Office of Public Sector Information
PART V continued
(4) The company shall (unless the statement is received too late for it to comply)—
(a) in any notice of the meeting given to members of the company, state the fact of the statement having been made, and
(b) send a copy of the statement to every member of the company to whom notice of the meeting is or has been sent.
(5) If the directors do not within 21 days from the date of the deposit of a requisition under this section proceed duly to convene a meeting for a day not more than 28 days after the date on which the notice convening the meeting is given, every director who failed to take all reasonable steps to secure that a meeting was convened as mentioned above is guilty of an offence and liable to a fine.
(6) If a copy of the statement mentioned above 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 statement be read out at the meeting.
(7) Copies of a statement need not be sent out and the statement need not be read out at the meeting if, on the application either of the company or of any other person who claims 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 such an application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.
(8) An auditor who has resigned has, notwithstanding his resignation, the rights conferred by section 390 in relation to any such general meeting of the company as is mentioned in subsection (3)(a) or (b).
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) When an election is in force under section 386 (election by private company to dispense with annual appointment), any member of the company may deposit notice in writing at the company’s registered office proposing that the appointment of the company’s auditors be brought to an end.
No member may deposit more than one such notice in any financial year of the company.
(2) If such a notice is deposited it is the duty of the directors—
(a) to convene a general meeting of the company for a date not more than 28 days after the date on which the notice was given, and
(b) to propose at the meeting a resolution in a form enabling the company to decide whether the appointment of the company’s auditors should be brought to an end.
(3) If the decision of the company at the meeting is that the appointment of the auditors should be brought to an end, the auditors shall not be deemed to be re-appointed when next they would be and, if the notice was deposited within the period immediately following the distribution of accounts, any deemed re-appointment for the financial year following that to which those accounts relate which has already occurred shall cease to have effect.
The period immediately following the distribution of accounts means the period beginning with the day on which copies of the company’s annual accounts are sent to members of the company under section 238 and ending 14 days after that day.
(4) If the directors do not within 14 days from the date of the deposit of the notice proceed duly to convene a meeting, the member who deposited the notice (or, if there was more than one, any of them) may himself convene the meeting; but any meeting so convened shall not be held after the expiration of three months from that date.
(5) A meeting convened under this section by a member shall be convened in the same manner, as nearly as possible, as that in which meetings are to be convened by directors.
(6) Any reasonable expenses incurred by a member by reason of the failure of the directors duly to convene a meeting shall be made good to him by the company; and any such sums shall be recouped by the company from such of the directors as were in default out of any sums payable, or to become payable, by the company by way of fees or other remuneration in respect of their services.
(7) This section has effect notwithstanding anything in any agreement between the company and its auditors; and no compensation or damages shall be payable by reason of the auditors' appointment being terminated under this section.”.
(2) In Schedule 24 to the [1985 c. 6.] Companies Act 1985 (punishment of offences), at the appropriate place insert—
| “391(2) | Failing to give notice to registrar of removal of auditor. | Summary. | One-fifth of the statutory maximum. | One-fiftieth of the statutory maximum. |
| 392(3) | Company failing to forward notice of auditor’s resignation to registrar. | 1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
One-tenth of the statutory maximum. |
| 392A(5) | Directors failing to convene meeting requisitioned by resigning auditor. | 1. On indictment. 2. Summary. |
A fine. The statutory maximum.”. |
(1) The following section is inserted in Chapter V of Part XI of the [1985 c. 6.] Companies Act 1985 (auditors)—
(1) Where an auditor ceases for any reason to hold office, he shall deposit at the company’s registered office a statement of any circumstances connected with his ceasing to hold office which he considers should be brought to the attention of the members or creditors of the company or, if he considers that there are no such circumstances, a statement that there are none.
(2) In the case of resignation, the statement shall be deposited along with the notice of resignation; in the case of failure to seek re-appointment, the statement shall be deposited not less than 14 days before the end of the time allowed for next appointing auditors; in any other case, the statement shall be deposited not later than the end of the period of 14 days beginning with the date on which he ceases to hold office.
(3) If the statement is of circumstances which the auditor considers should be brought to the attention of the members or creditors of the company, the company shall within 14 days of the deposit of the statement either—
(a) send a copy of it to every person who under section 238 is entitled to be sent copies of the accounts, or
(b) apply to the court.
(4) The company shall if it applies to the court notify the auditor of the application.
(5) Unless the auditor receives notice of such an application before the end of the period of 21 days beginning with the day on which he deposited the statement, he shall within a further seven days send a copy of the statement to the registrar.
(6) If the court is satisfied that the auditor is using the statement to secure needless publicity for defamatory matter—
(a) it shall direct that copies of the statement need not be sent out, and
(b) it may further 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;
and the company shall within 14 days of the court’s decision send to the persons mentioned in subsection (3)(a) a statement setting out the effect of the order.
(7) If the court is not so satisfied, the company shall within 14 days of the court’s decision—
(a) send copies of the statement to the persons mentioned in subsection (3)(a), and
(b) notify the auditor of the court’s decision;
and the auditor shall within seven days of receiving such notice send a copy of the statement to the registrar.
(1) If a person ceasing to hold office as auditor fails to comply with section 394 he is guilty of an offence and liable to a fine.
(2) In proceedings for an offence under subsection (1) it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
(3) Sections 733 (liability of individuals for corporate default) and 734 (criminal proceedings against unincorporated bodies) apply to an offence under subsection (1).
(4) If a company makes default in complying with section 394, 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.”.
(2) In Schedule 24 to the [1985 c. 65.] Companies Act 1985 (punishment of offences), at the appropriate place insert—
| “394A(1) | Person ceasing to hold office as auditor failing to deposit statement as to circumstances. | 1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
|
| 394A(4) | Company failing to comply with requirements as to statement of person ceasing to hold office as auditor. | 1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
One-tenth of the statutory maximum.” |
(3) In section 733 of the [1985 c. 6.] Companies Act 1985 (liability of individuals for corporate default), in subsection (1) (offences in relation to which provisions apply) after “216(3)” insert “, 394A(1)”.
(4) 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 394A(1) or”.
(5) In Schedule 22 to the [1985 c. 6.] Companies Act 1985 (unregistered companies), in the entry for sections 384 to 393, for “393” substitute “394A”.
In section 11 of the [1974 c. 52.] Trade Union and Labour Relations Act 1974 (duties of trade unions and employers' associations as to auditors, &c.), after subsection (8) insert—
“(9) Where a trade union or employers' association to which this section applies is a company within the meaning of the [1985 c. 6.] Companies Act 1985—
(a) subsection (3) above, and the provisions of paragraphs 6 to 15 of Schedule 2 to this Act, do not apply, and
(b) the rights and powers conferred, and duties imposed, by paragraphs 16 to 21 of that Schedule belong to the auditors of the company appointed under Chapter V of Part XI of that Act.”.
(1) For section 706 of the [1985 c. 6.] Companies Act 1985 (size, durability, &c. of documents delivered to the registrar) substitute—
(1) This section applies to the delivery to the registrar under any provision of the Companies Acts of documents in legible form.
(2) The document must—
(a) state in a prominent position the registered number of the company to which it relates,
(b) satisfy any requirements prescribed by regulations for the purposes of this section, and
(c) conform to such requirements as the registrar may specify for the purpose of enabling him to copy the document.
(3) If a document is delivered to the registrar which does not comply with the requirements of this section, he may serve on the person by whom the document was delivered (or, if there are two or more such persons, on any of them) a notice indicating the respect in which the document does not comply.
(4) Where the registrar serves such a notice, then, unless a replacement document—
(a) is delivered to him within 14 days after the service of the notice, and
(b) complies with the requirements of this section (or section 707) or is not rejected by him for failure to comply with those requirements,
the original document shall be deemed not to have been delivered to him.
But for the purposes of any enactment imposing a penalty for failure to deliver, so far as it imposes a penalty for continued contravention, no account shall be taken of the period between the delivery of the original document and the end of the period of 14 days after service of the registrar’s notice.
(5) Regulations made for the purposes of this section may make different provision with respect to different descriptions of document.”.
(2) For section 707 of the [1985 c. 6.] Companies Act 1985 (power of registrar to accept information on microfilm, &c.) substitute—
(1) This section applies to the delivery to the registrar under any provision of the Companies Acts of documents otherwise than in legible form.
(2) Any requirement to deliver a document to the registrar, or to deliver a document in the prescribed form, is satisfied by the communication to the registrar of the requisite information in any non-legible form prescribed for the purposes of this section by regulations or approved by the registrar.
(3) Where the document is required to be signed or sealed, it shall instead be authenticated in such manner as may be prescribed by regulations or approved by the registrar.
(4) The document must—
(a) contain in a prominent position the registered number of the company to which it relates,
(b) satisfy any requirements prescribed by regulations for the purposes of this section, and
(c) be furnished in such manner, and conform to such requirements, as the registrar may specify for the purpose of enabling him to read and copy the document.
(5) If a document is delivered to the registrar which does not comply with the requirements of this section, he may serve on the person by whom the document was delivered (or, if there are two or more such persons, on any of them) a notice indicating the respect in which the document does not comply.
(6) Where the registrar serves such a notice, then, unless a replacement document—
(a) is delivered to him within 14 days after the service of the notice, and
(b) complies with the requirements of this section (or section 706) or is not rejected by him for failure to comply with those requirements,
the original document shall be deemed not to have been delivered to him.
But for the purposes of any enactment imposing a penalty for failure to deliver, so far as it imposes a penalty for continued contravention, no account shall be taken of the period between the delivery of the original document and the end of the period of 14 days after service of the registrar’s notice.
(7) The Secretary of State may by regulations make further provision with respect to the application of this section in relation to instantaneous forms of communication.
(8) Regulations made for the purposes of this section may make different provision with respect to different descriptions of document and different forms of communication, and as respects delivery to the registrar for England and Wales and delivery to the registrar for Scotland.”.
(1) In Part XXIV of the [1985 c. 6.] Companies Act 1985 (the registrar of companies, his functions and offices), after the sections inserted by section 125 above, insert—
(1) The information contained in a document delivered to the registrar under the Companies Acts may be recorded and kept by him in any form he thinks fit, provided it is possible to inspect the information and to produce a copy of it in legible form.
This is sufficient compliance with any duty of his to keep, file or register the document.
(2) The originals of documents delivered to the registrar in legible form shall be kept by him for ten years, after which they may be destroyed.
(3) Where a company has been dissolved, the registrar may, at any time after the expiration of two years from the date of the dissolution, direct that any records in his custody relating to the company may be removed to the Public Record Office; and records in respect of which such a direction is given shall be disposed of in accordance with the enactments relating to that Office and the rules made under them.
This subsection does not extend to Scotland.
(4) In subsection (3) “company” includes a company provisionally or completely registered under the Joint Stock Companies Act 1844.”.
(2) For sections 709 and 710 of the [1985 c. 6.] Companies Act 1985 (inspection of documents kept by the registrar) substitute—
(1) Any person may inspect any records kept by the registrar for the purposes of the Companies Acts and may require—
(a) a copy, in such form as the registrar considers appropriate, of any information contained in those records, or
(b) a certified copy of, or extract from, any such record.
(2) The right of inspection extends to the originals of documents delivered to the registrar in legible form only where the record kept by the registrar of the contents of the document is illegible or unavailable.
(3) A copy of or extract from a record kept at any of the offices for the registration of companies in England and Wales or Scotland, certified in writing by the registrar (whose official position it is unnecessary to prove) to be an accurate record of the contents of any document delivered to him under the Companies Acts, is in all legal proceedings admissible in evidence as of equal validity with the original document and as evidence of any fact stated therein of which direct oral evidence would be admissible.
In England and Wales this is subject to compliance with any applicable rules of court under section 5 of the Civil Evidence Act 1968 or section 69(2) of the Police and Criminal Evidence Act 1984 (which relate to evidence from computer records).
(4) Copies of or extracts from records furnished by the registrar may, instead of being certified by him in writing to be an accurate record, be sealed with his official seal.
(5) No process for compelling the production of a record kept by the registrar shall issue from any court except with the leave of the court; and any such process shall bear on it a statement that it is issued with the leave of the court.
Any person may require a certificate of the incorporation of a company, signed by the registrar or authenticated by his official seal.
(1) Any requirement of the Companies Acts as to the supply by the registrar of a document may, if the registrar thinks fit, be satisfied by the communication by the registrar of the requisite information in any non-legible form prescribed for the purposes of this section by regulations or approved by him.
(2) Where the document is required to be signed by him or sealed with his official seal, it shall instead be authenticated in such manner as may be prescribed by regulations or approved by the registrar.”.
(1) In Part XXIV of the [1985 c. 6.] Companies Act 1985 (the registrar of companies, his functions and offices), after section 715 insert—
(1) In this Part—
“document” includes information recorded in any form; and
“legible”, in the context of documents in legible or non-legible form, means capable of being read with the naked eye.
(2) References in this Part to delivering a document include sending, forwarding, producing or (in the case of a notice) giving it.”.
(2) In section 708(1) of the [1985 c. 6.] Companies Act 1985 (fees)—
(a) in paragraph (a) for the words from “any notice or other document” to the end substitute “any document which under those Acts is required to be delivered to him”, and
(b) in paragraph (b) omit “or other material”.
(3) Omit sections 712 and 715 of the [1985 c. 6.] Companies Act 1985 (removal and destruction of old records).
(4) In section 713(1) (enforcement of duty to make returns, &c.), for the words from “file with” to “or other document” substitute “deliver a document to the registrar of companies”.
(5) In section 735A(2) of the [1985 c. 6.] Companies Act 1985 (provisions applying to Insolvency Act 1986 and [1986 c. 46.] Company Directors Disqualification Act 1986 as to the Companies Acts)—
(a) after “707(1),” insert “707A(1),”,
(b) after “708(1)(a) and (4),” insert “709(1) and (3),”, and
(c) for “710(5)” substitute “710A”.
(6) After section 735A of the [1985 c. 6.] Companies Act 1985 insert—
In sections 704(5), 706(1), 707(1), 707A(1), 708(1)(a) and (4), 709(1) and (3), 710A and 713(1) references to the Companies Acts include Parts IV and V of the Financial Services Act 1986.”.
(7) In Schedule 22 to the [1985 c. 6.] Companies Act 1985 (unregistered companies), in the entry for Part XXIV for “sections 706, 708 to 710, 712 and 713” substitute “sections 706 to 710A, 713 and 715A”.
In Chapter I of Part I of the [1985 c. 6.] Companies Act 1985 (company formation), after section 8 (Tables A, C, D and E) insert—
(1) The Secretary of State may by regulations prescribe a Table G containing articles of association appropriate for a partnership company, that is, a company limited by shares whose shares are intended to be held to a substantial extent by or on behalf of its employees.
(2) A company limited by shares may for its articles adopt the whole or any part of that Table.
(3) If in consequence of regulations under this section Table G is altered, the alteration does not affect a company registered before the alteration takes effect, or repeal as respects that company any portion of the Table.
(4) 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) In Chapter I of Part I of the Companies Act [1985 c. 6.] 1985 (company formation), for section 23 (membership of holding company) substitute—
(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 [1985 c. 6.] Companies 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)”
(1) In Chapter III of Part I of the [1985 c. 6.] Companies Act 1985 (a company’s capacity; the formalities of carrying on business), for section 36 (form of company contracts) substitute—
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—
(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) After the section inserted by subsection (2) insert—
(1) Under the law of Scotland the following provisions have effect with respect to the execution of documents by a company.
(2) A document—
(a) is signed by a company if it is signed on its behalf by a director, or by the secretary, of the company or by a person authorised to sign the document on its behalf, and
(b) is subscribed by a company if it is subscribed on its behalf by being signed in accordance with the provisions of paragraph (a) at the end of the last page.
(3) A document shall be presumed, unless the contrary is shown, to have been subscribed by a company in accordance with subsection (2) if—
(a) it bears to have been subscribed on behalf of the company by a director, or by the secretary, of the company or by a person bearing to have been authorised to subscribe the document on its behalf; and
(b) it bears—
(i) to have been signed by a person as a witness of the subscription of the director, secretary or other person subscribing on behalf of the company; or
(ii) (if the subscription is not so witnessed) to have been sealed with the common seal of the company.
Companies Act 1989