Part V Other amendments of Company Law
De-regulation of private companies
113 Written resolutions of private companies.
1
Chapter IV of Part XI of the Companies Act 1985 (meetings and resolutions) is amended as follows.
2
After section 381 insert—
Written resolutions of private companies
381A Written resolutions of private companies.
1
Anything which in the case of a private company may be done—
a
by resolution of the company in general meeting, or
b
by resolution of a meeting of any class of members of the company,
may be done, without a meeting and without any previous notice being required, by resolution in writing signed by or on behalf of all the members of the company who at the date of the resolution would be entitled to attend and vote at such meeting.
2
The signatures need not be on a single document provided each is on a document which accurately states the terms of the resolution.
3
The date of the resolution means when the resolution is signed by or on behalf of the last member to sign.
4
A resolution agreed to in accordance with this section has effect as if passed—
a
by the company in general meeting, or
b
by a meeting of the relevant class of members of the company,
as the case may be; and any reference in any enactment to a meeting at which a resolution is passed or to members voting in favour of a resolution shall be construed accordingly.
5
Any reference in any enactment to the date of passing of a resolution is, in relation to a resolution agreed to in accordance with this section, a reference to the date of the resolution, unless section 381B(4) applies in which case it shall be construed as a reference to the date from which the resolution has effect.
6
A resolution may be agreed to in accordance with this section which would otherwise be required to be passed as a special, extraordinary or elective resolution; and any reference in any enactment to a special, extraordinary or elective resolution includes such a resolution.
7
This section has effect subject to the exceptions specified in Part I of Schedule 15A; and in relation to certain descriptions of resolution under this section the procedural requirements of this Act have effect with the adaptations specified in Part II of that Schedule.
381B Rights of auditors in relation to written resolution.
1
A copy of any written resolution proposed to be agreed to in accordance with section 381A shall be sent to the company’s auditors.
2
If the resolution concerns the auditors as auditors, they may within seven days from the day on which they receive the copy give notice to the company stating their opinion that the resolution should be considered by the company in general meeting or, as the case may be, by a meeting of the relevant class of members of the company.
3
A written resolution shall not have effect unless—
a
the auditors notify the company that in their opinion the resolution—
i
does not concern them as auditors, or
ii
does so concern them but need not be considered by the company in general meeting or, as the case may be, by a meeting of the relevant class of members of the company, or
b
the period for giving a notice under subsection (2) expires without any notice having been given in accordance with that subsection.
4
A written resolution previously agreed to in accordance with section 381A shall not have effect until that notification is given or, as the case may be, that period expires.
381C Written resolutions: supplementary provisions.
1
Sections 381A and 381B have effect notwithstanding any provision of the company’s memorandum or articles.
2
Nothing in those sections affects any enactment or rule of law as to—
a
things done otherwise than by passing a resolution, or
b
cases in which a resolution is treated as having been passed, or a person is precluded from alleging that a resolution has not been duly passed.
3
After section 382 insert—
382A Recording of written resolutions.
1
Where a written resolution is agreed to in accordance with section 381A which has effect as if agreed by the company in general meeting, the company shall cause a record of the resolution (and of the signatures) to be entered in a book in the same way as minutes of proceedings of a general meeting of the company.
2
Any such record, if purporting to be signed by a director of the company or by the company secretary, is evidence of the proceedings in agreeing to the resolution; and where a record is made in accordance with this section, then, until the contrary is proved, the requirements of this Act with respect to those proceedings shall be deemed to be complied with.
3
Section 382(5) (penalties) applies in relation to a failure to comply with subsection (1) above as it applies in relation to a failure to comply with subsection (1) of that section; and section 383 (inspection of minute books) applies in relation to a record made in accordance with this section as it applies in relation to the minutes of a general meeting.
114 Written resolutions: supplementary provisions.
1
In the M27Companies Act 1985 the following Schedule is inserted after Schedule 15—
Schedule 15A Written Resolutions of Private Companies
Part I Exceptions
1
Section 381A does not apply to—
a
a resolution under section 303 removing a director before the expiration of his period of office, or
b
a resolution under section 391 removing an auditor before the expiration of his term of office.
Part II ADAPTATION OF PROCEDURAL REQUIREMENTS
Introductory
2
1
In this Part of this Schedule (which adapts certain requirements of this Act in relation to proceedings under section 381A)—
a
a “written resolution” means a resolution agreed to, or proposed to be agreed to, in accordance with that section, and
b
a “relevant member” means a member by whom, or on whose behalf, the resolution is required to be signed in accordance with that section.
2
A written resolution is not effective if any of the requirements of this Part of this Schedule is not complied with.
Section 95 (disapplication of pre-emption rights)
3
1
The following adaptations have effect in relation to a written resolution under section 95(2) (disapplication of pre-emption rights), or renewing a resolution under that provision.
2
So much of section 95(5) as requires the circulation of a written statement by the directors with a notice of meeting does not apply, but such a statement must be supplied to each relevant member at or before the time at which the resolution is supplied to him for signature.
3
Section 95(6) (offences) applies in relation to the inclusion in any such statement of matter which is misleading, false or deceptive in a material particular.
Section 155 (financial assistance for purchase of company’s own shares or those of holding company)
4
In relation to a written resolution giving approval under section 155(4) or (5) (financial assistance for purchase of company’s own shares or those of holding company), section 157(4)(a) (documents to be available at meeting) does not apply, but the documents referred to in that provision must be supplied to each relevant member at or before the time at which the resolution is supplied to him for signature.
Sections 164, 165 and 167 (authority for off-market purchase or contingent purchase contract of company’s own shares)
5
1
The following adaptations have effect in relation to a written resolution—
a
conferring authority to make an off-market purchase of the company’s own shares under section 164(2),
b
conferring authority to vary a contract for an off-market purchase of the company’s own shares under section 164(7), or
c
varying, revoking or renewing any such authority under section 164(3).
2
Section 164(5) (resolution ineffective if passed by exercise of voting rights by member holding shares to which the resolution relates) does not apply; but for the purposes of section 381A(1) a member holding shares to which the resolution relates shall not be regarded as a member who would be entitled to attend and vote.
3
Section 164(6) (documents to be available at company’s registered office and at meeting) does not apply, but the documents referred to in that provision and, where that provision applies by virtue of section 164(7), the further documents referred to in that provision must be supplied to each relevant member at or before the time at which the resolution is supplied to him for signature.
4
The above adaptations also have effect in relation to a written resolution in relation to which the provisions of section 164(3) to (7) apply by virtue of—
a
section 165(2) (authority for contingent purchase contract), or
b
section 167(2) (approval of release of rights under contract approved under section 164 or 165).
Section 173 (approval for payment out of capital)
6
1
The following adaptations have effect in relation to a written resolution giving approval under section 173(2) (redemption or purchase of company’s own shares out of capital).
2
Section 174(2) (resolution ineffective if passed by exercise of voting rights by member holding shares to which the resolution relates) does not apply; but for the purposes of section 381A(1) a member holding shares to which the resolution relates shall not be regarded as a member who would be entitled to attend and vote.
3
Section 174(4) (documents to be available at meeting) does not apply, but the documents referred to in that provision must be supplied to each relevant member at or before the time at which the resolution is supplied to him for signature.
Section 319 (approval of director’s service contract)
7
In relation to a written resolution approving any such term as is mentioned in section 319(1) (director’s contract of employment for more than five years), section 319(5) (documents to be available at company’s registered office and at meeting) does not apply, but the documents referred to in that provision must be supplied to each relevant member at or before the time at which the resolution is supplied to him for signature.
Section 337 (funding of director’s expenditure in performing his duties)
8
In relation to a written resolution giving approval under section 337(3)(a) (funding a director’s expenditure in performing his duties), the requirement of that provision that certain matters be disclosed at the meeting at which the resolution is passed does not apply, but those matters must be disclosed to each relevant member at or before the time at which the resolution is supplied to him for signature.
2
115 Election by private company to dispense with certain requirements.
1
In Part IV of the Companies Act 1985 (allotment of shares and debentures), in section 80(1) (authority of company required for certain allotments) after “this section” insert “or section 80A”; and after that section insert—
80A Election by private company as to duration of authority.
1
A private company may elect (by elective resolution in accordance with section 379A) that the provisions of this section shall apply, instead of the provisions of section 80(4) and (5), in relation to the giving or renewal, after the election, of an authority under that section.
2
The authority must state the maximum amount of relevant securities that may be allotted under it and may be given—
a
for an indefinite period, or
b
for a fixed period, in which case it must state the date on which it will expire.
3
In either case an authority (including an authority contained in the articles) may be revoked or varied by the company in general meeting.
4
An authority given for a fixed period may be renewed or further renewed by the company in general meeting.
5
A resolution renewing an authority—
a
must state, or re-state, the amount of relevant securities which may be allotted under the authority or, as the case may be, the amount remaining to be allotted under it, and
b
must state whether the authority is renewed for an indefinite period or for a fixed period, in which case it must state the date on which the renewed authority will expire.
6
The references in this section to the maximum amount of relevant securities that may be allotted shall be construed in accordance with section 80(6).
7
If an election under this section ceases to have effect, an authority then in force which was given for an indefinite period or for a fixed period of more than five years—
a
if given five years or more before the election ceases to have effect, shall expire forthwith, and
b
otherwise, shall have effect as if it had been given for a fixed period of five years.
2
In Chapter IV of Part XI of the M6Companies Act 1985 (meetings and resolutions), after section 366 (annual general meeting) insert—
366A Election by private company to dispense with annual general meetings.
1
A private company may elect (by elective resolution in accordance with section 379A) to dispense with the holding of annual general meetings.
2
An election has effect for the year in which it is made and subsequent years, but does not affect any liability already incurred by reason of default in holding an annual general meeting.
3
In any year in which an annual general meeting would be required to be held but for the election, and in which no such meeting has been held, any member of the company may, by notice to the company not later than three months before the end of the year, require the holding of an annual general meeting in that year.
4
If such a notice is given, the provisions of section 366(1) and (4) apply with respect to the calling of the meeting and the consequences of default.
5
If the election ceases to have effect, the company is not obliged under section 366 to hold an annual general meeting in that year if, when the election ceases to have effect, less than three months of the year remains.
This does not affect any obligation of the company to hold an annual general meeting in that year in pursuance of a notice given under subsection (3).
3
In the same Chapter, in sections 369(4) and 378(3) (majority required to sanction short notice of meeting) insert—
A private company may elect (by elective resolution in accordance with section 379A) that the above provisions shall have effect in relation to the company as if for the references to 95 per cent. there were substituted references to such lesser percentage, but not less than 90 per cent., as may be specified in the resolution or subsequently determined by the company in general meeting.
116 Elective resolution of private company.
1
Chapter IV of Part XI of the Companies Act 1985 (meetings and resolutions) is amended as follows.
2
After section 379 insert—
379A Elective resolution of private company.
1
An election by a private company for the purposes of—
a
section 80A (election as to duration of authority to allot shares),
b
section 252 (election to dispense with laying of accounts and reports before general meeting),
c
section 366A (election to dispense with holding of annual general meeting),
d
section 369(4) or 378(3) (election as to majority required to authorise short notice of meeting), or
e
section 386 (election to dispense with appointment of auditors annually),
shall be made by resolution of the company in general meeting in accordance with this section.
Such a resolution is referred to in this Act as an “elective resolution”.
2
An elective resolution is not effective unless—
a
at least 21 days’ notice in writing is given of the meeting, stating that an elective resolution is to be proposed and stating the terms of the resolution, and
b
the resolution is agreed to at the meeting, in person or by proxy, by all the members entitled to attend and vote at the meeting.
3
The company may revoke an elective resolution by passing an ordinary resolution to that effect.
4
An elective resolution shall cease to have effect if the company is re-registered as a public company.
5
An elective resolution may be passed or revoked in accordance with this section, and the provisions referred to in subsection (1) have effect, notwithstanding any contrary provision in the company’s articles of association.
3
In section 380 (registration of resolutions), in subsection (4) (resolutions to which the section applies), after paragraph (b) insert—
bb
an elective resolution or a resolution revoking such a resolution;
117 Power to make further provision by regulations.
1
The Secretary of State may by regulations make provision enabling private companies to elect, by elective resolution in accordance with section 379A of the M7Companies Act 1985, to dispense with compliance with such requirements of that Act as may be specified in the regulations, being requirements which appear to the Secretary of State to relate primarily to the internal administration and procedure of companies.
2
The regulations may add to, amend or repeal provisions of that Act; and may provide for any such provision to have effect, where an election is made, subject to such adaptations and modifications as appear to the Secretary of State to be appropriate.
3
The regulations may make different provision for different cases and may contain such supplementary, incidental and transitional provisions as appear to the Secretary of State to be appropriate.
4
Regulations under this section shall be made by statutory instrument.
5
No regulations under this section shall be made unless a draft of the instrument containing the regulations has been laid before Parliament and approved by a resolution of each House.
Miscellaneous
F13128 Form and articles for partnership company.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129 Membership of holding company.
1
In Chapter I of Part I of the Companies Act 1985 (company formation), for section 23 (membership of holding company) substitute—
23 Membership of holding company.
1
Except as mentioned in this section, a body corporate cannot be a member of a company which is its holding company and any allotment or transfer of shares in a company to its subsidiary is void.
2
The prohibition does not apply where the subsidiary is concerned only as personal representative or trustee unless, in the latter case, the holding company or a subsidiary of it is beneficially interested under the trust.
For the purpose of ascertaining whether the holding company or a subsidiary is so interested, there shall be disregarded—
a
any interest held only by way of security for the purposes of a transaction entered into by the holding company or subsidiary in the ordinary course of a business which includes the lending of money;
b
any such interest as is mentioned in Part I of Schedule 2.
3
The prohibition does not apply where the subsidiary is concerned only as a market maker.
For this purpose a person is a market maker if—
a
he holds himself out at all normal times in compliance with the rules of a recognised investment exchange other than an overseas investment exchange (within the meaning of the Financial Services Act 1986) as willing to buy and sell securities at prices specified by him, and
b
he is recognised as so doing by that investment exchange.
4
Where a body corporate became a holder of shares in a company—
a
before 1st July 1948, or
b
on or after that date and before the commencement of section 129 of the Companies Act 1989, in circumstances in which this section as it then had effect did not apply,
but at any time after the commencement of that section falls within the prohibition in subsection (1) above in respect of those shares, it may continue to be a member of that company; but for so long as that prohibition would apply, apart from this subsection, it has no right to vote in respect of those shares at meetings of the company or of any class of its members.
5
Where a body corporate becomes a holder of shares in a company after the commencement of that section in circumstances in which the prohibition in subsection (1) does not apply, but subsequently falls within that prohibition in respect of those shares, it may continue to be a member of that company; but for so long as that prohibition would apply, apart from this subsection, it has no right to vote in respect of those shares at meetings of the company or of any class of its members.
6
Where a body corporate is permitted to continue as a member of a company by virtue of subsection (4) or (5), an allotment to it of fully paid shares in the company may be validly made by way of capitalisation of reserves of the company; but for so long as the prohibition in subsection (1) would apply, apart from subsection (4) or (5), it has no right to vote in respect of those shares at meetings of the company or of any class of its members.
7
The provisions of this section apply to a nominee acting on behalf of a subsidiary as to the subsidiary itself.
8
In relation to a company other than a company limited by shares, the references in this section to shares shall be construed as references to the interest of its members as such, whatever the form of that interest.
2
In Schedule 2 to the M16Companies Act 1985 (interpretation of references to “beneficial interest”), in paragraphs 1(1), 3(1) and 4(2) for “as respects section 23(4)” substitute “as this paragraph applies for the purposes of section 23(2)”
130 Company contracts and execution of documents by companies.
1
In Chapter III of Part I of the Companies Act 1985 (a company’s capacity; the formalities of carrying on business), for section 36 (form of company contracts) substitute—
36 Company contracts: England and Wales.
Under the law of England and Wales a contract may be made—
a
by a company, by writing under its common seal, or
b
on behalf of a company, by any person acting under its authority, express or implied;
and any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of a company.
2
After that section insert—
36A Execution of documents: England and Wales.
1
Under the law of England and Wales the following provisions have effect with respect to the execution of documents by a company.
2
A document is executed by a company by the affixing of its common seal.
3
A company need not have a common seal, however, and the following subsections apply whether it does or not.
4
A document signed by a director and the secretary of a company, or by two directors of a company, and expressed (in whatever form of words) to be executed by the company has the same effect as if executed under the common seal of the company.
5
A document executed by a company which makes it clear on its face that it is intended by the person or persons making it to be a deed has effect, upon delivery, as a deed; and it shall be presumed, unless a contrary intention is proved, to be delivered upon its being so executed.
6
In favour of a purchaser a document shall be deemed to have been duly executed by a company if it purports to be signed by a director and the secretary of the company, or by two directors of the company, and, where it makes it clear on its face that it is intended by the person or persons making it to be a deed, to have been delivered upon its being executed.
A “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.
3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F5
4
After the section inserted by subsection (3) insert—
36C Pre-incorporation contracts, deeds and obligations.
1
A contract which purports to be made by or on behalf of a company at a time when the company has not been formed has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract accordingly.
2
Subsection (1) applies—
a
to the making of a deed under the law of England and Wales, and
b
to the undertaking of an obligation under the law of Scotland,
as it applies to the making of a contract.
5
In Schedule 22 of the M17Companies Act 1985 (provisions applying to unregistered companies), at the appropriate place insert—
Section 36
Company contracts.
Subject to section 718(3).
Sections 36A and 36B
Execution of documents.
Subject to section 718(3).
Section 36C
Pre-incorporation contracts, deeds and obligations.
Subject to section 718(3).
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; F6execution 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
Schedule 17 contains further minor and consequential amendments relating to company contracts, the execution of documents by companies and related matters.
131 Members’ rights to damages, &c.
1
In Part IV of the Companies Act 1985 (allotment of shares and debentures), before section 112 and after the heading “Other matters arising out of allotment &c.”,insert—
111A Right to damages, &c. not affected.
A person is not debarred from obtaining damages or other compensation from a company by reason only of his holding or having held shares in the company or any right to apply or subscribe for shares or to be included in the company’s register in respect of shares.
2
In section 116 of the Companies Act 1985 (extended operation of certain provisions applying to public companies) for “and 110 to 115” substitute “, 110, 111 and 112 to 115”.
132 Financial assistance for purposes of employees’ share scheme.
In Chapter VI of Part V of the Companies Act 1985 (financial assistance by company for purchase of its own shares), in section 153 (transactions not prohibited), for subsection (4)(b) (provision of money in accordance with employees’ share scheme) substitute—
b
the provision by a company, in good faith in the interests of the company, of financial assistance for the purposes of an employees’ share scheme,
F12133 Issue of redeemable shares.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134 Disclosure of interests in shares.
1
Part VI of the Companies Act 1985 (disclosure of interests in shares) is amended as follows.
2
In section 199(2) (notifiable interests), for the words from “the percentage” to the end substitute “3 per cent. of the nominal value of that share capital”.
The order bringing the above amendment into force may make such provision as appears to the Secretary of State appropriate as to the obligations of a person whose interest in a company’s shares becomes notifiable by virtue of the amendment coming into force.
3
In sections 202(1) and (4) and 206(8) (which require notification of certain matters within a specified period) for “5 days” substitute “2 days”.
I104
In section 202 (particulars to be contained in notification), for subsection (3) substitute—
3
A notification (other than one stating that a person no longer has a notifiable interest) shall include the following particulars, so far as known to the person making the notification at the date when it is made—
a
the identity of each registered holder of shares to which the notification relates and the number of such shares held by each of them, and
b
the number of such shares in which the interest of the person giving the notification is such an interest as is mentioned in section 208(5).
5
After section 210 insert—
210A Power to make further provision by regulations.
1
The Secretary of State may by regulations amend—
a
the definition of “relevant share capital” (section 198(2)),
b
the percentage giving rise to a “notifiable interest” (section 199(2)),
c
the periods within which an obligation of disclosure must be fulfilled or a notice must be given (sections 202(1) and (4) and 206(8)),
d
the provisions as to what is taken to be an interest in shares (section 208) and what interests are to be disregarded (section 209), and
e
the provisions as to company investigations (section 212);
and the regulations may amend, replace or repeal the provisions referred to above and make such other consequential amendments or repeals of provisions of this Part as appear to the Secretary of State to be appropriate.
2
The regulations may in any case make different provision for different descriptions of company; and regulations under subsection (1)(b), (c) or (d) may make different provision for different descriptions of person, interest or share capital.
3
The regulations may contain such transitional and other supplementary and incidental provisions as appear to the Secretary of State to be appropriate, and may in particular make provision as to the obligations of a person whose interest in a company’s shares becomes or ceases to be notifiable by virtue of the regulations.
4
Regulations under this section shall be made by statutory instrument.
5
No regulations shall be made under this section unless a draft of the regulations has been laid before and approved by a resolution of each House of Parliament.
6
Any regulations made under section 209(1)(j) which are in force immediately before the repeal of that paragraph by this Act shall have effect as if made under section 210A(1)(d) as inserted by subsection (5) above.
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 M18Companies Act 1985 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
The provisions referred to in subsection (1) are section 210(5), section 216(1) and (2), section 445 and Part XV of the Companies Act 1985.
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.
136 A company’s registered office.
For section 287 of the Companies Act 1985 (registered office) substitute—
287 Registered office.
1
A company shall at all times have a registered office to which all communications and notices may be addressed.
2
On incorporation the situation of the company’s registered office is that specified in the statement sent to the registrar under section 10.
3
The company may change the situation of its registered office from time to time by giving notice in the prescribed form to the registrar.
4
The change takes effect upon the notice being registered by the registrar, but until the end of the period of 14 days beginning with the date on which it is registered a person may validly serve any document on the company at its previous registered office.
5
For the purposes of any duty of a company—
a
to keep at its registered office, or make available for public inspection there, any register, index or other document, or
b
to mention the address of its registered office in any document,
a company which has given notice to the registrar of a change in the situation of its registered office may act on the change as from such date, not more than 14 days after the notice is given, as it may determine.
6
Where a company unavoidably ceases to perform at its registered office any such duty as is mentioned in subsection (5)(a) in circumstances in which it was not practicable to give prior notice to the registrar of a change in the situation of its registered office, but—
a
resumes performance of that duty at other premises as soon as practicable, and
b
gives notice accordingly to the registrar of a change in the situation of its registered office within 14 days of doing so,
it shall not be treated as having failed to comply with that duty.
7
In proceedings for an offence of failing to comply with any such duty as is mentioned in subsection (5), it is for the person charged to show that by reason of the matters referred to in that subsection or subsection (6) no offence was committed.
137 Effecting of insurance for officers and auditors of company.
1
In section 310 of the M34Companies Act 1985 (provisions exempting officers and auditors from liability), for subsection (3) (permitted provisions) substitute—
3
This section does not prevent a company—
a
from purchasing and maintaining for any such officer or auditor insurance against any such liability, or
b
from indemnifying any such officer or auditor against any liability incurred by him—
i
in defending any proceedings (whether civil or criminal) in which judgment is given in his favour or he is acquitted, or
ii
in connection with any application under section 144(3) or (4) (acquisition of shares by innocent nominee) or section 727 (general power to grant relief in case of honest and reasonable conduct) in which relief is granted to him by the court.
2
F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
138 Increase of limits on certain exemptions.
Part X of the M35Companies Act 1985 (enforcement of fair dealing by directors) is amended as follows—
a
in section 332(1)(b) (short-term quasi-loans) for “£1,000” substitute “£5,000”;
b
in section 334 (loans of small amounts) for “£2,500” substitute “£5,000”;
c
in section 338(4) and (6) (loans or quasi-loans by money-lending company) for “£50,000” substitute “£100,000”.
139 Annual returns.
1
In Part XI of the Companies Act 1985 (company administration and procedure), for Chapter III (annual return) substitute—
Chapter III Annual Return
363 Duty to deliver annual returns.
1
Every company shall deliver to the registrar successive annual returns each of which is made up to a date not later than the date which is from time to time the company’s “return date”, that is—
a
the anniversary of the company’s incorporation, or
b
if the company’s last return delivered in accordance with this Chapter was made up to a different date, the anniversary of that date.
2
Each return shall—
a
be in the prescribed form,
b
contain the information required by or under the following provisions of this Chapter, and
c
be signed by a director or the secretary of the company;
and it shall be delivered to the registrar within 28 days after the date to which it is made up.
3
If a company fails to deliver an annual return in accordance with this Chapter before the end of the period of 28 days after a return date, the company is guilty of an offence and liable to a fine and, in the case of continued contravention, to a daily default fine.
The contravention continues until such time as an annual return made up to that return date and complying with the requirements of subsection (2) (except as to date of delivery) is delivered by the company to the registrar.
4
Where a company is guilty of an offence under subsection (3), every director or secretary of the company is similarly liable unless he shows that he took all reasonable steps to avoid the commission or continuation of the offence.
5
The references in this section to a return being delivered “in accordance with this Chapter” are—
a
in relation to a return made after the commencement of section 139 of the Companies Act 1989, to a return with respect to which all the requirements of subsection (2) are complied with;
b
in relation to a return made before that commencement, to a return with respect to which the formal and substantive requirements of this Chapter as it then had effect were complied with, whether or not the return was delivered in time.
364 Contents of annual return: general.
1
Every annual return shall state the date to which it is made up and shall contain the following information—
a
the address of the company’s registered office;
b
the type of company it is and its principal business activities;
c
the name and address of the company secretary;
d
the name and address of every director of the company;
e
in the case of each individual director—
i
his nationality, date of birth and business occupation, and
ii
such particulars of other directorships and former names as are required to be contained in the company’s register of directors;
f
in the case of any corporate director, such particulars of other directorships as would be required to be contained in that register in the case of an individual;
g
if the register of members is not kept at the company’s registered office, the address of the place where it is kept;
h
if any register of debenture holders (or a duplicate of any such register or a part of it) is not kept at the company’s registered office, the address of the place where it is kept;
i
if the company has elected—
i
to dispense under section 252 with the laying of accounts and reports before the company in general meeting, or
ii
to dispense under section 366A with the holding of annual general meetings,
a statement to that effect.
2
The information as to the company’s type shall be given by reference to the classification scheme prescribed for the purposes of this section.
3
The information as to the company’s principal business activities may be given by reference to one or more categories of any prescribed system of classifying business activities.
4
A person’s “name” and “address” mean, respectively—
a
in the case of an individual, his Christian name (or other forename) and surname and his usual residential address;
b
in the case of a corporation or Scottish firm, its corporate or firm name and its registered or principal office.
5
In the case of a peer, or an individual usually known by a title, the title may be stated instead of his Christian name (or other forename) and surname or in addition to either or both of them.
6
Where all the partners in a firm are joint secretaries, the name and principal office of the firm may be stated instead of the names and addresses of the partners.
364A Contents of annual return: particulars of share capital and shareholders.
1
The annual return of a company having a share capital shall contain the following information with respect to its share capital and members.
2
The return shall state the total number of issued shares of the company at the date to which the return is made up and the aggregate nominal value of those shares.
3
The return shall state with respect to each class of shares in the company—
a
the nature of the class, and
b
the total number and aggregate nominal value of issued shares of that class at the date to which the return is made up.
4
The return shall contain a list of the names and addresses of every person who—
a
is a member of the company on the date to which the return is made up, or
b
has ceased to be a member of the company since the date to which the last return was made up (or, in the case of the first return, since the incorporation of the company);
and if the names are not arranged in alphabetical order the return shall have annexed to it an index sufficient to enable the name of any person in the list to be easily found.
5
The return shall also state—
a
the number of shares of each class held by each member of the company at the date to which the return is made up, and
b
the number of shares of each class transferred since the date to which the last return was made up (or, in the case of the first return, since the incorporation of the company) by each member or person who has ceased to be a member, and the dates of registration of the transfers.
6
The return may, if either of the two immediately preceding returns has given the full particulars required by subsections (4) and (5), give only such particulars as relate to persons ceasing to be or becoming members since the date of the last return and to shares transferred since that date.
7
Subsections (4) and (5) do not require the inclusion of particulars entered in an overseas branch register if copies of those entries have not been received at the company’s registered office by the date to which the return is made up.
Those particulars shall be included in the company’s next annual return after they are received.
8
Where the company has converted any of its shares into stock, the return shall give the corresponding information in relation to that stock, stating the amount of stock instead of the number or nominal value of shares.
365 Supplementary provisions: regulations and interpretation.
1
The Secretary of State may by regulations make further provision as to the information to be given in a company’s annual return, which may amend or repeal the provisions of sections 364 and 364A.
2
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.
3
For the purposes of this Chapter, except section 363(2)(c) (signature of annual return), a shadow director shall be deemed to be a director.
2
Where a company was, immediately before the commencement of this section, in default with respect to the delivery of one or more annual returns, this section does not affect its obligation to make such a return (in accordance with Chapter III of Part XI of the M19Companies Act 1985 as it then had effect) or any liability arising from failure to do so.
3
In Schedule 24 to the Companies Act 1985 (punishment of offences) in the entry relating to section 363(7), in the first column for “363(7)” substitute “363(3)”.
4
In Schedule 1 to the M20Company Directors Disqualification Act 1986 (matters relevant to determining unfitness of directors), in paragraph 4 (failure of company to comply with certain provisions), for sub-paragraphs (f) and (g) substitute—
f
section 363 (duty of company to make annual returns);
5
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I7140 Floating charges (Scotland).
C11
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.
C13
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
After subsection (1) there shall be inserted the following subsection—
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
For subsection (3) there shall be substituted—
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).
C16
In subsection (5) at the end there shall be added the following paragraph—
; 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.
141 Application to declare dissolution of company void.
1
Section 651 of the M21Companies Act 1985 (power of court to declare dissolution of company void) is amended as follows.
2
In subsection (1) omit the words “at any time within 2 years of the date of the dissolution”.
3
After subsection (3) add—
4
Subject to the following provisions, an application under this section may not be made after the end of the period of two years from the date of the dissolution of the company.
5
An application for the purpose of bringing proceedings against the company—
a
for damages in respect of personal injuries (including any sum claimed by virtue of section 1(2)(c) of the Law Reform (Miscellaneous Provisions) Act 1934 (funeral expenses)), or
b
for damages under the Fatal Accidents Act 1976 or the Damages (Scotland) Act 1976,
may be made at any time; but no order shall be made on such an application if it appears to the court that the proceedings would fail by virtue of any enactment as to the time within which proceedings must be brought.
6
Nothing in subsection (5) affects the power of the court on making an order under this section to direct that the period between the dissolution of the company and the making of the order shall not count for the purposes of any such enactment.
7
In subsection (5)(a) “personal injuries” includes any disease and any impairment of a person’s physical or mental condition.
4
An application may be made under section 651(5) of the Companies Act 1985 as inserted by subsection (3) above (proceedings for damages for personal injury, &c.) in relation to a company dissolved before the commencement of this section notwithstanding that the time within which the dissolution might formerly have been declared void under that section had expired before commencement.
But no such application shall be made in relation to a company dissolved more than twenty years before the commencement of this section.
5
Except as provided by subsection (4), the amendments made by this section do not apply in relation to a company which was dissolved more than two years before the commencement of this section.
142 Abolition of doctrine of deemed notice.
1
In Part XXIV of the Companies Act 1985 (the registrar of companies, his functions and offices), after section 711 insert—
711A Exclusion of deemed notice.
1
A person shall not be taken to have notice of any matter merely because of its being disclosed in any document kept by the registrar of companies (and thus available for inspection) or made available by the company for inspection.
2
This does not affect the question whether a person is affected by notice of any matter by reason of a failure to make such inquiries as ought reasonably to be made.
3
In this section “document” includes any material which contains information.
4
Nothing in this section affects the operation of—
a
section 416 of this Act (under which a person taking a charge over a company’s property is deemed to have notice of matters disclosed on the companies charges register), or
b
section 198 of the Law of Property Act 1925 as it applies by virtue of section 3(7) of the Land Charges Act 1972 (under which the registration of certain land charges under Part XII, or Chapter III of Part XXIII, of this Act is deemed to constitute actual notice for all purposes connected with the land affected).
2
In Schedule 22 to the M22Companies Act 1985 (unregistered companies), in the entry for Part XXIV at the appropriate place insert—
Section 711A
Abolition of doctrine of deemed notice.
Subject to section 718(3).
I8143 Rights of inspection and related matters.
1
In Part XXV of the Companies Act 1985 (miscellaneous and supplementary provisions), after section 723 insert—
723A Obligations of company as to inspection of registers, &c.
1
The Secretary of State may make provision by regulations as to the obligations of a company which is required by any provision of this Act—
a
to make available for inspection any register, index or document, or
b
to provide copies of any such register, index or document, or part of it;
and a company which fails to comply with the regulations shall be deemed to have refused inspection or, as the case may be, to have failed to provide a copy.
2
The regulations may make provision as to the time, duration and manner of inspection, including the circumstances in which and extent to which the copying of information is permitted in the course of inspection.
3
The regulations may define what may be required of the company as regards the nature, extent and manner of extracting or presenting any information for the purposes of inspection or the provision of copies.
4
Where there is power to charge a fee, the regulations may make provision as to the amount of the fee and the basis of its calculation.
5
Regulations under this section may make different provision for different classes of case.
6
Nothing in any provision of this Act or in the regulations shall be construed as preventing a company from affording more extensive facilities than are required by the regulations or, where a fee may be charged, from charging a lesser fee than that prescribed or no fee at all.
7
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.
2
In section 169(5) of the M23Companies Act 1985 (contract for purchase by company of its own shares), omit the words from “, during business hours” to “for inspection)”.
3
In section 175(6) of the Companies Act 1985 (statutory declaration and auditors’ report relating to payment out of capital), in paragraph (b) omit the words from “during business hours” to “period”.
4
In section 191 of the Companies Act 1985 (register of debenture holders)—
a
in subsection (1), omit the words from “(but” to “for inspection)” and for the words from “a fee of 5 pence” to the end substitute “such fee as may be prescribed”;
b
in subsection (2) for the words from “10 pence” to the end substitute “such fee as may be prescribed”; and
c
in subsection (3), after “on payment” insert “of such fee as may be prescribed” and omit paragraphs (a) and (b).
5
In section 219 of the Companies Act 1985 (register of interests in shares, &c.)—
a
in subsection (1), omit the words from “during” to “for inspection)”; and
b
in subsection (2) for the words from “10 pence” to “required to be copied” substitute “such fee as may be prescribed”.
6
In section 288 of the Companies Act 1985 (register of directors and secretaries), in subsection (3), omit the words from “during” to “for inspection)” and for the words from “5 pence” to the end substitute “such fee as may be prescribed”.
7
In section 318 of the Companies Act 1985 (directors’ service contracts), in subsection (7) omit the words from “, during business hours” to “for inspection)”.
8
In section 356 of the Companies Act 1985 (register and index of members’ names)—
a
in subsection (1), omit “during business hours” and for “the appropriate charge” substitute “such fee as may be prescribed”;
b
omit subsection (2);
c
in subsection (3) for “the appropriate charge” substitute “such fee as may be prescribed”; and
d
omit subsection (4).
9
In section 383 of the Companies Act 1985 (minutes of proceedings of general meetings)—
a
in subsection (1), omit “during business hours”;
b
omit subsection (2); and
c
in subsection (3), after “entitled” insert “on payment of such fee as may be prescribed” and omit the words from “at a charge” to the end.
10
In Part IV of Schedule 13 to the M24Companies Act 1985 (register of directors’ interests)—
a
in paragraph 25, omit the words from “during” to “for inspection)” and for the words from “5 pence” to the end substitute “such fee as may be prescribed”; and
b
in paragraph 26(1), for the words from “10 pence” to the end substitute “such fee as may be prescribed”.
11
In Schedule 22 to the Companies Act 1985 (provisions applying to unregistered companies), in the entry relating to Part XXV at the appropriate place insert—
Section 723A
Rights of inspection and related matters.
To apply only so far as this provision has effect in relation to provisions applying by virtue of the foregoing provisions of this Schedule.
144“Subsidiary”, “holding company” and “wholly-owned subsidiary”.
1
In Part XXVI of the Companies Act 1985 (general interpretation provisions), for section 736 substitute—
736“Subsidiary”, “holding company” and “wholly-owned subsidiary”.
1
A company is a “subsidiary” of another company, its “holding company”, if that other company—
a
holds a majority of the voting rights in it, or
b
is a member of it and has the right to appoint or remove a majority of its board of directors, or
c
is a member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it,
or if it is a subsidiary of a company which is itself a subsidiary of that other company.
2
A company is a “wholly-owned subsidiary” of another company if it has no members except that other and that other’s wholly-owned subsidiaries or persons acting on behalf of that other or its wholly-owned subsidiaries.
3
In this section “company” includes any body corporate.
736A Provisions supplementing s. 736.
1
The provisions of this section explain expressions used in section 736 and otherwise supplement that section.
2
In section 736(1)(a) and (c) the references to the voting rights in a company are to the rights conferred on shareholders in respect of their shares or, in the case of a company not having a share capital, on members, to vote at general meetings of the company on all, or substantially all, matters.
3
In section 736(1)(b) the reference to the right to appoint or remove a majority of the board of directors is to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters; and for the purposes of that provision—
a
a company shall be treated as having the right to appoint to a directorship if—
i
a person’s appointment to it follows necessarily from his appointment as director of the company, or
ii
the directorship is held by the company itself; and
b
a right to appoint or remove which is exercisable only with the consent or concurrence of another person shall be left out of account unless no other person has a right to appoint or, as the case may be, remove in relation to that directorship.
4
Rights which are exercisable only in certain circumstances shall be taken into account only—
a
when the circumstances have arisen, and for so long as they continue to obtain, or
b
when the circumstances are within the control of the person having the rights;
and rights which are normally exercisable but are temporarily incapable of exercise shall continue to be taken into account.
5
Rights held by a person in a fiduciary capacity shall be treated as not held by him.
6
Rights held by a person as nominee for another shall be treated as held by the other; and rights shall be regarded as held as nominee for another if they are exercisable only on his instructions or with his consent or concurrence.
7
Rights attached to shares held by way of security shall be treated as held by the person providing the security—
a
where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with his instructions;
b
where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in his interests.
8
Rights shall be treated as held by a company if they are held by any of its subsidiaries; and nothing in subsection (6) or (7) shall be construed as requiring rights held by a company to be treated as held by any of its subsidiaries.
9
For the purposes of subsection (7) rights shall be treated as being exercisable in accordance with the instructions or in the interests of a company if they are exercisable in accordance with the instructions of or, as the case may be, in the interests of—
a
any subsidiary or holding company of that company, or
b
any subsidiary of a holding company of that company.
10
The voting rights in a company shall be reduced by any rights held by the company itself.
11
References in any provision of subsections (5) to (10) to rights held by a person include rights falling to be treated as held by him by virtue of any other provision of those subsections but not rights which by virtue of any such provision are to be treated as not held by him.
12
In this section “company” includes any body corporate.
2
Any reference in any enactment (including any enactment contained in subordinate legislation within the meaning of the Interpretation Act M251978) to a “subsididary” or “holding company” within the meaning of section 736 of the Companies Act M261985 shall, subject to any express amendment or saving made by or under this Act, be read as referring to a subsidiary or holding company as defined in section 736 as substituted by subsection (1) above.
This applies whether the reference is specific or general, or express or implied.
3
In Part XXVI of the Companies Act 1985 (general interpretation provisions), after section 736A insert—
736B Power to amend ss. 736 and 736A.
1
The Secretary of State may by regulations amend sections 736 and 736A so as to alter the meaning of the expressions “holding company”, “subsidiary” or “wholly-owned subsidiary”.
2
The regulations may make different provision for different cases or classes of case and may contain such incidental and supplementary provisions as the Secretary of State thinks fit.
3
Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
4
Any amendment made by regulations under this section does not apply for the purposes of enactments outside the Companies Acts unless the regulations so provide.
5
So much of section 23(3) of the Interpretation Act 1978 as applies section 17(2)(a) of that Act (effect of repeal and re-enactment) to deeds, instruments and documents other than enactments shall not apply in relation to any repeal and re-enactment effected by regulations made under this section.
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.
I9145
The Companies Act 1985 has effect with the further amendments specified in Schedule 19.