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Companies Act 2006

Type Public General Act

Publication 2006-11-08

Last updated 2026-07-24

State In force

Department Statute Law Database

Source legislation.gov.uk

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(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fiftieth of the statutory maximumone-fiftieth of the greater of £5,000 or the amount corresponding to level 4 on the standard scale for summary offences;

(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fiftieth of the statutory maximum.

Effect of notice under section 979

981

(1) Subject to section 986 (applications to the court), this section applies where the offeror gives a shareholder a notice under section 979.

(2) The offeror is entitled and bound to acquire the shares to which the notice relates on the terms of the offer.

(3) Where the terms of an offer are such as to give the shareholder a choice of consideration, the notice must give particulars of the choice and state—

(a) that the shareholder may, within six weeks from the date of the notice, indicate his choice by a written communication sent to the offeror at an address specified in the notice, and

(b) which consideration specified in the offer will apply if he does not indicate a choice.

The reference in subsection (2) to the terms of the offer is to be read accordingly.

(4) Subsection (3) applies whether or not any time-limit or other conditions applicable to the choice under the terms of the offer can still be complied with.

(5) If the consideration offered to or (as the case may be) chosen by the shareholder—

(a) is not cash and the offeror is no longer able to provide it, or

(b) was to have been provided by a third party who is no longer bound or able to provide it,

the consideration is to be taken to consist of an amount of cash, payable by the offeror, which at the date of the notice is equivalent to the consideration offered or (as the case may be) chosen.

(6) At the end of six weeks from the date of the notice the offeror must immediately—

(a) send a copy of the notice to the company, and

(b) pay or transfer to the company the consideration for the shares to which the notice relates.

Where the consideration consists of shares or securities to be allotted by the offeror, the reference in paragraph (b) to the transfer of the consideration is to be read as a reference to the allotment of the shares or securities to the company.

(7) If the shares to which the notice relates are registered, the copy of the notice sent to the company under subsection (6)(a) must be accompanied by an instrument of transfer executed on behalf of the holder of the shares by a person appointed by the offeror.

On receipt of that instrument the company must register the offeror as the holder of those shares.

(8) If the shares to which the notice relates are transferable by the delivery of warrants or other instruments, the copy of the notice sent to the company under subsection (6)(a) must be accompanied by a statement to that effect.

On receipt of that statement the company must issue the offeror with warrants or other instruments in respect of the shares, and those already in issue in respect of the shares become void.

(9) The company must hold any money or other consideration received by it under subsection (6)(b) on trust for the person who, before the offeror acquired them, was entitled to the shares in respect of which the money or other consideration was received.

Section 982 contains further provision about how the company should deal with such money or other consideration.

Further provision about consideration held on trust under section 981(9)

982

(1) This section applies where an offeror pays or transfers consideration to the company under section 981(6).

(2) The company must pay into a separate bank account that complies with subsection (3)—

(a) any money it receives under paragraph (b) of section 981(6), and

(b) any dividend or other sum accruing from any other consideration it receives under that paragraph.

(3) A bank account complies with this subsection if the balance on the account—

(a) bears interest at an appropriate rate, and

(b) can be withdrawn by such notice (if any) as is appropriate.

(4) If—

(a) the person entitled to the consideration held on trust by virtue of section 981(9) cannot be found, and

(b) subsection (5) applies,

the consideration (together with any interest, dividend or other benefit that has accrued from it) must be paid into court.

(5) This subsection applies where—

(a) reasonable enquiries have been made at reasonable intervals to find the person, and

(b) twelve years have elapsed since the consideration was received, or the company is wound up.

(6) In relation to a company registered in Scotland, subsections (7) and (8) apply instead of subsection (4).

(7) If the person entitled to the consideration held on trust by virtue of section 981(9) cannot be found and subsection (5) applies—

(a) the trust terminates,

(b) the company or (if the company is wound up) the liquidator must sell any consideration other than cash and any benefit other than cash that has accrued from the consideration, and

(i) the consideration so far as it is cash,

(ii) the proceeds of any sale under paragraph (b), and

(iii) any interest, dividend or other benefit that has accrued from the consideration,

must be deposited in the name of the Accountant of Court in a separate bank account complying with subsection (3) and the receipt for the deposit must be transmitted to the Accountant of Court.

(8) Section 150 of the Bankruptcy (Scotland) Act 2016 (so far as consistent with this Act) applies (with any necessary modifications) to sums deposited under subsection (7) as it applies to sums deposited under section 148(3) of that Act.

(9) The expenses of any such enquiries as are mentioned in subsection (5) may be paid out of the money or other property held on trust for the person to whom the enquiry relates.

“Sell-out”

Right of minority shareholder to be bought out by offeror

983

(1) Subsections (2) and (3) apply in a case where a takeover offer relates to all the shares in a company.

For this purpose a takeover offer relates to all the shares in a company if it is an offer to acquire all the shares in the company within the meaning of section 974.

(2) The holder of any voting shares to which the offer relates who has not accepted the offer may require the offeror to acquire those shares if, at any time before the end of the period within which the offer can be accepted—

(a) the offeror has by virtue of acceptances of the offer acquired or unconditionally contracted to acquire some (but not all) of the shares to which the offer relates, and

(b) those shares, with or without any other shares in the company which he has acquired or contracted to acquire (whether unconditionally or subject to conditions being met)—

(i) amount to not less than 90% in value of all the voting shares in the company (or would do so but for section 990(1)), and

(ii) carry not less than 90% of the voting rights in the company (or would do so but for section 990(1)).

(3) The holder of any non-voting shares to which the offer relates who has not accepted the offer may require the offeror to acquire those shares if, at any time before the end of the period within which the offer can be accepted—

(a) the offeror has by virtue of acceptances of the offer acquired or unconditionally contracted to acquire some (but not all) of the shares to which the offer relates, and

(b) those shares, with or without any other shares in the company which he has acquired or contracted to acquire (whether unconditionally or subject to conditions being met), amount to not less than 90% in value of all the shares in the company (or would do so but for section 990(1)).

(4) If a takeover offer relates to shares of one or more classes and at any time before the end of the period within which the offer can be accepted—

(a) the offeror has by virtue of acceptances of the offer acquired or unconditionally contracted to acquire some (but not all) of the shares of any class to which the offer relates, and

(b) those shares, with or without any other shares of that class which he has acquired or contracted to acquire (whether unconditionally or subject to conditions being met)—

(i) amount to not less than 90% in value of all the shares of that class, and

(ii) in a case where the shares of that class are voting shares, carry not less than 90% of the voting rights carried by the shares of that class,

the holder of any shares of that class to which the offer relates who has not accepted the offer may require the offeror to acquire those shares.

(5) For the purposes of subsections (2) to (4), in calculating 90% of the value of any shares, shares held by the company as treasury shares are to be treated as having been acquired by the offeror.

(6) Subsection (7) applies where—

(a) a shareholder exercises rights conferred on him by subsection (2), (3) or (4),

(b) at the time when he does so, there are shares in the company which the offeror has contracted to acquire subject to conditions being met, and in relation to which the contract has not become unconditional, and

(c) the requirement imposed by subsection (2)(b), (3)(b) or (4)(b) (as the case may be) would not be satisfied if those shares were not taken into account.

(7) The shareholder is treated for the purposes of section 985 as not having exercised his rights under this section unless the requirement imposed by paragraph (b) of subsection (2), (3) or (4) (as the case may be) would be satisfied if—

(a) the reference in that paragraph to other shares in the company which the offeror has contracted to acquire unconditionally or subject to conditions being met were a reference to such shares which he has unconditionally contracted to acquire, and

(b) the reference in that subsection to the period within which the offer can be accepted were a reference to the period referred to in section 984(2).

(8) A reference in subsection (2)(b), (3)(b), (4)(b), (6) or (7) to shares which the offeror has acquired or contracted to acquire includes a reference to shares which an associate of his has acquired or contracted to acquire.

Further provision about rights conferred by section 983

984

(1) Rights conferred on a shareholder by subsection (2), (3) or (4) of section 983 are exercisable by a written communication addressed to the offeror.

(2) Rights conferred on a shareholder by subsection (2), (3) or (4) of that section are not exercisable after the end of the period of three months from—

(a) the end of the period within which the offer can be accepted, or

(b) if later, the date of the notice that must be given under subsection (3) below.

(3) Within one month of the time specified in subsection (2), (3) or (4) (as the case may be) of that section, the offeror must give any shareholder who has not accepted the offer notice in the prescribed manner of—

(a) the rights that are exercisable by the shareholder under that subsection, and

(b) the period within which the rights are exercisable.

If the notice is given before the end of the period within which the offer can be accepted, it must state that the offer is still open for acceptance.

(4) Subsection (3) does not apply if the offeror has given the shareholder a notice in respect of the shares in question under section 979.

(5) An offeror who fails to comply with subsection (3) commits an offence.

If the offeror is a company, every officer of that company who is in default or to whose neglect the failure is attributable also commits an offence.

(6) If an offeror other than a company is charged with an offence for failing to comply with subsection (3), it is a defence for him to prove that he took all reasonable steps for securing compliance with that subsection.

(7) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum and, for continued contravention, a daily default fine not exceeding one-fiftieth of the statutory maximumone-fiftieth of the greater of £5,000 or the amount corresponding to level 4 on the standard scale for summary offences.

Effect of requirement under section 983

985

(1) Subject to section 986, this section applies where a shareholder exercises his rights under section 983 in respect of any shares held by him.

(2) The offeror is entitled and bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.

(3) Where the terms of an offer are such as to give the shareholder a choice of consideration—

(a) the shareholder may indicate his choice when requiring the offeror to acquire the shares, and

(b) the notice given to the shareholder under section 984(3)—

(i) must give particulars of the choice and of the rights conferred by this subsection, and

(ii) may state which consideration specified in the offer will apply if he does not indicate a choice.

The reference in subsection (2) to the terms of the offer is to be read accordingly.

(4) Subsection (3) applies whether or not any time-limit or other conditions applicable to the choice under the terms of the offer can still be complied with.

(5) If the consideration offered to or (as the case may be) chosen by the shareholder—

(a) is not cash and the offeror is no longer able to provide it, or

(b) was to have been provided by a third party who is no longer bound or able to provide it,

the consideration is to be taken to consist of an amount of cash, payable by the offeror, which at the date when the shareholder requires the offeror to acquire the shares is equivalent to the consideration offered or (as the case may be) chosen.

Supplementary

Applications to the court

986

(1) Where a notice is given under section 979 to a shareholder the court may, on an application made by him, order—

(a) that the offeror is not entitled and bound to acquire the shares to which the notice relates, or

(b) that the terms on which the offeror is entitled and bound to acquire the shares shall be such as the court thinks fit.

(2) An application under subsection (1) must be made within six weeks from the date on which the notice referred to in that subsection was given.

If an application to the court under subsection (1) is pending at the end of that period, section 981(6) does not have effect until the application has been disposed of.

(3) Where a shareholder exercises his rights under section 983 in respect of any shares held by him, the court may, on an application made by him or the offeror, order that the terms on which the offeror is entitled and bound to acquire the shares shall be such as the court thinks fit.

(4) On an application under subsection (1) or (3)—

(a) the court may not require consideration of a higher value than that specified in the terms of the offer (“the offer value”) to be given for the shares to which the application relates unless the holder of the shares shows that the offer value would be unfair;

(b) the court may not require consideration of a lower value than the offer value to be given for the shares.

(5) No order for costs or expenses may be made against a shareholder making an application under subsection (1) or (3) unless the court considers that—

(a) the application was unnecessary, improper or vexatious,

(b) there has been unreasonable delay in making the application, or

(6) A shareholder who has made an application under subsection (1) or (3) must give notice of the application to the offeror.

(7) An offeror who is given notice of an application under subsection (1) or (3) must give a copy of the notice to—

(a) any person (other than the applicant) to whom a notice has been given under section 979;

(b) any person who has exercised his rights under section 983.

(8) An offeror who makes an application under subsection (3) must give notice of the application to—

(a) any person to whom a notice has been given under section 979;

(b) any person who has exercised his rights under section 983.

(9) Where a takeover offer has not been accepted to the extent necessary for entitling the offeror to give notices under subsection (2) or (4) of section 979 the court may, on an application made by him, make an order authorising him to give notices under that subsection if it is satisfied that—

(a) the offeror has after reasonable enquiry been unable to trace one or more of the persons holding shares to which the offer relates,

(b) the requirements of that subsection would have been met if the person, or all the persons, mentioned in paragraph (a) above had accepted the offer, and

This is subject to subsection (10).

(10) The court may not make an order under subsection (9) unless it considers that it is just and equitable to do so having regard, in particular, to the number of shareholders who have been traced but who have not accepted the offer.

Joint offers

987

(1) In the case of a takeover offer made by two or more persons jointly, this Chapter has effect as follows.

(2) The conditions for the exercise of the rights conferred by section 979 are satisfied—

(a) in the case of acquisitions by virtue of acceptances of the offer, by the joint offerors acquiring or unconditionally contracting to acquire the necessary shares jointly;

(b) in other cases, by the joint offerors acquiring or unconditionally contracting to acquire the necessary shares either jointly or separately.

(3) The conditions for the exercise of the rights conferred by section 983 are satisfied—

(a) in the case of acquisitions by virtue of acceptances of the offer, by the joint offerors acquiring or unconditionally contracting to acquire the necessary shares jointly;

(b) in other cases, by the joint offerors acquiring or contracting (whether unconditionally or subject to conditions being met) to acquire the necessary shares either jointly or separately.

(4) Subject to the following provisions, the rights and obligations of the offeror under sections 979 to 985 are respectively joint rights and joint and several obligations of the joint offerors.

(5) A provision of sections 979 to 986 that requires or authorises a notice or other document to be given or sent by or to the joint offerors is complied with if the notice or document is given or sent by or to any of them (but see subsection (6)).

(6) The statutory declaration required by section 980(4) must be made by all of the joint offerors and, where one or more of them is a company, signed by a director of that company.

(7) In sections 974 to 977, 979(9), 981(6), 983(8) and 988 references to the offeror are to be read as references to the joint offerors or any of them.

(8) In section 981(7) and (8) references to the offeror are to be read as references to the joint offerors or such of them as they may determine.

(9) In sections 981(5)(a) and 985(5)(a) references to the offeror being no longer able to provide the relevant consideration are to be read as references to none of the joint offerors being able to do so.

(10) In section 986 references to the offeror are to be read as references to the joint offerors, except that—

(a) an application under subsection (3) or (9) may be made by any of them, and

(b) the reference in subsection (9)(a) to the offeror having been unable to trace one or more of the persons holding shares is to be read as a reference to none of the offerors having been able to do so.

Interpretation

Associates

988

(1) In this Chapter “associate”, in relation to an offeror, means—

(a) a nominee of the offeror,

(b) a holding company, subsidiary or fellow subsidiary of the offeror or a nominee of such a holding company, subsidiary or fellow subsidiary,

(d) a person who is, or is a nominee of, a party to a share acquisition agreement with the offeror, or

(e) (where the offeror is an individual) his spouse or civil partner and any minor child or step-child of his.

(2) For the purposes of subsection (1)(b) a company is a fellow subsidiary of another body corporate if both are subsidiaries of the same body corporate but neither is a subsidiary of the other.

(3) For the purposes of subsection (1)(c) an offeror has a substantial interest in a body corporate if—

(a) the body or its directors are accustomed to act in accordance with his directions or instructions, or

(b) he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of the body.

Subsections (2) and (3) of section 823 (which contain provision about when a person is treated as entitled to exercise or control the exercise of voting power) apply for the purposes of this subsection as they apply for the purposes of that section.

(4) For the purposes of subsection (1)(d) an agreement is a share acquisition agreement if—

(a) it is an agreement for the acquisition of, or of an interest in, shares to which the offer relates,

(b) it includes provisions imposing obligations or restrictions on any one or more of the parties to it with respect to their use, retention or disposal of such shares, or their interests in such shares, acquired in pursuance of the agreement (whether or not together with any other shares to which the offer relates or any other interests of theirs in such shares), and

(5) An agreement is an “excluded agreement”—

(a) if it is not legally binding, unless it involves mutuality in the undertakings, expectations or understandings of the parties to it, or

(b) if it is an agreement to underwrite or sub-underwrite an offer of shares in a company, provided the agreement is confined to that purpose and any matters incidental to it.

(6) The reference in subsection (4)(b) to the use of interests in shares is to the exercise of any rights or of any control or influence arising from those interests (including the right to enter into an agreement for the exercise, or for control of the exercise, of any of those rights by another person).

(7) In this section—

(a) “agreement” includes any agreement or arrangement;

(b) references to provisions of an agreement include—

(i) undertakings, expectations or understandings operative under an arrangement, and

(ii) any provision whether express or implied and whether absolute or not.

Convertible securities

989

(1) For the purposes of this Chapter securities of a company are treated as shares in the company if they are convertible into or entitle the holder to subscribe for such shares.

References to the holder of shares or a shareholder are to be read accordingly.

(2) Subsection (1) is not to be read as requiring any securities to be treated—

(a) as shares of the same class as those into which they are convertible or for which the holder is entitled to subscribe, or

(b) as shares of the same class as other securities by reason only that the shares into which they are convertible or for which the holder is entitled to subscribe are of the same class.

Debentures carrying voting rights

990

(1) For the purposes of this Chapter debentures issued by a company to which subsection (2) applies are treated as shares in the company if they carry voting rights.

(2) This subsection applies to a company that has voting shares, or debentures carrying voting rights, which are admitted to trading on a regulated market.

(3) In this Chapter, in relation to debentures treated as shares by virtue of subsection (1)—

(a) references to the holder of shares or a shareholder are to be read accordingly;

(b) references to shares being allotted are to be read as references to debentures being issued.

Interpretation

991

(1) In this Chapter—

“the company” means the company whose shares are the subject of a takeover offer;

“date of the offer” means—where the offer is published, the date of publication;where the offer is not published, or where any notices of the offer are given before the date of publication, the date when notices of the offer (or the first such notices) are given;and references to the date of the offer are to be read in accordance with section 974(7) (revision of offer terms) where that applies;

“non-voting shares” means shares that are not voting shares;

“offeror” means (subject to section 987) the person making a takeover offer;

“voting rights” means rights to vote at general meetings of the company, including rights that arise only in certain circumstances;

“voting shares” means shares carrying voting rights.

(2) For the purposes of this Chapter a person contracts unconditionally to acquire shares if his entitlement under the contract to acquire them is not (or is no longer) subject to conditions or if all conditions to which it was subject have been met.

A reference to a contract becoming unconditional is to be read accordingly.

Chapter 4 — Amendments to Part 7 of the Companies Act 1985

Matters to be dealt with in directors' report

992

(1) Part 7 of the Companies Act 1985 (c. 6) (accounts and audit) is amended as follows.

(2) In Schedule 7 (matters to be dealt with in directors' report), after Part 6 insert—

(13) (1) This Part of this Schedule applies to the directors' report for a financial year if the company had securities carrying voting rights admitted to trading on a regulated market at the end of that year. (2) The report shall contain detailed information, by reference to the end of that year, on the following matters— (a) the structure of the company's capital, including in particular— (i) the rights and obligations attaching to the shares or, as the case may be, to each class of shares in the company, and (ii) where there are two or more such classes, the percentage of the total share capital represented by each class; (b) any restrictions on the transfer of securities in the company, including in particular— (i) limitations on the holding of securities, and (ii) requirements to obtain the approval of the company, or of other holders of securities in the company, for a transfer of securities; (c) in the case of each person with a significant direct or indirect holding of securities in the company, such details as are known to the company of— (i) the identity of the person, (ii) the size of the holding, and (iii) the nature of the holding; (d) in the case of each person who holds securities carrying special rights with regard to control of the company— (i) the identity of the person, and (ii) the nature of the rights; (e) where— (i) the company has an employees' share scheme, and (ii) shares to which the scheme relates have rights with regard to control of the company that are not exercisable directly by the employees, how those rights are exercisable; (f) any restrictions on voting rights, including in particular— (i) limitations on voting rights of holders of a given percentage or number of votes, (ii) deadlines for exercising voting rights, and (iii) arrangements by which, with the company's co-operation, financial rights carried by securities are held by a person other than the holder of the securities; (g) any agreements between holders of securities that are known to the company and may result in restrictions on the transfer of securities or on voting rights; (h) any rules that the company has about— (i) appointment and replacement of directors, or (ii) amendment of the company's articles of association; (i) the powers of the company's directors, including in particular any powers in relation to the issuing or buying back by the company of its shares; (j) any significant agreements to which the company is a party that take effect, alter or terminate upon a change of control of the company following a takeover bid, and the effects of any such agreements; (k) any agreements between the company and its directors or employees providing for compensation for loss of office or employment (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid. (3) For the purposes of sub-paragraph (2)(a) a company's capital includes any securities in the company that are not admitted to trading on a regulated market. (4) For the purposes of sub-paragraph (2)(c) a person has an indirect holding of securities if— (a) they are held on his behalf, or (b) he is able to secure that rights carried by the securities are exercised in accordance with his wishes. (5) Sub-paragraph (2)(j) does not apply to an agreement if— (a) disclosure of the agreement would be seriously prejudicial to the company, and (b) the company is not under any other obligation to disclose it. (6) In this paragraph— - “securities” means shares or debentures; - “takeover bid” has the same meaning as in the Takeovers Directive; - “the Takeovers Directive” means Directive 2004/25/EC of the European Parliament and of the Council; - “voting rights” means rights to vote at general meetings of the company in question, including rights that arise only in certain circumstances.

(3) In section 234ZZA (requirements of directors' reports), at the end of subsection (4) (contents of Schedule 7) insert— “ Part 7 specifies information to be disclosed by certain publicly-traded companies. ”.

(4) After that subsection insert—

(5) A directors' report shall also contain any necessary explanatory material with regard to information that is required to be included in the report by Part 7 of Schedule 7.

(5) In section 251 (summary financial statements), after subsection (2ZA) insert—

(2ZB) A company that sends to an entitled person a summary financial statement instead of a copy of its directors' report shall— (a) include in the statement the explanatory material required to be included in the directors' report by section 234ZZA(5), or (b) send that material to the entitled person at the same time as it sends the statement. For the purposes of paragraph (b), subsections (2A) to (2E) apply in relation to the material referred to in that paragraph as they apply in relation to a summary financial statement.

(6) The amendments made by this section apply in relation to directors' reports for financial years beginning on or after 20th May 2006.

Part 29 — Fraudulent trading

Offence of fraudulent trading

993

(1) If any business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits an offence.

(2) This applies whether or not the company has been, or is in the course of being, wound up.

(3) A person guilty of an offence under this section is liable—

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

(b) on summary conviction—

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

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

Part 30 — Protection of members against unfair prejudice

Main provisions

Petition by company member

994

(1) A member of a company may apply to the court by petition for an order under this Part on the ground—

(a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or

(b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.

(1A) For the purposes of subsection (1)(a), a removal of the company's auditor from office—

(a) on grounds of divergence of opinions on accounting treatments or audit procedures, or

(b) on any other improper grounds,

shall be treated as being unfairly prejudicial to the interests of some part of the company's members.

(2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company.

(3) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, “company” means—

(a) a company within the meaning of this Act, or

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Petition by Secretary of State

995

(1) This section applies to a company in respect of which—

(a) the Secretary of State has received a report under section 437 of the Companies Act 1985 (c. 6) (inspector's report);

(b) the Secretary of State has exercised his powers under section 447 or 448 of that Act (powers to require documents and information or to enter and search premises);

(c) the Secretary of State , the Financial Conduct Authority, the Prudential Regulation Authority or the Bank of England has exercised his or its powers under Part 11 of the Financial Services and Markets Act 2000 (c. 8) (information gathering and investigations); or

(d) the Secretary of State has received a report from an investigator appointed by him , the Financial Conduct Authority, the Prudential Regulation Authority or the Bank of England under that Part.

(2) If it appears to the Secretary of State that in the case of such a company—

(a) the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members, or

(b) an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial,

he may apply to the court by petition for an order under this Part.

(3) The Secretary of State may do this in addition to, or instead of, presenting a petition for the winding up of the company.

(4) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, “company” means any body corporate that is liable to be wound up under the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

Powers of the court under this Part

996

(1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of.

(2) Without prejudice to the generality of subsection (1), the court's order may—

(a) regulate the conduct of the company's affairs in the future;

(b) require the company—

(i) to refrain from doing or continuing an act complained of, or

(ii) to do an act that the petitioner has complained it has omitted to do;

(c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct;

(d) require the company not to make any, or any specified, alterations in its articles without the leave of the court;

(e) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company's capital accordingly.

Supplementary provisions

Application of general rule-making powers

997

The power to make rules under section 411 of the Insolvency Act 1986 (c. 45) or Article 359 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), so far as relating to a winding-up petition, applies for the purposes of a petition under this Part.

Copy of order affecting company's constitution to be delivered to registrar

998

(1) Where an order of the court under this Part—

(a) alters the company's constitution, or

(b) gives leave for the company to make any, or any specified, alterations to its constitution,

the company must deliver a copy of the order to the registrar.

(2) It must do so within 14 days from the making of the order or such longer period as the court may allow.

(3) If a company makes default in complying with this section, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

Supplementary provisions where company's constitution altered

999

(1) This section applies where an order under this Part alters a company's constitution.

(2) If the order amends—

(a) a company's articles, or

(b) any resolution or agreement to which Chapter 3 of Part 3 applies (resolution or agreement affecting a company's constitution),

the copy of the order delivered to the registrar by the company under section 998 must be accompanied by a copy of the company's articles, or the resolution or agreement in question, as amended.

(3) Every copy of a company's articles issued by the company after the order is made must be accompanied by a copy of the order, unless the effect of the order has been incorporated into the articles by amendment.

(4) If a company makes default in complying with this section an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Part 31 — Dissolution and restoration to the register

Chapter 1 — Striking off

Registrar's power to strike off defunct company

Power to strike off company not carrying on business or in operation

1000

(1) If the registrar has reasonable cause to believe that a company is not carrying on business or in operation, the registrar may send to the company a communication inquiring whether the company is carrying on business or in operation.

(2) If the registrar does not within 14 days of sending the communication receive any answer to it, the registrar must within 14 days after the expiration of that period send to the company a second communication referring to the first communication, and stating—

(a) that no answer to it has been received, and

(b) that if an answer is not received to the second communication within 14 days from its date, a notice will be published in the Gazette with a view to striking the company's name off the register.

(3) If the registrar—

(a) receives an answer to the effect that the company is not carrying on business or in operation, or

(b) does not within 14 days after sending the second communication receive any answer,

the registrar may publish in the Gazette, and send to the company ..., a notice that at the expiration of 2 months from the date of the notice the name of the company mentioned in it will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved.

(4) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register.

(5) The registrar must publish notice in the Gazette of the company's name having been struck off the register.

(6) On the publication of the notice in the Gazette the company is dissolved.

(7) However—

(a) the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and

(b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.

Duty to act in case of company being wound up

1001

(1) If, in a case where a company is being wound up—

(a) the registrar has reasonable cause to believe—

(i) that no liquidator is acting, or

(ii) that the affairs of the company are fully wound up, and

(b) the returns required to be made by the liquidator have not been made for a period of six consecutive months,

the registrar must publish in the Gazette and send to the company or the liquidator (if any) a notice that at the expiration of 2 months from the date of the notice the name of the company mentioned in it will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved.

(2) At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register.

(3) The registrar must publish notice in the Gazette of the company's name having been struck off the register.

(4) On the publication of the notice in the Gazette the company is dissolved.

(5) However—

(a) the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and

(b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.

Supplementary provisions as to service of communication or notice

1002

(1) If the registrar is not able to send a communication or notice under section 1000 or 1001 to a company in accordance with Schedule 4, the communication may be sent to an officer of the company at an address for that officer that has been notified to the registrar by the company.

(2) If there is no officer of the company whose name and address are known to the registrar, the communication or notice may be sent to each of the persons who subscribed the memorandum (if their addresses are known to the registrar).

(3) A notice to be sent to a liquidator under section 1001 may be sent to the address of the liquidator’s last known place of business or to an address specified by the liquidator to the registrar for the purpose of receiving notices, or notices of that kind.

(4) In this section “address” has the same meaning as in section 1148(1).

Registrar’s power to strike off company registered on false basis

Power to strike off company registered on false basis

1002A

(1) The registrar may strike a company’s name off the register if the registrar has reasonable cause to believe that—

(a) any information contained in the application for the registration of the company, or in any application for restoration of the company to the register, is misleading, false or deceptive in a material particular, or

(b) any statement made to the registrar in connection with such an application is misleading, false or deceptive in a material particular.

(2) In subsection (1) the reference to an application includes any documents delivered to the registrar in connection with the application.

(3) The registrar may not exercise the power in subsection (1) unless—

(a) the registrar has published a notice in the Gazette that, at the end of the period of 28 days beginning with the date of the notice, the name of the company mentioned in the notice will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved, and

(b) the period mentioned in paragraph (a) has expired.

(4) If the registrar exercises the power in subsection (1), the registrar must publish a notice in the Gazette of the company’s name having been struck off the register.

(5) On the publication of the notice in the Gazette the company is dissolved.

(6) However—

(a) the liability (if any) of every director, managing officer or member of the company continues and may be enforced as if the company had not been dissolved, and

(b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.

Voluntary striking off

Striking off on application by company

1003

(1) On application by a company, the registrar of companies may strike the company's name off the register.

(2) The application—

(a) must be made on the company's behalf by its directors or by a majority of them, and

(b) must contain the prescribed information.

(3) The registrar may not strike a company off under this section until after the expiration of 2 months from the publication by the registrar in the Gazette of a notice—

(a) stating that the registrar may exercise the power under this section in relation to the company, and

(b) inviting any person to show cause why that should not be done.

(4) The registrar must publish notice in the Gazette of the company's name having been struck off.

(5) On the publication of the notice in the Gazette the company is dissolved.

(6) However—

(a) the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved, and

(b) nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register.

Circumstances in which application not to be made: activities of company

1004

(1) An application under section 1003 (application for voluntary striking off) on behalf of a company must not be made if, at any time in the previous three months, the company has—

(a) changed its name,

(b) traded or otherwise carried on business,

(c) made a disposal for value of property or rights that, immediately before ceasing to trade or otherwise carry on business, it held for the purpose of disposal for gain in the normal course of trading or otherwise carrying on business, or

(d) engaged in any other activity, except one which is—

(i) necessary or expedient for the purpose of making an application under that section, or deciding whether to do so,

(ii) necessary or expedient for the purpose of concluding the affairs of the company,

(iii) necessary or expedient for the purpose of complying with any statutory requirement, or

(iv) specified by the Secretary of State by order for the purposes of this sub-paragraph.

(2) For the purposes of this section, a company is not to be treated as trading or otherwise carrying on business by virtue only of the fact that it makes a payment in respect of a liability incurred in the course of trading or otherwise carrying on business.

(3) The Secretary of State may by order amend subsection (1) for the purpose of altering the period in relation to which the doing of the things mentioned in paragraphs (a) to (d) of that subsection is relevant.

(4) An order under this section is subject to negative resolution procedure.

(5) It is an offence for a person to make an application in contravention of this section.

(6) In proceedings for such an offence it is a defence for the accused to prove that he did not know, and could not reasonably have known, of the existence of the facts that led to the contravention.

(7) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Circumstances in which application not to be made: other proceedings not concluded

1005

(1) An application under section 1003 (application for voluntary striking off) on behalf of a company must not be made at a time when—

(a) an application to the court under Part 26 or 26A has been made on behalf of the company for the sanctioning of a compromise or arrangement and the matter has not been finally concluded;

(b) a voluntary arrangement in relation to the company has been proposed under Part 1 of the Insolvency Act 1986 (c. 45) or Part 2 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) and the matter has not been finally concluded;

(d) paragraph 44 of Schedule B1 to that Act or paragraph 45 of Schedule B1 to that Order applies (interim moratorium on proceedings where application to the court for an administration order has been made or notice of intention to appoint administrator has been filed);

(e) the company is being wound up under Part 4 of that Act or Part 5 of that Order, whether voluntarily or by the court, or a petition under that Part for winding up of the company by the court has been presented and not finally dealt with or withdrawn;

(f) there is a receiver or manager of the company's property;

(g) the company's estate is being administered by a judicial factor.

(2) For the purposes of subsection (1)(a), the matter is finally concluded if—

(a) the application has been withdrawn,

(b) the application has been finally dealt with without a compromise or arrangement being sanctioned by the court, or

(c) a compromise or arrangement has been sanctioned by the court and has, together with anything required to be done under any provision made in relation to the matter by order of the court, been fully carried out.

(3) For the purposes of subsection (1)(b), the matter is finally concluded if—

(a) no meetings are to be summoned under section 3 of the Insolvency Act 1986 (c. 45) or Article 16 of the Insolvency (Northern Ireland) Order 1989,

(b) meetings summoned under that section or Article fail to approve the arrangement with no, or the same, modifications,

(c) an arrangement approved by meetings summoned under that section, or in consequence of a direction under section 6(4)(b) of that Act or Article 19(4)(b) of that Order, has been fully implemented, or

(d) the court makes an order under section 6(5) of that Act or Article 19(5) of that Order revoking approval given at previous meetings and, if the court gives any directions under section 6(6) of that Act or Article 19(6) of that Order, the company has done whatever it is required to do under those directions.

(4) It is an offence for a person to make an application in contravention of this section.

(5) In proceedings for such an offence it is a defence for the accused to prove that he did not know, and could not reasonably have known, of the existence of the facts that led to the contravention.

(6) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Copy of application to be given to members, employees, etc

1006

(1) A person who makes an application under section 1003 (application for voluntary striking off) on behalf of a company must secure that, within seven days from the day on which the application is made, a copy of it is given to every person who at any time on that day is—

(a) a member of the company,

(b) an employee of the company,

(d) a director of the company,

(e) a manager or trustee of any pension fund established for the benefit of employees of the company, or

(f) a person of a description specified for the purposes of this paragraph by regulations made by the Secretary of State.

Regulations under paragraph (f) are subject to negative resolution procedure.

(2) Subsection (1) does not require a copy of the application to be given to a director who is a party to the application.

(3) The duty imposed by this section ceases to apply if the application is withdrawn before the end of the period for giving the copy application.

(4) A person who fails to perform the duty imposed on him by this section commits an offence.

If he does so with the intention of concealing the making of the application from the person concerned, he commits an aggravated offence.

(5) In proceedings for an offence under this section it is a defence for the accused to prove that he took all reasonable steps to perform the duty.

(6) A person guilty of an offence under this section (other than an aggravated offence) is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(7) A person guilty of an aggravated offence under this section is liable—

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

(b) on summary conviction—

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

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

Copy of application to be given to new members, employees, etc

1007

(1) This section applies in relation to any time after the day on which a company makes an application under section 1003 (application for voluntary striking off) and before the day on which the application is finally dealt with or withdrawn.

(2) A person who is a director of the company at the end of a day on which a person (other than himself) becomes—

(a) a member of the company,

(b) an employee of the company,

(d) a director of the company,

(e) a manager or trustee of any pension fund established for the benefit of employees of the company, or

(f) a person of a description specified for the purposes of this paragraph by regulations made by the Secretary of State,

must secure that a copy of the application is given to that person within seven days from that day.

Regulations under paragraph (f) are subject to negative resolution procedure.

(3) The duty imposed by this section ceases to apply if the application is finally dealt with or withdrawn before the end of the period for giving the copy application.

(4) A person who fails to perform the duty imposed on him by this section commits an offence.

If he does so with the intention of concealing the making of the application from the person concerned, he commits an aggravated offence.

(5) In proceedings for an offence under this section it is a defence for the accused to prove—

(a) that at the time of the failure he was not aware of the fact that the company had made an application under section 1003, or

(b) that he took all reasonable steps to perform the duty.

(6) A person guilty of an offence under this section (other than an aggravated offence) is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(7) A person guilty of an aggravated offence under this section is liable—

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

(b) on summary conviction—

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

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

Copy of application: provisions as to service of documents

1008

(1) The following provisions have effect for the purposes of—

section 1006 (copy of application to be given to members, employees, etc), and

section 1007 (copy of application to be given to new members, employees, etc).

(2) A document is treated as given to a person if it is—

(a) delivered to him, or

(b) left at his proper address, or

(3) For the purposes of subsection (2) and section 7 of the Interpretation Act 1978 (c. 30) (service of documents by post) as it applies in relation to that subsection, the proper address of a person is—

(a) in the case of a firm incorporated or formed in the United Kingdom, its registered or principal office;

(b) in the case of a firm incorporated or formed outside the United Kingdom—

(i) if it has a place of business in the United Kingdom, its principal office in the United Kingdom, or

(ii) if it does not have a place of business in the United Kingdom, its registered or principal office;

(4) In the case of a creditor of the company a document is treated as given to him if it is left or sent by post to him—

(a) at the place of business of his with which the company has had dealings by virtue of which he is a creditor of the company, or

(b) if there is more than one such place of business, at each of them.

Circumstances in which application to be withdrawn

1009

(1) This section applies where, at any time on or after the day on which a company makes an application under section 1003 (application for voluntary striking off) and before the day on which the application is finally dealt with or withdrawn—

(a) the company—

(i) changes its name,

(ii) trades or otherwise carries on business,

(iii) makes a disposal for value of any property or rights other than those which it was necessary or expedient for it to hold for the purpose of making, or proceeding with, an application under that section, or

(iv) engages in any activity, except one to which subsection (4) applies;

(b) an application is made to the court under Part 26 or 26A on behalf of the company for the sanctioning of a compromise or arrangement;

(c) a voluntary arrangement in relation to the company is proposed under Part 1 of the Insolvency Act 1986 (c. 45) or Part 2 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19));

(d) an application to the court for an administration order in respect of the company is made under paragraph 12 of Schedule B1 to that Act or paragraph 13 of Schedule B1 to that Order;

(e) an administrator is appointed in respect of the company under paragraph 14 or 22 of Schedule B1 to that Act or paragraph 15 or 23 of Schedule B1 to that Order, or a copy of notice of intention to appoint an administrator of the company under any of those provisions is filed with the court;

(f) there arise any of the circumstances in which, under section 84(1) of that Act or Article 70 of that Order, the company may be voluntarily wound up;

(g) a petition is presented for the winding up of the company by the court under Part 4 of that Act or Part 5 of that Order;

(h) a receiver or manager of the company's property is appointed; or

(i) a judicial factor is appointed to administer the company's estate.

(2) A person who, at the end of a day on which any of the events mentioned in subsection (1) occurs, is a director of the company must secure that the company's application is withdrawn forthwith.

(3) For the purposes of subsection (1)(a), a company is not treated as trading or otherwise carrying on business by virtue only of the fact that it makes a payment in respect of a liability incurred in the course of trading or otherwise carrying on business.

(4) The excepted activities referred to in subsection (1)(a)(iv) are—

(a) any activity necessary or expedient for the purposes of—

(i) making, or proceeding with, an application under section 1003 (application for voluntary striking off),

(ii) concluding affairs of the company that are outstanding because of what has been necessary or expedient for the purpose of making, or proceeding with, such an application, or

(iii) complying with any statutory requirement;

(b) any activity specified by the Secretary of State by order for the purposes of this subsection.

An order under paragraph (b) is subject to negative resolution procedure.

(5) A person who fails to perform the duty imposed on him by this section commits an offence.

(6) In proceedings for an offence under this section it is a defence for the accused to prove—

(a) that at the time of the failure he was not aware of the fact that the company had made an application under section 1003, or

(b) that he took all reasonable steps to perform the duty.

(7) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Withdrawal of application

1010

An application under section 1003 is withdrawn by notice to the registrar.

Meaning of “creditor”

1011

In this Chapter “creditor” includes a contingent or prospective creditor.

Chapter 2 — Property of dissolved company

Property vesting as bona vacantia

Property of dissolved company to be bona vacantia

1012

(1) When a company is dissolved, all property and rights whatsoever vested in or held on trust for the company immediately before its dissolution (including leasehold property, but not including property held by the company on trust for another person) are deemed to be bona vacantia and—

(a) accordingly belong to the Crown, or to the Duchy of Lancaster or to the Duke of Cornwall for the time being (as the case may be), and

(b) vest and may be dealt with in the same manner as other bona vacantia accruing to the Crown, to the Duchy of Lancaster or to the Duke of Cornwall.

(2) Subsection (1) has effect subject to the possible restoration of the company to the register under Chapter 3 (see section 1034).

Crown disclaimer of property vesting as bona vacantia

1013

(1) Where property vests in the Crown under section 1012, the Crown's title to it under that section may be disclaimed by a notice signed by the Crown representative, that is to say the Treasury Solicitor, or, in relation to property in Scotland, the Queen's and Lord Treasurer's Remembrancer.

(2) The right to execute a notice of disclaimer under this section may be waived by or on behalf of the Crown either expressly or by taking possession.

(3) A notice of disclaimer must be executed within three years after—

(a) the date on which the fact that the property may have vested in the Crown under section 1012 first comes to the notice of the Crown representative, or

(b) if ownership of the property is not established at that date, the end of the period reasonably necessary for the Crown representative to establish the ownership of the property.

(4) If an application in writing is made to the Crown representative by a person interested in the property requiring him to decide whether he will or will not disclaim, any notice of disclaimer must be executed within twelve months after the making of the application or such further period as may be allowed by the court.

(5) A notice of disclaimer under this section is of no effect if it is shown to have been executed after the end of the period specified by subsection (3) or (4).

(6) A notice of disclaimer under this section must be delivered to the registrar and retained and registered by him.

(7) Copies of it must be published in the Gazette and sent to any persons who have given the Crown representative notice that they claim to be interested in the property.

(8) This section applies to property vested in the Duchy of Lancaster or the Duke of Cornwall under section 1012 as if for references to the Crown and the Crown representative there were respectively substituted references to the Duchy of Lancaster and to the Solicitor to that Duchy, or to the Duke of Cornwall and to the Solicitor to the Duchy of Cornwall, as the case may be.

Effect of Crown disclaimer

1014

(1) Where notice of disclaimer is executed under section 1013 as respects any property, that property is deemed not to have vested in the Crown under section 1012.

(2) The following sections contain provisions as to the effect of the Crown disclaimer—

sections 1015 to 1019 apply in relation to property in England and Wales or Northern Ireland;

sections 1020 to 1022 apply in relation to property in Scotland.

Effect of Crown disclaimer: England and Wales and Northern Ireland

General effect of disclaimer

1015

(1) The Crown's disclaimer operates so as to terminate, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed.

(2) It does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.

Disclaimer of leaseholds

1016

(1) The disclaimer of any property of a leasehold character does not take effect unless a copy of the disclaimer has been served (so far as the Crown representative is aware of their addresses) on every person claiming under the company as underlessee or mortgagee, and either—

(a) no application under section 1017 (power of court to make vesting order) is made with respect to that property before the end of the period of 14 days beginning with the day on which the last notice under this paragraph was served, or

(b) where such an application has been made, the court directs that the disclaimer shall take effect.

(2) Where the court gives a direction under subsection (1)(b) it may also, instead of or in addition to any order it makes under section 1017, make such order as it thinks fit with respect to fixtures, tenant's improvements and other matters arising out of the lease.

(3) In this section the “Crown representative” means—

(a) in relation to property vested in the Duchy of Lancaster, the Solicitor to that Duchy;

(b) in relation to property vested in the Duke of Cornwall, the Solicitor to the Duchy of Cornwall;

(d) in relation to other property, the Treasury Solicitor.

Power of court to make vesting order

1017

(1) The court may on application by a person who—

(a) claims an interest in the disclaimed property, or

(b) is under a liability in respect of the disclaimed property that is not discharged by the disclaimer,

make an order under this section in respect of the property.

(2) An order under this section is an order for the vesting of the disclaimed property in, or its delivery to—

(a) a person entitled to it (or a trustee for such a person), or

(b) a person subject to such a liability as is mentioned in subsection (1)(b) (or a trustee for such a person).

(3) An order under subsection (2)(b) may only be made where it appears to the court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

(4) An order under this section may be made on such terms as the court thinks fit.

(5) On a vesting order being made under this section, the property comprised in it vests in the person named in that behalf in the order without conveyance, assignment or transfer.

Protection of persons holding under a lease

1018

(1) The court must not make an order under section 1017 vesting property of a leasehold nature in a person claiming under the company as underlessee or mortgagee except on terms making that person—

(a) subject to the same liabilities and obligations as those to which the company was subject under the lease, or

(b) if the court thinks fit, subject to the same liabilities and obligations as if the lease had been assigned to him.

(2) Where the order relates to only part of the property comprised in the lease, subsection (1) applies as if the lease had comprised only the property comprised in the vesting order.

(3) A person claiming under the company as underlessee or mortgagee who declines to accept a vesting order on such terms is excluded from all interest in the property.

(4) If there is no person claiming under the company who is willing to accept an order on such terms, the court has power to vest the company's estate and interest in the property in any person who is liable (whether personally or in a representative character, and whether alone or jointly with the company) to perform the lessee's covenants in the lease.

(5) The court may vest that estate and interest in such a person freed and discharged from all estates, incumbrances and interests created by the company.

Land subject to rentcharge

1019

Where in consequence of the disclaimer land that is subject to a rentcharge vests in any person, neither he nor his successors in title are subject to any personal liability in respect of sums becoming due under the rentcharge, except sums becoming due after he, or some person claiming under or through him, has taken possession or control of the land or has entered into occupation of it.

Effect of Crown disclaimer: Scotland

General effect of disclaimer

1020

(1) The Crown's disclaimer operates to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company, and the property of the company, in or in respect of the property disclaimed.

(2) It does not (except so far as is necessary for the purpose of releasing the company and its property from liability) affect the rights or liabilities of any other person.

Power of court to make vesting order

1021

(1) The court may—

(a) on application by a person who either claims an interest in disclaimed property or is under a liability not discharged by this Act in respect of disclaimed property, and

(b) on hearing such persons as it thinks fit,

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