Water Act 1989

• (2) Where the Secretary of State has made an order under subsection (1) above in respect of the liabilities of any successor company and he considers it appropriate to do so, he may give a direction under this subsection to that company and that company shall, as a consequence of the making of the order, issue such debentures of the company to its nominated holding company as may be specified or described in the direction.

• (3) The Secretary of State—

• (a) shall not exercise his power to make an order under this section except with the consent of the Treasury; and

• (b) shall not make such an order transferring the liability of any company or give a direction under subsection (2) above to any company, except at a time when the company is wholly owned by the Crown.

• (4) Subsection (4) of section 83 above shall apply for the purposes of this section as it applies for the purposes of that section.

• (5) In this section “relevant loan”, in relation to the successor company of a water authority, means any sum borrowed or treated as borrowed by the authority from the Secretary of State or the Public Works Loan Commissioners, being a sum the liability to repay which has vested in the authority’s successor company in accordance with any scheme under Schedule 2 to this Act.

Conversion of certain loans

86

• (1) The Secretary of State may by order made by statutory instrument extinguish all or any of the liabilities of the nominated holding company of a successor company in respect of the principal of any loan of either of the following descriptions, that is to say—

• (a) a loan made to that company under section 84 above;

• (b) a loan the liability to repay the principal of which has been transferred to that company under section 85 above;

and the assets of the National Loans Fund shall accordingly be reduced by amounts corresponding to any liabilities so extinguished.

• (2) An order made under subsection (1) above in respect of any loan the liability to repay the principal of which was transferred to the nominated holding company of a successor company under section 85 above may extinguish all or any of the liabilities of that successor company under debentures issued in respect of the transfer under subsection (2) of that section.

• (3) Where the Secretary of State has made an order under subsection (1) above and he considers it appropriate to do so, he may give a direction under this subsection to any nominated holding company whose liabilities are extinguished by the order and that company shall, as a consequence of the making of the order, issue such debentures of the company as may be specified or described in the direction—

• (a) to the Treasury or the Secretary of State; or

• (b) to any person entitled to require the issue of the debentures following their initial allotment to the Treasury or the Secretary of State.

• (4) The Secretary of State shall not—

• (a) make an order under subsection (1) above extinguishing the liability of any company; or

• (b) give a direction under subsection (3) above for the issue of debentures,

except at a time when the company whose liability is extinguished by the order or, as the case may be, the company which is directed to issue debentures is wholly owned by the Crown.

• (5) Except as may be agreed between the Secretary of State and a company which is directed to issue debentures in pursuance of this section—

• (a) the aggregate of the principal sums payable under the debentures to which the direction relates shall be equal to the aggregate of the sums the liability to repay which is extinguished by the order; and

• (b) the terms as to the payment of the principal sums payable under the debentures to which the direction relates, and as to the payment of interest thereon, shall be the same as the corresponding terms of the loans specified in the order.

• (6) For the purposes of subsection (5) above any express or implied terms of a loan shall be disregarded in so far as they relate to the early discharge of liabilities to make repayments of principal and payments of interest.

• (7) Subsection (4) and subsections (6) and (7) of section 83 above shall apply for the purposes of this section as they apply for the purposes of that section.

Government investment in securities of the nominated holding companies

87

• (1) The Treasury or, with the consent of the Treasury, the Secretary of State may at any time acquire—

• (a) securities of the nominated holding company of a successor company; or

• (b) rights to subscribe for any such securities.

• (2) The Secretary of State shall not dispose of any securities acquired under this section without the consent of the Treasury.

• (3) Any expenses incurred by the Treasury or the Secretary of State in consequence of the provisions of this section shall be paid out of money provided by Parliament.

• (4) Any dividends or other sums received by the Treasury or the Secretary of State in right of, or on the disposal of, any securities or rights acquired under this section shall be paid into the Consolidated Fund.

Exercise of functions through nominees

88

• (1) The Treasury or, with the consent of the Treasury, the Secretary of State may for the purposes of section 83, 86 or 87 above appoint any person to act as the nominee, or one of the nominees, of the Treasury or, as the case may be, of the Secretary of State; but—

• (a) the issue in pursuance of section 83 above of securities of a successor company to any nominee of the Secretary of State appointed for the purposes of that section;

• (b) the issue in pursuance of section 83 or 86 above of securities of such a company’s nominated holding company to such nominee of the Treasury or the Secretary of State as is appointed for the purposes of that section or to any person entitled to require the issue of the securities following their initial allotment to any such nominee; and

• (c) the acquisition by any nominee of the Treasury or the Secretary of State who is appointed for the purposes of section 87 above of any securities or rights under that section,

shall be in accordance with such directions as may be given from time to time by the Treasury or, with the consent of the Treasury, by the Secretary of State.

• (2) Any person holding any securities or rights as a nominee of the Treasury or the Secretary of State by virtue of the preceding provisions of this section shall hold and deal with them (or any of them) on such terms and in such manner as the Treasury or, with the consent of the Treasury, the Secretary of State may direct.

Target investment limit for Government shareholding

89

• (1) The following provisions of this section shall apply separately in relation to each company which is the nominated holding company of a successor company.

• (2) As soon as he considers it expedient and, in any case, not later than six months after the company ceases to be wholly owned by the Crown, the Secretary of State shall by order fix a target investment limit in relation to the aggregate of the shares in the company which are for the time being held, by virtue of any provision of this Chapter, by any of the following, that is to say, the Treasury, the Secretary of State or any nominee of the Treasury or the Secretary of State (in this section referred to as “the Government shareholding”).

• (3) The target investment limit for the Government shareholding in the company shall be expressed as a proportion of the voting rights which are exercisable in all circumstances at general meetings of the company (in this section referred to as “the ordinary voting rights”).

• (4) The first target investment limit fixed under this section for the Government shareholding in the company shall not exceed, by more than 0.5 per cent of the ordinary voting rights, the proportion of the ordinary voting rights which is in fact carried by the Government shareholding in the company at the time when the order fixing the limit is made.

• (5) The Secretary of State may from time to time by order fix a new target investment limit for the Government shareholding in the company in place of the one previously in force under this section; but—

• (a) any new limit must be lower than the one it replaces in relation to the company; and

• (b) an order under this section may only be revoked by an order fixing a new limit.

• (6) It shall be the duty of the Treasury and of the Secretary of State—

• (a) so to exercise their powers under section 87 above, any power to dispose of any shares held by virtue of any provision of this Chapter and their power to give directions to their respective nominees as to secure that the Government shareholding in the company does not carry a proportion of the ordinary voting rights exceeding any target investment limit for the time being in force under this section in relation to the company; and

• (b) not at any time on or after the fixing of the first target investment limit in relation to the company to exercise any power to acquire, or to authorise any nominee to acquire, any shares in the successor company of which the company is the nominated holding company.

• (7) Notwithstanding subsection (6) above but subject to subsection (8) below, the Treasury or the Secretary of State may take up, or direct any nominee of the Treasury or of the Secretary of State to take up, any rights for the time being available to them or him, or to the nominee—

• (a) as an existing holder of shares or other securities of the company; or

• (b) by reason of the rescission of any contracts for the sale of any such shares or securities.

• (8) If, as a result of anything done under subsection (7) above, the proportion of the ordinary voting rights carried by the Government shareholding in the company at any time exceeds the target investment limit for the time being in force under this section in relation to the company, it shall be the duty of the Treasury or, as the case may be, the Secretary of State to comply with subsection (6) above as soon after that time as is reasonably practicable.

• (9) For the purposes of this section the temporary suspension of any of the ordinary voting rights shall be disregarded.

• (10) The power to make an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

Responsibility for listing particulars of nominated holding companies

90

• (1) Where—

• (a) the same document contains listing particulars for securities of two or more nominated holding companies; and

• (b) any person’s responsibility for any information included in the document is stated in the document to be confined to its inclusion as part of the listing particulars for securities of any one of those companies,

that person shall not be treated as responsible for that information in so far as it is stated in the document to form part of the listing particulars for securities of any other of those companies.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In this section—

• “listing particulars” has the same meaning as in section 90(1) of the Financial Services and Markets Act 2000; and

• “responsible”, in relation to listing particulars, has the meaning given in section 79(3) of that Act.

Statutory accounts of the group

91

• (1) For the purposes of any statutory accounts of a water authority’s successor company—

• (a) the vesting effected in accordance with any scheme under Schedule 2 to this Act shall be taken—

• (i) to have been a vesting in that company of all the property, rights and liabilities to which that authority was entitled or subject immediately before the end of their last accounting date and which, at that time, were not property, rights and liabilities relating to Part III functions; and

• (ii) to have been effected immediately after that date;

and

• (b) the value of any asset and the amount of any liability of that authority which is taken by virtue of paragraph (a) above to have been vested in that company shall be taken to have been the value or (as the case may be) amount assigned to that asset or liability for the purposes of the corresponding statement of accounts prepared by that authority in respect of the complete accounting year ending with that date.

• (2) For the purposes of any statutory accounts of a water authority’s successor company the amount to be included in respect of any item shall be determined as if the company had done anything not relating to Part III functions which has been done by that authority (whether by way of acquiring, revaluing or disposing of any asset or incurring, revaluing or discharging any liability, or by carrying any amount to any provision or reserve, or otherwise).

Accordingly (but without prejudice to the generality of the preceding provision) the amount to be included from time to time in any reserves of a water authority’s successor company as representing the company’s accumulated realised profits shall be determined as if any profits realised and retained by that authority had been realised and retained by the company.

• (3) For the purposes of any statutory accounts of the nominated holding company of a successor company—

• (a) a successor company which becomes a subsidiary of the holding company in the course of an accounting reference period of that successor company shall be assumed to have become such a subsidiary at the beginning of that period; and

• (b) the value, at the time of its issue, of any security issued to the holding company in pursuance of section 83 or 85 above shall be taken—

• (i) in the case of a share, to have been equal to its nominal value; and

• (ii) in the case of a debenture, to have been equal to the principal sum payable under the debenture.

• (4) For the purposes of this section the question whether any property, right or liability of a water authority, or anything done by a water authority, relates to Part III functions shall be determined in accordance with such principles for determining whether anything so relates as the Secretary of State—

• (a) considers appropriate to apply in the case of that authority’s successor company; and

• (b) has notified to that company in writing.

• (5) References in this section to the statutory accounts of a company are references to any accounts prepared by the company for the purposes of any provision of the Companies Act 2006 (including group accounts); and in this section—

• “accounting reference period” has the same meaning, in relation to a successor company, as in that Act;

• “complete accounting year,” in relation to a water authority, means an accounting year of the authority ending on 31st March;

• “the last accounting date”, in relation to any water authority, means the last day of the last complete accounting year of that authority to end before the transfer date; and

• “Part III functions”, in relation to a water authority, means the functions of that authority which are transferred to the Authority by virtue of this Act or correspond to any functions assigned to the Authority under this Act.

Temporary restrictions on borrowings etc. by the group

92

• (1) The aggregate amount outstanding in respect of the principal of the relevant borrowing of a group to which a successor company belongs shall not, at any time when the company is wholly owned by the Crown, exceed £1,400 million or such greater sum, not exceeding £1,800 million, as the Secretary of State may specify by order made by statutory instrument.

• (2) The power to make an order under subsection (1) above shall include power to specify different amounts in relation to different groups; and no order shall be made under that subsection unless a draft of the order has been laid before the House of Commons and has been approved by a resolution of that House.

• (3) If articles of association of a successor company or of such a company’s nominated holding company confer on the Secretary of State powers exercisable with the consent of the Treasury for, or in connection with, restricting the sums of money which may be borrowed or raised during any period by the group to which that company belongs, those powers shall be exercisable in the national interest notwithstanding any rule of law and the provisions of any enactment.

• (4) For the purposes of subsection (3) above an alteration of the articles of association of a successor company or of such a company’s nominated holding company shall be disregarded if the alteration—

• (a) has the effect of conferring or extending any such power as is mentioned in that subsection; and

• (b) is made at a time when that company has ceased to be wholly owned by the Crown.

• (5) In this section—

• “group”, in relation to a successor company, means that company’s nominated holding company and all of the nominated holding company’s subsidiaries (including the successor company and its subsidiaries) taken together; and

• “relevant borrowing”, in relation to a group to which a successor company belongs, means—

• (a) such loans made or treated as made to any company in the group, including loans treated by virtue of the issue of debentures in pursuance of this Act as having been made to any such company, as are not loans made or treated as made by one company belonging to the group to another such company; and

• (b) any sums borrowed or treated as borrowed by local authorities in respect of the repayment of which, or the payment of interest on which, the successor company is required to make contributions by virtue of the transfer of any liability in accordance with a scheme under Schedule 2 to this Act.

• (6) Where any amount outstanding in respect of the principal of any relevant borrowing of a group—

• (a) is treated as repaid or extinguished in connection with the issue of any securities of a company belonging to that group; or

• (b) would fall to be so treated, in the case of an extinguishment under section 86 above, if the Secretary of State had given a direction under subsection (3) of that section,

that amount shall be deemed for the purposes of this section to continue to be outstanding except to the extent that any amount payable by the company by reason of the issue of securities in connection with the repayment or extinguishment itself falls to be treated for the purposes of this section as an amount outstanding in respect of the principal of any relevant borrowing of the group.

Reserves of the successor companies

93

• (1) Where the Secretary of State, at any time before the company ceases to be wholly owned by the Crown, so directs in relation to any successor company, such sums as may be specified in the direction shall, instead of being applied in any other way, be carried by the company to a reserve for the purposes of this section.

• (2) A company having a reserve for the purposes of this section shall not apply it except in paying up unissued shares of the company to be allotted to members of the company as fully paid bonus shares.

Application of Trustee Investments Act 1961 in relation to investment in the nominated holding companies

94

• (1) Subsection (2) below shall have effect for the purpose of applying paragraph 3(b) of Part IV of Schedule 1 to the Trustee Investments Act 1961 (which provides that shares and debentures of a company shall not count as wider-range and narrower-range investments respectively within the meaning of that Act unless the company has paid dividends in each of the five years immediately preceding that in which the investment is made) in relation to investment, during the first investment year or any following year, in shares or debentures of a company which is the nominated holding company of a successor company.

• (2) The company shall be deemed to have paid a dividend as mentioned in the said paragraph 3(b)—

• (a) in every year preceding the first investment year which is included in the relevant five years; and

• (b) in the first investment year, if that year is included in the relevant five years and that company does not in fact pay such a dividend in that year.

• (3) In this section—

• “the first investment year”, in relation to a company which is the nominated holding company of a successor company, means the calendar year in which shares in that successor company are first issued, in pursuance of section 83(1) above, to the nominated holding company; and

• “the relevant five years” means the five years immediately preceding the year in which the investment in question is made or proposed to be made.

Tax provisions

95

• (1) The Secretary of State may, for the purposes of section 2 of the Capital Allowances Act 1968 (writing-down allowance), by order make provision specifying—

• (a) the amount to be taken for the purposes of subsection (3) of that section as the residue on the transfer date of any expenditure in relation to which any property vested in a successor company in accordance with a scheme under Schedule 2 to this Act is a relevant interest for the purposes of that section; and

• (b) the part of the period mentioned in subsection (3) of that section which is to be treated, in relation to any such property, as unexpired on that date.

• (2) For the purposes of Chapter I of Part III of the Finance Act 1971 (capital allowances in respect of machinery and plant) property which is vested in a successor company in accordance with a scheme under Schedule 2 to this Act shall be treated as if—

• (a) it had been acquired by that company on the transfer date for the purposes for which it is used by that company on and after that date; and

• (b) capital expenditure of such amount as may be specified for the purposes of this subsection in an order made by the Secretary of State had been incurred on that date by that company on the acquisition of the property for the purposes mentioned in paragraph (a) above.

• (3) The Secretary of State shall not make an order under subsection (1) or (2) above in relation to any property of a successor company except with the consent of the Treasury and at a time when the company is wholly owned by the Crown; and the power to make such an order shall be exercisable by statutory instrument and shall include power to make different provision for different cases, including different provision in relation to different property or descriptions of property.

• (4) Subject to subsection (5) below, for the purposes of the Taxation of Chargeable Gains Act 1992 (“the 1992 Act”) the following securities of a successor company, that is to say—

• (a) those issued to that company’s nominated holding company in pursuance of section 83 above;

• (b) those issued to that company’s nominated holding company in pursuance of section 85 above, so far as they are not extinguished under section 86 above; and

• (c) those not issued in pursuance of section 83 or 85 above which are—

• (i) held by that holding company, or any of its nominees, on the transfer date; or

• (ii) held by the Secretary of State, or any of his nominees, on that date and transferred to that holding company at any time when that holding company is wholly owned by the Crown,

shall, together, be deemed to have been acquired by the nominated holding company on the transfer date for a consideration equal to whatever is the market value of the successor company’s undertaking immediately after the coming into force, on that date, of the scheme under Schedule 2 to this Act in accordance with which property, rights and liabilities of a water authority are transferred to the successor company.

• (5) For the purposes of the 1992 Act—

• (a) any loan which is a relevant loan for the purposes of section 85 above shall be disregarded in determining the market value referred to in subsection (4) above; and

• (b) where an apportionment of the aggregate amount for which securities of any company are treated under that subsection as having been acquired by any company falls to be made between different securities, any debenture to which that subsection applies shall be treated as having been acquired by that company for an amount equal to the principal sum payable under the debenture.

• (6) Where—

• (a) any debt owed to a water authority is transferred to its successor company in accordance with a scheme under Schedule 2 to this Act; and

• (b) the authority would have been the original creditor in relation to that debt for the purposes of section 251 of the 1992 Act (disposal of debts),

the successor company shall be treated as the original creditor for those purposes.

• (7) For the purposes of Part VI of the Income and Corporation Taxes Act 1988 (company distributions) any securities of a company issued in pursuance of section 83, 85 or 86 above shall be treated as having been issued for new consideration equal—

• (a) in the case of a share, to its nominal value; and

• (b) in the case of a debenture, to the principal sum payable under the debenture.

• (8) Subsection (1) of section 400 of the Income and Corporation Taxes Act 1988 (write-off of government investment: restriction of tax losses) shall not have effect in relation to any extinguishment, at a time when the nominated holding company of a successor company is wholly owned by the Crown, of any liabilities of that holding company.

• (9) Subsection (6) of the said section 400 shall apply in relation to any such extinguishment of liabilities as is mentioned in subsection (8) above as if the reference to the body in question were a reference to the company whose liabilities are extinguished.

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) The vesting in accordance with a scheme under Schedule 2 to this Act in a successor company of any liability for a loan made to a water authority shall not affect any direction in respect of the loan which has been given, or has effect as if given, under section 755 of the Income Tax (Trading and Other Income) Act 2005 (income tax exemption for interest on foreign currency securities).

Interpretation of Chapter V

96

In this Chapter—

• “debentures” includes debenture stock;

• “nominated holding company”, in relation to a successor company, means the company nominated under section 83(1) above as that successor company’s nominated holding company;

• “securities”, in relation to a company, includes shares, debentures, bonds and other securities of the company, whether or not constituting a charge on the assets of the company; and

• “shares” includes stock.

Chapter VI — Statutory Water Companies

General powers of appointed companies

97

Relaxation of limits on capital, borrowing and dividends

98

• (1) Subject to the following provisions of this section, so much of any provision contained in any local statutory provision or having effect by virtue of anything done under any local statutory provision, under section 41(5) of the 1945 Act (rate of dividend or interest etc. on redeemable stock) or under the Statutory Companies (Redeemable Stock) Act 1915, as—

• (a) imposes any limit to which this section applies in relation to any statutory water company; or

• (b) otherwise relates to any such limit,

shall have effect subject to such modifications as may be approved by special resolution of the company.

• (2) This section applies, in relation to a statutory water company, to the following limits (whether they are expressed by reference to a specified sum or percentage or by reference to the respective proportions of, or of different descriptions of, capital raised and sums borrowed or to any other matter), that is to say—

• (a) a limit on the amount of capital, or of capital of a particular description, that may be raised by the company;

• (b) a limit on the amount that may be borrowed, or borrowed in a particular way or in particular circumstances, by the company; and

• (c) a limit on the dividends payable on shares or stock in the company, or on shares or stock of a particular description.

• (3) Where there is a division of the shares or stock of a statutory water company into different classes, no modification of a limit falling within subsection (2)(c) above shall have effect by virtue of this section unless a consent to or approval of the modification has been given under subsection (4) below in respect of each class the rights attached to which are varied in consequence of the modification.

• (4) A consent or approval is given for the purposes of subsection (3) above in respect of a class of shares or stock if—

• (a) consent in writing to the modification has been given by not less than three-quarters, in nominal value, of the members of the company holding shares or stock of that class; or

• (b) a resolution approving the modification is passed by not less than three-quarters, in nominal value, of the members of the company holding shares or stock of that class who are present (whether in person or by proxy) at a meeting of which not less than twenty-one days' notice, specifying the intention to propose the resolution, has been duly given;

and for the purpose of determining whether the requirements of subsection (3) above are satisfied in relation to any two or more classes of shares or stock in a statutory water company, it shall be immaterial that consents and approvals have been given in respect of different classes in accordance with different paragraphs of this subsection.

• (5) Where subsection (3) above applies in relation to a modification specified in a resolution passed for the purposes of this section, the holders of not less, in the aggregate, than fifteen per cent., in nominal value, of the issued shares or stock of any class of shares or stock of the company (being persons who have not for the purposes of this section consented to the modification or voted in favour of any resolution for the modification) may apply to the High Court to have the modification cancelled.

• (6) An application to the High Court under subsection (5) above—

• (a) may be made on behalf of the shareholders or stockholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose; but

• (b) shall not be made in relation to any modification more than twenty-one days after the date of the giving of the last consent or approval to the modification to be given for the purposes of subsection (1) or (3) above.

• (7) Where an application is made under subsection (5) above—

• (a) the modification to which it relates shall have no effect unless and until it is confirmed by the High Court; and

• (b) the High Court, after hearing the applicant and any other persons who apply to that Court to be heard and appear to that Court to be interested in the application—

• (i) if satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders or stockholders of the class represented by the applicant, may disallow the modification; and

• (ii) if not so satisfied, shall confirm it;

and the decision of the High Court on an application under subsection (5) above shall be final.

• (8) Provision having effect by virtue of a resolution passed in accordance with this section may be modified by a subsequent such resolution.

• (9) Without prejudice to the definition in section 189(1) below of “modifications” and cognate expressions, references in this section, in relation to a statutory water company, to the modification of any provision imposing a limit to which this section applies—

• (a) include references to the removal of that limit and to the replacement of that provision with a provision imposing a different such limit in relation to that company; but

• (b) do not include, in the case of a limit falling within subsection (2)(a) above, any modification having the effect of reducing the authorised share capital, or the authorised capital stock, of that company.

• (10) In this section “special resolution”, in relation to a statutory water company, means a resolution passed by a majority of not less than three-quarters of such of the members of the company as (being entitled to do so) vote (whether in person or by proxy) at a meeting of the company of which not less than twenty-one days' notice, specifying the intention to propose the resolution, has been duly given; and in computing any majority for the purposes of this subsection the regulations contained in any local statutory provision as to the number of votes to which each member is entitled shall apply.

Removal of restrictions on payment of interest and application of profits etc

99

• (1) Nothing in so much of any local statutory provision as imposes a requirement as to the rate of interest at which sums may be borrowed by a statutory water company, or as to the rate at which interest on sums so borrowed is to be paid, shall apply in relation to any borrowing by a statutory water company after the coming into force of this subsection.

• (2) Notwithstanding the provisions of any local statutory provision, every statutory water company shall have power to form and maintain reserve and contingency funds by setting apart such sums in such circumstances, and to invest those funds in such manner, as it thinks fit.

• (3) Nothing in subsection (2) above shall authorise any failure by a statutory water company to meet any obligation imposed on it by virtue of any local statutory provision to pay any sum to any other person.

• (4) Nothing in so much of any local statutory provision as imposes a limit on the amount that may be carried forward at the end of any period to the credit of the profit and loss (net revenue) account of a statutory water company shall apply in relation to any such company after the coming into force of this subsection.

Sale of shares or stock

100

Nothing in any local statutory provision shall have effect at any time after the coming into force of this section so as to require any shares or stock in a statutory water company to be offered for sale to the public or so as to require any offer for the sale of any such shares or stock to be an offer for sale by auction or tender.

Registration of statutory water companies under the Companies Act 1985

101

• (1) Chapter II of Part XXII of the Companies Act 1985 (registration of companies not formed under that Act) shall have effect in relation to statutory water companies as if—

• (a) any reference in that Chapter to a joint stock company included a reference to such a statutory water company as would not fall to be treated as a joint stock company for the purposes of that Chapter apart from this paragraph; and

• (b) any reference in that Chapter to an Act of Parliament included a reference to a local statutory provision which is not contained in an Act of Parliament;

and it is hereby declared that nothing in this Act or in the said Act of 1985 shall be construed as requiring a statutory water company to which a certificate has been issued under section 688 of that Act (certificates of registration under Chapter II of Part XXII) to be treated for the purposes of this Act or any other purposes as if it had been a different person in law before the issue of that certificate.

• (2) Where—

• (a) provision for the constitution and regulation of a statutory water company holding an appointment under Chapter I of this Part—

• (i) is contained in local statutory provisions having effect in accordance with paragraph 5 of Schedule 21 to the said Act of 1985 (enactments to have effect as if contained in memorandum and articles); or

• (ii) would, apart from this subsection, be so contained if the company became a registered water company;

• (b) the company has by special resolution proposed (whether before or after becoming a registered water company) that provision contained in a memorandum and articles shall have effect in substitution for those local statutory provisions;

• (c) the proposal that a memorandum and articles shall so have effect in relation to the company has been approved by order made by the Secretary of State; and

• (d) in the case of a company that has not already done so, the company becomes a registered water company,

those local statutory provisions shall cease to have effect on such date as may, for the purposes of this subsection, be specified or described in that order and the proposed memorandum and articles shall come into force on that date subject to any modifications, terms or conditions contained in any order made by the High Court under section 102 below.

• (3) The Secretary of State shall not make an order for the purposes of subsection (2)(c) above in relation to a proposal by any company unless it appears to him—

• (a) that neither an application under section 102 below with respect to the company’s proposal nor an appeal with respect to the subject-matter of such an application is pending and that the time within which any such application or appeal may be made or brought has expired; and

• (b) where there is —

• (i) a division of the shares or stock of the company into different classes; and

• (ii) such a proposed difference between the memorandum and articles and the local statutory provisions which they will replace as will vary the rights attached to any such class,

that a consent to or approval of the difference has been given under subsection (4) below in respect of each class the rights attached to which would be varied if the order were made.

• (4) A consent to or approval of a proposal is given for the purposes of subsection (3)(b) above in respect of a class of shares or stock if—

• (a) consent in writing to the proposal has been given by the holders of not less than three-quarters, in nominal value, of the issued shares or stock of that class; or

• (b) an extraordinary resolution approving the proposal is passed at a separate general meeting of holders of shares or stock of that class;

and for the purpose of determining whether the requirements specified in subsection (3)(b) above are satisfied in relation to any two or more classes of shares or stock in a company, it shall be immaterial that consents and approvals have been given in respect of different classes in accordance with different paragraphs of this subsection.

• (5) Where an order has been made for the purposes of subsection (2)(c) above in relation to any company—

• (a) nothing in sections 97 to 100 above or in section 41 of the 1945 Act (power to issue redeemable stock) shall have effect on and after the date specified or described in the order so as to confer powers in relation to the company in addition to those conferred by virtue of the company’s memorandum and articles;

• (b) on and after that date, the memorandum and articles which come into force by virtue of the order shall have effect, in accordance with section 14 and the other provisions of the Companies Act 1985, as if they were the company’s registered memorandum and articles; and

• (c) the company shall, before the end of the period of fifteen days beginning with the day after that date, deliver to the registrar of companies a printed copy of the memorandum and articles which have so come into force;

and subsection (3) of section 6 of the said Act of 1985 (penalty for default in delivering documents to the registrar of companies) shall apply in relation to the obligation imposed by paragraph (c) above as it applies in relation to the obligations imposed by subsection (1) of that section.

• (6) Where the Secretary of State makes an order for the purposes of subsection (2)(c) above in relation to any company and it appears to him to be appropriate to do so for the purposes of, or in consequence of, the approval contained in the order, he may by order repeal or amend any local statutory provision.

• (7) The power to make an order for the purposes of subsection (2)(c) above or an order under subsection (6) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; and an order under subsection (6) above may—

• (a) make different provision for different cases, including different provision in relation to different persons, circumstances or localities; and

• (b) contain such supplemental, consequential and transitional provision as the Secretary of State considers appropriate.

• (8) In this section and section 102 below—

• “extraordinary resolution”— in relation to a meeting held after the company in question has become a registered water company, means an extraordinary resolution within the meaning of the Companies Act 1985; and in relation to a meeting held before that company becomes a registered water company, means such a resolution as would be a special resolution within the meaning of section 98 above if the meeting were a meeting of the company;

• “memorandum and articles” means a document containing only such provision as may be contained in a memorandum and articles of association registered under that Act;

• “registrar of companies” has the same meaning as in that Act; and

• “special resolution”— in relation to a time after the company in question has become a registered water company, means (subject to subsection (2) of section 102 below) a special resolution within the meaning of that Act; and in relation to a time before that company becomes a registered water company, means (subject to that subsection) a special resolution within the meaning of section 98 above; and in this section and section 102 below a reference to a company’s becoming a registered water company is a reference to the issue to that company (whether before or on or after the transfer date) of a certificate under section 688 of that Act.

Procedure for cancelling resolutions for substituting memorandum and articles

102

• (1) Where a special resolution has been passed containing a proposal, in relation to a company, for a memorandum and articles to have effect as mentioned in subsection (2) of section 101 above, an application for the resolution to be cancelled may be made to the High Court—

• (a) by the holders of not less, in the aggregate, than fifteen per cent., in nominal value of the company’s issued share capital or issued stock;

• (b) by the holders of not less, in the aggregate, than fifteen per cent., in nominal value, of the issued shares or stock of any class in respect of which a consent to or approval of the proposal to which the resolution relates is required for the purposes of subsection (3)(b) of that section; or

• (c) if the resolution incorporates a modification of the company’s objects, by the holders of not less than fifteen per cent. of such of the company’s debentures as entitle the holders to object under this section to such a modification;

but an application under this section shall not be made by any person who has consented to or voted in favour of the proposal (whether for the purposes of subsection (2) or subsection (3)(b) of that section).

• (2) Accordingly, in the case of such a special resolution for the purposes of section 101(2) above as incorporates a modification of the company’s objects—

• (a) the same notice as is given for the purposes of that resolution to members of the company is required to be given to the holders of debentures entitling the holders to object under this section to a modification of the company’s objects; and

• (b) in the absence of any local statutory provision regulating the giving of that notice, that notice shall be given in accordance with the provisions regulating the giving of the notice to the members.

• (3) An application under this section—

• (a) 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; but

• (b) shall not be made in relation to any special resolution more than twenty-one days after the date of the last resolution, consent or approval to be passed or given for the purposes of subsection (2)(b) or (3)(b) of section 101 above or for the purposes, in connection with the company’s becoming a registered water company, of section 681 of the Companies Act 1985 (procedural requirements for registration).

• (4) The powers of the High Court on an application under this section shall be to do one or more of the following, that is to say—

• (a) to make an order, on such terms and conditions as it thinks fit, cancelling the resolution to which the application relates or confirming the proposal contained in that resolution either subject to such modifications of the proposed memorandum and articles as may be specified in the order or without modifications;

• (b) if it thinks fit, to adjourn the proceedings in order that arrangements may be made to the Court’s satisfaction for the purchase of the interests of dissentient members or for the payment of compensation to such members;

• (c) to give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement; and

• (d) to require that provision contained in any memorandum and articles, as confirmed by the Court, shall not at any time be modified in the respects specified in the Court’s order except with the leave of the Court.

• (5) Without prejudice to the powers conferred by subsection (4)(c) above, an order of the High Court under this section may (if the Court thinks fit) provide for the purchase by a company of the shares or stock of any members of the company and for the reduction accordingly of the company’s capital; and an order which so provides shall not confirm a proposal for a memorandum and articles to have effect in substitution for any local statutory provisions except subject to such modifications (if any) as may be required in consequence of that purchase and reduction.

• (6) The High Court shall not on an application under this section confirm any proposal in so far as it incorporates such an alteration of a company’s objects as could not be made under section 4 of the Companies Act 1985 (alteration of objects) if the company were entitled to alter its objects under that section.

• (7) The debentures entitling the holders to object to a modification of a company’s objects are any debentures secured on the company’s undertaking which were issued or first issued before the day on which this Act is passed or which form part of the same series as any debentures so issued but have been issued on or after that date; and in this section “debentures” has the same meaning as in the said Act of 1985.

Part III — The Protection and Management of Rivers and other Waters

Chapter I — Control of Pollution

General provisions

Waters to which Chapter I applies

103

Classification of quality of waters

104

• (1) The Secretary of State may, in relation to any description of controlled waters (being a description applying to some or all of the waters of a particular class or of two or more different classes), by regulations prescribe a system of classifying the quality of those waters according to criteria specified in the regulations.

• (2) The criteria specified in regulations under this section in relation to any classification shall consist of one or more of the following, that is to say—

• (a) general requirements as to the purposes for which the waters to which the classification is applied are to be suitable;

• (b) specific requirements as to the substances that are to be present in or absent from the water and as to the concentrations of substances which are or are required to be present in the water;

• (c) specific requirements as to other characteristics of those waters;

and for the purposes of any such classification regulations under this section may provide that the question whether prescribed requirements are satisfied may be determined by reference to such samples as may be prescribed.

Water quality objectives

105

• (1) For the purpose of maintaining and improving the quality of controlled waters the Secretary of State may, by serving a notice on the Authority specifying—

• (a) one or more of the classifications for the time being prescribed under section 104 above; and

• (b) in relation to each specified classification, a date,

establish the water quality objectives for any waters which are, or are included in, waters of a description prescribed for the purposes of that section.

• (2) The water quality objectives for any waters to which a notice under this section relates shall be the satisfaction by those waters, on and at all times after each date specified in the notice, of the requirements which at the time of the notice were the requirements for the classification in relation to which that date is so specified.

• (3) Where the Secretary of State has established water quality objectives under this section for any waters he may review objectives for those waters if—

• (a) five years or more have elapsed since the service of the last notice under subsection (1) or (6) of this section to be served in respect of those waters; or

• (b) the Authority, after consultation with such water undertakers and other persons as it considers appropriate, requests a review;

and the Secretary of State shall not exercise his power to establish objectives for any waters by varying the existing objectives for those waters except in consequence of such a review.

• (4) Where the Secretary of State proposes to exercise his power under this section to establish or vary the objectives for any waters he shall—

• (a) give notice setting out his proposal and specifying the period (not being less than three months from the date of publication of the notice) within which representations or objections with respect to the proposal may be made; and

• (b) consider any representations or objections which are duly made and not withdrawn;

and, if he decides, after considering any such representations or objections, to exercise his power to establish or vary those objectives, he may do so either in accordance with the proposal contained in the notice or in accordance with that proposal as modified in such manner as he considers appropriate.

• (5) A notice under subsection (4) above shall be given—

• (a) by publishing the notice in such manner as the Secretary of State considers appropriate for bringing it to the attention of persons likely to be affected by it; and

• (b) by serving a copy of the notice on the Authority.

• (6) If, on a review under this section or in consequence of any representations or objections made following such a review for the purposes of subsection (4) above, the Secretary of State decides that the water quality objectives for any waters should remain unchanged, he shall serve notice of that decision on the Authority.

General duties to achieve and maintain objectives etc

106

• (1) It shall be the duty of the Secretary of State and of the Authority to exercise the powers conferred on him or it by or under the following provisions of this Chapter in such manner as ensures, so far as it is practicable by the exercise of those powers to do so, that the water quality objectives specified for any waters in a notice under section 105 above, or in a notice under section 30C of the Control of Pollution Act 1974, are achieved at all times.

• (2) It shall be the duty of the Authority, for the purposes of the carrying out of its functions under this Chapter, to monitor the extent of pollution in controlled waters and to consult, in such cases as it may consider appropriate, with river purification authorities in Scotland.

Controlling and remedying pollution

Offences of polluting controlled waters etc

107

• (1) Subject to section 108 below, a person contravenes this section if he causes or knowingly permits—

• (a) any poisonous, noxious or polluting matter or any solid waste matter to enter any controlled waters; or

• (b) any matter, other than trade effluent or sewage effluent, to enter controlled waters by being discharged from a drain or sewer in contravention of a relevant prohibition; or

• (c) any trade effluent or sewage effluent to be discharged—

• (i) into any controlled waters; or

• (ii) from land in England and Wales, through a pipe, into the sea outside the seaward limits of controlled waters;

or

• (d) any trade effluent or sewage effluent to be discharged, in contravention of any relevant prohibition, from a building or from any fixed plant on to or into any land or into any waters of a lake or pond which are not inland waters; or

• (e) any matter whatever to enter any inland waters so as to tend (either directly or in combination with other matter which he or another person causes or permits to enter those waters) to impede the proper flow of the waters in a manner leading or likely to lead to a substantial aggravation of—

• (i) pollution due to other causes; or

• (ii) the consequences of such pollution.

• (2) For the purposes of this section a discharge of any effluent or other matter is, in relation to any person, in contravention of a relevant prohibition if—

• (a) the Authority has given that person notice prohibiting him from making or, as the case may be, continuing the discharge;

• (b) the Authority has given that person notice prohibiting him from making or, as the case may be, continuing the discharge unless specified conditions are observed, and those conditions are not observed; or

• (c) the effluent or matter discharged contains a prescribed substance or a prescribed concentration of such a substance or derives from a prescribed process or from a process involving the use of prescribed substances or the use of such substances in quantities which exceed the prescribed amounts;

but nothing in this subsection shall authorise the giving of such a notice in respect of discharges from a vessel and nothing in any regulations made by virtue of paragraph (c) above shall require any discharge from a vessel to be treated as a discharge in contravention of a relevant prohibition.

• (3) A notice given for the purposes of subsection (2)(a) or (b) above shall expire at such time as may be specified in the notice; and that time shall not be before the end of the period of three months beginning with the day on which the notice is given except in a case where the Authority is satisfied that there is an emergency which requires the relevant prohibition in question to come into force at such time before the end of that period as may be so specified.

• (4) Where, in the case of such a notice for the purposes of subsection (2)(a) or (b) above as (but for this subsection) would expire at a time which is or is after the end of the said period of three months, an application is made before that time for a consent under this Chapter in respect of the discharge to which the notice relates, that notice shall be deemed not to expire until the result of the application becomes final—

• (a) on the grant or withdrawal of the application;

• (b) on the expiration, without the bringing of an appeal with respect to the decision on the application, of any period prescribed as the period within which any such appeal must be brought; or

• (c) on the withdrawal or determination of any such appeal.

• (5) For the purposes of this section where—

• (a) any sewage effluent is discharged as mentioned in subsection (1)(c) or (d) above from any sewer or works vested in a sewerage undertaker; and

• (b) the undertaker did not cause or knowingly permit the discharge but was bound (either unconditionally or subject to conditions which were observed) to receive into the sewer or works matter included in the discharge,

the undertaker shall be deemed to have caused the discharge.

• (6) A person who contravenes this section or the conditions of any consent given under this Chapter for the purposes of this section shall be guilty of an offence and liable—

• (a) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both;

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

Authority for discharges and other defences for the purposes of section 107

108

• (1) A person shall not be guilty of an offence under section 107 above in respect of the entry of any matter into any waters or any discharge if the entry occurs or the discharge is made under and in accordance with, or as a result of any act or omission under and in accordance with—

• (a) a consent given under this Chapter or under Part II of the Control of Pollution Act 1974;

• (b) a disposal licence;

• (c) a licence granted under Part II of the Food and Environment Protection Act 1985;

• (d) any local statutory provision or statutory order which expressly confers power to discharge effluent into water; or

• (e) any prescribed enactment;

but nothing in any disposal licence shall be treated for the purposes of this subsection as authorising any such entry or discharge as is mentioned in paragraphs (b) to (d) of section 107(1) above or as authorising any act or omission so far as it results in any such entry or discharge.

• (2) A person shall not be guilty of an offence under section 107 above in respect of the entry of any matter into any waters or any discharge if—

• (a) the entry is caused or permitted, or the discharge is made, in an emergency in order to avoid danger to life or health;

• (b) that person takes all such steps as are reasonably practicable in the circumstances for minimising the extent of the entry or discharge and of its polluting effects; and

• (c) particulars of the entry or discharge are furnished to the Authority as soon as reasonably practicable after it occurs.

• (3) A person shall not be guilty of an offence under section 107 above by reason of his causing or permitting any discharge of trade or sewage effluent from a vessel.

• (4) A person shall not be guilty of an offence under section 107 above by reason only of his permitting water from an abandoned mine to enter controlled waters.

• (5) A person shall not, otherwise than in respect of the entry of any poisonous, noxious or polluting matter into any controlled waters, be guilty of an offence under section 107 above by reason of his depositing the solid refuse of a mine or quarry on any land so that it falls or is carried into inland waters if—

• (a) he deposits the refuse on the land with the consent of the Authority;

• (b) no other site for the deposit is reasonably practicable; and

• (c) he takes all reasonably practicable steps to prevent the refuse from entering those inland waters.

• (6) A highway authority or other person entitled to keep open a drain by virtue of section 100 of the Highways Act 1980 shall not be guilty of an offence under section 107 above by reason of his causing or permitting any discharge to be made from a drain kept open by virtue of that section unless the discharge is made in contravention of a relevant prohibition under section 107 above.

• (7) A sewerage undertaker shall not be guilty of an offence under section 107 above by reason only of the fact that a discharge from a sewer or works vested in the undertaker contravenes conditions of a consent relating to the discharge if—

• (a) the contravention is attributable to a discharge which another person caused or permitted to be made into the sewer or works;

• (b) the undertaker either was not bound to receive the discharge into the sewer or works or was bound to receive it there subject to conditions which were not observed; and

• (c) the undertaker could not reasonably have been expected to prevent the discharge into the sewer or works.

• (8) A person shall not be guilty of an offence under section 107 above in respect of a discharge which he caused or permitted to be made into a sewer or works vested in a sewerage undertaker if the undertaker was bound to receive the discharge there either unconditionally or subject to conditions which were observed.

• (9) In this section—

• “disposal licence” has the same meaning as in Part I of the Control of Pollution Act 1974; and

• “statutory order” means an order under section 155 below or any order, byelaw, scheme or award made under any other enactment, including an order or scheme confirmed by Parliament or brought into operation in accordance with special parliamentary procedure.

Deposits and vegetation in rivers etc

109

• (1) A person shall be guilty of an offence under this section if, without the consent of the Authority, he—

• (a) removes from any part of the bottom, channel or bed of any inland waters a deposit accumulated by reason of any dam, weir or sluice holding back the waters; and

• (b) does so by causing the deposit to be carried away in suspension in the waters.

• (2) A person shall be guilty of an offence under this section if, without the consent of the Authority, he—

• (a) causes or permits a substantial amount of vegetation to be cut or uprooted in any inland waters, or to be cut or uprooted so near to any such waters that it falls into them; and

• (b) fails to take all reasonable steps to remove the vegetation from those waters.

• (3) A person guilty of an offence under this section shall be liable, on summary conviction, to a fine not exceeding level 4 on the standard scale.

• (4) Nothing in subsection (1) above applies to anything done in the exercise of any power conferred by or under any enactment relating to land drainage, flood prevention or navigation.

• (5) In giving a consent for the purposes of this section the Authority may make the consent subject to such conditions as it considers appropriate.

• (6) The Secretary of State may by regulations provide that any reference to inland waters in subsection (1) or (2) above shall be construed as including a reference to such coastal waters as may be prescribed.

Requirements to take precautions against pollution

110

• (1) The Secretary of State may by regulations make provision—

• (a) for prohibiting a person from having custody or control of any poisonous, noxious or polluting matter unless prescribed works and prescribed precautions and other steps have been carried out or taken for the purpose of preventing or controlling the entry of the matter into any controlled waters;

• (b) for requiring a person who already has custody or control of, or makes use of, any such matter to carry out such works for that purpose and to take such precautions and other steps for that purpose as may be prescribed.

• (2) Without prejudice to the generality of the power conferred by subsection (1) above, regulations under that subsection may—

• (a) confer power on the Authority—

• (i) to determine for the purposes of the regulations the circumstances in which a person is required to carry out works or take any precautions or other steps; and

• (ii) by notice to that person, to impose the requirement and to specify or describe the works, precautions or other steps which that person is required to carry out or take;

• (b) provide for appeals to the Secretary of State against notices served by the Authority in pursuance of provision made by virtue of paragraph (a) above; and

• (c) provide that a contravention of the regulations shall be an offence the maximum penalties for which shall not exceed the penalties specified in subsection (6) of section 107 above.

Water protection zones

111

• (1) Where the Secretary of State, after consultation (in the case of an area wholly or partly in England) with the Minister, considers that it is appropriate, with a view to preventing or controlling the entry of any poisonous, noxious or polluting matter into controlled waters, to prohibit or restrict the carrying on in a particular area of activities which he considers are likely to result in the pollution of any such waters, he may by order make provision—

• (a) designating that area as a water protection zone; and

• (b) prohibiting or restricting the carrying on in the designated area of such activities as may be specified or described in the order.

• (2) Without prejudice to the generality of the power conferred by virtue of subsection (1) above, an order under this section may—

• (a) confer power on the Authority to determine for the purposes of the order the circumstances in which the carrying on of any activities is prohibited or restricted and to determine the activities to which any such prohibition or restriction applies;

• (b) apply a prohibition or restriction in respect of any activities to cases where the activities are carried on without the consent of the Authority or in contravention of any conditions subject to which any such consent is given;

• (c) provide that a contravention of a prohibition or restriction contained in the order or of a condition of a consent given for the purposes of any such prohibition or restriction shall be an offence the maximum penalties for which shall not exceed the penalties specified in subsection (6) of section 107 above;

• (d) provide (subject to any regulations under subsection (4) below) for anything falling to be determined under the order by the Authority to be determined in accordance with such procedure and by reference to such matters and to the opinion of such persons as may be specified in the order;

• (e) make different provision for different cases, including different provision in relation to different persons, circumstances or localities; and

• (f) contain such supplemental, consequential and transitional provision as the Secretary of State considers appropriate.

• (3) The power of the Secretary of State to make an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; but the Secretary of State shall not make such an order except—

• (a) in accordance with Schedule 7 to this Act; and

• (b) on an application made in accordance with that Schedule by the Authority.

• (4) The Secretary of State may, for the purposes of any orders under this section which require the consent of the Authority to the carrying on of any activities, by regulations make provision with respect to—

• (a) applications for any such consent;

• (b) the conditions of any such consent;

• (c) the revocation or variation of any such consent;

• (d) appeals against determinations on any such application;

• (e) the exercise by the Secretary of State of any power conferred on the Authority by the orders;

• (f) the imposition of charges where such an application has been made, such a consent has been given or anything has been done in pursuance of any such consent; and

• (g) the registration of any such application or consent;

and, without prejudice to the generality of that power, regulations under this subsection may apply (with or without modifications) any enactment having effect in relation to consents under this Chapter.

• (5) The reference in subsection (1) above to the entry of poisonous, noxious or polluting matter into controlled waters shall not include a reference to the entry of nitrate into controlled waters as a result of, or of anything done in connection with, the use of any land for agricultural purposes.

Nitrate sensitive areas

112

• (1) Where the relevant Minister considers that it is appropriate to do so with a view to achieving the following purpose, that is to say, preventing or controlling the entry of nitrate into controlled waters as a result of, or of anything done in connection with, the use of any land for agricultural purposes, he may by order make provision designating that land, together with any other land to which he considers it appropriate to apply the designation, as a nitrate sensitive area.

• (2) Where any area has been designated as a nitrate sensitive area by an order under this section and the relevant Minister considers that it is appropriate to do so with a view to achieving the purpose mentioned in subsection (1) above, he may, subject to such restrictions (if any) as may be set out in the order, enter into an agreement under which, in consideration of payments to be made by the relevant Minister—

• (a) the owner of the freehold interest in any agricultural land in that area; or

• (b) where the owner of the freehold interest in any such land has given his written consent to the agreement being entered into by any person having another interest in that land, that other person,

accepts such obligations with respect to the management of that land or otherwise as may be imposed by the agreement.

• (3) An agreement such as is mentioned in subsection (2) above between the relevant Minister and a person having an interest in any land shall bind all persons deriving title from or under that person to the extent that the agreement is expressed to bind that land in relation to those persons.

• (4) Where it appears to the relevant Minister in relation to any area which is or is to be designated by an order under this section as a nitrate sensitive area that it is appropriate for provision for the imposition of requirements, prohibitions or restrictions to be contained in an order under this section (as well as for him to be able to enter into such agreements as are mentioned in subsection (2) above), he may, by a subsequent order under this section or, as the case may be, by the order designating that area—

• (a) with a view to achieving the purpose mentioned in subsection (1) above, require, prohibit or restrict the carrying on on or in relation to any agricultural land in that area of such activities as may be specified or described in the order; and

• (b) provide for such amounts (if any) as may be specified in or determined under the order to be paid by the Minister or the Secretary of State, to such persons as may be so specified or determined, in respect of the obligations imposed in relation to that area on those persons by virtue of paragraph (a) above.

• (5) Without prejudice to the generality of subsection (4) above, provision contained in an order under this section by virtue of that subsection may—