any interest on that amount due under section 347F(3) (as so applied);
(b)that repayment has been approved by the company in general meeting; and
(c)in the notice of the relevant resolution submitted to that meeting full disclosure was made—
(i)of the circumstances in which the donation or expenditure was made without having been authorised as mentioned in section 347E(2), and
(ii)of the circumstances in which, and the person or persons by whom, the repayment was made.
(7)In this section “the unauthorised amount”, in relation to any donation or expenditure, means the amount of the donation or expenditure—
(a)which was made or incurred in contravention of section 347C or 347D, or
(b)which was not authorised as mentioned in section 347E(2),
as the case may be.
Textual Amendments
F8Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
(1)Any liability of any person under section 347F or 347G as a director or former director of a company is (in addition to being enforceable by proceedings brought by the company) enforceable by proceedings brought under this section in the name of the company by an authorised group of members of the company.
(2)For the purposes of this section “authorised group”, in relation to the members of a company, means any such combination of members as is specified in section 54(2)(a), (b) or (c).
(3)An authorised group of members of a company may not bring proceedings under this section unless—
(a)the group has given written notice to the company stating—
(i)the cause of action and a summary of the facts on which the proceedings are to be based,
(ii)the names and addresses of the members of the company comprising the group, and
(iii)the grounds on which it is alleged that those members constitute an authorised group; and
(b)not less than 28 days have elapsed between the date of the giving of the notice to the company and the institution of the proceedings.
(4)Where such a notice is given to a company, any director may apply to the court within the period of 28 days beginning with the date of the giving of the notice for an order directing that the proposed proceedings are not to be instituted.
(5)An application under subsection (4) may be made on one or more of the following grounds—
(a)that the unauthorised amount within the meaning of section 347H has been repaid to the company or subsidiary undertaking as mentioned in subsection (1), (2), (4) or (6) of that section (as the case may be) and the other conditions mentioned in that subsection were satisfied with respect to that repayment;
(b)that proceedings to enforce the liability have been instituted by the company and are being pursued with due diligence by the company;
(c)that the members proposing to institute proceedings under this section do not constitute an authorised group.
(6)Where such an application is made on the ground mentioned in subsection (5)(b), the court may make such order as it thinks fit; and such an order may, as an alternative to directing that the proposed proceedings under this section are not to be instituted, direct—
(a)that those proceedings may be instituted on such terms and conditions as the court thinks fit;
(b)that the proceedings instituted by the company are to be discontinued;
(c)that the proceedings instituted by the company may be continued on such terms and conditions as the court thinks fit.
(7)If proceedings are brought under this section by an authorised group of members of a company, the group shall owe the same duties to the company in relation to the bringing of those proceedings on behalf of the company as would be owed by the directors of the company if the proceedings were being brought by the company itself; but no proceedings to enforce any duty owed by virtue of this subsection shall be brought by the company except with the leave of the court.
(8)Proceedings brought under this section may not be discontinued or settled by the group except with the leave of the court; and the court may grant leave under this subsection on such terms as it thinks fit.
Textual Amendments
F9Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
(1)This section applies in relation to proceedings brought under section 347I by an authorised group of members of a company (“the group”).
(2)The group may apply to the court for an order directing the company to indemnify the group in respect of costs incurred or to be incurred by the group in connection with the proceedings; and on such an application the court may make such an order on such terms as it thinks fit.
(3)The group shall not be entitled to be paid any such costs out of the assets of the company except by virtue of such an order.
(4)If—
(a)the company is awarded costs in connection with the proceedings or it is agreed that costs incurred by the company in connection with the proceedings should be paid by any defendant, and
(b)no order has been made with respect to the proceedings under subsection (2),
the costs shall be paid to the group.
(5)If—
(a)any defendant is awarded costs in connection with the proceedings or it is agreed that any defendant should be paid costs incurred by him in connection with the proceedings, and
(b)no order has been made with respect to the proceedings under subsection (2),
the costs shall be paid by the group.
(6)In the application of this section to Scotland references to costs are to expenses and references to any defendant are to any defender.
Textual Amendments
F10Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
(1)Where any proceedings have been instituted under section 347I by an authorised group within the meaning of that section, the group is entitled to require the company to provide the group with all information relating to the subject matter of the proceedings which is in the company’s possession or under its control or which is reasonably obtainable by it.
(2)If the company, having been required by the group to provide the information referred to in subsection (1), refuses to provide the group with all or any of the information, the court may, on an application made by the group, make an order directing—
(a)the company, and
(b)any of its officers or employees specified in the application,
to provide the group with the information in question in such form and by such means as the court may direct.
Textual Amendments
F11Pt. XA (ss. 347A-347K) inserted (16.2.2001) by 2000 c. 41, s. 139, Sch. 19 (with s. 156(6), Sch. 3 para. 12); S.I. 2001/222, art. 2, Sch. 1 Pt. I (subject to transitional provisions in Sch. 1 Pt. II)
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