(1)The Secretary of State may appoint one or more competent inspectors to investigate the affairs of a company and to report on them in such manner as he may direct.
(2)The appointment may be made—
(a)in the case of a company having a share capital, on the application either of not less than 200 members or of members holding not less than one-tenth of the shares issued,
(b)in the case of a company not having a share capital, on the application of not less than one-fifth in number of the persons on the company’s register of members, and
(c)in any case, on application of the company.
(3)The application shall be supported by such evidence as the Secretary of State may require for the purpose of showing that the applicant or applicants have good reason for requiring the investigation.
(4)The Secretary of State may, before appointing inspectors, require the applicant or applicants to give security, to an amount not exceeding £5,000, or such other sum as he may by order specify, for payment of the costs of the investigation.
An order under this subsection shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.
Modifications etc. (not altering text)
C1S. 431 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)The Secretary of State shall appoint one or more competent inspectors to investigate the affairs of a company and report on them in such manner as he directs, if the court by order declares that its affairs out to be so investigated.
(2)The Secretary of State may make such an appointment if it appears to him that there are circumstances suggesting—
(a)that the company’s affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person, or otherwise for a fraudulent or unlawful purpose, or in a manner which is unfairly prejudicial to some part of its members, or
(b)that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, or that the company was formed for any fraudulent or unlawful purpose, or
(c)that persons concerned with the company’s formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members, or
(d)that the company’s members have not been given all the information with respect to its affairs which they might reasonably expect.
[F1(2A)Inspectors may be appointed under subsection (2) on terms that any report they may make is not for publication; and in such a case, the provisions of section 437(3) (availability and publication of inspectors’ reports) do not apply.]
(3)Subsections (1) and (2) are without prejudice to the powers of the Secretary of State under section 431; and the power conferred by subsection (2) is exercisable with respect to a body corporate notwithstanding that it is in course of being voluntarily wound up.
(4)The reference in subsection (2)(a) to a company’s members includes any person who is not a member but to whom shares in the company have been transferred or transmitted by operation of law.
Textual Amendments
F1S. 432(2A) inserted by Companies Act 1989 (c. 40, SIF 27), ss. 55, 213(2)
Modifications etc. (not altering text)
C2S. 432 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
C3S. 432(1)(2) extended (with modifications) by S.I. 1989/638, regs. 18, 21, Sch. 4 para. 5
(1)If inspectors appointed under section 431 or 432 to investigate the affairs of a company think it necessary for the purposes of their investigation to investigate also the affairs of another body corporate which is or at any relevant time has been the company’s subsidiary or holding company, or a subsidiary of its holding company or a holding company of its subsidiary, they have power to do so; and they shall report on the affairs of the other body corporate so far as they think that the results of their investigation of its affairs are relevant to the investigation of the affairs of the company first mentioned above.
F2(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F2S. 433(2) repealed by Financial Services Act 1986 (c. 60, SIF 69), ss. 182, 212(3), Sch. 13 para. 7, Sch. 17 Pt. I
Modifications etc. (not altering text)
C4S. 433 applied (wih modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)When inspectors are appointed under section 431 or 432, it is the duty of all officers and agents of the company, and of all officers and agents of any other body corporate whose affairs are investigated under section 433(1)—
(a)to produce to the inspectors all [F3documents] of or relating to the company or, as the case may be, the other body corporate which are in their custody or power,
(b)to attend before the inspectors when required to do so, and
(c)otherwise to give the inspectors all assistance in connection with the investigation which they are reasonably able to give.
[F4(2)If the inspectors consider that an officer or agent of the company or other body corporate, or any other person, is or may be in possession of information relating to a matter which they believe to be relevant to the investigation, they may require him—
(a)to produce to them any documents in his custody or power relating to that matter,
(b)to attend before them, and
(c)otherwise to give them all assistance in connection with the investigation which he is reasonably able to give;
and it is that person’s duty to comply with the requirement.]
[F5(3)An inspector may for the purposes of the investigation examine any person on oath, and may administer an oath accordingly.]
(4)In this section a reference to officers or to agents includes past, as well as present, officers or agents (as the case may be); and “agents”, in relation to a company or other body corporate, includes its bankers and solicitors and persons employed by it as auditors, whether these persons are or are not officers of the company or other body corporate.
(5)An answer given by a person to a question put to him in exercise of powers conferred by this section (whether as it has effect in relation to an investigation under any of sections 431 to 433, or as applied by any other section in this Part) may be used in evidence against him.
[F6(5A)However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—
(a)no evidence relating to the answer may be adduced, and
(b)no question relating to it may be asked,
by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.
F6(5B)Subsection (5A) applies to any offence other than—
(a)an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath); or
(b)an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).]
[F7(6)In this section “documents" includes information recorded in any form; and, in relation to information recorded otherwise than in legible form, the power to require its production includes power to require the production of a copy of the information in legible form.]
Textual Amendments
F3Words in s. 434(1)(a) substituted by Companies Act 1989 (c. 40, SIF 27), ss. 56(2), 213(2)
F4S. 434(2) substituted by Companies Act 1989 (c. 40, SIF 27), ss. 56(3), 213(2)
F5S. 434(3) substituted by Companies Act 1989 (c. 40, SIF 27), ss. 56(4), 213(2)
F6S. 434(5A)(5B) inserted (14.4.2000 for E.W.N.I. and 1.1.2001 for S.) by 1999 c. 23, ss. 59, 68(3), Sch. 3 para. 5 (with Sch. 7 para. 5(2)); S.I. 2000/1034, art. 2(a); S.S.I. 2000/445, art. 2
F7S. 434(6) inserted by Companies Act 1989 (c. 40, SIF 27), ss. 56(5), 213(2)
Modifications etc. (not altering text)
C5S. 434 extended (with modifications) by S.I. 1989/638, regs. 18, 21, Sch. 4 para. 6
C6S. 434 applied (with modifications) by Financial Services Act 1986 (c. 60, SIF 69), s. 94(3)(7)
S. 434 applied (with modifications) (6.1.1997) by S.I. 1996/2827, reg. 22(3)(4)
C7S. 434 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
C8S. 434(4) amended (E.W.)(01.01.1992) by S.I. 1991/2684, arts. 2(1), 4, 5, Sch. 1.
Textual Amendments
F8S. 435 repealed by Companies Act 1989 (c. 40, SIF 27), ss. 212, 213(2), Sch. 24
[F9(1)If any person—
(a)fails to comply with section 434(1)(a) or (c),
(b)refuses to comply with a requirement under section 434(1)(b) or (2), or
(c)refuses to answer any question put to him by the inspectors for the purposes of the investigation,
the inspectors may certify that fact in writing to the court.]
(3)The court may thereupon enquire into the case; and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, the court may punish the offender in like manner as if he had been guilty of contempt of the court.
Textual Amendments
F9S. 436(1) substituted for subsections (1)(2) by Companies Act 1989 (c. 40, SIF 27), ss. 56(6), 213(2)
Modifications etc. (not altering text)
C9S. 436 applied (with modifications) by Financial Services Act 1986 (c. 60, SIF 69), s. 94(3)(7)
S. 436 applied (with modifications) (6.1.1997) by S.I. 1996/2827, reg. 22(3)(4)
C10S. 436 extended (with modifications) by S.I. 1989/638, regs. 18, 21, Sch. 4 para. 7
C11S. 436 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)The inspectors may, and if so directed by the Secretary of State shall, make interim reports to the Secretary of State, and on the conclusion of their investigation shall make a final report to him.
Any such report shall be written or printed, as the Secretary of State directs.
[F10(1A)Any persons who have been appointed under section 431 or 432 may at any time and, if the Secretary of State directs them to do so, shall inform him of any matters coming to their knowledge as a result of their investigations.]
[F11(1B)If it appears to the Secretary of State that matters have come to light in the course of the inspectors’ investigation which suggest that a criminal offence has been committed, and those matters have been referred to the appropriate prosecuting authority, he may direct the inspectors to take no further steps in the investigation or to take only such further steps as are specified in the direction.
(1C)Where an investigation is the subject of a direction under subsection (1B), the inspectors shall make a final report to the Secretary of State only where—
(a)they were appointed under section 432(1) (appointment in pursuance of an order of the court), or
(b)the Secretary of State directs them to do so.]
(2)If the inspectors were appointed under section 432 in pursuance of an order of the court, the Secretary of State shall furnish a copy of any report of theirs to the court.
(3)In any case the Secretary of State may, if he thinks fit—
(a)forward a copy of any report made by the inspectors to the company’s registered office,
(b)furnish a copy on request and on payment of the prescribed fee to—
(i)any member of the company or other body corporate which is the subject of the report,
(ii)any person whose conduct is referred to in the report,
(iii)the auditors of that company or body corporate,
(iv)the applicants for the investigation,
(v)any other person whose financial interests appear to the Secretary of State to be affected by the matters dealt with in the report, whether as a creditor of the company or body corporate, or otherwise, and
(c)cause any such report to be printed and published.
Textual Amendments
F10S. 437(1A) inserted by Financial Services Act 1986 (c. 60, SIF 69), s. 182, Sch. 13 para. 7
F11S. 437(1B)(1C) inserted by Companies Act 1989 (c. 40, SIF 27), ss. 57, 213(2)
Modifications etc. (not altering text)
C12S. 437 extended (with modifications) by S.I. 1989/638, regs. 18, 21
C13S. 437 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
(1)[F12If from any report made or information obtained under this Part it appears to the Secretary of State] that any civil proceedings ought in the public interest to be brought by any body corporate, he may himself bring such proceedings in the name and on behalf of the body corporate.
(2)The Secretary of State shall indemnify the body corporate against any costs or expenses incurred by it in or in connection with proceedings brought under this section.
Textual Amendments
F12Words substituted by Companies Act 1989 (c. 40, SIF 27), ss. 58, 213(2)
Modifications etc. (not altering text)
C14S. 438 extended (with modifications) by S.I. 1989/638, regs. 18, 21, Sch. 4 para. 8
C15S. 438 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
C16S. 438(1): transfer of functions (5.1.1998) by virtue of S.I. 1997/2781, art. 4(2) (with art. 7)
[F13(1)The expenses of an investigation under any of the powers conferred by this Part shall be defrayed in the first instance by the Secretary of State, but he may recover those expenses from the persons liable in accordance with this section.
There shall be treated as expenses of the investigation, in particular, such reasonable sums as the Secretary of State may determine in respect of general staff costs and overheads.]
(2)A person who is convicted on a prosecution instituted as a result of the investigation, or is ordered to pay the whole or any part of the costs of proceedings brought under section 438, may in the same proceedings be ordered to pay those expenses to such extent as may be specified in the order.
(3)A body corporate in whose name proceedings are brought under that section is liable to the amount or value of any sums or property recovered by it as a result of those proceedings; and any amount for which a body corporate is liable under this subsection is a first charge on the sums or property recovered.
(4)A body corporate dealt with by [F14an inspectors’ report], where the inspectors were appointed otherwise than of the Secretary of State’s own motion, is liable except where it was the applicant for the investigation, and except so far as the Secretary of State otherwise directs.
[F15(5)Where inspectors were appointed—
(a)under section 431, or
(b)on an application under section 442(3),
the applicant or applicants for the investigation is or are liable to such extent (if any) as the Secretary of State may direct.]
(6)The report of inspectors appointed otherwise than of the Secretary of State’s own motion may, if they think fit, and shall if the Secretary of State so directs, include a recommendation as to the directions (if any) which they think appropriate, in the light of their investigation, to be given under subsection (4) or (5) of this section.
(7)For purposes of this section, any costs or expenses incurred by the Secretary of State in or in connection with proceedings brought under section 438 (including expenses incurred under subsection (2) of it) are to be treated as expenses of the investigation giving rise to the proceedings.
(8)Any liability to repay the Secretary of State imposed by subsections (2) and (3) above is (subject to satisfaction of his right to repayment) a liability also to indemnify all persons against liability under subsections (4) and (5); and any such liability imposed by subsection (2) is (subject as mentioned above) a liability also to indemnify all persons against liability under subsection (3).
(9)A person liable under any one of those subsections is entitled to contribution from any other person liable under the same subsection, according to the amount of their respective liabilities under it.
(10)Expenses to be defrayed by the Secretary of State under this section shall, so far as not recovered under it, be paid out of money provided by Parliament.
Textual Amendments
F13S. 439(1) substituted by Companies Act 1989 (c. 40, SIF 27), ss. 59(2), 213(2)
F14Words substituted by Companies Act 1989 (c. 40, SIF 27), ss. 59(3), 213(2)
F15S. 439(5) substituted by Companies Act 1989 (c. 40, SIF 27), ss. 59(4), 213(2)
Modifications etc. (not altering text)
C17S. 439 extended (with modifications) by S.I. 1989/638, regs. 18, 21, Sch. 4 para. 8
C18S. 439 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F16S. 440 repealed and superseded by Companies Act 1989 (c. 40, SIF 27), ss. 60, 212, 213(2), Sch. 24 and amended by 1995 c. 40, s. 5, Sch. 4 para. 56
(1)A copy of any report of inspectors appointed under [F17this Part], certified by the Secretary of State to be a true copy, is admissible in any legal proceedings as evidence of the opinion of the inspectors in relation to any matter contained in the report [F18and, in proceedings on an application under [F19section 8 of the Company Directors Disqualification Act 1986], as evidence of any fact stated therein].
(2)A document purporting to be such a certificate as is mentioned above shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.
Textual Amendments
F17Words substituted by Companies Act 1989 (c. 40, SIF 27), ss. 61, 213(2)
F18Words inserted by Insolvency Act 1985 (c. 65, SIF 27), s. 109, Sch. 6 para. 3
F19Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(1), Sch. 13 Pt. I
Modifications etc. (not altering text)
C19S. 441 extended (with modifications) by S.I. 1989/638, regs. 18, 21, Sch. 4 para. 9
C20S. 441 applied (with modifications) (6.4.2001) by S.I. 2001/1090, reg. 4, Sch. 2 Pt. I