Office of Public Sector Information
PART V continued
(1) In Part IV of the [1985 c. 6.] 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—
(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 [1985 c. 6.] Companies Act 1985 (meetings and resolutions), after section 366 (annual general meeting) insert—
(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.”.
(1) Chapter IV of Part XI of the [1985 c. 6.] Companies Act 1985 (meetings and resolutions) is amended as follows.
(2) After section 379 insert—
(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;”.
(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 [1985 c. 6.] Companies 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.
(1) The following sections amend the provisions of the [1985 c. 6.] Companies Act 1985 relating to auditors by inserting new provisions in Chapter V of Part XI of that Act.
(2) The new provisions, together with the amendment made by section 124, replace the present provisions of that Chapter except section 389 (qualification for appointment as auditor) which is replaced by provisions in Part II of this Act.
(1) The following sections are inserted in Chapter V of Part XI of the [1985 c. 6.] Companies Act 1985 (auditors)—
(1) Every company shall appoint an auditor or auditors in accordance with this Chapter.
This is subject to section 388A (dormant company exempt from obligation to appoint auditors).
(2) Auditors shall be appointed in accordance with section 385 (appointment at general meeting at which accounts are laid), except in the case of a private company which has elected to dispense with the laying of accounts in which case the appointment shall be made in accordance with section 385A.
(3) References in this Chapter to the end of the time for appointing auditors are to the end of the time within which an appointment must be made under section 385(2) or 385A(2), according to whichever of those sections applies.
(4) Sections 385 and 385A have effect subject to section 386 under which a private company may elect to dispense with the obligation to appoint auditors annually.
(1) This section applies to every public company and to a private company which has not elected to dispense with the laying of accounts.
(2) The company shall, at each general meeting at which accounts are laid, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next general meeting at which accounts are laid.
(3) The first auditors of the company may be appointed by the directors at any time before the first general meeting of the company at which accounts are laid; and auditors so appointed shall hold office until the conclusion of that meeting.
(4) If the directors fail to exercise their powers under subsection (3), the powers may be exercised by the company in general meeting.
(1) This section applies to a private company which has elected in accordance with section 252 to dispense with the laying of accounts before the company in general meeting.
(2) Auditors shall be appointed by the company in general meeting before the end of the period of 28 days beginning with the day on which copies of the company’s annual accounts for the previous financial year are sent to members under section 238 or, if notice is given under section 253(2) requiring the laying of the accounts before the company in general meeting, the conclusion of that meeting.
Auditors so appointed shall hold office from the end of that period or, as the case may be, the conclusion of that meeting until the end of the time for appointing auditors for the next financial year.
(3) The first auditors of the company may be appointed by the directors at any time before—
(a) the end of the period of 28 days beginning with the day on which copies of the company’s first annual accounts are sent to members under section 238, or
(b) if notice is given under section 253(2) requiring the laying of the accounts before the company in general meeting, the beginning of that meeting;
and auditors so appointed shall hold office until the end of that period or, as the case may be, the conclusion of that meeting.
(4) If the directors fail to exercise their powers under subsection (3), the powers may be exercised by the company in general meeting.
(5) Auditors holding office when the election is made shall, unless the company in general meeting determines otherwise, continue to hold office until the end of the time for appointing auditors for the next financial year; and auditors holding office when an election ceases to have effect shall continue to hold office until the conclusion of the next general meeting of the company at which accounts are laid.
(1) A private company may elect (by elective resolution in accordance with section 379A) to dispense with the obligation to appoint auditors annually.
(2) When such an election is in force the company’s auditors shall be deemed to be re-appointed for each succeeding financial year on the expiry of the time for appointing auditors for that year, unless—
(a) a resolution has been passed under section 250 by virtue of which the company is exempt from the obligation to appoint auditors, or
(b) a resolution has been passed under section 393 to the effect that their appointment should be brought to an end.
(3) If the election ceases to be in force, the auditors then holding office shall continue to hold office—
(a) where section 385 then applies, until the conclusion of the next general meeting of the company at which accounts are laid;
(b) where section 385A then applies, until the end of the time for appointing auditors for the next financial year under that section.
(4) No account shall be taken of any loss of the opportunity of further deemed re-appointment under this section in ascertaining the amount of any compensation or damages payable to an auditor on his ceasing to hold office for any reason.
(1) If in any case no auditors are appointed, re-appointed or deemed to be re-appointed before the end of the time for appointing auditors, the Secretary of State may appoint a person to fill the vacancy.
(2) In such a case the company shall within one week of the end of the time for appointing auditors give notice to the Secretary of State of his power having become exercisable.
If a company fails to give the notice required by this subsection, the company and every officer of it who is in default is guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine.
(1) The directors, or the company in general meeting, may fill a casual vacancy in the office of auditor.
(2) While such a vacancy continues, any surviving or continuing auditor or auditors may continue to act.
(3) Special notice is required for a resolution at a general meeting of a company—
(a) filling a casual vacancy in the office of auditor, or
(b) re-appointing as auditor a retiring auditor who was appointed by the directors to fill a casual vacancy.
(4) On receipt of notice of such an intended resolution the company shall forthwith send a copy of it—
(a) to the person proposed to be appointed, and
(b) if the casual vacancy was caused by the resignation of an auditor, to the auditor who resigned.
(1) A company which by virtue of section 250 (dormant companies: exemption from provisions as to audit of accounts) is exempt from the provisions of Part VII relating to the audit of accounts is also exempt from the obligation to appoint auditors.
(2) The following provisions apply if the exemption ceases.
(3) Where section 385 applies (appointment at general meeting at which accounts are laid), the directors may appoint auditors at any time before the next meeting of the company at which accounts are to be laid; and auditors so appointed shall hold office until the conclusion of that meeting.
(4) Where section 385A applies (appointment by private company not obliged to lay accounts), the directors may appoint auditors at any time before—
(a) the end of the period of 28 days beginning with the day on which copies of the company’s annual accounts are next sent to members under section 238, or
(b) if notice is given under section 253(2) requiring the laying of the accounts before the company in general meeting, the beginning of that meeting;
and auditors so appointed shall hold office until the end of that period or, as the case may be, the conclusion of that meeting.
(5) If the directors fail to exercise their powers under subsection (3) or (4), the powers may be exercised by the company in general meeting.”.
(2) In Schedule 24 to the [1985 c. 6.] Companies Act 1985 (punishment of offences), at the appropriate place insert—
| “387(2) | Company failing to give Secretary of State notice of non-appointment of auditors. | Summary. | One-fifth of the statutory maximum. | One-fiftieth of the statutory maximum.”. |
(3) In section 46(2) of the [1987 c. 22.] Banking Act 1987 (duty of auditor of authorised institution to give notice to Bank of England of certain matters) for “appointed under section 384” substitute “appointed under Chapter V of Part XI”; and in section 46(4) (adaptation of references in relation to Northern Ireland) for “sections 384,” substitute “Chapter V of Part XI and sections”.
(1) The following sections are inserted in Chapter V of Part XI of the [1985 c. 6.] Companies Act 1985 (auditors)—
(1) The auditors of a company have a right of access at all times to the company’s books, accounts and vouchers, and are entitled to require from the company’s officers such information and explanations as they think necessary for the performance of their duties as auditors.
(2) An officer of a company commits an offence if he knowingly or recklessly makes to the company’s auditors a statement (whether written or oral) which—
(a) conveys or purports to convey any information or explanations which the auditors require, or are entitled to require, as auditors of the company, and
(b) is misleading, false or deceptive in a material particular.
A person guilty of an offence under this subsection is liable to imprisonment or a fine, or both.
(3) A subsidiary undertaking which is a body corporate incorporated in Great Britain, and the auditors of such an undertaking, shall give to the auditors of any parent company of the undertaking such information and explanations as they may reasonably require for the purposes of their duties as auditors of that company.
If a subsidiary undertaking fails to comply with this subsection, the undertaking and every officer of it who is in default is guilty of an offence and liable to a fine; and if an auditor fails without reasonable excuse to comply with this subsection he is guilty of an offence and liable to a fine.
(4) A parent company having a subsidiary undertaking which is not a body corporate incorporated in Great Britain shall, if required by its auditors to do so, take all such steps as are reasonably open to it to obtain from the subsidiary undertaking such information and explanations as they may reasonably require for the purposes of their duties as auditors of that company.
If a parent company fails to comply with this subsection, the company and every officer of it who is in default is guilty of an offence and liable to a fine.
(5) Section 734 (criminal proceedings against unincorporated bodies) applies to an offence under subsection (3).
(1) A company’s auditors are entitled—
(a) to receive all notices of, and other communications relating to, any general meeting which a member of the company is entitled to receive;
(b) to attend any general meeting of the company; and
(c) to be heard at any general meeting which they attend on any part of the business of the meeting which concerns them as auditors.
(2) In relation to a written resolution proposed to be agreed to by a private company in accordance with section 381A, the company’s auditors are entitled—
(a) to receive all such communications relating to the resolution as, by virtue of any provision of Schedule 15A, are required to be supplied to a member of the company,
(b) to give notice in accordance with section 381B of their opinion that the resolution concerns them as auditors and 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,
(c) to attend any such meeting, and
(d) to be heard at any such meeting which they attend on any part of the business of the meeting which concerns them as auditors.
(3) The right to attend or be heard at a meeting is exercisable in the case of a body corporate or partnership by an individual authorised by it in writing to act as its representative at the meeting.”.
(2) In section 734 of the [1985 c. 6.] Companies Act 1985 (criminal proceedings against unincorporated bodies), in subsection (1) (offences in relation to which the provisions apply), after “under” insert “section 389A(3) or”.
(3) In Schedule 24 to the [1985 c. 6.] Companies Act 1985 (punishment of offences) at the appropriate place insert—
| “389A(2) | Officer of company making false, misleading or deceptive statement to auditors. | 1. On indictment. 2. Summary. |
2 years or a fine; or both. 6 months or the statutory maximum; or both. |
| 389A(3) | Subsidiary undertaking or its auditor failing to give information to auditors of parent company. | Summary. | One-fifth of the statutory maximum. |
| 389A(4) | Parent company failing to obtain from subsidiary undertaking information for purposes of audit. | Summary. | One-fifth of the statutory maximum.” |
(4) In Schedule 4 to the [1982 c. 25.] Iron and Steel Act 1982 (constitution and proceedings of publicly-owned companies that are private companies), in paragraph 3(6) (entitlement of auditors to attend and be heard at general meetings, &c.) for “387(1)” substitute “390(1)”.
The following sections are inserted in Chapter V of Part XI of the [1985 c. 6.] Companies Act 1985 (auditors)—
(1) The remuneration of auditors appointed by the company in general meeting shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.
(2) The remuneration of auditors appointed by the directors or the Secretary of State shall be fixed by the directors or the Secretary of State, as the case may be.
(3) There shall be stated in a note to the company’s annual accounts the amount of the remuneration of the company’s auditors in their capacity as such.
(4) For the purposes of this section “remuneration” includes sums paid in respect of expenses.
(5) This section applies in relation to benefits in kind as to payments in cash, and in relation to any such benefit references to its amount are to its estimated money value.
The nature of any such benefit shall also be disclosed.
(1) The Secretary of State may make provision by regulations for securing the disclosure of the amount of any remuneration received or receivable by a company’s auditors or their associates in respect of services other than those of auditors in their capacity as such.
(2) The regulations may—
(a) provide that “remuneration” includes sums paid in respect of expenses,
(b) apply in relation to benefits in kind as to payments in cash, and in relation to any such benefit require disclosure of its nature and its estimated money value,
(c) define “associate” in relation to an auditor,
(d) require the disclosure of remuneration in respect of services rendered to associated undertakings of the company, and
(e) define “associated undertaking” for that purpose.
(3) The regulations may require the auditors to disclose the relevant information in their report or require the relevant information to be disclosed in a note to the company’s accounts and require the auditors to supply the directors of the company with such information as is necessary to enable that disclosure to be made.
(4) The regulations may make different provision for different cases.
(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.”.
(1) The following sections are inserted in Chapter V of Part XI of the [1985 c. 6.] Companies Act 1985 (auditors)—
(1) A company may by ordinary resolution at any time remove an auditor from office, notwithstanding anything in any agreement between it and him.
(2) Where a resolution removing an auditor is passed at a general meeting of a company, the company shall within 14 days give notice of that fact in the prescribed form to the registrar.
If a company fails to give the notice required by this subsection, the company and every officer of it who is in default is guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine.
(3) Nothing in this section shall be taken as depriving a person removed under it of compensation or damages payable to him in respect of the termination of his appointment as auditor or of any appointment terminating with that as auditor.
(4) An auditor of a company who has been removed has, notwithstanding his removal, the rights conferred by section 390 in relation to any general meeting of the company—
(a) at which his term of office would otherwise have expired, or
(b) at which it is proposed to fill the vacancy caused by his removal.
In such a case the references in that section to matters concerning the auditors as auditors shall be construed as references to matters concerning him as a former auditor.
(1) Special notice is required for a resolution at a general meeting of a company—
(a) removing an auditor before the expiration of his term of office, or
(b) appointing as auditor a person other than a retiring auditor.
(2) On receipt of notice of such an intended resolution the company shall forthwith send a copy of it to the person proposed to be removed or, as the case may be, to the person proposed to be appointed and to the retiring auditor.
(3) The auditor proposed to be removed or (as the case may be) the retiring auditor may make with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and request their notification to members of the company.
(4) The company shall (unless the representations are received by it too late for it to do so)—
(a) in any notice of the resolution given to members of the company, state the fact of the representations having been made, and
(b) send a copy of the representations to every member of the company to whom notice of the meeting is or has been sent.
(5) If a copy of any such representations is not sent out as required because received too late or because of the company’s default, the auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.
(6) Copies of the representations need not be sent out and the representations need not be read at the meeting if, on the application either of the company or of any other person claiming to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter; and the court may order the company’s costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
(1) An auditor of a company may resign his office by depositing a notice in writing to that effect at the company’s registered office.
The notice is not effective unless it is accompanied by the statement required by section 394.
(2) An effective notice of resignation operates to bring the auditor’s term of office to an end as of the date on which the notice is deposited or on such later date as may be specified in it.
(3) The company shall within 14 days of the deposit of a notice of resignation send a copy of the notice to the registrar of companies.
If default is made in complying with this subsection, the company and every officer of it who is in default is guilty of an offence and liable to a fine and, for continued contravention, a daily default fine.
(1) This section applies where an auditor’s notice of resignation is accompanied by a statement of circumstances which he considers should be brought to the attention of members or creditors of the company.
(2) He may deposit with the notice a signed requisition calling on the directors of the company forthwith duly to convene an extraordinary general meeting of the company for the purpose of receiving and considering such explanation of the circumstances connected with his resignation as he may wish to place before the meeting.
Companies Act 1989