C1Part 37Companies: supplementary provisions

Annotations:
Modifications etc. (not altering text)

Requirements as to independent valuation

1149Application of valuation requirements

The provisions of sections 1150 to 1153 apply to the valuation and report required by—

  • section 93 (re-registration as public company: recent allotment of shares for non-cash consideration);

  • section 593 (allotment of shares of public company in consideration of non-cash asset);

  • section 599 (transfer of non-cash asset to public company).

1150Valuation by qualified independent person

1

The valuation and report must be made by a person (“the valuer”) who—

a

is eligible for appointment as a statutory auditor (see section 1212), and

b

meets the independence requirement in section 1151.

2

However, where it appears to the valuer to be reasonable for the valuation of the consideration, or part of it, to be made by (or for him to accept a valuation made by) another person who—

a

appears to him to have the requisite knowledge and experience to value the consideration or that part of it, and

b

is not an officer or employee of—

i

the company, or

ii

any other body corporate that is that company's subsidiary or holding company or a subsidiary of that company's holding company,

or a partner of or employed by any such officer or employee,

he may arrange for or accept such a valuation, together with a report which will enable him to make his own report under this section.

3

The references in subsection (2)(b) to an officer or employee do not include an auditor.

4

Where the consideration or part of it is valued by a person other than the valuer himself, the latter's report must state that fact and shall also—

a

state the former's name and what knowledge and experience he has to carry out the valuation, and

b

describe so much of the consideration as was valued by the other person, and the method used to value it, and specify the date of that valuation.

I11151The independence requirement

1

A person meets the independence requirement for the purposes of section 1150 only if—

a

he is not—

i

an officer or employee of the company, or

ii

a partner or employee of such a person, or a partnership of which such a person is a partner;

b

he is not—

i

an officer or employee of an associated undertaking of the company, or

ii

a partner or employee of such a person, or a partnership of which such a person is a partner; and

c

there does not exist between—

i

the person or an associate of his, and

ii

the company or an associated undertaking of the company,

a connection of any such description as may be specified by regulations made by the Secretary of State.

2

An auditor of the company is not regarded as an officer or employee of the company for this purpose.

3

In this section—

  • “associated undertaking” means—

    1. a

      a parent undertaking or subsidiary undertaking of the company, or

    2. b

      a subsidiary undertaking of a parent undertaking of the company; and

  • “associate” has the meaning given by section 1152.

4

Regulations under this section are subject to negative resolution procedure.

1152Meaning of “associate”

1

This section defines “associate” for the purposes of section 1151 (valuation: independence requirement).

2

In relation to an individual, “associate” means—

a

that individual's spouse or civil partner or minor child or step-child,

b

any body corporate of which that individual is a director, and

c

any employee or partner of that individual.

3

In relation to a body corporate, “associate” means—

a

any body corporate of which that body is a director,

b

any body corporate in the same group as that body, and

c

any employee or partner of that body or of any body corporate in the same group.

4

In relation to a partnership that is a legal person under the law by which it is governed, “associate” means—

a

any body corporate of which that partnership is a director,

b

any employee of or partner in that partnership, and

c

any person who is an associate of a partner in that partnership.

5

In relation to a partnership that is not a legal person under the law by which it is governed, “associate” means any person who is an associate of any of the partners.

6

In this section, in relation to a limited liability partnership, for “director” read “member”.

1153Valuer entitled to full disclosure

1

A person carrying out a valuation or making a report with respect to any consideration proposed to be accepted or given by a company, is entitled to require from the officers of the company such information and explanation as he thinks necessary to enable him to—

a

carry out the valuation or make the report, and

b

provide any note required by section 596(3) or 600(3) (note required where valuation carried out by another person).

2

A person who knowingly or recklessly makes a statement to which this subsection applies that is misleading, false or deceptive in a material particular commits an offence.

3

Subsection (2) applies to a statement—

a

made (whether orally or in writing) to a person carrying out a valuation or making a report, and

b

conveying or purporting to convey any information or explanation which that person requires, or is entitled to require, under subsection (1).

4

A person guilty of an offence under subsection (2) is liable—

a

on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);

b

on summary conviction—

i

in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);

ii

in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).