Part XXVI Interpretation

C1735“Company”, etc.

1

In this Act—

a

“company” means a company formed and registered under this Act, or an existing company;

b

“existing company” means a company formed and registered under the former Companies Acts, but does not include a company registered under the Joint Stock Companies Acts, the Companies Act 1862or the Companies (Consolidation) Act 1908 in what was then Ireland;

c

“the former Companies Acts” means the Joint Stock Companies Acts, the Companies Act 1862, the Companies (Consolidation) Act 1908, the M1Companies Act 1929 and the Companies Acts 1948 to 1983.

2

“Public company” and “private company” have the meanings given by section 1(3).

3

“The Joint Stock Companies Acts” means the M2 Joint Stock Companies Act 1856 the M3Joint Stock Companies Acts 1856, M4 1857, the M5Joint Stock Banking Companies Act 1857and the Act to enable Joint Stock Banking Companies to be formed on the principle of limited liability, or any one or more of those Acts (as the case may require), but does not include the Joint Stock Companies Act 1844

4

The definitions in this section apply unless the contrary intention appears.

C2735AF2 Relationship of this Act to Insolvency Act.

1

In this Act “the Insolvency Act” means the Insolvency Act 1986; and in the following provisions of this Act, namely, sections 375(1)(b), 425(6)(a), . . . F3, 460(2), 675, 676, 677, 699(1), 728 and Schedule 21, paragraph 6(1), the words “this Act” are to be read as including Parts I to VII of that Act, sections 411, 413, 414, 416 and 417 in Part XV of that Act, and also the Company Directors Disqualification Act 1986.

2

In sections F4Sections704(5),(7) and (8) 706(1), F5707B(1), F6707A(1), 708(1)(a) and (4) F6709(1) and (3),F7710A, 713(1), 729 and 732(3) references to the Companies Acts include Parts I to VII of the Insolvency Act, sections 411, 413, 414, 416 and 417 in Part XV of that Act, and also the Company Directors Disqualification Act 1986.

3

Subsections (1) and (2) apply unless the contrary intention appears.

735BF8 Relationship of this Act to Parts IV and V of the Financial Services Act 1986.

In F9sections 704(5), (7) and (8)706(1), 707(1), 707A(1), 708(1)(a) and (4), 709(1) and (3), 710A and 713(1) references to the Companies Acts include F10Part 6 of the Financial Services and Markets Act 2000.

C4C5C6C7C8C9C10736F11“Subsidiary”, “holding company” and “wholly-owned subsidiary”. C3

1

A company is a “subsidiary” of another company, its “holding company”, if that other company—

a

holds a majority of the voting rights in it, or

b

is a member of it and has the right to appoint or remove a majority of its board of directors, or

c

is a member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it,

or if it is a subsidiary of a company which is itself a subsidiary of that other company.

C112

A company is a “wholly-owned subsidiary” of another company if it has no members except that other and that other’s wholly-owned subsidiaries or persons acting on behalf of that other or its wholly-owned subsidiaries.

3

In this section “company” includes any body corporate.

F12C12C13736A Provisions supplementing s. 736.

1

The provisions of this section explain expressions used in section 736 and otherwise supplement that section.

C142

In section 736(1)(a) and (c) the references to the voting rights in a company are to the rights conferred on shareholders in respect of their shares or, in the case of a company not having a share capital, on members, to vote at general meetings of the company on all, or substantially all, matters.

C14C153

In section 736(1)(b) the reference to the right to appoint or remove a majority of the board of directors is to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters; and for the purposes of that provision—

a

a company shall be treated as having the right to appoint to a directorship if—

i

a person’s appointment to it follows necessarily from his appointment as director of the company, or

ii

the directorship is held by the company itself; and

b

a right to appoint or remove which is exercisable only with the consent or concurrence of another person shall be left out of account unless no other person has a right to appoint or, as the case may be, remove in relation to that directorship.

C14C154

Rights which are exercisable only in certain circumstances shall be taken into account only—

a

when the circumstances have arisen, and for so long as they continue to obtain, or

b

when the circumstances are within the control of the person having the rights;

and rights which are normally exercisable but are temporarily incapable of exercise shall continue to be taken into account.

C155

Rights held by a person in a fiduciary capacity shall be treated as not held by him.

C156

Rights held by a person as nominee for another shall be treated as held by the other; and rights shall be regarded as held as nominee for another if they are exercisable only on his instructions or with his consent or concurrence.

C157

Rights attached to shares held by way of security shall be treated as held by the person providing the security—

a

where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with his instructions;

b

where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in his interests.

C158

Rights shall be treated as held by a company if they are held by any of its subsidiaries; and nothing in subsection (6) or (7) shall be construed as requiring rights held by a company to be treated as held by any of its subsidiaries.

C159

For the purposes of subsection (7) rights shall be treated as being exercisable in accordance with the instructions or in the interests of a company if they are exercisable in accordance with the instructions of or, as the case may be, in the interests of—

a

any subsidiary or holding company of that company, or

b

any subsidiary of a holding company of that company.

C1510

The voting rights in a company shall be reduced by any rights held by the company itself.

C1511

References in any provision of subsections (5) to (10) to rights held by a person include rights falling to be treated as held by him by virtue of any other provision of those subsections but not rights which by virtue of any such provision are to be treated as not held by him.

C1512

In this section “company” includes any body corporate.

736BF13 Power to amend ss. 736 and 736A.

1

The Secretary of State may by regulations amend sections 736 and 736A so as to alter the meaning of the expressions “holding company”, “subsidiary” or “wholly-owned subsidiary”.

2

The regulations may make different provision for different cases or classes of case and may contain such incidental and supplementary provisions as the Secretary of State thinks fit.

3

Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

4

Any amendment made by regulations under this section does not apply for the purposes of enactments outside the Companies Acts unless the regulations so provide.

5

So much of section 23(3) of the Interpretation Act M61978 as applies section 17(2)(a) of that Act (effect of repeal and re-enactment) to deeds, instruments and documents other than enactments shall not apply in relation to any repeal and re-enactment effected by regulations made under this section.

C16C17737“Called-up share capital”.

1

In this Act, “called-up share capital”, in relation to a company, means so much of its share capital as equals the aggregate amount of the calls made on its shares (whether or not those calls have been paid), together with any share capital paid up without being called and any share capital to be paid on a specified future date under the articles, the terms of allotment of the relevant shares or any other arrangements for payment of those shares.

2

“Uncalled share capital” is to be construed accordingly.

3

The definitions in this section apply unless the contrary intention appears.

738“Allotment” and “paid up”.

1

In relation to an allotment of shares in a company, the shares are to be taken for the purposes of this Act to be allotted when a person acquires the unconditional right to be included in the company’s register of members in respect of those shares.

2

For purposes of this Act, a share in a company is deemed paid up (as to its nominal value or any premium on it) in cash, or allotted for cash, if the consideration for the allotment or payment up is cash received by the company, or is a cheque received by it in good faith which the directors have no reason for suspecting will not be paid, or is a release of a liability of the company for a liquidated sum, or is an undertaking to pay cash to the company at a future date.

3

In relation to the allotment or payment up of any shares in a company, references in this Act (except sections 89 to 94) to consideration other than cash and to the payment up of shares and premiums on shares otherwise than in cash include the payment of, or any undertaking to pay, cash to any person other than the company.

4

For the purpose of determining whether a share is or is to be allotted for cash, or paid up in cash, “cash” includes foreign currency.

C18739“Non-cash asset”.

1

In this Act “non-cash asset” means any property or interest in property other than cash; and for this purpose “cash” includes foreign currency.

2

A reference to the transfer or acquisition of a non-cash asset includes the creation or extinction of an estate or interest in, or a right over, any property and also the discharge of any person’s liability, other than a liability for a liquidated sum.

C20740“Body corporate” and “corporation”. C19

References in this Act to a body corporate or to a corporation do not include a corporation sole, but include a company incorporated elsewhere than in Great Britain.

Such references to a body corporate do not include a Scottish firm.

741“Director” and “shadow director”.

F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C21742F14 Expressions used in connection with accounts.

1

In this Act, unless a contrary intention appears, the following expressions have the same meaning as in Part VII (accounts)—

  • “annual accounts,”

  • “accounting reference date” and “accounting reference period”,

  • “balance sheet” and “balance sheet date”,

  • F16“Companies Act accounts”

  • F17“Companies Act individual accounts”

  • “current assets”,

  • “financial year”, in relation to a company,

  • “fixed assets”,

  • F18“IAS accounts”

  • F19“IAS individual accounts”

  • “parent company” and “parent undertaking”,

  • “profit and loss account”, and

  • “subsidiary undertaking”.

2

References in this Act to “realised profits” and “realised losses”, in relation to a company’s accounts, shall be construed in accordance with section 262(3).

F152A

References in this Act to sending or sending out copies of any of the documents referred to in section 238(1) include sending or sending out such copies in accordance with section 238(4A) or (4B).

742AF57 Meaning of “offer to the public”

1

Any reference in Part IV (allotment of shares and debentures) F58, Part 7 (accounts) or section 744 (general interpretation) to offering shares or debentures to the public is to be read as including a reference to offering them to any section of the public, however selected.

2

This section does not require an offer to be treated as made to the public if it can properly be regarded, in all the circumstances—

a

as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer; or

b

as being a domestic concern of the persons receiving and making it.

3

An offer of shares in or debentures of a private company (other than an offer to which subsection (5) applies) is to be regarded (unless the contrary is proved) as being a domestic concern of the persons making and receiving it if—

a

it is made to—

i

an existing member of the company making the offer,

ii

an existing employee of that company,

iii

the widow or widower F59or surviving civil partner of a person who was a member or employee of that company,

iv

a member of the family of a person who is or was a member or employee of that company, or

v

an existing debenture holder; or

b

it is an offer to subscribe for shares or debentures to be held under an employee’s share scheme.

4

Subsection (5) applies to an offer—

a

which falls within paragraph (a) or (b) of subsection (3); but

b

which is made on terms which permit the person to whom it is made to renounce his right to the allotment of shares or issue of debentures.

5

The offer is to be regarded (unless the contrary is proved) as being a domestic concern of the persons making and receiving it if the terms are such that the right may be renounced only in favour—

a

of any person mentioned in subsection (3)(a); or

b

in the case of an employee’s share scheme, of a person entitled to hold shares or debentures under the scheme.

6

For the purposes of subsection (3)(a)(iv), the members of a person’s family are—

a

the person’s spouse F60or civil partner and children (including step-children) and their descendants, and

b

any trustee (acting in his capacity as such) of a trust the principal beneficiary of which is the person him or herself or of any of those relatives.

7

Where an application has been made to the competent authority in any EEA State for the admission of any securities to official listing, then an offer of those securities for subscription or sale to a person whose ordinary business it is to buy or sell shares or debentures (whether as principal or agent) is not to be regarded as an offer to the public for the purposes of this Part.

8

For the purposes of subsection (7)—

a

“competent authority” means a competent authority appointed for the purposes of the Council Directive of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on those securities; and

b

“official listing” means official listing pursuant to that directive.

F61742B Meaning of “banking company”

1

Subject to subsection (2), “banking company” means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits.

2

A banking company does not include—

a

a person who is not a company, and

b

a person who has permission to accept deposits only for the purpose of carrying on another regulated activity in accordance with that permission.

3

This section must be read with—

a

section 22 of the Financial Services and Markets Act 2000;

b

any relevant order under that section; and

c

Schedule 2 to that Act.

F62742C Meaning of “insurance company” and “authorised insurance company”

1

For the purposes of this Act, “insurance company” has the meaning given in subsection (2) and “authorised insurance company” has the meaning given in subsection (4).

2

Subject to subsection (3), “insurance company” means a person (whether incorporated or not)—

a

who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance; or

b

who carries on insurance market activity; or

c

who may effect or carry out contracts of insurance under which the benefits provided by that person are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle, and does not fall within paragraph (a).

3

An insurance company does not include a friendly society, within the meaning of section 116 of the Friendly Societies Act 1992.

4

An “authorised insurance company” means a person falling within paragraph (a) of subsection (2).

5

References in this section to contracts of insurance and the effecting or carrying out of such contracts must be read with -

a

section 22 of the Financial Services and Markets Act 2000;

b

any relevant order under that section; and

c

Schedule 2 to that Act.

743“Employees’ share scheme”. C22

For purposes of this Act, an employees’ share scheme is a scheme for encouraging or facilitating the holding of shares or debentures in a company by or for the benefit of—

a

the bona fide employees or former employees of the company, the company’s subsidiary or holding company or a subsidiary of the company’s holding company, or

b

the F20spouses, civil partners, surviving spouses, surviving civil partners or children or step-children under the age of 18 of such employees or former employees.

C23743AF21 Meaning of “office copy” in Scotland.

References in this Act to an office copy of a court order shall be construed, as respects Scotland, as references to a certified copy interlocutor.

C24C25C26744 Expressions used generally in this Act.

In this Act, unless the contrary intention appears, the following definitions apply—

  • “agent” does not include a person’s counsel acting as such;

  • F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • “articles” means, in relation to a company, its articles of association, as originally framed or as altered by resolution, including (so far as applicable to the company) regulations contained in or annexed to any enactment relating to companies passed before this Act, as altered by or under any such enactment;

  • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F23

  • F24“authorised minimum” has the meaning given by section 118;

  • “bank holiday” means a holiday under the M7Banking and Financial Dealings Act 1971;

  • F25 . . .

  • “books and papers” and “books or papers” include accounts, deeds, writings and documents;

  • F26“communication” means the same as in the Electronic Communications Act 2000;

  • “the Companies Acts” means this Act, the F27insider dealing legislation and the Consequential Provisions Act;

  • “the Consequential Provisions Act” means the M8Companies Consolidation (Consequential Provisions) Act 1985;

  • “the court”, in relation to a company, means the court having jurisdiction to wind up the company;

  • “debenture” includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not;

  • “document” includes summons, notice, order, and other legal process, and registers;

  • F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F28“electronic communication” means the same as in the Electronic Communications Act 2000;

  • “equity share capital” means, in relation to a company, its issued share capital excluding any part of that capital which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution;

  • F29“expert” has the meaning given by section 62;

  • F30“floating charge” includes a floating charge within the meaning given by section 462;

  • “the Gazette” means, as respects companies registered in England and Wales, the London Gazette and, as respects companies registered in Scotland, the Edinburgh Gazette;

  • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F31;

  • “hire-purchase agreement” has the same meaning as in the M9Consumer Credit Act 1974;

  • F32“the insider dealing legislation” means Part V of the Criminal Justice Act 1993 (insider dealing).

  • F33“insurance market activity” has the meaning given in section 316(3) of the Financial Services and Markets Act 2000;

  • F25 . . .

  • F34“joint stock company” has the meaning given by section 683;

  • “memorandum”, in relation to a company, means its memorandum of association, as originally framed or as altered in pursuance of any enactment;

  • “number”, in relation to shares, includes amount, where the context admits of the reference to shares being construed to include stock;

  • “officer”, in relation to a body corporate, includes a director, manager or secretary;

  • “official seal”, in relation to the registrar of companies, means a seal prepared under section 704(4) for the authentication of documents required for or in connection with the registration of companies;

  • “oversea company” means—

    1. a

      a company incorporated elsewhere than in Great Britain which, after the commencement of this Act, establishes a place of business in Great Britain, and

    2. b

      a company so incorporated which has, before than commencement, established a place of business and continues to have an established place of business in Great Britain at that commencement;

  • “place of business” includes a share transfer or share registration office;

  • “prescribed” means—

    1. a

      as respects provisions of this Act relating to winding up, prescribed by general rules . . . F35, and

    2. b

      otherwise, prescribed by statutory instrument made by the Secretaty of State;

  • “prospectus” means any prospectus, notice, circular, advertisement, or other invitation, offering to the public for subscription or purchase any shares in or debentures of a company;

  • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F36;

  • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F37;

  • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F38;

  • F39“regulated activity” has the meaning given in section 22 of the Financial Services and Markets Act 2000;

  • “the registrar of companies” and “the registrar” means the registrar or other officer performing under this Act the duty of registration of companies in England and Wales or in Scotland, as the case may require;

  • “share” means share in the share capital of a company, and includes stock (except where a distinction between shares and stock is express or implied); and

  • F40“undistributable reserves” has the meaning given by section 264(3).

C27744AF42 Index of defined expressions.

The following Table shows provisions defining or otherwise explaining expressions for the purposes of this Act generally—

accounting reference date, accounting reference period

sections 224 and 742(1)

acquisition (in relation to a non-cash asset)

section 739(2)

agent

section 744

allotment (and related expressions)

section 738

annual accounts

sections 261(2), 262(1) and 742(1)

annual general meeting

section 366

annual return

section 363

articles

section 744

F43authorised insurance company

section 742C

authorised minimum

section 118

balance sheet and balance sheet date

sections 261(2), 262(1) and 742(1)

bank holiday

section 744

banking company

F44section 7 42B

body corporate

section 740

books and papers, books or papers

section 744

called-up share capital

section 737(1)

capital redemption reserve

section 170(1)

F45“communication”

F45section 744

F52Companies Act accounts

Sections 262(1) and 742(1)

F53Companies Act individual accounts

Sections 226(2), 255(4A) and 742(1)

Company Acts

section 744

companies charges register

section 397

company

section 735(1)

the Consequential Provisions Act

section 744

corporation

section 740

the court (in relation to a company)

section 744

current assets

sections 262(1) and 742(1)

debenture

section 744

director

section 741(1)

document

section 744

F46EEA State

F46section 744

elective resolution

section 379A

F47“electronic communication”

F47section 744

employees’ share scheme

section 743

equity share capital

section 744

existing company

section 735(1)

extraordinary general meeting

section 368

extraordinary resolution

section 378(1)

financial year (of a company)

sections 223 and 742(1)

fixed assets

sections 262(1) and 742(1)

floating charge (in Scotland)

section 462

the former Companies Acts

section 735(1)

the Gazette

section 744

hire-purchase agreement

section 744

holding company

section 736

F54IAS accounts

Sections 262(1) and 742(1)

F55IAS individual accounts

Sections 226(2) and 742(1)

the Insider Dealing Act

section 744

the Insolvency Act

section 735A(1)

insurance company

F48sectio n 742C

F49insurance mar ket activity

F49section 7 44

the Joint Stock Companies Acts

section 735(3)

limited company

section 1(2)

member (of a company)

section 22

memorandum (in relation to a company)

section 744

non-cash asset

section 739(1)

number (in relation to shares)

section 744

office copy (in relation to a court order in Scotland)

section 743A

officer (in relation to a body corporate)

section 744

official seal (in relation to the registrar of companies)

section 744

oversea company

section 744

overseas branch register

section 362

paid up (and related expressions)

section 738

parent company and parent undertaking

sections 258 and 742(1)

place of business

section 744

prescribed

section 744

private company

section 1(3)

profit and loss account

section F56262(1) and (2) and 742(1)

prospectus

section 744

public company

section 1(3)

realised profits or losses

sections 262(3) and 742(2)

registered number (of a company)

section 705(1)

registered office (of a company)

section 287

registrar and registrar of companies

section 744

F50regulated activity

F50section 744

resolution for reducing share capital

section 135(3)

shadow director

section 741(2) and (3)

share

section 744

share premium account

section 130(1)

share warrant

section 188

special notice (in relation to a resolution)

section 379

special resolution

section 378(2)

subsidiary

section 736

subsidiary undertaking

sections 258 and 742(1)

transfer (in relation to a non-cash asset)

section 739(2)

F51treasury shares

section 162A(3)

uncalled share capital

section 737(2)

undistributable reserves

section 264(3)

unlimited company

section 1(2)

unregistered company

section 718

wholly-owned subsidiary

section 736(2)