Companies Act 1985

• (2) The steps taken may include the passing of a resolution to alter the company’s memorandum so that it no longer states that the company is to be a public company; and the resolution may make such other alterations in the memorandum as are requisite in the circumstances.Chapter 3 of Part 3 of the Companies Act 2006 (resolutions affecting a company's constitution) applies to such a resolution.

• (3) The application for re-registration required by section 146(2)(b) must be in the prescribed form and be signed by a director or secretary of the company, and must be delivered to the registrar of companies together with a printed copy of the memorandum and articles of the company as altered by the resolution.

• (4) If the registrar is satisfied that the company may be re-registered under section 146, he shall retain the application and other documents delivered with it and issue the company with a certificate of incorporation appropriate to a company that is not a public company; and—

• (a) the company by virtue of the issue of the certificate becomes a private company, and the alterations in the memorandum and articles set out in the resolution take effect accordingly, and

• (b) the certificate is conclusive evidence that the requirements of sections 146 to 148 in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company is a private company.

Further provisions supplementing ss. 146, 147

148

• (1) Where, after shares in a private company—

• (a) are forfeited in pursuance of the company’s articles or are surrendered to the company in lieu of forfeiture, or

• (b) are acquired by the company (otherwise than by such surrender or forfeiture, and otherwise than by any of the methods mentioned in section 143(3)), the company having a beneficial interest in the shares, or

• (c) are acquired by the nominee of a company in the circumstances mentioned in section 146(1)(c), or

• (d) are acquired by any person in the circumstances mentioned in section 146(1)(d),

the company is re-registered as a public company, sections 146 and 147, and also section 149, apply to the company as if it had been a public company at the time of the forfeiture, surrender or acquisition, but with the modification required by the following subsection.

• (2) That modification is to treat any reference to the relevant period from the forfeiture, surrender or acquisition as referring to the relevant period from the re-registration of the company as a public company.

• (3) Schedule 2 to this Act has effect for the interpretation of the reference in subsection (1)(b) to the company having a beneficial interest in shares.

• (4) Where a public company or a nominee of a public company acquires shares in the company or an interest in such shares, and those shares are (or that interest is) shown in a balance sheet of the company as an asset, an amount equal to the value of the shares or (as the case may be) the value to the company of its interest in them shall be transferred out of profits available for dividend to a reserve fund and are not then available for distribution.

Sanctions for non-compliance

149

• (1) If a public company required by section 146(2) to apply to be re-registered as a private company fails to do so before the end of the relevant period referred to in that subsection, Chapter 1 of Part 20 of the Companies Act 2006 (restriction on public offers) applies to it as if it were a private company such as is mentioned in that section; but, subject to this, the company continues to be treated for the purpose of this Act as a public company until it is so re-registered.

• (2) If a company when required to do so by section 146(2) (including that subsection as applied by section 148(1)) fails to cancel any shares in accordance with paragraph (a) of that subsection or to make an application for re-registration in accordance with paragraph (b) of it, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.

Charges of public companies on own shares

150

• (1) A lien or other charge of a public company on its own shares (whether taken expressly or otherwise), except a charge permitted by any of the following subsections, is void.

This is subject to section 6 of the Consequential Provisions Act (saving for charges of old public companies on their own shares).

• (2) In the case of any description of company, a charge on its own shares is permitted if the shares are not fully paid and the charge is for any amount payable in respect of the shares.

• (3) In the case of a company whose ordinary business—

• (a) includes the lending of money, or

• (b) consists of the provision of credit or the bailment (in Scotland, hiring) of goods under a hire purchase agreement, or both,

a charge of the company on its own shares is permitted (whether the shares are fully paid or not) if it arises in connection with a transaction entered into by the company in the ordinary course of its business.

• (4) In the case of a company which is re-registered or is registered under section 680 as a public company, a charge on its own shares is permitted if the charge was in existence immediately before the company’s application for re-registration or (as the case may be) registration.

This subsection does not apply in the case of such a company as is referred to in section 6(3) of the Consequential Provisions Act (old public company remaining such after 22nd March 1982, not having applied to be re-registered as public company).

Chapter VI — Financial Assistance by a Company for Acquisition of its Own Shares

Provisions applying to both public and private companies

Financial assistance generally prohibited

151

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definitions for this Chapter

152

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions not prohibited by s. 151

153

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special restriction for public companies

154

• (1) In the case of a public company, section 153(4) authorises the giving of financial assistance only if the company has net assets which are not thereby reduced or, to the extent that those assets are thereby reduced, if the assistance is provided out of distributable profits.

• (2) For this purpose the following definitions apply—

• (a) “net assets” means the amount by which the aggregate of the company’s assets exceeds the aggregate of its liabilities (taking the amount of both assets and liabilities to be as stated in the company’s accounting records immediately before the financial assistance is given);

• (b) “liabilities” includes any amount retained as reasonably necessary for the purpose of providing for any liability the nature of which is clearly defined and which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

Private companies

Relaxation of s. 151 for private companies

155

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Statutory declaration under s. 155

156

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special resolution under s. 155

157

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Time for giving financial assistance under s. 155

158

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter VII — Redeemable Shares; Purchase by a Company of its Own Shares

Redemption and purchase generally

Power to issue redeemable shares

159

• (1) Subject to the provisions of this Chapter, a company limited by shares or limited by guarantee and having a share capital may, if authorised to do so by its articles, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or the shareholder.

• (2) No redeemable shares may be issued at a time when there are no issued shares of the company which are not redeemable.

• (3) Redeemable shares may not be redeemed unless they are fully paid; and the terms of redemption must provide for payment on redemption.

Financing, etc., of redemption

160

• (1) Subject to the next subsection and to sections 171 (private companies redeeming or purchasing own shares out of capital) and 178(4) (terms of redemption or purchase enforceable in a winding up)—

• (a) redeemable shares may only be redeemed out of distributable profits of the company or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; and

• (b) any premium payable on redemption must be paid out of distributable profits of the company.

• (2) If the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to—

• (a) the aggregate of the premiums received by the company on the issue of the shares redeemed, or

• (b) the current amount of the company’s share premium account (including any sum transferred to that account in respect of premiums on the new shares),

whichever is the less; and in that case the amount of the company’s share premium account shall be reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made by virtue of this subsection out of the proceeds of the issue of the new shares.

• (3) Subject to the following provisions of this Chapter, redemption of shares may be effected on such terms and in such manner as may be provided by the company’s articles.

• (4) Shares redeemed under this sectionredeemed under this Chapter shall be treated as cancelled on redemption, and the amount of the company’s issued share capital shall be diminished by the nominal value of those shares accordingly; but the redemption of shares by a company is not to be taken as reducing the amount of the company’s authorised share capital.

• (5) Without prejudice to subsection (4), where a company is about to redeem shares, it has power to issue shares up to the nominal value of the shares to be redeemed as if those shares had never been issued.

Stamp duty on redemption of shares

161

Power of company to purchase own shares

162

• (1) Subject to the following provisions of this Chapter, a company limited by shares or limited by guarantee and having a share capital may, if authorised to do so by its articles, purchase its own shares (including any redeemable shares).

• (2) Sections 159 and 160 apply to the purchase by a company under this section of its own shares as they apply to the redemption of redeemable shares.

This is subject to subsections (2A) and (2B).

• (2A) The terms and manner of a purchase under this section need not be determined by the articles as required by section 160(3).

• (2B) Where a company makes a purchase of qualifying shares out of distributable profits under this section, section 162A applies to the shares purchased; and accordingly section 160(4) does not apply to those shares.

• (3) A company may not under this section purchase its shares if as a result of the purchase there would no longer be any member of the company holding shares other than redeemable shares or shares held as treasury shares .

• (4) For the purposes of this Chapter “qualifying shares” are shares which—

• (a) are included in the official list in accordance with the provisions of Part 6 of the Financial Services and Markets Act 2000 ,

• (b) are traded on the market known as the Alternative Investment Market established under the rules of London Stock Exchange plc,

• (c) are officially listed in an EEA State, or

• (d) are traded on a market established in an EEA State which is a regulated market which appears on the list drawn up by that State pursuant to Article 47 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments,

and in paragraph (a) “the official list” has the meaning given in section 103(1) of the Financial Services and Markets Act 2000.

Definitions of " off-market" and " market " purchase

163

• (1) A purchase by a company of its own shares is “off-market” if the shares either—

• (a) are purchased otherwise than on a recognised investment exchange, or

• (b) are purchased on a recognised investment exchange but are not subject to a marketing arrangement on that investment exchange.

• (2) For this purpose, a company’s shares are subject to a marketing arrangement on a recognised stock exchange if either—

• (a) they are listed Part 6 of the Financial Services and Markets Act 2000; or

• (b) the company has been afforded facilities for dealings in those shares to take place on that investment exchange without prior permission for individual transactions from the authority governing that investment exchange and without limit as to the time during which those facilities are to be available.

• (3) A purchase by a company of its own shares is a “market purchase” if it is a purchase made on a recognised stock exchange, other than a purchase which is an off-market purchase by virtue of subsection (1)(b).

• (4) “Recognised investment exchange” means a recognised investment exchange other than an overseas investment exchange.

• (5) Expressions used in the definition contained in subsection (4) have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Authority for off-market purchase

164

• (1) A company may only make an off-market purchase of its own shares in pursuance of a contract approved in advance in accordance with this section or under section 165 below.

• (2) The terms of the proposed contract must be authorised by a special resolution of the company before the contract is entered into; and the following subsections apply with respect to that authority and to resolutions conferring it.

• (3) Subject to the next subsection, the authority may be varied, revoked or from time to time renewed by special resolution of the company.

• (4) In the case of a public company, the authority conferred by the resolution must specify a date on which the authority is to expire; and in a resolution conferring or renewing authority that date must not be later than 18 months after that on which the resolution is passed.

• (5) A special resolution to confer, vary, revoke or renew authority is not effective if any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he had not done so.

For this purpose—

• (a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll;

• (b) notwithstanding anything in the company’s articles, any member of the company may demand a poll on that question; and

• (c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.

• (6) Such a resolution is not effective for the purposes of this section unless (if the proposed contract is in writing) a copy of the contract or (if not) a written memorandum of its terms is available for inspection by members of the company both—

• (a) at the company’s registered office for not less than 15 days ending with the date of the meeting at which the resolution is passed, and

• (b) at the meeting itself.

A memorandum of contract terms so made available must include the names of any members holding shares to which the contract relates; and a copy of the contract so made available must have annexed to it a written memorandum specifying any such names which do not appear in the contract itself.

• (7) A company may agree to a variation of an existing contract so approved, but only if the variation is authorised by a special resolution of the company before it is agreed to; and subsections (3) to (6) above apply to the authority for a proposed variation as they apply to the authority for a proposed contract, save that a copy of the original contract or (as the case may require) a memorandum of its terms, together with any variations previously made, must also be available for inspection in accordance with subsection (6).

Authority for contingent purchase contract

165

• (1) A contingent purchase contract is a contract entered into by a company and relating to any of its shares—

• (a) which does not amount to a contract to purchase those shares, but

• (b) under which the company may (subject to any conditions) become entitled or obliged to purchase those shares.

• (2) A company may only make a purchase of its own shares in pursuance of a contingent purchase contract if the contract is approved in advance by a special resolution of the company before the contract is entered into; and subsections (3) to (7) of section 164 apply to the contract and its terms.

Authority for market purchase

166

• (1) A company shall not make a market purchase of its own shares unless the purchase has first been authorised by the company in general meeting.

• (2) That authority—

• (a) may be general for that purpose, or limited to the purchase of shares of any particular class or description, and

• (b) may be unconditional or subject to conditions.

• (3) The authority must—

• (a) specify the maximum number of shares authorised to be acquired,

• (b) determine both the maximum and the minimum prices which may be paid for the shares, and

• (c) specify a date on which it is to expire.

• (4) The authority may be varied, revoked or from time to time renewed by the company in general meeting, but this is subject to subsection (3) above; and in a resolution to confer or renew authority, the date on which the authority is to expire must not be later than 18 months after that on which the resolution is passed.

• (5) A company may under this section make a purchase of its own shares after the expiry of the time limit imposed to comply with subsection (3)(c), if the contract of purchase was concluded before the authority expired and the terms of the authority permitted the company to make a contract of purchase which would or might be executed wholly or partly after its expiration.

• (6) A resolution to confer or vary authority under this section may determine either or both the maximum and minimum prices for purchase by—

• (a) specifying a particular sum, or

• (b) providing a basis or formula for calculating the amount of the price in question without reference to any person’s discretion or opinion.

• (7) Chapter 3 of Part 3 of the Companies Act 2006 (resolutions affecting a company's constitution) applies to a resolution of a company conferring, varying, revoking or renewing authority under this section.

Assignment or release of company's right to purchase own shares

167

• (1) The rights of a company under a contract approved under section 164 or 165, or under a contract for a purchase authorised under section 166, are not capable of being assigned.

• (2) An agreement by a company to release its rights under a contract approved under section 164 or 165 is void unless the terms of the release agreement are approved in advance by a special resolution of the company before the agreement is entered into; and subsections (3) to (7) of section 164 apply to approval for a proposed release agreement as to authority for a proposed variation of an existing contract.

Payments apart from purchase price to be made out of distributable profits

168

• (1) A payment made by a company in consideration of—

• (a) acquiring any right with respect to the purchase of its own shares in pursuance of a contract approved under section 165, or

• (b) the variation of a contract approved under section 164 or 165, or

• (c) the release of any of the company’s obligations with respect to the purchase of any of its own shares under a contract approved under section 164 or 165 or under a contract for a purchase authorised under section 166,

must be made out of the company’s distributable profits.

• (2) If the requirements of subsection (1) are not satisfied in relation to a contract—

• (a) in a case within paragraph (a) of the subsection, no purchase by the company of its own shares in pursuance of that contract is lawful under this Chapter,

• (b) in a case within paragraph (b), no such purchase following the variation is lawful under this Chapter, and

• (c) in a case within paragraph (c), the purported release is void.

Disclosure by company of purchase of own shares

169

• (1) Within the period of 28 days beginning with the date on which any shares purchased by a company under this Chapter are delivered to it, the company shall deliver to the registrar of companies for registration a return in the prescribed form stating with respect to shares of each class purchased the number and nominal value of those shares and the date on which they were delivered to the company.

• (1A) But in the case of a company which has purchased its own shares in circumstances in which section 162A applies, the requirement to deliver a return under subsection (1) shall apply only where some or all of the shares have been cancelled forthwith after the date of their delivery in accordance with section 162D(1) and in those circumstances the particulars required by that subsection to be stated with respect to the shares purchased shall apply only to such of the shares as have been so cancelled.

• (1B) Where a company has purchased its own shares in circumstances in which section 162A applies, the company shall within the period of 28 days beginning with the date on which such shares are delivered to it (except where all of the shares have been cancelled forthwith after the date of their delivery in the circumstances referred to in subsection (1A)) deliver to the registrar of companies for registration a return in the prescribed form stating with respect to shares of each class purchased (other than any shares which have been cancelled in the circumstances referred to in subsection (1A)) the number and nominal value of each of those shares which are held as treasury shares and the date on which they were delivered to the company.

• (2) In the case of a public company, any return under subsection (1) or (1B) shall also state—

• (a) the aggregate amount paid by the company for the shares; and

• (b) the maximum and minimum prices paid in respect of shares of each class purchased.

• (3) Particulars of shares delivered to the company on different dates and under different contracts may be included in a single return under either subsection (1) or (1B) to the registrar; and in such a case the amount required to be stated under subsection (2)(a) is the aggregate amount paid by the company for all the shares to which the return relates.

• (4) Where a company enters into a contract approved under section 164 or 165, or a contract for a purchase authorised under section 166, the company shall keep at its registered office—

• (a) if the contract is in writing, a copy of it; and

• (b) if not, a memorandum of its terms,

from the conclusion of the contract until the end of the period of 10 years beginning with the date on which the purchase of all the shares in pursuance of the contract is completed or (as the case may be) the date on which the contract otherwise determines.

• (5) Every copy and memorandum so required to be kept shall . . . be open to inspection without charge—

• (a) by any member of the company, and

• (b) if it is a public company, by any other person.

• (6) If default is made in delivering to the registrar any return required by this section, every officer of the company who is in default is liable to a fine and, for continued contravention, to a daily default fine.

• (7) If default is made in complying with subsection (4), or if an inspection required under subsection (5) is refused, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.

• (8) In the case of a refusal of an inspection required under subsection (5) of a copy or memorandum, the court may by order compel an immediate inspection of it.

• (9) The obligation of a company under subsection (4) to keep a copy of any contract or (as the case may be) a memorandum of its terms applies to any variation of the contract so long as it applies to the contract.

The capital redemption reserve

170

• (1) Where under this Chapter shares of a company are redeemed or purchased wholly out of the company’s profits, the amount by which the company’s issued share capital is diminished in accordance with section 160(4) on cancellation of the shares redeemed or purchased , or in accordance with section 162D(4) on cancellation of shares held as treasury shares, shall be transferred to a reserve, called “the capital redemption reserve”.

• (2) Of the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue and the aggregate amount of those proceeds is less than the aggregate nominal value of the shares redeemed or purchased, the amount of the difference shall be transferred to the capital redemption reserve.

• (3) But subsection (2) does not apply if the proceeds of the fresh issue are applied by the company in making a redemption or purchase of its own shares in addition to a payment out of capital under section 171.

• (4) The provisions of this Act relating to the reduction of a company’s share capital apply as if the capital redemption reserve were paid-up share capital of the company, except that the reserve may be applied by the company in paying up its unissued shares to be allotted to members of the company as fully paid bonus shares.

Redemption or purchase of own shares out of capital (private companies only)

Power of private companies to redeem or purchase own shares out of capital

171

• (1) Subject to the following provisions of this Chapter, a private company limited by shares or limited by guarantee and having a share capital may, if so authorised by its articles, make a payment in respect of the redemption or purchase under section 160 or (as the case may be) section 162, of its own shares otherwise than out of its distributable profits or the proceeds of a fresh issue of shares.

• (2) References below in this Chapter to payment out of capital are (subject to subsection (6)) to any payment so made, whether or not it would be regarded apart from this section as a payment out of capital.

• (3) The payment which may (if authorised in accordance with the following provisions of this Chapter) be made by a company out of capital in respect of the redemption or purchase of its own shares is such an amount as, taken together with—

• (a) any available profits of the company, and

• (b) the proceeds of any fresh issue of shares made for the purposes of the redemption or purchase,

is equal to the price of redemption or purchase; and the payment permissible under this subsection is referred to below in this Chapter as the permissible capital payment for the shares.

• (4) Subject to subsection (6), if the permissible capital payment for shares redeemed or purchased is less than their nominal amount, the amount of the difference shall be transferred to the company’s capital redemption reserve.

• (5) Subject to subsection (6), if the permissible capital payment is greater than the nominal amount of the shares redeemed or purchased—

• (a) the amount of any capital redemption reserve, share premium account or fully paid share capital of the company, and

• (b) any amount representing unrealised profits of the company for the time being standing to the credit of any revaluation reserve maintained by the company in accordance with regulations made under section 396 of the Companies Act 2006,

may be reduced by a sum not exceeding (or by sums not in the aggregate exceeding) the amount by which the permissible capital payment exceeds the nominal amount of the shares.

• (6) Where the proceeds of a fresh issue are applied by a company in making any redemption or purchase of its own shares in addition to a payment out of capital under this section, the references in subsections (4) and (5) to the permissible capital payment are to be read as referring to the aggregate of that payment and those proceeds.

Availability of profits for purposes of s. 171

172

• (1) The reference in section 171(3)(a) to available profits of the company is to the company’s profits which are available for distribution (within the meaning of Part 23 of the Companies Act 2006); but the question whether a company has any profits so available and the amount of any such profits are to be determined for purposes of that section in accordance with the following subsections, instead of Chapter 2 of that Part.

• (2) Subject to the next subsection, that question is to be determined by reference to the following items as stated in the relevant accounts for determining the permissible capital payments for shares—

• (a) profits, losses, assets and liabilities,

• (b) the following provisions–

• (i) in the case of Companies Act individual accounts, provisions of any of the kinds mentioned in paragraphs 88 and 89 of Schedule 4 (depreciation, diminution in value of assets, retentions to meet liabilities, etc., and

• (ii) in the case of IAS individual accounts, provisions of any kind), and

• (c) share capital and reserves (including undistributable reserves),

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) The relevant accounts for this purpose are such accounts, prepared as at any date within the period for determining the amount of the permissible capital payment, as are necessary to enable a reasonable judgment to be made as to the amounts of any of the items mentioned in subsection (2)(a) to (c) above.

• (4) For purposes of determining the amount of the permissible capital payment for shares, the amount of the company’s available profits (if any) determined in accordance with subsections (2) and (3) is treated as reduced by the amount of any distributions lawfully made by the company after the date of the relevant accounts and before the end of the period for determining the amount of that payment.

• (5) The reference in subsection (4) to distributions lawfully made by the company includes—

• (a) financial assistance lawfully given out of distributable profits in a case falling within section 154 . . . ,

• (b) any payment lawfully made by the company in respect of the purchase by it of any shares in the company (except a payment lawfully made otherwise than out of distributable profits), and

• (c) a payment of any description specified in section 168(1) lawfully made by the company.

• (6) References in this section to the period for determining the amount of the permissible capital payment for shares are to the period of 3 months ending with the date on which the statutory declaration of the directors purporting to specify the amount of that payment is made in accordance with subsection (3) of the section next following.

Conditions for payment out of capital

173

• (1) Subject to any order of the court under section 177, a payment out of capital by a private company for the redemption or purchase of its own shares is now lawful unless the requirements of this and the next two sections are satisfied.

• (2) The payment out of capital must be approved by a special resolution of the company.

• (3) The company’s directors must make a statutory declaration specifying the amount of the permissible capital payment for the shares in question and stating that, having made full inquiry into the affairs and prospects of the company, they have formed the opinion—

• (a) as regards its initial situation immediately following the date on which the payment out of capital is proposed to be made, that there will be no grounds on which the company could then be found unable to pay its debts, and

• (b) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to continue to carry on business as a going concern (and will accordingly be able to pay its debts as they fall due) throughout that year.

• (4) In forming their opinion for purposes of subsection (3)(a), the directors shall take into account the same liabilities (including prospective and contingent liabilities) as would be relevant under section 122 of the Insolvency Act (winding up by the court) to the question whether a company is unable to pay its debts.

• (5) The directors’ statutory declaration must be in the prescribed form and contain such information with respect to the nature of the company’s business as may be prescribed, and must in addition have annexed to it a report addressed to the directors by the company’s auditors stating that—

• (a) they have inquired into the company’s state of affairs; and

• (b) the amount specified in the declaration as the permissible capital payment for the shares in question is in their view properly determined in accordance with sections 171 and 172; and

• (c) they are not aware of anything to indicate that the opinion expressed by the directors in the declaration as to any of the matters mentioned in subsection (3) is unreasonable in all the circumstances.

• (6) A director who makes a declaration under this section without having reasonable grounds for the opinion expressed in the declaration is liable to imprisonment or a fine, or both.

Procedure for special resolution under s. 173

174

• (1) The resolution required by section 173 must be passed on, or within the week immediately following, the date on which the directors make the statutory declaration required by that section; and the payment out of capital must be made no earlier than 5 nor more than 7 weeks after the date of the resolution.

• (2) The resolution is ineffective if any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he had not done so.

• (3) For purposes of subsection (2), a member who holds such shares is to be regarded as exercising the voting rights carried by them in voting on the resolution not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll; and notwithstanding anything in a company’s articles, any member of the company may demand a poll on that question.

• (4) The resolution is ineffective unless the statutory declaration and auditors’ report required by the section are available for inspection by members of the company at the meeting at which the resolution is passed.

• (5) For purposes of this section a vote and a demand for a poll by a person as proxy for a member are the same (respectively) as a vote and demand by the member.

Publicity for proposed payment out of capital

175

• (1) Within the week immediately following the date of the resolution for payment out of capital the company must cause to be published in the Gazette a notice—

• (a) stating that the company has approved a payment out of capital for the purpose of acquiring its own shares by redemption or purchase or both (as the case may be);

• (b) specifying the amount of the permissible capital payment for the shares in question and the date of the resolution under section 173;

• (c) stating that the statutory declaration of the directors and the auditors’ report required by that section are available for inspection at the company’s registered office; and

• (d) stating that any creditor of the company may at any time within the 5 weeks immediately following the date of the resolution for payment out of capital apply to the court under section 176 for an order prohibiting the payment.

• (2) Within the week immediately following the date of the resolution the company must also either cause a notice to the same effect as that required by subsection (1) to be published in an appropriate national newspaper or give notice in writing to that effect to each of its creditors.

• (3) “An appropriate national newspaper” means a newspaper circulating throughout England and Wales (in the case of a company registered in England and Wales), and a newspaper circulating throughout Scotland (in the case of a company registered in Scotland).

• (4) References below in this section to the first notice date are to the day on which the company first publishes the notice required by subsection (1) or first publishes or gives the notice required by subsection (2) (whichever is the earlier).

• (5) Not later than the first notice date the company must deliver to the registrar of companies a copy of the statutory declaration of the directors and of the auditors’ report required by section 173.

• (6) The statutory declaration and auditors’ report—

• (a) shall be kept at the company’s registered office throughout the period beginning with the first notice date and ending 5 weeks after the date of the resolution for payment out of capital, and

• (b) shall . . . be open to the inspection of any member or creditor of the company without charge.

• (7) If an inspection required under subsection (6) is refused, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.

• (8) In the case of refusal of an inspection required under subsection (6) of a declaration or report, the court may by order compel an immediate inspection of that declaration or report.

Objections by company's members or creditors

176

• (1) Where a private company passes a special resolution approving for purposes of this Chapter any payment out of capital for the redemption or purchase of any of its shares—

• (a) any member of the company other than one who consented to or voted in favour of the resolution; and

• (b) any creditor of the company,

may within 5 weeks of the date on which the resolution was passed apply to the court for cancellation of the resolution.

• (2) The application may be made on behalf of the persons entitled to make it by such one or more of their number as they may appoint in writing for the purpose.

• (3) If an application is made, the company shall—

• (a) forthwith give notice in the prescribed form of that fact to the registrar of companies; and

• (b) within 15 days from the making of any order of the court on the hearing of the application, or such longer period as the court may by order direct, deliver an office copy of the order to the registrar.

• (4) A company which fails to comply with subsection (3), and any officer of it who is in default, is liable to a fine and for continued contravention, to a daily default fine.

Powers of court on application under s. 176

177

• (1) On the hearing of an application under section 176 the court may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the court’s satisfaction for the purchase of the interests of dissentient members or for the protection of dissentient creditors (as the case may be); and the court may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement.

• (2) Without prejudice to its powers under subsection (1), the court shall make an order on such terms and conditions as it thinks fit either confirming or cancelling the resolution; and, if the court confirms the resolution, it may in particular by order alter or extend any date or period of time specified in the resolution or in any provision in this Chapter which applies to the redemption or purchase of shares to which the resolution refers.

• (3) The court’s order may, if the court thinks fit, provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company’s capital, and may make such alterations in the company’s memorandum and articles as may be required in consequence of that provision.

• (4) If the court’s order requires the company not to make any, or any specified, alteration in its memorandum or articles, the company has not then power without leave of the court to make any such alteration in breach of the requirement.

• (5) An alteration in the memorandum or articles made by virtue of an order under this section, if not made by resolution of the company, is of the same effect as if duly made by resolution; and this Act applies accordingly to the memorandum or articles as so altered.

Supplementary

Effect of company's failure to redeem or purchase

178

• (1) This section has effect where a company has, on or after 15th June 1982,—

• (a) issued shares on terms that they are or are liable to be redeemed, or

• (b) agreed to purchase any of its own shares.

• (2) The company is not liable in damages in respect of any failure on its part to redeem or purchase any of the shares.

• (3) Subsection (2) is without prejudice to any right of the holder of the shares other than his right to sue the company for damages in respect of its failure; but the court shall not grant an order for specific performance of the terms of redemption or purchase if the company shows that it is unable to meet the costs of redeeming or purchasing the shares in question out of distributable profits.

• (4) If the company is wound up and at the commencement of the winding up any of the shares have not been redeemed or purchased, the terms of redemption or purchase may be enforced against the company; and when shares are redeemed or purchased under this subsection, they are treated as cancelled.

• (5) However, subsection (4) does not apply if—

• (a) the terms provided for the redemption or purchase to take place at a date later than that of the commencement of the winding up, or

• (b) during the period beginning with the date on which the redemption or purchase was to have taken place and ending with the commencement of the winding up the company could not at any time have lawfully made a distribution equal in value to the price at which the shares were to have been redeemed or purchased.

• (6) There shall be paid in priority to any amount which the company is liable under subsection (4) to pay in respect of any shares—

• (a) all other debts and liabilities of the company (other than any due to members in their character as such),

• (b) if other shares carry rights (whether as to capital or as to income) which are preferred to the rights as to capital attaching to the first-mentioned shares, any amount due in satisfaction of those preferred rights;

but, subject to that, any such amount shall be paid in priority to any amounts due to members in satisfaction of their rights (whether as to capital or income) as members.

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power for Secretary of State to modify this Chapter

179

• (1) The Secretary of State may by regulations made by statutory instrument modify the provisions of this Chapter with respect to any of the following matters—

• (a) the authority required for a purchase by a company of its own shares,

• (b) the authority required for the release by a company of its rights under a contract for the purchase of its own shares or a contract under which the company may (subject to any conditions) become entitled or obliged to purchase its own shares,

• (c) the information to be included in a return delivered by a company to the registrar of companies in accordance with section 169(1),

• (d) the matters to be dealt with in the statutory declaration of the directors under section 173 with a view to indicating their opinion of their company’s ability to make a proposed payment out of capital with due regard to its financial situation and prospects, and

• (e) the contents of the auditors’ report required by that section to be annexed to that declaration.

• (2) The Secretary of State may also by regulations so made make such provision (including modification of the provisions of this Chapter) as appears to him to be appropriate—

• (a) for wholly or partly relieving companies from the requirement of section 171(3)(a) that any available profits must be taken into account in determining the amount of the permissible capital payment for shares under that section, or

• (b) for permitting a company’s share premium account to be applied, to any extent appearing to the Secretary of State to be appropriate, in providing for the premiums payable on the redemption or purchase by the company of any of its own shares.

• (3) Regulations under this section—

• (a) may make such further modification of any provisions of this Chapter as appears to the Secretary of State to be reasonably necessary in consequence of any provision made under such regulations by virtue of subsection (1) or (2),

• (b) may make different provision for different cases or classes of case, and

• (c) may contain such further consequential provisions, and such incidental and supplementary provisions, as the Secretary of State thinks fit.

• (4) No regulations shall be made under this section unless a draft of the instrument containing them has been laid before Parliament and approved by resolution of each House.

Transitional cases arising under this Chapter; and savings

180

• (1) Any preference shares issued by a company before 15th June 1982 which could but for the repeal by the Companies Act 1981 of section 58 of the Companies Act 1948 (power to issue redeemable preference shares) have been redeemed under that section are subject to redemption in accordance with the provisions of this Chapter.

• (2) In a case to which sections 159 and 160 apply by virtue of this section, any premium payable on redemption may, notwithstanding the repeal by the 1981 Act of any provision of the 1948 Act, be paid out of the share premium account instead of out of profits, or partly out of that account and partly out of profits (but subject to the provisions of this Chapter so far as payment is out of profits).

• (3) Any capital redemption reserve fund established before 15th June 1982 by a company for the purposes of section 58 of the Act of 1948 is to be known as the company’s capital redemption reserve and be treated as if it had been established for the purposes of section 170 of this Act; and accordingly, a reference in any enactment or in the articles of any company, or in any other instrument, to a company’s capital redemption reserve fund is to be construed as a reference to the company’s capital redemption reserve.

Definitions for Chapter VII

181

In this Chapter—

• (a) “distributable profits”, in relation to the making of any payment by a company, means those profits out of which it could lawfully make a distribution (within the meaning given by section 829 of the Companies Act 2006) equal in value to the payment, and

• (b) “permissible capital payment” means the payment permitted by section 171;

and references to payment out of capital are to be construed in accordance with section 171.

Chapter VIII — Miscellaneous Provisions about Shares and Debentures

Share and debenture certificates, transfers and warrants

Nature, transfer and numbering of shares

182

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer and registration

183

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certification of transfers

184

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duty of company as to issue of certificates

185

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certificate to be evidence of title

186

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Evidence of grant of probate or confirmation as executor

187

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issue and effect of share warrant to bearer

188

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Offences in connection with share warrants (Scotland)

189

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Debentures

Register of debenture holders

190

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Right to inspect register

191

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liability of trustees of debentures

192

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Perpetual debentures

193

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to re-issue redeemed debentures

194

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contract to subscribe for debentures

195

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of debts out of assets subject to floating charge (England and Wales)

196

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Debentures to bearer (Scotland)

197

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part VI — Disclosure of Interests in Shares

Individual and group acquisitions

Obligation of disclosure: the cases in which it may arise and " the relevant time "

198

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interests to be disclosed

199

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

" Percentage level" in relation to notifiable interests

200

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The notifiable percentage

201

Particulars to be contained in notification

202

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notification of family and corporate interests

203

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Agreement to acquire interests in a particular company

204

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Obligation of disclosure arising under s. 204

205

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Obligation of persons acting together to keep each other informed

206

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interests in shares by attribution

207

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interests in shares which are to be notified

208

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interests to be disregarded

209

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions about notification under this Part

210

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registration and investigation of share acquisitions and disposals

Register of interests in shares

211

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company investigations

212

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registration of interests disclosed under s. 212

213

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company investigation on requisition by members

214

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company report to members

215

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalty for failure to provide information

216

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Removal of entries from register

217

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Otherwise, entries not to be removed

218

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inspection of register and reports

219

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary

Definitions for Part VI

220

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part VII — Accounts and Audit

Chapter I — Provisions Applying to Companies Generally

Accounting records

Companies to keep accounting records

221

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Where and for how long records to be kept

222

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalties for non-compliance with ss. 221, 222

223

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A company's accounting reference periods and financial year

Accounting reference period and date

224

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Alteration of accounting reference period

225

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequence of giving notice under s. 225

226

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors' duty to prepare annual accounts

227

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form and content of company individual and group accounts

Form and content of individual accounts

228

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Group accounts of holding company

229

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form and content of group accounts

230

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Additional disclosure required in notes to accounts

231

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loans in favour of directors and connected persons

232

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loans etc. to company's officers; statement of amounts outstanding

233

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recognised banks: disclosure of dealings with and for directors

234

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors' and auditors' reports

Directors' report

235

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Auditors' report

236

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Auditors' duties and powers

237

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedure on completion of accounts

Signing of balance sheet; documents to be annexed

238

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Documents to be included in company's accounts

239

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Persons entitled to receive accounts as of right

240

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors' duty to lay and deliver accounts

241

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Period allowed for laying and delivery

242

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalty for non-compliance with s. 241

243

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Default order in case of non-compliance

244

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalty for laying or delivering defective accounts

245

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shareholders' right to obtain copies of accounts

246

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Modified accounts

Entitlement to deliver accounts in modified form

247

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualification of company as small or medium-sized

248

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Modified individual accounts

249

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Modified accounts of holding company

250

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power of Secretary of State to modify ss. 247-250 and Sch. 8

251

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dormant companies

Company resolution not to appoint auditors

252

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Laying and delivery of unaudited accounts

253

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Publication of accounts

Publication of full company accounts

254

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Publication of abridged accounts

255

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary

Power of Secretary of State to alter accounting requirements

256

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter II — Exemptions, Exceptions and Special Provisions

Special category companies and their accounts

257

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special category individual accounts

258

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special category group accounts

259

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to special category accounts

260

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors' report

261

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Auditors' report

262

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part VIII — Distribution of Profits and Assets

Limits of company’s power of distribution

Certain distributions prohibited

263

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on distribution of assets

264

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other distributions by investment companies

265

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of " investment company "

266

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extension of ss. 265, 266 to other companies

267

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Realised profits of insurance company with long term business

268

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of development costs

269

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relevant accounts

Distribution to be justified by reference to company's accounts

270

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements for last annual accounts

271

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements for interim accounts

272

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements for initial accounts

273

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Method of applying s. 270 to successive distributions

274

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of assets in the relevant accounts

275

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Distributions in kind

276

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary

Consequences of unlawful distribution

277

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Saving for provision in articles operative before Act of 1980

278

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Distributions by special category companies

279

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definitions for Part VIII

280

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Saving for other restraints on distribution

281

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IX — A Company’s Management; Directors and Secretaries; their Qualifications, Duties and Responsibilities

Officers and registered office

Directors

282

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Secretary

283

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Acts done by person in dual capacity

284

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Validity of acts of directors

285

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifications of company secretaries

286

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registered office

287

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Register of directors and secretaries

288

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Particulars of directors to be registered under s. 288

289

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Particulars of secretaries to be registered under s. 288

290

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions governing appointment of directors

Share qualification of directors

291

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appointment of directors to be voted on individually

292

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Age limit for directors

293

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duty of director to disclose his age

294

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disqualification

Disqualification orders: introductory

295–299

Disqualification on conviction of indictable offence

296

• (1) The court may make a disqualification order against a person where he is convicted of an indictable offence (whether on indictment or summarily) in connection with the promotion, formation, management or liquidation of a company, or with the receivership or management of a company's property.

• (2) " The court" for this purpose means—

• (a) any court having jurisdiction to wind up the company in relation to which the offence was committed, or

• (b) the court by or before which the person is convicted of the offence, or

• (c) In the case of a summary conviction in England and Wales, any other magistrates' court acting for the same petty sessions area;

and for purposes of this section the definition of " indictable offence " in Schedule 1 to the Interpretation Act 1978 applies in relation to Scotland as it does in relation to England and Wales.

Disqualification for persistent default under Companies Acts

297

• (1) The court may make a disqualification order against a person where it appears to it that he has been persistently in default in relation to provisions of this Act or the Consequential Provisions Act requiring any return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the registrar of companies.

• (2) On an application to the court for an order to be made under this section, the fact that a person has been persistently in default in relation to such provisions as are mentioned above may (without prejudice to its proof in any other manner) be conclusively proved by showing that in the 5 years ending with the date of the application he has been adjudged guilty (whether or not on the same occasion) of three or more defaults in relation to those provisions.

• (3) A person is treated under subsection (2) as being adjudged guilty of a default in relation to any such provision if—

• (a) he is convicted (whether on indictment or summarily) of an offence consisting in a contravention of or failure to comply with that provision (whether on his own part or on the part of any company), or

• (b) a default order is made against him, that is to say an order under—

• (i) section 244 (order requiring delivery of company accounts), or

• (ii) section 499 (enforcement of receiver's or manager's duty to make returns), or

• (iii) section 636 (corresponding provision for liquidator in winding-up), or

• (iv) section 713 (enforcement of company's duty to make returns),

in respect of any such contravention of or failure to comply with that provision (whether on his own part or on the part of any company).

• (4) In this section " the court" means any court having jurisdiction to wind up any of the companies in relation to which the offence or other default has been or is alleged to have been committed.

Disqualification for fraud etc. in winding up

298

• (1) The court may make a disqualification order against a person if, in the course of the winding up of a company, it appears that he—

• (a) has been guilty of an offence for which he is liable (whether he has been convicted or not) under section 458 (fraudulent trading), or

• (b) has otherwise been guilty, while an officer or liquidator of the company or receiver or manager of its property, of any fraud in relation to the company or of any breach of his duty as such officer, liquidator, receiver or manager.

• (2) In this section " the court" means the same as in section 297 ; and " officer " includes a shadow director.

Disqualification on summary conviction

299

• (1) An offence counting for the purposes of this section is one of which a person is convicted (either on indictment or summarily) in consequence of a contravention of, or failure to comply with, any provision of this Act or the Consequential Provisions Act requiring a return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the registrar of companies (whether the contravention or failure is on the person's own part or on the part of any company).

• (2) Where a person is convicted of a summary offence counting for those purposes, the court by which he is convicted (or, in England and Wales, any other magistrates' court acting for the same petty sessions area) may make a disqualification order against him if the circumstances specified in the next subsection are present

• (3) Those circumstances are that during the 5 years ending with the date of the conviction, the person has had made against him, or has been convicted of, in total not less than 3 default orders and offences counting for the purposes of this section; and those offences may include that of which he is convicted as mentioned in subsection (2) and any other offence of which he is convicted on the same occasion.

• (4) For the purposes of this section—

• (a) the definition of " summary offence" in Schedule 1 to the Interpretation Act 1978 applies for Scotland as for England and Wales, and

• (b) " default order" means the same as in section 297(3)(b).

Disqualification by reference to association with insolvent companies

300

Register of disqualification orders

301

Provision against undischarged bankrupt acting as director etc.

302

• (1) If any person being an undischarged bankrupt acts as director or liquidator of, or directly or indirectly takes part in or is concerned in the promotion, formation or management of, a company except with the leave of the court, he is liable to imprisonment or a fine, or both.

• (2) " The court" for this purpose is the court by which the person was adjudged bankrupt or, in Scotland, sequestration of his estates was awarded.

• (3) In England and Wales, the leave of the court shall not be given unless notice of intention to apply for it has been served on the official receiver in bankruptcy; and it is the latter's duty, if he is of opinion that it is contrary to the public interest that the application should be granted, to attend on the hearing of the application and oppose it

• (4) In this section " company " includes an unregistered company and a company incorporated outside Great Britain which has an established place of business in Great Britain.

Removal of directors

Resolution to remove director

303

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director's right to protest removal

304

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions about directors and officers

Directors' names on company correspondence, etc.

305

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limited company may have directors with unlimited liability

306

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special resolution making liability of directors unlimited

307

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assignment of office by directors

308

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors to have regard to interests of employees

309

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions exempting officers and auditors from liability

310

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part X — Enforcement of Fair Dealing by Directors

Restrictions on directors taking financial advantage

Prohibition on tax-free payments to directors

311

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment to director for loss of office, etc.

312

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company approval for property transfer

313

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director's duty of disclosure on takeover, etc.

314

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequences of non-compliance with s. 314

315

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Provisions supplementing ss. 312-315

316