Part I Company Accounts
Introduction
1 Introduction.
F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions applying to companies generally
2 Accounting records.
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 A company’s financial year and accounting reference periods.
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Individual company accounts.
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 Group accounts.
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 Additional disclosure required in notes to accounts.
F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 Approval and signing of accounts.
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8 Directors’ report.
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 Auditors’ report.
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 Publication of accounts and reports.
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11 Laying and delivering of accounts and reports.
F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12 Remedies for failure to comply with accounting requirements.
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exemptions and special provisions
13 Small and medium-sized companies and groups.
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14 Dormant companies.
F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15 Public listed companies: provision of summary financial statement.
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16 Private companies: election to dispense with laying of accounts and reports before general meeting.
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17 Unlimited companies: exemption from requirement to deliver accounts and reports.
F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 Banking and insurance companies and groups: special provisions.
F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplementary provisions
19 Accounting standards.
F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 Power to alter accounting requirements.
F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21 Parent and subsidiary undertakings.
F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22 Other interpretation provisions.
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consequential amendments
23 Consequential amendments.
The enactments specified in Schedule 10 have effect with the amendments specified there, which are consequential on the amendments made by the preceding provisions of this Part.
Part II Eligibility for Appointment as Company Auditor
Introduction
24Introduction.
F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eligibility for appointment
25 Eligibility for appointment.
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26 Effect of appointment of partnership.
F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27 Ineligibility on ground of lack of independence.
F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28 Effect of ineligibility.
F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29 Power of Secretary of State to require second audit.
F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognition of supervisory bodies and professional qualifications
30 Supervisory bodies.
F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31 Meaning of “appropriate qualification”.
F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32 Qualifying bodies and recognised professional qualifications.
F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33 Approval of overseas qualifications.
F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34 Eligibility of individuals retaining only 1967 Act authorisation.
F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Duties of recognised bodies
35 The register of auditors.
F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36 Information about firms to be available to public.
F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37 Matters to be notified to the Secretary of State.
F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38 Power to call for information.
F37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39 Compliance orders.
F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40 Directions to comply with international obligations.
F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Offences
41 False and misleading statements.
F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42 Offences by bodies corporate, partnerships and unincorporated associations.
F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43 Time limits for prosecution of offences.
F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44 Jurisdiction and procedure in respect of offences.
F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplementary provisions
45 Fees.
F44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46 Delegation of functions of Secretary of State.
F45. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F4646ACircumstances in which Secretary of State may delegate functions to existing body
F47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47 Restrictive practices.
F48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48 Exemption from liability for damages.
F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49 Service of notices.
F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50 Power to make consequential amendments.
F51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51 Power to make provision in consequence of changes affecting accountancy bodies.
F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52 Meaning of “associate”.
F53. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53 Minor definitions.
F54. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54 Index of defined expressions.
F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part III Investigations and Powers to Obtain Information
Amendments of the Companies Act 1985
55 Investigations by inspectors not leading to published report.
“(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.”.
56 Production of documents and evidence to inspectors.
(1)
Section 434 of the Companies Act 1985 (production of documents and evidence to inspectors) is amended as follows.
(2)
In subsection (1) (duty of officers to assist inspectors), for “books and documents” substitute “documents”.
(3)
“(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.”.
(4)
“(3)
An inspector may for the purposes of the investigation examine any person on oath, and may administer an oath accordingly.”.
(5)
“(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.”.
(6)
“(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.”.
57 Duty of inspectors to report.
“(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.”.
58 Power to bring civil proceedings on the company’s behalf.
F56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59 Expenses of investigating a company’s affairs.
(1)
Section 439 of the Companies Act 1985 (expenses of investigating a company’s affairs) is amended as follows.
(2)
“(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.”.
(3)
In subsection (4) for “the inspectors’ report” substitute “
an inspectors’ report
”
.
(4)
“(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.”.
60 Power of Secretary of State to present winding-up petition.
(1)
Section 440 of the M3Companies Act 1985 (power of Secretary of State to present winding-up petition) is repealed; but the following amendments have the effect of re-enacting that provision, with modifications.
(2)
“(b)
in a case falling within section 124A below.”.
(3)
“124A Petition for winding up on grounds of public interest.
(1)
Where it appears to the Secretary of State from—
(a)
any report made or information obtained under Part XIV of the Companies Act 1985 (company investigations, &c.),
(b)
any report made under section 94 or 177 of the Financial Services Act 1986 or any information obtained under section 105 of that Act,
(c)
any information obtained under section 2 of the Criminal Justice Act 1987 or section 52 of the Criminal Justice (Scotland) Act 1987 (fraud investigations), or
(d)
any information obtained under section 83 of the Companies Act 1989 (powers exercisable for purpose of assisting overseas regulatory authorities),
that it is expedient in the public interest that a company should be wound up, he may present a petition for it to be wound up if the court thinks it just and equitable for it to be so.
(2)
This section does not apply if the company is already being wound up by the court.”.
61 Inspectors’ reports as evidence.
In section 441 of the Companies Act 1985 (inspectors’ reports to be evidence), in subsection (1) for “sections 431 or 432” substitute “
this Part
”
.
62 Investigation of company ownership.
“(3)
If an application for investigation under this section with respect to particular shares or debentures of a company is made to the Secretary of State by members of the company, and the number of applicants or the amount of shares held by them is not less than that required for an application for the appointment of inspectors under section 431(2)(a) or (b), then, subject to the following provisions, the Secretary of State shall appoint inspectors to conduct the investigation applied for.
(3A)
The Secretary of State shall not appoint inspectors if he is satisfied that the application is vexatious; and where inspectors are appointed their terms of appointment shall exclude any matter in so far as the Secretary of State is satisfied that it is unreasonable for it to be investigated.
(3B)
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 which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(3C)
If on an application under subsection (3) it appears to the Secretary of State that the powers conferred by section 444 are sufficient for the purposes of investigating the matters which inspectors would be appointed to investigate, he may instead conduct the investigation under that section.”.
63 Secretary of State’s power to require production of documents.
F57. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64 Entry and search of premises.
(1)
“448 Entry and search of premises.
(1)
A justice of the peace may issue a warrant under this section if satisfied on information on oath given by or on behalf of the Secretary of State, or by a person appointed or authorised to exercise powers under this Part, that there are reasonable grounds for believing that there are on any premises documents whose production has been required under this Part and which have not been produced in compliance with the requirement.
(2)
A justice of the peace may also issue a warrant under this section if satisfied on information on oath given by or on behalf of the Secretary of State, or by a person appointed or authorised to exercise powers under this Part—
(a)
that there are reasonable grounds for believing that an offence has been committed for which the penalty on conviction on indictment is imprisonment for a term of not less than two years and that there are on any premises documents relating to whether the offence has been committed,
(b)
that the Secretary of State, or the person so appointed or authorised, has power to require the production of the documents under this Part, and
(c)
that there are reasonable grounds for believing that if production was so required the documents would not be produced but would be removed from the premises, hidden, tampered with or destroyed.
(3)
A warrant under this section shall authorise a constable, together with any other person named in it and any other constables—
(a)
to enter the premises specified in the information, using such force as is reasonably necessary for the purpose;
(b)
to search the premises and take possession of any documents appearing to be such documents as are mentioned in subsection (1) or (2), as the case may be, or to take, in relation to any such documents, any other steps which may appear to be necessary for preserving them or preventing interference with them;
(c)
to take copies of any such documents; and
(d)
to require any person named in the warrant to provide an explanation of them or to state where they may be found.
(4)
If in the case of a warrant under subsection (2) the justice of the peace is satisfied on information on oath that there are reasonable grounds for believing that there are also on the premises other documents relevant to the investigation, the warrant shall also authorise the actions mentioned in subsection (3) to be taken in relation to such documents.
(5)
A warrant under this section shall continue in force until the end of the period of one month beginning with the day on which it is issued.
(6)
Any documents of which possession is taken under this section may be retained—
(a)
for a period of three months; or
(b)
if within that period proceedings to which the documents are relevant are commenced against any person for any criminal offence, until the conclusion of those proceedings.
(7)
Any person who intentionally obstructs the exercise of any rights conferred by a warrant issued under this section or fails without reasonable excuse to comply with any requirement imposed in accordance with subsection (3)(d) is guilty of an offence and liable to a fine.
Sections 732 (restriction on prosecutions), 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies) apply to this offence.
(8)
For the purposes of sections 449 and 451A (provision for security of information) documents obtained under this section shall be treated as if they had been obtained under the provision of this Part under which their production was or, as the case may be, could have been required.
(9)
In the application of this section to Scotland for the references to a justice of the peace substitute references to a justice of the peace or a sheriff, and for the references to information on oath substitute references to evidence on oath.
(10)
In this section “document” includes information recorded in any form.”.
(2)
In Schedule 24 to the M5Companies Act 1985 (punishment of offences), in the entry relating to section 448(5)—
(a)
in the first column for “448(5)” substitute “448(7)”, and
(b)
“Obstructing the exercise of any rights conferred by a warrant or failing to comply with a requirement imposed under subsection (3)(d).”.
65 Provision for security of information obtained.
F58. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66 Punishment for destroying, mutilating, &c. company documents.
(1)
Section 450 of the M6Companies Act 1985 (punishment for destroying, mutilating, &c. company documents) is amended as follows.
(2)
In subsection (1) for the opening words down to “insurance company” substitute “An officer of a company, or of an insurance company”, for “body’s” substitute “company’s” and for “the body” substitute “the company”.
(3)
“(4)
Sections 732 (restriction on prosecutions), 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies) apply to an offence under this section.”.
(4)
“(5)
In this section “document” includes information recorded in any form.”.
67 Punishment for furnishing false information.
F59. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68 Disclosure of information by Secretary of State or inspector.
“451A Disclosure of information by Secretary of State or inspector.
(1)
This section applies to information obtained under sections 434 to 446.
(2)
The Secretary of State may, if he thinks fit—
(a)
disclose any information to which this section applies to any person to whom, or for any purpose for which, disclosure is permitted under section 449, or
(b)
authorise or require an inspector appointed under this Part to disclose such information to any such person or for any such purpose.
(3)
Information to which this section applies may also be disclosed by an inspector appointed under this Part to—
(a)
another inspector appointed under this Part or an inspector appointed under section 94 or 177 of the Financial Services Act 1986, or
(b)
a person authorised to exercise powers under section 44 of the Insurance Companies Act 1982, section 447 of this Act, section 106 of the Financial Services Act 1986 or section 84 of the Companies Act 1989.
(4)
Any information which may by virtue of subsection (3) be disclosed to any person may be disclosed to any officer or servant of that person.
(5)
The Secretary of State may, if he thinks fit, disclose any information obtained under section 444 to—
(a)
the company whose ownership was the subject of the investigation,
(b)
any member of the company,
(c)
any person whose conduct was investigated in the course of the investigation,
(d)
the auditors of the company, or
(e)
any person whose financial interests appear to the Secretary of State to be affected by matters covered by the investigation.”.
69 Protection of banking information.
(1)
Section 452 of the M7Companies Act 1985 (privileged information) is amended as follows.
(2)
F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
“(1A)
Nothing in section 434, 443 or 446 requires a person (except as mentioned in subsection (1B) below) to disclose information or produce documents in respect of which he owes an obligation of confidence by virtue of carrying on the business of banking unless—
(a)
the person to whom the obligation of confidence is owed is the company or other body corporate under investigation,
(b)
the person to whom the obligation of confidence is owed consents to the disclosure or production, or
(c)
the making of the requirement is authorised by the Secretary of State.
(1B)
Subsection (1A) does not apply where the person owing the obligation of confidence is the company or other body corporate under investigation under section 431, 432 or 433.”.
(4)
F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70 Investigation of oversea companies.
“(1)
The provisions of this Part apply to bodies corporate incorporated outside Great Britain which are carrying on business in Great Britain, or have at any time carried on business there, as they apply to companies under this Act; but subject to the following exceptions, adaptations and modifications.
(1A)
The following provisions do not apply to such bodies—
(a)
section 431 (investigation on application of company or its members),
(b)
section 438 (power to bring civil proceedings on the company’s behalf),
(c)
sections 442 to 445 (investigation of company ownership and power to obtain information as to those interested in shares, &c.), and
(d)
section 446 (investigation of share dealings).
(1B)
The other provisions of this Part apply to such bodies subject to such adaptations and modifications as may be specified by regulations made by the Secretary of State.”.
71 Investigation of unregistered companies.
“Part XIV (except section 446)
Investigation of companies and their affairs; requisition of documents.
—”.
Amendments of the Financial Services Act 1986
F6172. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6273. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6374. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6475. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6576. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendments of other enactments
F6677. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6778. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F6879. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80 Amendment of the Building Societies Act 1986.
“, or
(iii)
Part II, III or VII of the Companies Act 1989;”.
F6981. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Powers exercisable to assist overseas regulatory authorities
82 Request for assistance by overseas regulatory authority.
(1)
The powers conferred by section 83 are exercisable by the Secretary of State for the purpose of assisting an overseas regulatory authority which has requested his assistance in connection with inquiries being carried out by it or on its behalf.
(2)
An “overseas regulatory authority” means an authority which in a country or territory outside the United Kingdom exercises—
F70(a)
any function corresponding to—
(i)
any function of the Secretary of State under the Companies Act 1985 F71or the Companies Act 2006;
(ii)
any function of the F72FCA, the PRA or the Bank of England under the Financial Services and Markets Act 2000;
F73(iii)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)
any function in connection with the investigation of, or the enforcement of rules (whether or not having the force of law) relating to, conduct of the kind prohibited by F74Part V of the Criminal Justice Act 1993 (insider dealing), or
(c)
any function prescribed for the purposes of this subsection by order of the Secretary of State, being a function which in the opinion of the Secretary of State relates to companies or financial services.
An order under paragraph (c) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(3)
The Secretary of State shall not exercise the powers conferred by section 83 unless F75he and the F76corresponding UK regulator (if any) are satisfied that the assistance requested by the overseas regulatory authority is for the purposes of its regulatory functions.
An authority’s “regulatory functions” means any functions falling within subsection (2) and any other functions relating to companies or financial services.
F77(3A)
In subsection (3), “the corresponding UK regulator” means such one or more of the FCA, PRA and the Bank of England as appears to the Secretary of State to exercise functions corresponding to the regulatory functions for the purposes of which the request is made.
(4)
In deciding whether to exercise those powers the Secretary of State may take into account, in particular—
(a)
whether corresponding assistance would be given in that country or territory to an authority exercising regulatory functions in the United Kingdom;
(b)
whether the inquiries relate to the possible breach of a law, or other requirement, which has no close parallel in the United Kingdom or involves the assertion of a jurisdiction not recognised by the United Kingdom;
(c)
the seriousness of the matter to which the inquiries relate, the importance to the inquiries of the information sought in the United Kingdom and whether the assistance could be obtained by other means;
(d)
whether it is otherwise appropriate in the public interest to give the assistance sought.
(5)
Before deciding whether to exercise those powers in a case where the overseas regulatory authority is a banking supervisor, the Secretary of State shall consult the F78FCA and the PRA.
A “banking supervisor” means an overseas regulatory authority with respect to which the F79FCA or the PRA has notified the Secretary of State, for the purposes of this subsection, that it exercises functions corresponding to those of F80the body giving the notification F81in relation to authorised persons with permission under the Financial Services and Markets Act 2000 to accept deposits.
F82(5A)
In subsection (5), “authorised person” has the meaning given in the Financial Services and Markets Act 2000 and the references to deposits and their acceptance must be read with—
(a)
section 22 of that Act;
(b)
any relevant order under that section; and
(c)
Schedule 2 to that Act.
(6)
The Secretary of State may decline to exercise those powers unless the overseas regulatory authority undertakes to make such contribution towards the costs of their exercise as the Secretary of State considers appropriate.
(7)
References in this section to financial services include, in particular, investment business, insurance and banking.
83 Power to require information, documents or other assistance.
(1)
The following powers may be exercised in accordance with section 82, if the Secretary of State considers there is good reason for their exercise.
(2)
The Secretary of State may require any person—
(a)
to attend before him at a specified time and place and answer questions or otherwise furnish information with respect to any matter relevant to the inquiries,
(b)
to produce at a specified time and place any specified documents which appear to the Secretary of State to relate to any matter relevant to the inquiries, and
(c)
otherwise to give him such assistance in connection with the inquiries as he is reasonably able to give.
(3)
The Secretary of State may examine a person on oath and may administer an oath accordingly.
(4)
Where documents are produced the Secretary of State may take copies or extracts from them.
(5)
A person shall not under this section be required to disclose information or produce a document which he would be entitled to refuse to disclose or produce on grounds of legal professional privilege in proceedings in the High Court or on grounds of confidentiality as between client and professional legal adviser in proceedings in the Court of Session, except that a lawyer may be required to furnish the name and address of his client.
(6)
A statement by a person in compliance with a requirement imposed under this section may be used in evidence against him.
F83(6A)
However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—
(a)
no evidence relating to the statement 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.
(6B)
Subsection (6A) applies to any offence other than—
(a)
an offence under section 85;
(b)
an offence under section 2 or 5 of the M9Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath);
(c)
an offence under section 44(1) or (2) of the M10Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath); or
(d)
an offence under Article 7 or 10 of the M11Perjury (Northern Ireland) Order 1979 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).
(7)
Where a person claims a lien on a document, its production under this section is without prejudice to his lien.
(8)
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 it in legible form.
84 Exercise of powers by officer, &c.
(1)
The Secretary of State may authorise an officer of his or any other competent person to exercise on his behalf all or any of the powers conferred by section 83.
(2)
No such authority shall be granted except for the purpose of investigating—
(a)
the affairs, or any aspects of the affairs, of a person specified in the authority, or
(b)
a subject-matter so specified,
being a person who, or subject-matter which, is the subject of the inquiries being carried out by or on behalf of the overseas regulatory authority.
(3)
No person shall be bound to comply with a requirement imposed by a person exercising powers by virtue of an authority granted under this section unless he has, if required, produced evidence of his authority.
(4)
A person shall not by virtue of an authority under this section be required to disclose any information or produce any documents in respect of which he owes an obligation of confidence by virtue of carrying on the business of banking unless—
(a)
the imposing on him of a requirement with respect to such information or documents has been specifically authorised by the Secretary of State, or
(b)
the person to whom the obligation of confidence is owed consents to the disclosure or production.
In this subsection “documents” has the same meaning as in section 83.
(5)
Where the Secretary of State authorises a person other than one of his officers to exercise any powers by virtue of this section, that person shall make a report to the Secretary of State in such manner as he may require on the exercise of those powers and the results of exercising them.
85 Penalty for failure to comply with requirement, &c.
(1)
A person who without reasonable excuse fails to comply with a requirement imposed on him under section 83 commits an offence and is liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding level 5 on the standard scale, or both.
(2)
A person who in purported compliance with any such requirement furnishes information which he knows to be false or misleading in a material particular, or recklessly furnishes information which is false or misleading in a material particular, commits an offence and is liable—
(a)
on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both;
(b)
on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or both.
86 Restrictions on disclosure of information.
(1)
This section applies to information relating to the business or other affairs of a person which—
(a)
is supplied by an overseas regulatory authority in connection with a request for assistance, or
(b)
is obtained by virtue of the powers conferred by section 83, whether or not any requirement to supply it is made under that section.
(2)
Except as permitted by section 87 below, such information shall not be disclosed for any purpose—
(a)
by the primary recipient, or
(b)
by any person obtaining the information directly or indirectly from him,
without the consent of the person from whom the primary recipient obtained the information and, if different, the person to whom it relates.
(3)
The “primary recipient” means, as the case may be—
(a)
the Secretary of State,
(b)
any person authorised under section 84 to exercise powers on his behalf, and
(c)
any officer or servant of any such person.
(4)
Information shall not be treated as information to which this section applies if it has been made available to the public by virtue of being disclosed in any circumstances in which, or for any purpose for which, disclosure is not precluded by this section.
(5)
A person who contravenes this section commits an offence and is liable—
(a)
on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both;
(b)
on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum, or both.
87 Exceptions from restrictions on disclosure.
(1)
Information to which section 86 applies may be disclosed—
(a)
to any person with a view to the institution of, or otherwise for the purposes of, relevant proceedings,
(b)
for the purpose of enabling or assisting a relevant authority to discharge any relevant function (including functions in relation to proceedings),
(c)
to the Treasury, if the disclosure is made in the interests of investors or in the public interest,
(d)
if the information is or has been available to the public from other sources,
(e)
in a summary or collection of information framed in such a way as not to enable the identity of any person to whom the information relates to be ascertained, or
(f)
in pursuance of any F84EU obligation.
(2)
The relevant proceedings referred to in subsection (1)(a) are—
(a)
any criminal proceedings,
F85(b)
civil proceedings arising under or by virtue of the Financial Services and Markets Act 2000 and proceedings before the Upper Tribunal in respect of—
F86(i)
a decision of the FCA;
(ia)
a decision of the PRA;
(ii)
a decision of the Bank of England; or
(iii)
a decision of a person relating to the assessment of any compensation or consideration under the Banking (Special Provisions) Act 2008 F87, the Banking Act 2009 or Schedule 11 to the Financial Services and Markets Act 2023,
(c)
disciplinary proceedings relating to—
(i)
the exercise by a F88relevant lawyer, auditor, accountant, valuer or actuary of his professional duties, or
(ii)
the discharge by a public servant of his duties.
F91(2A)
In subsection (2)(c)(i) “relevant lawyer” means—
(a)
a person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which constitutes a reserved legal activity (within the meaning of that Act),
(b)
a solicitor or barrister in Northern Ireland, or
(c)
a solicitor or advocate in Scotland.
(3)
In subsection (2)(c)(ii) “public servant” means an officer or servant of the Crown or of any public or other authority for the time being designated for the purposes of that provision by order of the Secretary of State.
(4)
The relevant authorities referred to in subsection (1)(b), and the relevant functions in relation to each such authority, are as follows—
Authority | Functions |
|---|---|
F92The Secretary of State | Functions under— (a)the enactments relating to companies or insolvency; (b)Part 2, this Part or Part 7 of this Act; (c)the Financial Services and Markets Act 2000. |
F93The Treasury. | Functions under— (a)this Part or Part 7 of this Act; (b)the Financial Services and Markets Act 2000. |
F94An inspector appointed under Part 14 of the Companies Act 1985. | Functions under that Part. |
F95A person authorised to exercise powers under section 447 of the Companies Act 1985 or section 84 of this Act. | Functions under that section. |
F95A person appointed under— (a)section 167 of the Financial Services and Markets Act 2000 (general investigations), (b)section 168 of that Act (investigations in particular cases), (c)section 169(1)(b) of that Act (investigation in support of overseas regulator), (d)section 284 of that Act (investigations into affairs of certain collective investment schemes), or (e)regulations made as a result of section 262(2)(k) of that Act (investigations into open-ended investment companies),to conduct an investigation. | Functions in relation to the investigation. |
An overseas regulatory authority. | Its regulatory functions (within the meaning of section 82 of this Act). |
The Department of Economic Development in Northern Ireland or a person appointed or authorised by that Department. | Functions conferred on it or him by the enactments relating to companies or insolvency. |
F96. . . | F96. . . |
F96. . . | F96. . . |
F96. . . | F96. . . |
F96. . . | F96. . . |
F96. . . | F96. . . |
F96. . . | F96. . . |
The Bank of England. | F97Any of its functions |
Functions under the enactments relating to friendly societies, under the Building Societies Act 1986 and under the Financial Services and Markets Act 2000. | |
F100A body corporate established in accordance with section 212(1) of that Act. | Functions under the Financial Services Compensation Scheme, established in accordance with section 213 of that Act. |
A recognised investment exchangeF101, recognised clearing house or recognised CSD (as defined by section 285 of that Act). | Functions in its capacity as an exchange F102clearing house or central securities depository recognised under that Act. |
A body designated under section 326(1) of the Financial Services and Markets Act 2000. | Functions in its capacity as a body designated under that section. |
F96. . . | F96. . . |
F103A body designated by order under section 1252 of the Companies Act 2006. | F103Functions under Part 42 of the Companies Act 2006. |
F104A recognised supervisory or qualifying body within the meaning of Part 42 of the Companies Act 2006. | F104Functions as such a body. |
F96. . . | F96. . . |
F105. . . | F105. . . |
The Official Receiver or, in Northern Ireland, the Official Assignee for company liquidations or for bankruptcy. | Functions under the enactments relating to insolvency. |
A recognised professional body (within the meaning of section 391 of the Insolvency Act 1986). | Functions in its capacity as such a body under the M12Insolvency Act 1986. |
F96. . . | F96. . . |
F106The Pensions Regulator | Functions conferred by or by virtue of—
or any enactment in force in Northern Ireland corresponding to an enactment mentioned in paragraphs (a) to (d) above. |
The Board of the Pension Protection Fund | Functions conferred by or by virtue of Part 2 of the Pensions Act 2004 or any enactment in force in Northern Ireland corresponding to that Part. |
F107The Competition and Markets Authority | Functions under the F108Financial Services and Markets Act 2000. |
F109A person authorised by the Secretary of State under sections 245C of the Companies Act 1985. | F109Functions relating to the securing of compliance by companies with the accounting requirements of that Act). |
F110. . . | F110. . . |
F111The Comptroller and Auditor General. | Functions under Part 2 of the National Audit Act 1983. |
F112The Scottish Ministers | Functions under the enactments relating to insolvency |
The Accountant in Bankruptcy | Functions he has under the enactments relating to insolvency. |
F113 The Regulator of Community Interest Companies. | Functions under the Companies (Audit, Investigations and Community Enterprise) Act 2004. |
F114The Gambling Commission | F115Functions under— (a)the Gambling Act 2005, (b)sections 5 to 10 and 15 of the National Lottery etc. Act 1993. |
F116Note: Article 3(4) of the Companies (Disclosure of Information) (Designated Authorities) (No. 2) Order 2002 restricts the circumstances in which disclosure for the purpose of enabling or assisting the Comptroller and Auditor General to discharge his relevant functions is permitted.
(5)
The Secretary of State may by order amend the Table in subsection (4) so as to—
(a)
add any public or other authority to the Table and specify the relevant functions of that authority,
(b)
remove any authority from the Table, or
(c)
add functions to, or remove functions from, those which are relevant functions in relation to an authority specified in the Table;
and the order may impose conditions subject to which, or otherwise restrict the circumstances in which, disclosure is permitted.
(6)
An order 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.
88 Exercise of powers in relation to Northern Ireland.
(1)
The following provisions apply where it appears to the Secretary of State that a request for assistance by an overseas regulatory authority may involve the powers conferred by section 83 being exercised in Northern Ireland in relation to matters which are transferred matters within the meaning of the M13Northern Ireland Constitution Act 1973.
(2)
The Secretary of State shall before deciding whether to accede to the request consult the Department of Economic Development in Northern Ireland, and if he decides to accede to the request and it appears to him—
(a)
that the powers should be exercised in Northern Ireland, and
(b)
that the purposes for which they should be so exercised relate wholly or primarily to transferred matters,
he shall by instrument in writing authorise the Department to exercise in Northern Ireland his powers under section 83.
(3)
The following provisions have effect in relation to the exercise of powers by virtue of such an authority with the substitution for references to the Secretary of State of references to the Department of Economic Development in Northern Ireland—
(a)
section 84 (exercise of powers by officer, &c.),
F117(b)
section 449 of the Companies Act 1985 and sections 86 and 87 above (restrictions on disclosure of information);
(c)
section 89 (authority for institution of criminal proceedings);
and references to the Secretary of State in other enactments which proceed by reference to those provisions shall be construed accordingly as being or including references to the Department.
(4)
The Secretary of State may after consultation with the Department of Economic Development in Northern Ireland revoke an authority given to the Department under this section.
(5)
In that case nothing in the provisions referred to in subsection (3)(b) shall apply so as to prevent the Department from giving the Secretary of State any information obtained by virtue of the authority; and (without prejudice to their application in relation to disclosure by the Department) those provisions shall apply to the disclosure of such information by the Secretary of State as if it had been obtained by him in the first place.
(6)
Nothing in this section affects the exercise by the Secretary of State of any powers in Northern Ireland—
(a)
in a case where at the time of acceding to the request it did not appear to him that the circumstances were such as to require him to authorise the Department of Economic Development in Northern Ireland to exercise those powers, or
(b)
after the revocation by him of any such authority;
and no objection shall be taken to anything done by or in relation to the Secretary of State or the Department on the ground that it should have been done by or in relation to the other.
89 Prosecutions.
Proceedings for an offence under section 85 or 86 shall not be instituted—
(a)
in England and Wales, except by or with the consent of the Secretary of State or the Director of Public Prosecutions;
(b)
in Northern Ireland, except by or with the consent of the Secretary of State or the Director of Public Prosecutions for Northern Ireland.
90 Offences by bodies corporate, partnerships and unincorporated associations.
(1)
Where an offence under section 85 or 86 committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a director, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity, he as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.
(2)
Where the affairs of a body corporate are managed by its members, subsection (1) applies in relation to the acts and defaults of a member in connection with his functions of management as to a director of a body corporate.
(3)
Where an offence under section 85 or 86 committed by a partnership is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a partner, he as well as the partnership is guilty of the offence and liable to be proceeded against and punished accordingly.
(4)
Where an offence under section 85 or 86 committed by an unincorporated association (other than a partnership) is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any officer of the association or any member of its governing body, he as well as the association is guilty of the offence and liable to be proceeded against and punished accordingly.
91 Jurisdiction and procedure in respect of offences.
(1)
Summary proceedings for an offence under section 85 may, without prejudice to any jurisdiction exercisable apart from this section, be taken against a body corporate or unincorporated association at any place at which it has a place of business and against an individual at any place where he is for the time being.
(2)
Proceedings for an offence alleged to have been committed under section 85 or 86 by an unincorporated association shall be brought in the name of the association (and not in that of any of its members), and for the purposes of any such proceedings any rules of court relating to the service of documents apply as in relation to a body corporate.
(3)
Section 33 of the M14Criminal Justice Act 1925 and Schedule 3 to the M15Magistrates’ Courts Act 1980 (procedure on charge of offence against a corporation) apply in a case in which an unincorporated association is charged in England and Wales with an offence under section 85 or 86 as they apply in the case of a corporation.
(4)
In relation to proceedings on indictment in Scotland for an offence alleged to have been committed under section 85 or 86 by an unincorporated association, F118section 70 of the M16Criminal Procedure (Scotland) Act 1995 (proceedings on indictment against bodies corporate) applies as if the association were a body corporate.
(5)
Section 18 of the M17Criminal Justice Act (Northern Ireland) 1945 and Schedule 4 to the M18Magistrates’ Courts (Northern Ireland) Order 1981 (procedure on charge of offence against a corporation) apply in a case in which an unincorporated association is charged in Northern Ireland with an offence under section 85 or 86 as they apply in the case of a corporation.
(6)
A fine imposed on an unincorporated association on its conviction of such an offence shall be paid out of the funds of the association.
F119 Part IV Registration of Company Charges
F119 Introduction
F11992 Introduction.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119 Registration in the companies charges register
F11993 Charges requiring registration.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11994 The companies charges register.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11995 Delivery of particulars for registration.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11996 Delivery of further particulars.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11997 Effect of omissions and errors in registered particulars.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11998 Memorandum of charge ceasing to affect company’s property.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11999 Further provisions with respect to voidness of charges.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119100 Additional information to be registered.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119 Copies of instruments and register to be kept by the company
F119101 Copies of instruments and register to be kept by the company
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119 Supplementary provisions
F119102 Power to make further provision by regulations.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119103 Other supplementary provisions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119104 Interpretation, &c.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119105 Charges on property of oversea company.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119106 Application of provisions to unregistered companies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F119107 Consequential amendments.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part V Other amendments of Company Law
De-regulation of private companies
113 Written resolutions of private companies.
F129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114 Written resolutions: supplementary provisions.
F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F131115 Election by private company to dispense with certain requirements.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116 Elective resolution of private company.
F132(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
“(bb)
an elective resolution or a resolution revoking such a resolution;”.
F133117 Power to make further provision by regulations.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous
F142128 Form and articles for partnership company.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F142129 Membership of holding company.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130 Company contracts and execution of documents by companies.
F143(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F144
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)
The Secretary of State may make provision by regulations applying sections 36 to 36C of the Companies Act 1985 (company contracts; execution of documents; F145execution of deeds; pre-incorporation contracts, deeds and obligations) to companies incorporated outside Great Britain, subject to such exceptions, adaptations or modifications as may be specified in the regulations.
Regulations under this subsection shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F146131 Members’ rights to damages, &c.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F146132 Financial assistance for purposes of employees’ share scheme.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F146133 Issue of redeemable shares.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134 Disclosure of interests in shares.
F147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135 Orders imposing restrictions on shares.
(1)
The Secretary of State may by regulations made by statutory instrument make such amendments of the provisions of the M19Companies Act 1985 F148and the Companies Act 2006 relating to orders imposing restrictions on shares as appear to him necessary or expedient—
(a)
for enabling orders to be made in a form protecting the rights of third parties;
(b)
with respect to the circumstances in which restrictions may be relaxed or removed;
(c)
with respect to the making of interim orders by a court.
(2)
(3)
The regulations may make different provision for different cases and may contain such transitional and other supplementary and incidental provisions as appear to the Secretary of State to be appropriate.
(4)
Regulations under this section shall not be made unless a draft of the regulations has been laid before Parliament and approved by resolution of each House of Parliament.
F151136 A company’s registered office.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
137 Effecting of insurance for officers and auditors of company.
F152. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138 Increase of limits on certain exemptions.
F153. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139 Annual returns.
F154(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F154(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F154(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
“(f)
section 363 (duty of company to make annual returns);”.
(5)
F155. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140 Floating charges (Scotland).
(1)
In section 463 of the Companies Act 1985 (effect of floating charge on winding up), in subsection (1) for the words “On the commencement of the winding up of a company,” there shall be substituted the words “
Where a company goes into liquidation within the meaning of section 247(2) of the Insolvency Act 1986,
”
.
(2)
Section 464 of the Companies Act 1985 (ranking of floating charges) is amended as follows.
(3)
In subsection (1)(b) at the beginning there shall be inserted the words “
with the consent of the holder of any subsisting floating charge or fixed security which would be adversely affected,
”
.
(4)
“(1A)
Where an instrument creating a floating charge contains any such provision as is mentioned in subsection (1)(a), that provision shall be effective to confer priority on the floating charge over any fixed security or floating charge created after the date of the instrument.”.
(5)
“(3)
The order of ranking of the floating charge with any other subsisting or future floating charges or fixed securities over all or any part of the company’s property is determined in accordance with the provisions of subsections (4) and (5) except where it is determined in accordance with any provision such as is mentioned in paragraph (a) or (b) of subsection (1).”.
(6)
“; and
(e)
(in the case of a floating charge to secure a contingent liability other than a liability arising under any further advances made from time to time) the maximum sum to which that contingent liability is capable of amounting whether or not it is contractually limited.”.
(7)
In subsection (6) after the words “subject to” there shall be inserted the words “
Part XII and to
”
.
(8)
In section 466 of the Companies Act 1985 (alteration of floating charges), subsections (4) and (5) and in subsection (6) the words “falling under subsection (4) of this section” shall cease to have effect.
F156141 Application to declare dissolution of company void.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F156142 Abolition of doctrine of deemed notice.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F156143 Rights of inspection and related matters.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
144“Subsidiary”, “holding company” and “wholly-owned subsidiary”.
F157(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F157(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F157(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
Schedule 18 contains amendments and savings consequential on the amendments made by this section; and the Secretary of State may by regulations make such further amendments or savings as appear to him to be necessary or expedient.
(5)
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.
(6)
So much of section 23(3) of the Interpretation Act 1978 as applies section 17(2)(a) of that Act (presumption as to meaning of references to enactments repealed and re-enacted) to deeds or other instruments or documents does not apply in relation to the repeal and re-enactment by this section of section 736 of the Companies Act 1985.
145
The Companies Act 1985 has effect with the further amendments specified in Schedule 19.
Part VI Mergers and Related Matters
146. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F158. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
147 Undertakings as alternative to merger reference.
F159. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
148 Enforcement of undertakings.
F160. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149 Temporary restrictions on share dealings.
F161. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150 Obtaining control by stages.
F162. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F163151 False or misleading information.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
152 Fees.
F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
152 Fees.
(1)
The Secretary of State may by regulations made by statutory instrument require the payment to him or to the Director of such fees as may be prescribed by the regulations in connection with the exercise by the Secretary of State, the Director and the Commission of their functions under Part V of the Fair Trading Act 1973.
(2)
The regulations may provide for fees to be payable—
(a)
in respect of—
(i)
an application for the consent of the Secretary of State under section 58(1) of the Fair Trading Act 1973 to the transfer of a newspaper or of newspaper assets, and
(ii)
a notice under section 75A(1) of that Act, and
(b)
on the occurrence of any event specified in the regulations.
(3)
The events that may be specified in the regulations by virtue of subsection (2)(b) above include—
(a)
the making by the Secretary of State of a merger reference to the Commission under section 64 or 75 of the Fair Trading Act 1973,
(b)
the announcement by the Secretary of State of his decision not to make a merger reference in any case where, at the time the announcement is made, he would under one of those sections have power to make a such a reference.
(4)
The regulations may also contain provision—
(a)
for ascertaining the persons by whom fees are payable,
(b)
specifying whether any fee is payable to the Secretary of State or to the Director,
(c)
for the amount of any fee to be calculated by reference to matters which may include—
(i)
in a case involving functions of the Secretary of State under sections 57 to 61 of the Fair Trading Act 1973, the number of newspapers concerned, the number of separate editions (determined in accordance with the regulations) of each newspaper and the average circulation per day of publication (within the meaning of Part V of that Act) of each newspaper, and
(ii)
in any other case, the value (determined in accordance with the regulations) of any assets concerned,
(d)
as to the time when any fee is to be paid, and
(e)
for the repayment by the Secretary of State or the Director of the whole or part of any fee in specified circumstances.
(5)
The regulations may make different provision for different cases.
(6)
Subsections (2) to (5) above do not prejudice the generality of subsection (1) above.
(7)
In determining the amount of any fees to be prescribed by the regulations, the Secretary of State may take into account all costs incurred by him and by the Director in respect of the exercise by him, by the Commission and by the Director of their respective functions—
(a)
under Part V of the Fair Trading Act 1973, and
(b)
under Parts I, VII and VIII of that Act in relation to merger references or other matters arising under Part V.
(8)
A statutory instrument containing regulations under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(9)
Fees paid to the Secretary of State or the Director under this section shall be paid into the Consolidated Fund.
(10)
In this section—
“the Commission”,
“the Director”, and
“merger reference”,
have the same meaning as in the Fair Trading Act 1973, and “newspaper” has the same meaning as in Part V of that Act.
(11)
References in this section to Part V of the Fair Trading Act 1973 and to merger references under section 64 or 75 of that Act or under that Part [include sections 32 to 34 of the Water Industry Act 1991 and any reference under section 32 of that Act].
152 Fees.
(1)
The Secretary of State may by regulations made by statutory instrument require the payment to him or to the Director of such fees as may be prescribed by the regulations in connection with the exercise by the Secretary of State, the Director and the Commission of their functions under Part V of the Fair Trading Act 1973.
(2)
The regulations may provide for fees to be payable—
(a)
in respect of—
(i)
an application for the consent of the Secretary of State under section 58(1) of the Fair Trading Act 1973 to the transfer of a newspaper or of newspaper assets, and
(ii)
a notice under section 75A(1) of that Act, and
(b)
on the occurrence of any event specified in the regulations.
(3)
The events that may be specified in the regulations by virtue of subsection (2)(b) above include—
(a)
the making by the Secretary of State of a merger reference to the Commission under section 64 or 75 of the Fair Trading Act 1973,
(b)
the announcement by the Secretary of State of his decision not to make a merger reference in any case where, at the time the announcement is made, he would under one of those sections have power to make a such a reference.
(4)
The regulations may also contain provision—
(a)
for ascertaining the persons by whom fees are payable,
(b)
specifying whether any fee is payable to the Secretary of State or to the Director,
(c)
for the amount of any fee to be calculated by reference to matters which may include—
(i)
in a case involving functions of the Secretary of State under sections 57 to 61 of the Fair Trading Act 1973, the number of newspapers concerned, the number of separate editions (determined in accordance with the regulations) of each newspaper and the average circulation per day of publication (within the meaning of Part V of that Act) of each newspaper, and
(ii)
in any other case, the value (determined in accordance with the regulations) of any assets concerned,
(d)
as to the time when any fee is to be paid, and
(e)
for the repayment by the Secretary of State or the Director of the whole or part of any fee in specified circumstances.
(5)
The regulations may make different provision for different cases.
(6)
Subsections (2) to (5) above do not prejudice the generality of subsection (1) above.
(7)
In determining the amount of any fees to be prescribed by the regulations, the Secretary of State may take into account all costs incurred by him and by the Director in respect of the exercise by him, by the Commission and by the Director of their respective functions—
(a)
under Part V of the Fair Trading Act 1973, and
(b)
under Parts I, VII and VIII of that Act in relation to merger references or other matters arising under Part V.
(8)
A statutory instrument containing regulations under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(9)
Fees paid to the Secretary of State or the Director under this section shall be paid into the Consolidated Fund.
(10)
In this section—
“the Commission”,
“the Director”, and
“merger reference”,
have the same meaning as in the Fair Trading Act 1973, and “newspaper” has the same meaning as in Part V of that Act.
(11)
References in this section to Part V of the Fair Trading Act 1973 and to merger references under section 64 or 75 of that Act or under that Part include sections 29 and 30 of the Water Act 1989 and any reference under section 29 of that Act.
153 Other amendments about mergers and related matters.
Schedule 20 to this Act has effect.
Part VII Financial Markets and Insolvency
Introduction
154 Introduction.
This Part has effect for the purposes of safeguarding the operation of certain financial markets by provisions with respect to—
(a)
the insolvency, winding up or default of a person party to transactions in the market (sections 155 to 172),
(b)
the effectiveness or enforcement of certain charges given to secure obligations in connection with such transactions (sections 173 to 176), and
(c)
rights and remedies in relation to certain property provided as cover for margin in relation to such transactions F165or as default fund contribution, or subject to such a charge (sections 177 to 181).
F166Recognised bodies
155 Market contracts.
F167(1)
In this Part—
(a)
“clearing member client contract” means a contract between a recognised central counterparty and one or more of the parties mentioned in subsection (1A) which is recorded in the accounts of the recognised central counterparty as a position held for the account of a client, an indirect client or a group of clients or indirect clients;
(b)
“clearing member house contract” means a contract between a recognised central counterparty and a clearing member recorded in the accounts of the recognised central counterparty as a position held for the account of a clearing member;
(c)
“client trade” means a contract between two or more of the parties mentioned in subsection (1A) which corresponds to a clearing member client contract;
(d)
“market contracts” means the contracts to which this Part applies by virtue of subsections (2) to F168(3ZA).
F169(1A)
The parties referred to in subsections (1)(a) and (c) are—
(a)
a clearing member;
(b)
a client; and
(c)
an indirect client.
F170(2)
Except as provided in subsection (2A), in relation to a recognised investment exchange this Part applies to—
(a)
contracts entered into by a member or designated non-member of the exchange F171with a person other than the exchangewhich are either
(i)
contracts made on the exchange or on an exchange to whose undertaking the exchange has succeeded whether by amalgamation, merger or otherwise; or
(ii)
contracts in the making of which the member or designated non-member was subject to the rules of the exchange or of an exchange to whose undertaking the exchange has succeeded whether by amalgama- tion, merger or otherwise; F172...
F173(b)
contracts entered into by the exchange, in its capacity as such, with a member of the exchange or with a recognised clearing house F174or with a recognised CSD or with another recognised investment exchange for the purpose of enabling the rights and liabilities of that member F175or recognised body under a transaction to be settled; and
A “designated non-member” means a person in respect of whom action may be taken under the default rules of the exchange but who is not a member of the exchange.
F176(2A)
Where the exchange in question is a recognised overseas investment exchange, this Part does not apply to a contract that falls within paragraph (a) of subsection (2) (unless it also falls within subsection (3)).
F177(2B)
In relation to transactions which are cleared through a recognised central counterparty, this Part applies to—
(a)
clearing member house contracts;
(b)
clearing member client contracts;
(c)
client trades, other than client trades excluded by subsection (2C) F178or (2D); and
(2C)
A client trade is excluded by this subsection from subsection (2B)(c) if—
(a)
the clearing member which is a party to the clearing member client contract corresponding to the client trade defaults; and
(b)
the clearing member client contract is not transferred to another clearing member within the period specified for this purpose in the default rules of the recognised central counterparty.
F181(2D)
A client trade is also excluded by this subsection from subsection (2B)(c) if—
(a)
the client trade was entered into by a client in the course of providing indirect clearing services to an indirect client;
(b)
the client defaults; and
(c)
the clearing member client contract corresponding to the client trade is not transferred within—
(i)
the period specified for this purpose in the default rules of the recognised central counterparty; or
(ii)
if no such period is specified in the default rules of the recognised central counterparty, a period of 14 days beginning with the day on which proceedings in respect of the client’s insolvency are begun.
F182(3)
In relation to a recognised clearing house F183which is not a recognised central counterparty, this Part applies to—
(a)
contracts entered into by the clearing house, in its capacity as such, with a member of the clearing house or with a recognised investment exchange F184or with a recognised CSD or with another recognised clearing house for the purpose of enabling the rights and liabilities of that member F185or recognised body under a transaction to be settled; and
(b)
F188(3ZA)
In relation to a recognised CSD, this Part applies to contracts entered into by the central securities depository with a member of the central securities depository or with a recognised investment exchange or with a recognised clearing house or with another recognised CSD for the purpose of providing authorised central securities depository services to that member or recognised body.
F189(3A)
In this section “central counterparty clearing services” means—
(a)
the services provided by a recognised investment exchange or a recognised clearing house to the parties to a transaction in connection with contracts between each of the parties and the investment exchange or clearing house (in place of, or as an alternative to, a contract directly between the parties),
(b)
the services provided by a recognised clearing house to F190a recognised body in connection with contracts between them, or
(c)
the services provided by a recognised investment exchange to F191a recognised body in connection with contracts between them.
F192(3B)
The reference in subsection (2D)(c)(ii) to the beginning of insolvency proceedings is to—
(a)
F193the making of a bankruptcy application or the presentation of a bankruptcy petition or a petition for sequestration of a client’s estate, or
(b)
the application for an administration order or the presentation of a winding-up petition or the passing of a resolution for voluntary winding up, or
(c)
the appointment of an administrative receiver.
(3C)
In subsection (3B)(b) the reference to an application for an administration order is to be taken to include a reference to—
(a)
in a case where an administrator is appointed under paragraph 14 or 22 of Schedule B1 to the Insolvency Act 1986 (appointment by floating charge holder, company or directors) following filing with the court of a copy of a notice of intention to appoint under that paragraph, the filing of the copy of the notice, and
(b)
in a case where an administrator is appointed under either of those paragraphs without a copy of a notice of intention to appoint having been filed with the court, the appointment of the administrator.
F194(3D)
In this Part “authorised central securities depository services” means, in relation to a recognised CSD—
(a)
the core services listed in Section A of the Annex to the CSD regulation which that central securities depository is authorised to provide pursuant to Article 16 or 19(1)(a) or (c) of the CSD regulation;
(b)
the non-banking-type ancillary services listed in or permitted under Section B of that Annex which that central securities depository is authorised to provide, including services notified under Article 19 of the CSD regulation; and
(c)
the banking-type ancillary services listed in or permitted under Section C of that Annex which that central securities depository is authorised to provide pursuant to Article 54(2)(a) of the CSD regulation.
(4)
The Secretary of State may by regulations make further provision as to the contracts to be treated as “market contracts”, for the purposes of this Part, in relation to F195a recognised body.
(5)
The regulations may add to, amend or repeal the provisions of subsections F196(2), (3), (3ZA) and (3D) above.
F197155A.Qualifying collateral arrangements and qualifying property transfers
(1)
In this Part—
(a)
“qualifying collateral arrangements” means the contracts and contractual obligations to which this Part applies by virtue of subsection (2); and
(b)
“qualifying property transfers” means the property transfers to which this Part applies by virtue of subsection (4).
(2)
In relation to transactions which are cleared through a recognised central counterparty, this Part applies to any contracts or contractual obligations for, or arising out of, the provision of property as margin where—
(a)
the margin is provided to a recognised central counterparty and is recorded in the accounts of the recognised central counterparty as an asset held for the account of a client, an indirect client, or a group of clients or indirect clients; or
(b)
the margin is provided to a client or clearing member for the purpose of providing cover for exposures arising out of present or future client trades.
(3)
In subsection (2)—
(a)
“property” has the meaning given by section 436(1) of the Insolvency Act 1986 and
(b)
the reference to a contract or contractual obligation for, or arising out of, the provision of property as margin in circumstances falling within paragraph (a) or (b) of that subsection includes a reference to a contract or contractual obligation of that kind which has been amended to reflect the transfer of a clearing member client contract or client trade.
(4)
In relation to transactions which are cleared through a recognised central counterparty, this Part applies to—
(a)
transfers of property made in accordance with Article 48(7) of the EMIR Level 1 Regulation;
F198(aa)
transfers of property made in accordance with Article 4(6) and (7) of the EMIR Level 2 Regulation or Article 4(6) and (7) of the MIFIR Level 2 Regulation;
(b)
transfers of property to the extent that they—
(i)
are made by a recognised central counterparty to a non-defaulting clearing member instead of, or in place of, a defaulting clearing member;
(ii)
represent the termination or close out value of a clearing member client contract which is transferred from a defaulting clearing member to a non-defaulting clearing member; and
(iii)
are determined in accordance with the default rules of the recognised central counterparty.
F199(c)
transfers of property to the extent that they—
(i)
are made by a clearing member to a non-defaulting client or another clearing member instead of, or in place of, a defaulting client;
(ii)
represent the termination or close out value of a client trade which is transferred from a defaulting client to another clearing member or a non-defaulting client; and
(iii)
do not exceed the termination or close out value of the clearing member client contract corresponding to that client trade, as determined in accordance with the default rules of the recognised central counterparty.
F200156. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
157
(1)
F201A recognised body shall give the F202appropriate regulator at least F203three months notice of any proposal to amend, revoke or add to its default rules; and the F204regulator may within F203three months from receipt of the notice direct F205the recognised body not to proceed with the proposal, in whole or in part.
F206(1A)
The appropriate regulator may, if it considers it appropriate to do so, agree a shorter period of notice and, in a case where it does so, any direction under this section must be given by it within that shorter period.
(2)
A direction under this section may be varied or revoked.
(3)
Any amendment or revocation of, or addition to, the default rules of F207a recognised body in breach of a direction under this section is ineffective.
F208(4)
The appropriate regulator”—
(a)
in relation to a recognised UK investment exchange, means the FCA, and
158 Modifications of the law of insolvency.
F211(1)
The general law of insolvency has effect in relation to—
(a)
market contracts,
(b)
action taken under the rules of F212a recognised body other than a recognised central counterparty, with respect to market contracts,
(c)
action taken under the rules of a recognised central counterparty to transfer clearing member client contracts, or settle clearing member client contracts or clearing member house contracts, in accordance with the default rules of the recognised central counterparty,
(d)
where clearing member client contracts transferred in accordance with the default rules of a recognised central counterparty were entered into by the clearing member F213or client as a principal, action taken to transfer F214... client trades, or groups of client trades, corresponding to those clearing member client contracts,
(e)
action taken to transfer qualifying collateral arrangements in conjunction with a transfer of clearing member client contracts as mentioned in paragraph (c) or a transfer of client trades as mentioned in paragraph (d), and
(f)
qualifying property transfers,
subject to the provisions of sections 159 to 165.
(2)
So far as those provisions relate to insolvency proceedings in respect of a person other than a defaulter, they apply in relation to—
F215(a)
proceedings in respect of a recognised investment exchange or a member or designated non-member of a recognised investment exchange,
(aa)
proceedings in respect of a recognised clearing house or a member of a recognised clearing house, F216...
F217(ab)
proceedings in respect of a recognised CSD or a member of a recognised CSD, and
(b)
but not in relation to any other insolvency proceedings, notwithstanding that rights or liabilities arising from market contracts fall to be dealt with in the proceedings.
(3)
The reference in subsection (2)(b) to the beginning of insolvency proceedings is to—
(a)
F220the making of a bankruptcy application or the presentation of a bankruptcy petition or a petition for sequestration of a person’s estate, or
F221(b)
the application for an administration order or the presentation of a winding-up petition or the passing of a resolution for voluntary winding up,
(c)
the appointment of an administrative receiver.
F222(3A)
In subsection (3)(b) the reference to an application for an administration order shall be taken to include a reference to—
(a)
in a case where an administrator is appointed under paragraph 14 or 22 of Schedule B1 to the Insolvency Act 1986 (appointment by floating charge holder, company or directors) following filing with the court of a copy of a notice of intention to appoint under that paragraph, the filing of the copy of the notice, and
(b)
in a case where an administrator is appointed under either of those paragraphs without a copy of a notice of intention to appoint having been filed with the court, the appointment of the administrator.
(4)
The Secretary of State may make further provision by regulations modifying the law of insolvency in relation to the matters mentioned in F223paragraphs (a) to (d) of subsection (1).
(5)
The regulations may add to, amend or repeal the provisions mentioned in subsection (1), and any other provision of this Part as it applies for the purposes of those provisions, or provide that those provisions have effect subject to such additions, exceptions or adaptations as are specified in the regulations.
159F224Proceedings of recognised bodies take precedence over insolvency procedures.
(1)
None of the following shall be regarded as to any extent invalid at law on the ground of inconsistency with the law relating to the distribution of the assets of a person on bankruptcy, winding up or sequestration, or F225in the administration of a company or other body or in the administration of an insolvent estate—
(a)
a market contract,
(b)
the default rules of F226a recognised body,
(c)
F229(d)
the rules of a recognised central counterparty on which the recognised central counterparty relies to give effect to the transfer of a clearing member client contract, or the settlement of a clearing member client contract or clearing member house contract, in accordance with its default rules,
(e)
a transfer of a clearing member client contract, or the settlement of a clearing member client contract or a clearing member house contract, in accordance with the default rules of a recognised central counterparty,
(f)
where a clearing member client contract transferred in accordance with the default rules of a recognised central counterparty was entered into by the clearing member F230or client as principal, a transfer of F231a client trade or group of client trades corresponding to that clearing member client contract,
(g)
a transfer of a qualifying collateral arrangement in conjunction with the transfer of clearing member client contract as mentioned in paragraph (e) or of a client trade as mentioned in paragraph (f), or
(h)
a qualifying property transfer.
(2)
The powers of a relevant office-holder in his capacity as such, and the powers of the court under the M21Insolvency Act 1986F232, the Bankruptcy (Scotland) Act F2332016, Part 10 of the Building Societies Act 1986, Parts 2 and 3 of the Banking Act 2009 or under regulations made under section 233 of that Act, shall not be exercised in such a way as to prevent or interfere with—
(a)
(b)
any action taken under the default rules of F236a recognised body other than a recognised central counterparty,
F237(c)
the transfer of a clearing member client contract, or the settlement of a clearing member client contract or a clearing member house contract, in accordance with the default rules of a recognised central counterparty,
(d)
where a clearing member client contract transferred in accordance with the default rules of a recognised central counterparty was entered into by the clearing member F238or client as principal, the transfer of F239a client trade or group of client trades corresponding to that clearing member contract,
(e)
the transfer of a qualifying collateral arrangement in conjunction with a transfer of a clearing member client contract as mentioned in paragraph (c), or a transfer of a client trade as mentioned in paragraph (d),
(f)
any action taken to give effect to any of the matters mentioned in paragraphs (c) to (e), or
(g)
any action taken to give effect to a qualifying property transfer.
This does not prevent a relevant office-holder from afterwards seeking to recover any amount under section 163(4) or 164(4) or prevent the court from afterwards making any such order or decree as is mentioned in section 165(1) or (2) (but subject to subsections (3) and (4) of that section).
(3)
Nothing in the following provisions of this Part shall be construed as affecting the generality of the above provisions.
(4)
A debt or other liability arising out of a market contract which is the subject of default proceedings may not be proved in a winding up or bankruptcy F240or in the administration of a company or other body, or in Scotland claimed in a winding up or sequestration F240or in the administration of a company or other body, until the completion of the default proceedings.
A debt or other liability which by virtue of this subsection may not be proved or claimed shall not be taken into account for the purposes of any set-off until the completion of the default proceedings.
F241(4A)
However, prior to the completion of default proceedings—
(a)
where it appears F242to the convener that a sum will be certified under section 162(1) to be payable, subsection (4) shall not prevent any proof or claim including or consisting of an estimate of that sum which has been lodged or, in Scotland, submitted, from being admitted or, in Scotland, accepted, for the purpose only of determining the entitlement of a creditor to vote F243in a decision procedure; and
(b)
a creditor whose claim or proof has been lodged and admitted or, in Scotland, submitted and accepted, for the purpose of determining the entitlement of a creditor to vote F244in a decision procedure and which has not been subsequently wholly withdrawn, disallowed or rejected, is eligible as a creditor to be a member of a liquidation committee or, in bankruptcy proceedings in England and Wales, F245or in the administration of a company or other body a creditors’ committee.
(5)
For the purposes of F246subsections (4) and (4A) the default proceedings shall be taken to be completed in relation to a person when a report is made under section 162 stating the sum (if any) certified to be due to or from him.
160
(1)
It is the duty of—
(a)
any person who has or had control of any assets of a defaulter, and
(b)
any person who has or had control of any documents of or relating to a defaulter,
to give F247a recognised body such assistance as it may reasonably require for the purposes of its default proceedings.
This applies notwithstanding any duty of that person under the enactments relating to insolvency.
(2)
A person shall not under this section be required to provide any information or produce any document which he would be entitled to refuse to provide or produce on grounds of legal professional priviledge in proceedings in the High Court or on grounds of confidentiality as between client and professional legal adviser in proceedings in the Court of Session.
(3)
Where original documents are supplied in pursuance of this section, F248the recognised body shall return them forthwith after the completion of the relevant default proceedings, and shall in the meantime allow reasonable access to them to the person by whom they were supplied and to any person who would be entitled to have access to them if they were still in the control of the person by whom they were supplied.
(4)
The expenses of a relevant office-holder in giving assistance under this section are recoverable as part of the expenses incurred by him in the discharge of his duties; and he shall not be required under this section to take any action which involves expenses which cannot be so recovered, unless F249the recognised body undertakes to meet them.
There shall be treated as expenses of his such reasonable sums as he may determine in respect of time spent in giving the assistance F250and for the purpose of determining the priority in which his expenses are payable out of the assets, sums in respect of time spent shall be treated as his remuneration and other sums shall be treated as his disbursements or, in Scotland, outlays.
(5)
The regulations may add to, amend or repeal the provisions of subsections (1) to (4) above.
(6)
In this section “document” includes information recorded in any form.
161 Supplementary provisions as to default proceedings.
(1)
If the court is satisfied on an application by a relevant office-holder that a party to a market contract with a defaulter intends to dissipate or apply his assets so as to prevent the office-holder recovering such sums as may become due upon the completion of the default proceedings, the court may grant such interlocutory relief (in Scotland, such interim order) as it thinks fit.
(2)
A liquidatorF253, administrator or trustee of a defaulter or, in Scotland, a F254trustee in the sequestration of the estate of the defaulter shall not—
(a)
declare or pay any dividend to the creditors, or
(b)
return any capital to contributories,
unless he has retained what he reasonably considers to be an adequate reserve in respect of any claims arising as a result of the default proceedings of F255the recognised body concerned.
(3)
The court may on an application by a relevant office-holder make such order as it thinks fit altering or dispensing from compliance with such of the duties of his office as are affected by the fact that default proceedings are pending or could be taken, or have been or could have been taken.
(4)
Nothing in F256section 126, 128, 130, 185 or 285 of, or paragraph F25740, 41, 42 or 43 (F258including those paragraphs as applied by paragraph 44) of Schedule B1 to, the Insolvency Act 1986 (which restrict the taking of certain legal proceedings and other steps), and nothing in any rule of law in Scotland to the like effect as the said section 285, in the Bankruptcy (Scotland) Act M22 F2592016 or in the Debtors (Scotland) Act M23 as to the effect of sequestration, shall affect any action taken by F260a recognised body for the purpose of its default proceedings.
162 Duty to report on completion of default procedings.
(1)
F261Subject to subsection (1A), F262a recognised body shall, on the completion of proceedings under its default rules, report to the F263appropriate regulator on its proceedings stating in respect of each creditor or debtor the sum F264or sums certified by them to be payable from or to the defaulter or, as the case may be, the fact that no sum is payable.
F265(1A)
A recognised overseas investment exchange or recognised overseas clearing house shall not be subject to the obligation under subsection (1) unless it has been notified by the F266appropriate regulator that a report is required for the purpose of insolvency proceedings in any part of the United Kingdom.
F267(1B)
The report under subsection (1) need not deal with a clearing member client contract which has been transferred in accordance with the default rules of a recognised central counterparty.
(2)
F268The recognised body may make a single report or may make reports from time to time as proceedings are completed with respect to the transactions affecting particular persons.
(3)
F269The recognised body shall apply a copy of every report under this section to the defaulter and to any relevant office-holder acting in relation to him or to his estate.
(4)
(5)
F274A recognised body shall make available for inspection by a creditor or debtor of the defaulter so much of any report by it under this section as relates to the sum (if any) certified to be due or from him or to the method by which that sum was determined.
(6)
F276(7)
“The appropriate regulator”—
(a)
in relation to a recognised investment exchange or a recognised overseas investment exchange, means the FCA, and
(b)
in relation to a F277recognised CSD, a recognised clearing house or a recognised overseas clearing house, means the Bank of England.
163 Net sum payable on completion of default proceedings.
F278(1)
The following provisions apply with respect to a net sum certified by F279a recognised body under its default rules to be payable by or to a defaulter.
(2)
If, in England and Wales, a bankruptcyF280, winding-up or administration order has been made, or a resolution for voluntary winding-up has been passed, the debt—
(a)
is provable in the bankruptcyF281, winding up or administration or, as the case may be, is payable to the relevant office-holder, and
(b)
shall be taken into account, where appropriate, under section 323 of the Insolvency Act M241986 (mutual dealings and set-off) or the corresponding provision applicable in the case of winding up F282or administration,
in the same way as a debt before the commencement of the bankruptcy, the date on which the body corporate goes into liquidation (within the meaning of section 247 of the Insolvency Act 1986)F283, or enters administration or, in the case of a partnership, the date of the winding-up order F284or the date on which the partnership enters administration.
(3)
If, in Scotland, an award of sequestration or a winding-up F285or administration order has been made, or a resolution for voluntary winding up has been passed, the debt—
(a)
may be claimed in the sequestrationF286, winding up or administration or, as the case may be, is payable to the relevant office-holder, and
(b)
shall be taken into account for the purposes of any rule of law relating to set-off applicable in sequestrationF287, winding up or administration,
in the same way as a debt due before the date of sequestration (within the meaning of section F28822(7) of the Bankruptcy (Scotland) Act 2016 ) or the commencement of the winding up (within the meaning of section 129 of the Insolvency Act 1986) F289or the date on which the body corporate enters administration.
F290(3A)
In subsections (2) and (3), a reference to the making of an administration order shall be taken to include a reference to the appointment of an administrator under—
(a)
paragraph 14 of Schedule B1 to the Insolvency Act 1986 (appointment by holder of qualifying floating charge); or
(b)
paragraph 22 of that Schedule (appointment by company or directors).
(4)
However, where (or to the extent that) a sum is taken into account by virtue of subsection (2)(b) or (3)(b) which arises from a contract entered into at a time when the creditor had notice—
(a)
(b)
F295(c)
that an application for an administration order was pending or that any person had given notice of intention to appoint an administrator,
the value of any profit to him arising from the sum being so taken into account (or being so taken into account to that extent) is recoverable from him by the relevant office-holder unless the court directs otherwise.
(5)
Subsection (4) does not apply in relation to a sum arising from a contract effected under the default rules of F296a recognised body.
(6)
Any sum recoverable by virtue of subsection (4) ranks for priority, in the event of the insolvency of the person from whom it is due, immediately before preferential or, in Scotland, preferred debts.
164 Disclaimer of property, rescission of contracts, &c.
(1)
Sections 178, 186, 315 and 345 of the Insolvency Act 1986 (power to disclaim onerous property and court’s power to order rescission of contracts, &c.) do not apply in relation to—
(a)
a market contract, F297...
F298(aa)
a qualifying collateral arrangement,
(ab)
a transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement, as mentioned in paragraphs (c) to (e) of section 158(1),
(ac)
a qualifying property transfer, or
(b)
In the application of this subsection in Scotland, the reference to sections 178, 315 and 345 shall be construed as a reference to any rule of law having the like effect as those sections.
(2)
In Scotland, a F301trustee in the sequestration of the estate of a defaulter or a liquidator is bound by any market contract to which that defaulter is a party and by any contract as is mentioned in subsection (1)(b) above notwithstanding section F302110 of the Bankruptcy (Scotland) Act 2016 or any rule of law to the like effect applying in liquidations.
(3)
Sections 127 and 284 of the Insolvency Act 1986 (avoidance of property dispositions effected after commencement of winding up F303, submission of bankruptcy application or or presentation of bankruptcy petition), and section F30487(4) of the Bankruptcy (Scotland) Act 2016 (effect of dealing with debtor relating to estate vested in F305... trustee), do not apply to—
(a)
a market contract, or any disposition of property in pursuance of such a contract,
(b)
the provision of margin in relation to market contracts,
F308(bb)
a qualifying collateral arrangement,
(bc)
a transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement, as mentioned in paragraphs (c) to (e) of section 158(1),
(bd)
a qualifying property transfer
(c)
(4)
However, where—
(a)
a market contract is entered into by a person who has notice that F311a bankruptcy application has been submitted or a petition has been presented for the winding up or bankruptcy or sequestration of the estate of the other party to the contract, or
(b)
the value of any profit to him arising from the contract or, as the case may be, the amount or value of the margin F314or default fund contribution is recoverable from him by the relevant office-holder unless the court directs otherwise.
F315(5)
Subsection (4)(a) does not apply where the person entering into the contract is F316a recognised body acting in accordance with its rules, or where the contract is effected under the default rules of such F317a recognised body; but subsection (4)(b) applies in relation to the provision of—
(a)
margin in relation to any such contract, unless the contract has been transferred in accordance with the default rules of the central counterparty, or
(b)
default fund contribution.
(6)
Any sum recoverable by virtue of subsection (4) ranks for priority, in the event of the insolvency of the person from whom it is due, immediately before preferential or, in Scotland, preferred debts.
165 Adjustment of prior transactions.
(1)
No order shall be made in relation to a transaction to which this section applies under—
(a)
section 238 or 339 of the Insolvency Act 1986 (transactions at an under-value),
(b)
section 239 or 340 of that Act (preferences), or
(c)
section 423 of that Act (transactions defrauding creditors).
(2)
As respects Scotland, no decree shall be granted in relation to any such transaction—
(a)
under section F31898 or 99 of the Bankruptcy (Scotland) Act 2016 or section 242 or 243 of the Insolvency Act 1986 (gratuitous alienations and unfair preferences), or
(b)
at common law on grounds of gratuitous alienations or fraudulent preferences.
(3)
This section applies to—
(a)
F321(ab)
a market contract to which this Part applies by virtue of section 155(2B), and
(b)
a disposition of property in pursuance of a market contract referred to in paragraph (a) or (ab).
(4)
Where margin is provided in relation to a market contract and (by virtue of subsection (3)(a)F322, (3)(ab) or otherwise) no such order or decree as is mentioned in subsection (1) or (2) has been, or could be, made in relation to that contract, this section applies to—
(a)
the provision of the margin,
F323(ab)
a qualifying collateral arrangement,
(b)
any contract effected by F324the recognised body in question for the purpose of realising the property provided as margin, and
F327(5)
This section also applies to—
(a)
the provision of default fund contribution to a F328recognised body,
(b)
(c)
F333(d)
a transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement as mentioned in paragraphs (c) to (e) of section 158(1), and
(e)
a qualifying property transfer.
166 Powers F334... to give directions.
(1)
(2)
Where in any case F337a recognised body has not taken action under its default rules—
(a)
(3)
Before giving such a direction the F343appropriate regulator shall consult the F344recognised body in question; and F345it shall not give a direction unless F345it is satisfied, in the light of that consultation—
(a)
in the case of a direction to take action, that failure to take action would involve undue risk to investors or other participants in the market, F346...
(b)
in the case of a direction not to take action, that the taking of action would be premature or otherwise undesirable in the interests of investors or other participants in the market,
F347(c)
in either case, that the direction is necessary having regard to the public interest in the stability of the financial system of the United Kingdom, or
(d)
in either case, that the direction is necessary—
(i)
to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 (special resolution regime) F348or Schedule 11 to the Financial Services and Markets Act 2023 (central counterparties), or
(ii)
in connection with a particular exercise of a power under that Part F349or that Schedule.
F350(3A)
The appropriate regulator may give a direction to a relevant office-holder appointed in respect of a defaulting clearing member to take any action, or refrain from taking any action, if the direction is given for the purposes of facilitating—
(a)
the transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement, or
(b)
a qualifying property transfer.
(3B)
The relevant office-holder to whom a direction is given under subsection (3A)—
(a)
must comply with the direction notwithstanding any duty on the relevant office-holder under any enactment relating to insolvency, but
(b)
is not required to comply with the direction given if the value of the clearing member’s estate is unlikely to be sufficient to meet the office-holder’s reasonable expenses of complying.
(3C)
The expenses of the relevant office-holder in complying with a direction of the regulator under subsection (3A) are recoverable as part of the expenses incurred in the discharge of the office-holder’s duties.
(4)
A direction shall specify the grounds on which it is given.
(5)
A direction not to take action may be expressed to have effect until the giving of a further direction (which may be a direction to take action or simply revoking the earlier direction).
(6)
No direction shall be given not to take action if, in relation to the person in question—
(a)
a bankruptcy order or an award of sequestration of his estate has been made, or an interim receiver or interim trustee has been appointed, or
(b)
a winding up order has been made, a resolution for voluntary winding up has been passed or an administrator, administrative receiver or provisional liquidator has been appointed;
and any previous direction not to take action shall cease to have effect on the making or passing of any such order, award or appointment.
(7)
Where F351a recognised body has taken or been directed to take action under its default rules, the F352appropriate regulator may direct it to do or not to do such things (being things which it has power to do under its default rules) as are specified in the direction.
F353. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F354(7A)
Where the F355recognised body is acting in accordance with a direction under subsection (2)(a) that was given only by virtue of paragraph (a) of subsection (3), the appropriate regulator shall not give a direction under subsection (7) unless it is satisfied that the direction under that subsection will not impede or frustrate the proper and efficient conduct of the default proceedings.
(7B)
Where the F356recognised body has taken action under its default rules without being directed to do so, the appropriate regulator shall not give a direction under subsection (7) unless—
(a)
it is satisfied that the direction under that subsection will not impede or frustrate the proper and efficient conduct of the default proceedings, or
(b)
it is satisfied that the direction is necessary—
(i)
having regard to the public interest in the stability of the financial system of the United Kingdom,
(ii)
to facilitate a proposed or possible use of a power under Part 1 of the Banking Act 2009 (special resolution regime) F357or Schedule 11 to the Financial Services and Markets Act 2023 (central counterparties), or
(iii)
in connection with a particular exercise of a power under that Part F358or that Schedule.
(8)
A direction under this section is enforceable, on the application of the F359regulator which gave the direction, by injunction or, in Scotland, by an order under section 45 of the M26Court of Session Act 1988; and where F360a recognised body F361or a relevant office-holder has not complied with a direction, the court may make such order as it thinks fit for restoring the position to what it would have been if the direction had been complied with.
F362(9)
“The appropriate regulator”—
(a)
in relation to a recognised UK investment exchange, means the FCA, and
167 Application to determine whether default proceedings to be taken.
F366(1)
This section applies where a relevant insolvency event has occurred in the case of—
(a)
a recognised investment exchange or a member or designated non-member of a recognised investment exchange,F367...
F370(ba)
a recognised CSD or a member of a recognised CSD, or
(c)
a client which is providing indirect clearing services to an indirect client.
F371The person referred to in paragraphs (a) to (c) in whose case a relevant insolvency event has occurred is referred to below as “the person in default”.
(1A)
For the purposes of this section a “relevant insolvency event” occurs where—
(a)
a bankruptcy order is made,
(b)
an award of sequestration is made,
(c)
an order appointing an interim receiver is made,
(d)
an administration or winding up order is made,
(e)
an administrator is appointed under paragraph 14 of Schedule B1 to the Insolvency Act 1986 (appointment by holder of qualifying floating charge) or under paragraph 22 of that Schedule (appointment by company or directors),
(f)
a resolution for voluntary winding up is passed, or
(g)
an order appointing a provisional liquidator is made.
(1B)
Where in relation to a person in default F372a recognised body (“F373the responsible recognised body”)—
(a)
has power under its default rules to take action in consequence of the relevant insolvency event or the matters giving rise to it, but
(b)
has not done so,
a relevant office-holder appointed in connection with or in consequence of the relevant insolvency event may apply to the F374appropriate regulator.
(2)
The application shall specify F375the responsible recognised body and the grounds on which it is made.
(3)
On receipt of the application the F376appropriate regulator shall notify F377the responsible recognised body, and unless within three business days after the day on which the notice is received F377the responsible recognised body —
(a)
takes action under its default rules, or
(b)
notifies the F376appropriate regulator that it proposes to do so forthwith,
then, subject as follows, the provisions of sections 158 to 165 above do not apply in relation to market contracts to which F378the person in default is a party or to anything done by F377the responsible recognised body for the purposes of, or in connection with, the settlement of any such contract.
For this purpose a “business day” means any day which is not a Saturday or Sunday, Christmas Day, Good Friday or a bank holiday in any part of the United Kingdom under the M27Banking and Financial Dealings Act 1971.
(4)
The provisions of sections 158 to 165 are not disapplied if before the end of the period mentioned in subsection (3) the F379appropriate regulator gives F380the responsible recognised body a direction under section 166(2)(a) (direction to take action under default rules).
No such direction may be given after the end of that period.
(5)
If F381the responsible recognised body notifies the F382appropriate regulator that it proposes to take action under its default rules forthwith, it shall do so; and that duty is enforceable, on the application of the F382appropriate regulator, by injunction or, in Scotland, by an order under section 45 of the M28Court of Session Act 1988.
F383(6)
“The appropriate regulator”—
(a)
in relation to a recognised investment exchange, means the FCA, and
(b)
in relation to a recognised clearing house or recognised CSD, means the Bank of England.
F384168. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
169 Supplementary provisions.
F385(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
F386Sections 296 and 297 of the Financial Services and Markets Act 2000 apply in relation to a failure by a recognised investment exchange or recognised clearing house to comply with an obligation under this Part as to a failure to comply with an obligation under that Act.
F387(2A)
Section 296 of the Financial Services and Markets Act 2000 applies in relation to a failure by a recognised CSD to comply with an obligation under this Part as to a failure to comply with an obligation under that Act.
(3)
Where the recognition of F388an investment exchange, clearing house or central securities depository is revoked under the F389Financial Services and Markets Act 2000, the appropriate authority may, before or after the revocation order, give such directions as F390it thinks fit with respect to the continued application of the provisions of this Part, with such exceptions, additions and adaptations as may be specified in the direction, in relation to cases where a relevant event of any description specified in the directions occurred before the revocation order takes effect.
F391(3A)
“The appropriate authority” means—
(a)
in the case of an overseas investment exchange or clearing house, the Treasury;
(c)
in the case of a UK clearing house, the Bank of EnglandF394, and
(d)
in the case of a central securities depository, the Bank of England.
F385(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
F395Regulations under section 414 of the Financial Services and Markets Act 2000 (service of notices) may make provision in relation to a notice, direction or other document required or authorised by or under this Part to be given to or served on any person other than the F396TreasuryF397, the FCA or the Bank of England.
Other exchanges and clearing houses
170 Certain overseas exchanges and clearing houses.
F398(1)
The Secretary of State and the Treasury may by regulations provide that this Part applies in relation to contracts connected with an overseas investment exchange or overseas clearing house which—
(a)
is not a recognised investment exchange or recognised clearing house, but
(b)
is approved by the Treasury in accordance with such requirements as may be so specified,
as it applies in relation to contracts connected with a recognised investment exchange or recognised clearing house.
(2)
The F399Treasury shall not approve an overseas investment exchange or clearing house unless F400they are satisfied—
(a)
that the rules and practices of the body, together with the law of the country in which the body’s head office is situated, provide adequate procedures for dealing with the default of persons party to contracts connected with the body, and
(b)
that it is otherwise appropriate to approve the body.
(3)
The reference in subsection (2)(a) to default is to a person being unable to meet his obligations.
(4)
The regulations may apply in relation to the approval of a body under this section such of the provisions of the F401Financial Services and Markets Act 2000 as the Secretary of State considers appropriate.
(5)
The Secretary of State may make regulations which, in relation to a body which is so approved—
(a)
apply such of the provisions of the F401Financial Services and Markets Act 2000 as the Secretary of State considers appropriate, and
(b)
provide that the provisions of this Part apply with such exceptions, additions and adaptations as appear to the Secretary of State to be necessary or expedient;
and different provision may be made with respect to different bodies or descriptions of body.
(6)
Where the regulations apply any provisions of the F401Financial Services and Markets Act 2000, they may provide that those provisions apply with such exceptions, additions and adaptations as appear to the Secretary of State to be necessary or expedient.
F402170A.F403Third country central counterparties
(1)
In this section and section 170B—
(a)
“assets” has the meaning given by Article 39(10) of the EMIR Level 1 Regulation;
F404(b)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F405(c)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)
“overseas competent authority” means a competent authority responsible for the authorisation or supervision of clearing houses or central counterparties in a country or territory other than the United Kingdom;
(e)
“relevant provisions” means any provisions of the default rules of F406a third country central counterparty which—
(i)
provide for the transfer of the positions or assets of a defaulting clearing member;
(ii)
are not necessary for the purposes of complying with the minimum requirements of Articles 48(5) and (6) of the EMIR Level 1 Regulation; and
(iii)
may be relevant to a question falling to be determined in accordance with the law of a part of the United Kingdom;
(f)
“relevant requirements” means the requirements specified in paragraph 34(2) (portability of accounts: default rules going beyond requirements of EMIR) of Part 6 of the Schedule to the Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges F407, Clearing Houses and Central Securities Depositories) Regulations 2001;
(g)
“UK clearing member” means a clearing member to which the law of a part of the United Kingdom will apply for the purposes of an insolvent reorganisation or winding upF408, and
(h)
“UK client” means a client—
(i)
which offers indirect clearing services, and
(ii)
to which the law of a part of the United Kingdom will apply for the purposes of an insolvent re-organisation or winding up.
(2)
(3)
“Change in default rules157.
(1)
F411A third country central counterparty in respect of which an order under section 170B(4) has been made and not revoked must give the Bank of England at least three months’ notice of any proposal to amend, revoke or add to its default rules.
(2)
The Bank of England may, if it considers it appropriate to do so, agree a shorter period of notice.
(3)
Where notice is given to the Bank of England under subsection (1) F412, a third country central counterparty must provide the Bank of England with such information, documents and reports as the Bank of England may require.
(4)
Information, documents and reports required under subsection (3) must be provided in English and be given at such times, in such form and at such place, and verified in such a manner, as the Bank of England may direct.”.
(4)
Section 162 does not apply to F413... a third country central counterparty unless it has been notified by the Bank of England that a report under that section is required for the purposes of insolvency proceedings in any part of the United Kingdom.
(5)
In relation to F414a third country central counterparty, references in this Part to the “rules” or “default rules” of the central counterparty are to be taken not to include references to any relevant provisions unless—
(a)
the relevant provisions satisfy the relevant requirements; or
(b)
the Bank of England has made an order under section 170B(4) recognising that the relevant provisions of its default rules satisfy the relevant requirements and the order has not been revoked.
170B.F415Third country central counterparties: procedure
(1)
F416A third country central counterparty may apply to the Bank of England for an order recognising that the relevant provisions of its default rules satisfy the relevant requirements.
(2)
The application must be made in such manner, and must be accompanied by such information, documents and reports, as the Bank of England may direct.
(3)
Information, documents and reports required under subsection (2) must be provided in English and be given at such times, in such form and at such place, and verified in such manner, as the Bank of England may direct.
(4)
The Bank of England may make an order recognising that the relevant provisions of the default rules satisfy the relevant requirements.
(5)
The Bank of England may by order revoke an order made under subsection (4) if—
(a)
the F417... third country central counterparty consents;
(b)
the F418... third country central counterparty has failed to pay a fee which is owing to the Bank of England under paragraph 36 of Schedule 17A to the Financial Services and Markets Act 2000;
(c)
the F419... third country central counterparty is failing or has failed to comply with a requirement of or imposed under section 157 (as modified by section 170A(3)); or
(d)
it appears to the Bank of England that the relevant provisions no longer satisfy the relevant requirements.
(6)
An order made under subsection (4) or (5) must state the time and date when it is to have effect.
(7)
An order made under subsection (5) may contain such transitional provision as the Bank of England considers appropriate.
(8)
The Bank of England must—
(a)
maintain a register of orders made under subsection (4) which are in force; and
(b)
publish the register in such manner as it appears to the Bank of England to be appropriate.
(9)
Section 298 of the Financial Services and Markets Act 2000 applies to a refusal to make an order under subsection (4) or the making of a revocation order under subsection (5)(b), (c) or (d) as it applies to the making of a revocation order under section 297(2) of the Financial Services and Markets Act 2000, but with the following modifications—
(a)
for “appropriate regulator” substitute “the Bank of England”;
(b)
for “recognised body” substitute “F420... third country central counterparty”; and
(c)
in subsection (7), for “give a direction under section 296” substitute “make an order under paragraph (b), (c) or (d) of section 170B(5) of the Companies Act 1989”.
(10)
If the Bank of England refuses to make an order under subsection (4) or makes an order under subsection (5)(b), (c) or (d), the F421... third country central counterparty may refer the matter to the Upper Tribunal.
(11)
The Bank of England may rely on information or advice from an overseas competent authorityF422... in its determination of an application under subsection (1) or the making of a revocation order under subsection (5)(d).
170C.F423Third country CSDs
(1)
This Part applies to transactions settled through F424... a third country CSD by a UK member of the central securities depository as it applies to transactions settled through a recognised CSD, but subject to subsections (2), (3) and (4).
(2)
““authorised central securities depository services” means, in relation to a third country CSD, those services which that central securities depository is authorised to provide that are equivalent to the services listed in the Annex to the CSD regulation.”.
(3)
Section 157 does not apply to F424... a third country CSD.
(4)
Section 162 does not apply to F424... a third country CSD unless it has been notified by the Bank of England that a report under that section is required for the purposes of insolvency proceedings in any part of the United Kingdom. Where F424... a third country CSD has been so notified, the appropriate regulator for the purposes of section 162 shall be the Bank of England.
(5)
In this section “UK member” means a member of F424... a third country CSD to which the law of a part of the United Kingdom will apply for the purposes of an insolvent reorganisation or winding up.
F425171. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
172 Settlement arrangements provided by the Bank of England.
(1)
The Secretary of State may by regulations provide that this Part applies to contracts of any specified description in relation to which settlement arrangements are provided by the Bank of England, as it applies to contracts connected with F426a recognised body.
(2)
Regulations under this section may provide that the provisions of this Part apply with such exceptions, additions and adaptations as appear to the Secretary of State to be necessary or expedient.
(3)
Before making any regulations under this section, the Secretary of State F427and the Treasury shall consult the Bank of England.
Market charges
173 Market charges.
(1)
In this Part “market charge” means a charge, whether fixed or floating, granted—
(a)
in favour of a recognised investment exchange, for the purpose of securing debts or liabilities arising in connection with the settlement of market contracts,
F428(aa)
in favour of The Stock Exchange, for the purpose of securing debts or liabilities arising in connection with short term certificates;
(b)
in favour of a recognised clearing house, for the purpose of securing debts or liabilities arising in connection with their ensuring the performance of market contracts, F429...
F430(ba)
in favour of a recognised CSD, for the purpose of securing debts or liabilities arising in connection with their ensuring the performance of market contracts, or
(c)
in favour of a person who agrees to make payments as a result of the transfer F431or allotment of specified securities made through the medium of a computer-based system established by the Bank of England and The Stock Exchange, for the purpose of securing debts or liabilities of the transferee F431or allottee arising in connection therewith.
(2)
(3)
F434In subsection (1)—
“short term certificate” means an instrument issued by The Stock Exchange undertaking to procure the transfer of property of a value and description specified in the instrument to or to the order of the person to whom the instrument is issued or his endorsee or to a person acting on behalf of either of them and also undertaking to make appropriate payments in cash, in the event that the obligation to procure the transfer of property cannot be discharged in whole or in part;
“specified securities” means securities for the time being specified in the list in Schedule 1 to the M29Stock Transfer Act 1982, and includes any right to such securities; and
“transfer”, in relation to any such securities or right, means a transfer of the beneficial interest.
(4)
The Secretary of State may by regulations make further provision as to the charges granted in favour of any such person as is mentioned in subsection (1)(a), (b) F435, (ba) or (c) which are to be treated as “market charges” for the purposes of this Part; and the regulations may add to, amend or repeal the provisions of subsections (1) to (3) above.
(5)
The regulations may provide that a charge shall or shall not be treated as a market charge if or to the extent that it secures obligations of a specified description, is a charge over property of a specified description or contains provisions of a specified description.
(6)
Before making regulations under this section in relation to charges granted in favour of a person within subsection (1)(c), the Secretary of State F436and the Treasury shall consult the Bank of England.
174 Modifications of the law of insolvency.
(1)
The general law of insolvency has effect in relation to market charges and action taken in enforcing them subject to the provisions of section 175.
(2)
The Secretary of State may by regulations make further provision modifying the law of insolvency in relation to the matters mentioned in subsection (1).
(3)
The regulations may add to, amend or repeal the provisions mentioned in subsection (1), and any other provision of this Part as it applies for the purposes of those provisions, or provide that those provisions have effect with such exceptions, additions or adaptations as are specified in the regulations.
(4)
The regulations may make different provision for cases defined by reference to the nature of the charge, the nature of the property subject to it, the circumstances, nature or extent of the obligations secured by it or any other relevant factor.
(5)
Before making regulations under this section in relation to charges granted in favour of a person within section 173(1)(c), the Secretary of State F437and the Treasury shall consult the Bank of England.
175 Administration orders, &c.
F438(1)
The following provisions of Schedule B1 to the Insolvency Act 1986 (administration) do not apply in relation to a market charge—
(a)
paragraph 43(2) and (3) (restriction on enforcement of security or repossession of goods) (including that provision as applied by paragraph 44 (interim moratorium)), and
(b)
paragraphs 70, 71 and 72 (power of administrator to deal with charged or hire-purchase property).
(1A)
Paragraph 41(2) of that Schedule (receiver to vacate office at request of administrator) does not apply to a receiver appointed under a market charge.
(2)
However, where a market charge falls to be enforced after F439the occurrence of an event to which subsection (2A) applies, and there exists another charge over some or all of the same property ranking in priority to or pari passu with the market charge, F440on the application of any person interested the court may order that there shall be taken after enforcement of the market charge such steps as the court may direct for the purpose of ensuring that the chargee under the other charge is not prejudiced by the enforcement of the market charge.
F441(2A)
This subsection applies to—
(a)
making an administration application under paragraph 12 of Schedule B1 to the Insolvency Act 1986,
(b)
appointing an administrator under paragraph 14 or 22 of that Schedule (appointment by floating charge holder, company or directors),
(c)
filing with the court a copy of notice of intention to appoint an administrator under either of those paragraphs.
(3)
The following provisions of the Insolvency Act 1986 (which relate to the powers of receivers) do not apply in relation to a market charge—
(a)
section 43 (power of administrative receiver to dispose of charged property), and
(b)
section 61 (power of receiver in Scotland to dispose of an interest in property).
(4)
Sections 127 and 284 of the Insolvency Act 1986 (avoidance of property dispositions effected after commencement of winding upF442, making of bankruptcy application or presentation of bankruptcy petition), and section F44387(4) of the Bankruptcy (Scotland) Act 2016 (effect of dealing with debtor relating to estate vested in F444... trustee), do not apply to a disposition of property as a result of which the property becomes subject to a market charge or any transaction pursuant to which that disposition is made.
F445(5)
However, if a person who is party to a disposition mentioned in subsection (4) has notice at the time of the disposition that F446a bankruptcy application has been made or a petition has been presented for the winding up or bankruptcy or sequestration of the estate of the party making the disposition, the value of any profit to him arising from the disposition is recoverable from him by the relevant office-holder unless—
(a)
the person is a chargee under the market charge,
(b)
the disposition is made in accordance with the default rules of a recognised central counterparty for the purposes of transferring a position or asset of a clearing member in default, or
(c)
the court directs otherwise.
F447(5A)
In subsection (5)(b), “asset” has the meaning given by Article 39(10) of the EMIR Level 1 Regulation.
(6)
Any sum recoverable by virtue of subsection (5) ranks for priority, in the event of the insolvency of the person from whom it is due, immediately before preferential or, in Scotland, preferred debts.
(7)
In a case falling within both subsection (4) above (as a disposition of property as a result of which the property becomes subject to a market charge) and section 164(3) (as the provision of margin in relation to a market contract), section 164(4) applies with respect to the recovery of the amount or value of the margin and subsection (5) above does not apply.
176 Power to make provision about certain other charges.
(1)
The Secretary of State may by regulations provide that the general law of insolvency has effect in relation to charges of such descriptions as may be specified in the regulations, and action taken in enforcing them, subject to such provisions as may be specified in the regulations.
(2)
The regulations may specify any description of charge granted in favour of—
(a)
a body approved under section 170 (certain overseas exchanges and clearing houses),
(b)
(c)
the Bank of England,
F452(d)
a person who has permission under F453Part 4A of the Financial Services and Markets Act 2000 to carry on a relevant regulated activity, or
(e)
an international securities self-regulating organisation approved for the purposes of an order made under section 22 of the Financial Services and Markets Act 2000,
for the purpose of securing debts or liabilities arising in connection with or as a result of the settlement of contracts or the transfer of assets, rights or interests on a financial market.
(3)
The regulations may specify any description of charge granted for that purpose in favour of any other person in connection with exchange facilities or clearing services F454or settlement arrangements provided by a recognised investment exchange or recognised clearing house or by any such body, person, authority or organisation as is mentioned in subsection (2) F455, or in connection with authorised central securities depository services (see section 155(3D)) provided by a recognised CSD.
(4)
Where a charge is granted partly for the purpose specified in subsection (2) and partly for other purposes, the power conferred by this section is exercisable in relation to the charge so far as it has effect for that purpose.
(5)
The regulations may—
(a)
make the same or similar provision in relation to the charges to which they apply as is made by or under sections 174 and 175 in relation to market charges, or
(b)
apply any of those provisions with such exceptions, additions or adaptations as are specified in the regulations.
F456(6)
Before making regulations under this section relating to a description of charges defined by reference to their being granted in favour of a person included in the list maintained by the F457. . . F458Bank of England for the purposes of F459section 301 of the Financial Services and Markets Act 2000, or in connection with exchange facilities or clearing services F460or settlement arrangements provided by a person included in that list, the Secretary of State and the Treasury shall consult the F461FCA and the Bank of England.
(6A)
Before making regulations under this section relating to a description of charges defined by reference to their being granted in favour of the Bank of England, or in connection with settlement arrangements provided by the Bank, the Secretary of State and the Treasury shall consult the Bank.
(7)
Regulations under this section may provide that they apply or do not apply to a charge if or to the extent that it secures obligations of a specified description, is a charge over property of a specified description or contains provisions of a specified description.
F462(8)
For the purposes of subsection (2)(d), “relevant regulated activity” means—
(a)
dealing in investments as principal or as agent;
(b)
arranging deals in investments;
F463(ba)
operating a multilateral trading facility;
F464(bb)
operating an organised trading facility;
(c)
managing investments;
(d)
safeguarding and administering investments;
(e)
sending dematerialised instructions; F465...
F466(ea)
managing a UCITS;
(eb)
acting as trustee or depositary of a UCITS;
(ec)
managing an AIF;
(ed)
acting as trustee or depositary of an AIF; or
(f)
establishing etc. a collective investment scheme.
(9)
Subsection (8) 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.
Market property
177 Application of margin F467or default fund contribution not affected by certain other interests.
(1)
(2)
So far as necessary to enable the property to be applied in accordance with the rules of F471the recognised body , it may be so applied notwithstanding any prior equitable interest or right, or any right or remedy arising from a breach of fiduciary duty, unless F471the recognised body had notice of the interest, right or breach of duty at the time the property was provided as margin F472or as default fund contribution.
(3)
(4)
178 Priority of floating market charge over subsequent charges.
(1)
The Secretary of State may by regulations provide that a market charge which is a floating charge has priority over a charge subsequently created or arising, including a fixed charge.
(2)
The regulations may make different provision for cases defined, as regards the market charge or the subsequent charge, by reference to the description of charge, its terms, the circumstances in which it is created or arises, the nature of the charge, the person in favour of whom it is granted or arises or any other relevant factor.
179 Priority of market charge over unpaid vendor’s lien.
Where property subject to an unpaid vendor’s lien becomes subject to a market charge, the charge has priority over the lien unless the chargee had actual notice of the lien at the time the property became subject to the charge.
180 Proceedings against market property by unsecured creditors.
(1)
Where property (other than land) is held by F477a recognised body as margin in relation to market contracts F478or as default fund contribution, or is subject to a market charge, no execution or other legal process for the enforcement of a judgment or order may be commenced or continued, and no distress may be levied, F479and no power to use the procedure in Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 (taking control of goods) may be exercised, against the property by a person not seeking to enforce any interest in or security over the property, except with the consent of—
(a)
(b)
in the case of property subject to a market charge, the person in whose favour the charge was granted.
(2)
Where consent is given the proceedings may be commenced or continued notwithstanding any provision of the M30Insolvency Act 1986 or the M31Bankruptcy (Scotland) Act F4822016.
(3)
Where by virtue of this section a person would not be entitled to enforce a judgment or order against any property, any injunction or other remedy granted with a view to facilitating the enforcement of any such judgment or order shall not extend to that property.
(4)
In the application of this section to Scotland, the reference to execution being commenced or continued includes a reference to diligence being carried out or continued, and the reference to distress being levied shall be omitted.
181 Power to apply provisions to other cases.
(1)
F483A power to which this subsection applies includes the power to apply sections 177 to 180 to any description of property provided as cover for margin in relation to contracts in relation to which the power is exercised or, as the case may be, property subject to charges in relation to which the power is exercised.
(2)
The regulations may provide that those sections apply with such exceptions, additions and adaptations as may be specified in the regulations.
F484(3)
Subsection (1) applies to the powers of the Secretary of State and the Treasury to act jointly under—
(a)
sections 170, 172 and 176 of this Act; and
(b)
section 301 of the Financial Services and Markets Act 2000 (supervision of certain contracts).
Supplementary provisions
182 Powers of court in relation to certain proceedings begun before commencement.
(1)
The powers conferred by this section are exercisable by the court where insolvency proceedings in respect of—
(a)
a member of a recognised investment exchange or a recognised clearing house, or
(b)
a person by whom a market charge has been granted,
are begun on or after 22nd December 1988 and before the commencement of this section.
That person is referred to in this section as “the relevant person”.
(2)
For the purposes of this section “insolvency proceedings” means proceedings under Part II, IV, V or IX of the M32Insolvency Act 1986 (administration, winding up and bankruptcy) or under the Bankruptcy (Scotland) Act F4852016; and references in this section to the beginning of such proceedings are to—
F486(za)
the making of a bankruptcy application on which a bankruptcy order is made,
(a)
the presentation of a petition on which an administration order, winding-up order, bankruptcy order or award of sequestration is made, or
(b)
the passing of a resolution for voluntary winding up.
(3)
This section applies in relation to—
(a)
in England and Wales, the administration of the insolvent estate of a deceased person, and
(b)
in Scotland, the administration by a judicial factor appointed under section 11A of the M33Judicial Factors (Scotland) Act 1889 of the insolvent estate of a deceased person,
as it applies in relation to insolvency proceedings.
In such a case references to the beginning of the proceedings shall be construed as references to the death of the relevant person.
(4)
The court may on an application made, within three months after the commencement of this section, by—
(a)
a recognised investment exchange or recognised clearing house, or
(b)
a person in whose favour a market charge has been granted,
make such order as it thinks fit for achieving, except so far as assets of the relevant person have been distributed before the making of the application, the same result as if the provisions of Schedule 22 had come into force on 22nd December 1988.
(5)
The provisions of that Schedule (“the relevant provisions”) reproduce the effect of certain provisions of this Part as they appeared in the Bill for this Act as introduced into the House of Lords and published on that date.
(6)
The court may in particular—
(a)
require the relevant person or a relevant office-holder—
(i)
to return property provided as cover for margin or which was subject to a market charge, or to pay to the applicant or any other person the proceeds of realisation of such property, or
(ii)
to pay to the applicant or any other person such amount as the court estimates would have been payable to that person if the relevant provisions had come into force on 22nd December 1988 and market contracts had been settled in accordance with the rules of the recognised investment exchange or recognised clearing house, or a proportion of that amount if the property of the relevant person or relevant office-holder is not sufficient to meet the amount in full;
(b)
provide that contracts, rules and dispositions shall be treated as not having been void;
(c)
modify the functions of a relevant office-holder, or the duties of the applicant or any other person, in relation to the insolvency proceedings, or indemnify any such person in respect of acts or omissions which would have been proper if the relevant provisions had been in force;
(d)
provide that conduct which constituted an offence be treated as not having done so;
(e)
dismiss proceedings which could not have been brought if the relevant provisions had come into force on 22nd December 1988, and reverse the effect of any order of a court which could not, or would not, have been made if those provisions had come into force on that date.
(7)
An order under this section shall not be made against a relevant office-holder if the effect would be that his remuneration, costs and expenses could not be met.
F487182A.Recognised central counterparties: disapplication of provisions on mutual credit and set-off
(1)
Nothing in the law of insolvency shall enable the setting off against each other of—
(a)
positions and assets recorded in an account at a recognised central counterparty and held for the account of a client, an indirect client or a group of clients or indirect clients in accordance with Article 39 of the EMIR Level 1 Regulation F488, Article 3(1) of the EMIR Level 2 Regulation or Article 3(1) of the MIFIR Level 2 Regulation; and
(b)
positions and assets recorded in any other account at the recognised central counterparty.
F489(2)
Nothing in the law of insolvency shall enable the setting off against each other of—
(a)
positions and assets recorded in an account at a clearing member and held for the account of an indirect client or a group of indirect clients in accordance with F490Article 4(2) of the EMIR Level 2 Regulation or Article 4(2) of the MIFIR Level 2 Regulation; and
(b)
positions and assets recorded in any other account at the clearing member.
183 Insolvency proceedings in other jurisdictions.
(1)
The references to insolvency law in section 426 of the M34Insolvency Act 1986 (co-operation with courts exercising insolvency jurisdiction in other jurisdictions) include, in relation to a part of the United Kingdom, the provisions made by or under this Part and, in relation to a relevant country or territory within the meaning of that section, so much of the law of that country or territory as corresponds to any provisions made by or under this Part.
(2)
A court shall not, in pursuance of that section or any other enactment or rule of law, recognise or give effect to—
(a)
any order of a court exercising jurisdiction in relation to insolvency law in a country or territory outside the United Kingdom, or
(b)
any act of a person appointed in such a country or territory to discharge any functions under insolvency law,
in so far as the making of the order or the doing of the act would be prohibited in the case of a court in the United Kingdom or a relevant office-holder by provisions made by or under this Part.
(3)
Subsection (2) does not affect the recognition or enforcement of a judgment required to be recognised or enforced under or by virtue of the M35Civil Jurisdiction and Judgments Act 1982F491....
184 Indemnity for certain acts, &c.
(1)
Where a relevant office-holder takes any action in relation to property of a defaulter which is liable to be dealt with in accordance with the default rules of a F492recognised body, and believes and has reasonable grounds for believing that he is entitled to take that action, he is not liable to any person in respect of any loss or damage resulting from his action except in so far as the loss or damage is caused by the office-holder’s own negligence.
(2)
Any failure by a F493recognised body to comply with its own rules in respect of any matter shall not prevent that matter being treated for the purposes of this Part as done in accordance with those rules so long as the failure does not substantially affect the rights of any person entitled to require compliance with the rules.
(3)
No F494recognised body, nor any officer or servant or member of the governing body of a F494recognised body, shall be liable in damages for anything done or omitted in the discharge or purported discharge of any functions to which this subsection applies unless the act or omission is shown to have been in bad faith.
(4)
The functions to which subsection (3) applies are the functions of F495the recognised body so far as relating to, or to matters arising out of—
(a)
its default rules, or
(b)
any obligations to which it is subject by virtue of this Part.
(5)
No person F496to whom the exercise of any function of a F497recognised body is delegated under its default rules, nor any officer or servant of such a person, shall be liable in damages for anything done or omitted in the discharge or purported discharge of those functions unless the act or omission is shown to have been in bad faith.
185 Power to make further provision by regulations.
(1)
The Secretary of State may by regulations make such further provision as appears to him necessary or expedient for the purposes of this Part.
(2)
Provision may, in particular, be made—
(a)
for integrating the provisions of this Part with the general law of insolvency, and
(b)
for adapting the provisions of this Part in their application to overseas investment exchanges and clearing houses.
(3)
Regulations under this section may add to, amend or repeal any of the provisions of this Part or provide that those provisions have effect subject to such additions, exceptions or adaptations as are specified in the regulations.
F498(4)
References in this section to the provisions of this Part include any provision made under section 301 of the Financial Services and Markets Act 2000.
186 Supplementary provisions as to regulations.
(1)
Regulations under this Part may make different provision for different cases and may contain such incidental, transitional and other supplementary provisions as appear to the Secretary of State to be necessary or expedient.
(2)
Regulations under this Part shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
187 Construction of references to parties to market contracts.
(1)
Where a person enters into market contracts in more than one capacity, the provisions of this Part apply (subject as follows) as if the contracts entered into in each different capacity were entered into by different persons.
(2)
References in this Part to a market contract to which a person is a party include (subject as follows, and unless the context otherwise requires) contracts to which he is party as agent.
F499(2A)
Subsections (1) and (2) do not apply to market contracts to which this Part applies by virtue of section 155(2B).
(3)
The Secretary of State may by regulations—
(a)
modify or exclude the operation of subsections (1) and (2), and
(b)
make provision as to the circumstances in which a person is to be regarded for the purposes of those provisions as acting in different capacities.
188 Meaning of “default rules” and related expressions.
(1)
In this Part “default rules” means rules of a F500recognised body which provide for the taking of action in the event of a person F501(including another F500recognised body) appearing to be unable, or likely to become unable, to meet his obligations in respect of one or more market contracts F502connected with F503the recognised body, F504....
F505(1A)
In the case of a recognised central counterparty, “default rules” includes—
(a)
the default procedures referred to in Article 48 of the EMIR Level 1 Regulation; and
(b)
any rules of the recognised central counterparty which provide for the taking of action in accordance with a request or instruction from a clearing member under the default procedures referred to in F506Article 4(6) and (7) of the EMIR Level 2 Regulation or Article 4(6) and (7) of the MIFIR Level 2 Regulation in respect of assets or positions held by the recognised central counterparty for the account of an indirect client or group of indirect clients.
F507(1B)
In the case of a recognised CSD, “default rules” includes the default rules and procedures referred to in Article 41 of the CSD regulation.
(2)
References in this Part to a “defaulter” are to a person in respect of whom action has been taken by F508a recognised body under its default rules, whether by declaring him to be a defaulter or otherwise; and references in this Part to “default”F509, “defaulting” and “non-defaulting” shall be construed accordingly.
F510(2A)
For the purposes of subsection (2), where a recognised central counterparty takes action under the rules referred to in subsection (1A)(b), the action is to be treated as taken in respect of the client providing the indirect clearing services.
(3)
In this Part “default proceedings” means proceedings taken by F511a recognised body under its default rules.
F512(3A)
In this Part “default fund contribution” means—
(a)
contribution by a member or designated non-member of a recognised investment exchange to a fund which—
(i)
is maintained by that exchange for the purpose of covering losses arising in connection with defaults by any of the members of the exchange, or defaults by any of the members or designated non-members of the exchange, and
(ii)
may be applied for that purpose under the default rules of the exchange;
(b)
contribution by a member of a recognised clearing house to a fund which—
(i)
is maintained by that clearing house for the purpose of covering losses arising in connection with defaults by any of the members of the clearing house, and
(ii)
may be applied for that purpose under the default rules of the clearing house;
(c)
contribution by a recognised clearing house to a fund which—
F513(i)
is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and
(ii)
may be applied for that purpose under A’s default rules; F514...
(d)
contribution by a recognised investment exchange to a fund which—
F515(i)
is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and
(ii)
may be applied for that purpose under A’s default rules.
F516(e)
contribution by a member of a recognised CSD to a fund which—
(i)
is maintained by that central securities depository for the purpose of covering losses arising in connection with defaults by any of the members of the central securities depository, and
(ii)
may be applied for that purpose under the default rules of the central securities depository; or
(f)
contribution by a recognised CSD to a fund which—
(i)
is maintained by another recognised body (A) for the purpose of covering losses arising in connection with defaults by recognised bodies other than A or by any of their members, and
(ii)
may be applied for that purpose under A’s default rules.
(4)
If F517a recognised body takes action under its default rules in respect of a person, all subsequent proceedings under its rules for the purposes of or in connection with the settlement of market contracts to which the defaulter is a party shall be treated as done under its default rules.
189 Meaning of “relevant office-holder”.
(1)
The following are relevant office-holders for the purposes of this Part—
(a)
the official receiver,
(b)
any person acting in relation to a company as its liquidator, provisional liquidator, administrator or administrative receiver,
(c)
(d)
any person acting as administrator of an insolvent estate of a deceased person.
(2)
In subsection (1)(b) “company” means any company, society, association, partnership or other body which may be wound up under the M36Insolvency Act 1986.
F520189A.Meaning of “transfer”
(1)
In this Part, a reference to a transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement shall be interpreted in accordance with this section.
(2)
A transfer of a clearing member client contract or client trade includes—
(a)
an assignment;
(b)
a novation; and
(c)
terminating or closing out the clearing member client contract or client trade and establishing an equivalent position between different parties.
(3)
Where a clearing member client contract is recorded in the accounts of a recognised central counterparty as a position held for the account of an indirect client or group of indirect clients, the clearing member client contract is to be treated as having been transferred if the position is transferred to a different account at the recognised central counterparty.
(4)
A reference to a transfer of a qualifying collateral arrangement includes an assignment or a novation.
190 Minor definitions.
(1)
In this Part—
“administrative receiver” has the meaning given by section 251 of the Insolvency Act 1986;
F521. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“charge” means any form of security, including a mortgage and, in Scotland, a heritable security;
F522. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F523“clearing member”, in relation to a recognised central counterparty, has the meaning given by Article 2(14) of the EMIR Level 1 Regulation;
F523“client” has the meaning given by Article 2(15) of the EMIR Level 1 Regulation;
F524“CSD regulation” means Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories;
F523“EMIR Level 1 Regulation” means Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories;
F523“EMIR Level 2 Regulation” means Commission Delegated Regulation (EU) No 149/2013 of 19 December 2012 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 with regard to regulatory technical standards on indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue, non-financial counterparties, risk mitigation for OTC derivatives contracts not cleared by a CCP F525as amended by Commission Delegated Regulation (EU) 2017/2155 of 22 September 2017;
F526“the FCA” means the Financial Conduct Authority;
F527“indirect clearing services” has the same meaning as in the EMIR Level 2 Regulation;
F523“indirect client” has the meaning given by Article 1(a) of the EMIR Level 2 Regulation;
F528“interim trustee” has the same meaning as in the Bankruptcy (Scotland) Act 2016
F522. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F524“member”, in relation to a central securities depository, means a participant of that central securities depository as defined in Article 2(1)(19) of the CSD regulation;
F523“member of a clearing house” includes a clearing member of a recognised central counterparty;
F529“MIFIR Level 2 Regulation” means Commission Delegated Regulation (EU) 2017/2154 of 22 September 2017 supplementing Regulation (EU) No. 600/2014 of the European Parliament and of the Council with regard to regulatory technical standards on indirect clearing arrangements;
“overseas”, in relation to an investment exchange or clearing house F530or central securities depository , means having its head office outside the United Kingdom;
F523“position” has the same meaning as in the EMIR Level 1 Regulation;
F531“the PRA” means the Prudential Regulation Authority;
F524“recognised body” has the same meaning as in section 313 of the Financial Services and Markets Act 2000;
F532F533...“recognised central counterparty”, “recognised CSD”, “recognised clearing house”, “recognised investment exchange” F534, “third country central counterparty” and “third country CSD” have the same meaning as in the Financial Services and Markets Act 2000 (see section 285 of that Act);
F535“sequestration” means sequestration under the Bankruptcy (Scotland) Act 2016;
F522. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“set-off”, in relation to Scotland, includes compensation;
F536“The Stock Exchange” means the London Stock Exchange Limited;
F537“UK”, in relation to an investment exchange, means having its head office in the United Kingdom.
F538(2)
References in this Part to settlement—
(a)
mean, in relation to a market contract, the discharge of the rights and liabilities of the parties to the contract, whether by performance, compromise or otherwise;
(b)
include, in relation to a clearing member client contract or a clearing member house contract, a reference to its liquidation for the purposes of Article 48 of the EMIR Level 1 Regulation.
(3)
In this Part the expressions “margin” and “cover for margin” have the same meaning.
F539(3A)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F540(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
For the purposes of this Part a person shall be taken to have notice of a matter if he deliberately failed to make enquiries as to that matter in circumstances in which a reasonable and honest person would have done so.
This does not apply for the purposes of a provision requiring “actual notice”.
F541(6)
References in this Part to the law of insolvency—
(a)
include references to every provision made by or under the Insolvency Act 1986 or the Bankruptcy (Scotland) Act F5422016; and in relation to a building society references to insolvency law or to any provision of the Insolvency Act 1986 are to that law or provision as modified by the Building Societies Act 1986;
(b)
are also to be interpreted in accordance with the modifications made by the enactments mentioned in subsection (6B).
(6A)
For the avoidance of doubt, references in this Part to administration, administrator, liquidator and winding up are to be interpreted in accordance with the modifications made by the enactments mentioned in subsection (6B).
(6B)
The enactments referred to in subsections (6)(b) and (6A) are—
(a)
article 3 of, and the Schedule to, the Banking Act 2009 (Parts 2 and 3 Consequential Amendments) Order 2009;
(b)
article 18 of, and paragraphs 1(a), (2) and (3) of Schedule 2 to, the Building Societies (Insolvency and Special Administration) Order 2009; and
(c)
regulation 27 of, and Schedule 6 to, the Investment Bank Special Administration Regulations 2011.
(7)
In relation to Scotland, references in this Part—
(a)
to sequestration include references to the administration by a judicial factor of the insolvent estate of a deceased person, and
(b)
to an interim F543trustee or to a trustee in the sequestration of an estate include references to a judicial factor on the insolvent estate of a deceased person,
unless the context otherwise requires.
191 Index of defined expressions.
The following Table shows provisions defining or otherwise explaining expressions used in this Part (other than provisions defining or explaining an expression used only in the same section or paragraph)—
F544Defined Expression | Section |
|---|---|
administration | Sections 190(6A) and (6B) |
administrator | Sections 190(6A) and (6B) |
administrative receiver | Section 190(1) |
F545authorised central securities depository services | Section 155(3D) |
charge | Section 190(1) |
clearing member | Section 190(1) |
clearing member client contract | Section 155(1)(a) |
clearing member house contract | Section 155(1)(b) |
client | Section 190(1) |
client trade | Section 155(1)(c) |
cover for margin | Section 190(3) |
F545CSD regulation | Section 190(1) |
default fund contribution | Section 188(3A) |
default rules (and related expressions) | Section 188 |
designated non-member | Section 155(2) |
F546. . . | F546. . . |
EMIR Level 1 Regulation | Section 190(1) |
EMIR Level 2 Regulation | Section 190(1) |
the FCA | Section 190(1) |
F547indirect clearing services | Section 190(1) |
indirect client | Section 190(1) |
insolvency law (and similar expressions) | Sections 190(6) and (6B) |
interim trustee | Sections 190(1) and 190(7)(b) |
liquidator | Sections 190(6A) and (6B) |
margin | Section 190(3) |
market charge | Section 173 |
market contract | Section 155 |
F545member (in relation to a central securities depository) | Section 190(1) |
member of a clearing house | Section 190(1) |
F548MIFIR Level 2 Regulation | Section 190(1) |
notice | Section 190(5) |
overseas (in relation to investment exchanges F549, clearing houses and central securities depositories) | Section 190(1) |
party (in relation to a market contract) | Section 187 |
F550. . . | F550. . . |
the PRA | Section 190(1) |
qualifying collateral arrangement | Section 155A(1)(a) |
qualifying property transfers | Section 155A(1)(b) |
F545recognised body | Section 190(1) |
recognised central counterparty | Section 190(1) |
recognised clearing house | Section 190(1) |
F545recognised CSD | Section 190(1) |
recognised investment exchange | Section 190(1) |
relevant office-holder | Section 189 |
sequestration | Section 190(7)(a) |
set off (in relation to Scotland) | Section 190(1) |
settlement and related expressions (in relation to a market contract) | Section 190 (2) |
The Stock Exchange | Section 190(1) |
F551third country central counterparty | Section 190(1) |
F545third country CSD | Section 190(1) |
F547transfer | Section 189A |
F552interim trustee and trustee in the sequestration of an estate (in relation to Scotland) | section 190(1) and (7)(b) |
UK (in relation to investment exchanges) | Section 190(1) |
winding up | Sections 190(6A) and (6B) |
Part VIII Amendments of the Financial Services Act 1986
F553192. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F554193. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F555194. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F556195. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F557196. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F558197. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F559198. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F560199. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200 Jurisdiction of High Court and Court of Session.
F561(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
“ Financial Services Act 1986
10
Proceedings such as are mentioned in section 188 of the Financial Services Act 1986.”.
F562201. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F563202. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F564203. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F565204. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F566205. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F567206. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IX Transfer of Securities
207 Transfer of securities.
F568. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part X Miscellaneous and General Provisions
Miscellaneous
208 Summary proceedings in Scotland for offences in connection with disqualification of directors.
“(4)
For the purposes of summary proceedings in Scotland, section 431 of that Act applies to summary proceedings for an offence under section 11 or 13 of this Act as it applies to summary proceedings for an offence under Parts I to VII of that Act.”.
F569209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
210 Restriction of duty to supply statements of premium income.
(1)
Schedule 3 to the M40Policyholders Protection Act 1975 (provisions with respect to levies on authorised insurance companies) is amended as follows.
(2)
“4
(1)
The Secretary of State may by notice in writing require an authorised insurance company to send him a statement of—
(a)
any income of the company for the year preceding that in which the notice is received by the company which is income liable to the general business levy, and
(b)
any income of the company for that year which is income liable to the long term business levy.
(2)
An authorised insurance company which receives a notice under this paragraph shall send the statement required by the notice to the Secretary of State within three months of receiving the notice.
(3)
Where an authorised insurance company is required under this paragraph to send a statement to the Secretary of State in respect of income of both descriptions mentioned in sub-paragraph (1)(a) and (b) above it shall send a separate statement in respect of income of each description.”.
(3)
In paragraph 5(3) (application of provisions of the M41Insurance Companies Act 1982 to failure to meet obligation imposed by paragraph 4) for “the obligation imposed on an insurance company by paragraph 4” substitute “an obligation imposed on an insurance company under paragraph 4”.
(4)
In paragraph 6 (declaration and enforcement of levies) omitsub-paragraph (4) (provision about notices).
(5)
“8 Notices under paragraphs 4 and 6
A notice under paragraph 4 or 6 above may be sent by post, and a letter containing such a notice shall be deemed to be properly addressed if it is addressed to the insurance company to which it is sent at its last known place of business in the United Kingdom.”.
211 Building societies: miscellaneous amendments.
(1)
“; and
(e)
section 110 (provisions exempting officers and auditors from liability).”.
(2)
In Schedule 15 to the Building Societies Act 1986 (application of companies winding-up legislation)—
(a)
in paragraph 1(a)
(provisions of M43Insolvency Act 1986 applied) for “and XII” substitute “
, XII and XIII
”
;
(b)
in paragraph 3(2)(b) (adaptations: references to be omitted), omit “, a shadow director”.
(3)
“22A Application of Act to building societies.
(1)
This Act applies to building societies as it applies to companies.
(2)
References in this Act to a company, or to a director or an officer of a company include, respectively, references to a building society within the meaning of the Building Societies Act 1986 or to a director or officer, within the meaning of that Act, of a building society.
(3)
In relation to a building society the definition of “shadow director” in section 22(5) applies with the substitution of “building society” for “company”.
(4)
In the application of Schedule 1 to the directors of a building society, references to provisions of the Insolvency Act or the Companies Act include references to the corresponding provisions of the Building Societies Act 1986.”.
General
F570211A.“Bank of England”
In this Act references to the Bank of England do not include the Bank acting in its capacity as the Prudential Regulation Authority.
212 Repeals.
The enactments mentioned in Schedule 24 are repealed to the extent specified there.
212 Repeals.
The enactments mentioned in Schedule 24 are repealed to the extent specified there.
213 Provisions extending to Northern Ireland.
(1)
The provisions of this Act extend to Northern Ireland so far as they amend, or provide for the amendment of, an enactment which so extends.
(2)
(3)
In Part III (investigations and powers to obtain information), sections 82 to 91, (powers exercisable to assist overseas regulatory authorities) extend to Northern Ireland.
(4)
Part VI (mergers and related matters) extends to Northern Ireland.
(5)
In Part VII (financial markets and insolvency) the following provisions extend to Northern Ireland—
(a)
sections 154 and 155 (introductory provisions and definition of “market contract”),
F572(b)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)
sections 157, 160, 162, and 166 to 169 (provisions relating to recognised investment exchanges F573, recognised clearing houses and recognised CSDs),
(d)
F574sections 170 and 172 (power to extend provisions to other financial markets),
(e)
section 184 (indemnity for certain acts), and
(f)
sections 185 to 191 (supplementary provisions).
F572(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)
Part IX (transfer of securities) extends to Northern Ireland.
F575. . .
(8)
In Part X (miscellaneous and general provisions), F576section 211A, this section and sections 214 to 216 (general provisions) extend to Northern Ireland.
(9)
Except as mentioned above, the provisions of this Act do not extend to Northern Ireland.
F577214. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
215 Commencement and transitional provisions.
(1)
The following provisions of this Act come into force on Royal Assent—
(a)
in Part V (amendments of company law), section 141 (application to declare dissolution of company void);
(b)
in Part VI (mergers)—
(i)
sections 147 to 150, and
(ii)
paragraphs 2 to 12, 14 to 16, 18 to 20, 22 to 25 of Schedule 20, and section 153 so far as relating to those paragraphs;
(c)
in Part VIII (amendments of the M46Financial Services Act 1986), section 202 (offers of short-dated debentures);
(d)
in Part X (miscellaneous and general provisions), the repeals made by Schedule 24 in sections 71, 74, 88 and 89 of, and Schedule 9 to, the M47Fair Trading Act 1973, and section 212 so far as relating to those repeals.
(2)
The other provisions of this Act come into force on such day as the Secretary of State may appoint by order made by statutory instrument; and different days may be appointed for different provisions and different purposes.
(3)
An order bringing into force any provision may contain such transitional provisions and savings as appear to the Secretary of State to be necessary or expedient.
(4)
The Secretary of State may also by order under this section amend any enactment which refers to the commencement of a provision brought into force by the order so as to substitute a reference to the actual date on which it comes into force.
216 Short title.
This Act may be cited as the Companies Act 1989.