Companies Act 2006 (c. 46)

(The document as of February, 2008)

-- Back --

Page 18

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16 | P.17 | P.18 | P.19 | P.20 | P.21 | P.22 | P.23 | P.24 | P.25 | P.26 | P.27 | P.28 | P.29 | P.30 | P.31 | P.32 | P.33 | P.34 | P.35 | P.36 | P.37 | P.38 | P.39 | P.40 | P.41 | P.42 | P.43 | P.44 | P.45 | P.46 | P.47 | P.48 | P.49 | P.50 | P.51 | P.52 | P.53 | P.54 | P.55 | P.56 | P.57 | P.58 | P.59 | P.60 | P.61 | P.62 | P.63 | P.64 | P.65 | P.66

Supplementary

352 Application of provisions to class meetings

(1) The provisions of--

section 341 (results of poll to be made available on website), and
sections 342 to 351 (independent report on poll),

apply (with any necessary modifications) in relation to a meeting of holders of a class of shares of a quoted company in connection with the variation of the rights attached to such shares as they apply in relation to a general meeting of the company.

(2) For the purposes of this section--

(a) any amendment of a provision contained in a company's articles for the variation of the rights attached to a class of shares, or the insertion of any such provision into the articles, is itself to be treated as a variation of those rights, and

(b) references to the variation of rights attached to a class of shares include references to their abrogation.

353 Requirements as to website availability

(1) The following provisions apply for the purposes of--

section 341 (results of poll to be made available on website), and
section 351 (report of independent observer to be made available on website).

(2) The information must be made available on a website that--

(a) is maintained by or on behalf of the company, and

(b) identifies the company in question.

(3) Access to the information on the website, and the ability to obtain a hard copy of the information from the website, must not be conditional on the payment of a fee or otherwise restricted.

(4) The information--

(a) must be made available as soon as reasonably practicable, and

(b) must be kept available throughout the period of two years beginning with the date on which it is first made available on a website in accordance with this section.

(5) A failure to make information available on a website throughout the period specified in subsection (4)(b) is disregarded if--

(a) the information is made available on the website for part of that period, and

(b) the failure is wholly attributable to circumstances that it would not be reasonable to have expected the company to prevent or avoid.

354 Power to limit or extend the types of company to which provisions of this Chapter apply

(1) The Secretary of State may by regulations--

(a) limit the types of company to which some or all of the provisions of this Chapter apply, or

(b) extend some or all of the provisions of this Chapter to additional types of company.

(2) Regulations under this section extending the application of any provision of this Chapter are subject to affirmative resolution procedure.

(3) Any other regulations under this section are subject to negative resolution procedure.

(4) Regulations under this section may--

(a) amend the provisions of this Chapter (apart from this section);

(b) repeal and re-enact provisions of this Chapter with modifications of form or arrangement, whether or not they are modified in substance;

(c) contain such consequential, incidental and supplementary provisions (including provisions amending, repealing or revoking enactments) as the Secretary of State thinks fit.

Chapter 6 Records of resolutions and meetings

355 Records of resolutions and meetings etc

(1) Every company must keep records comprising--

(a) copies of all resolutions of members passed otherwise than at general meetings,

(b) minutes of all proceedings of general meetings, and

(2) The records must be kept for at least ten years from the date of the resolution, meeting or decision (as appropriate).

(3) If a company fails to comply with this section, an offence is committed by 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.

356 Records as evidence of resolutions etc

(1) This section applies to the records kept in accordance with section 355.

(2) The record of a resolution passed otherwise than at a general meeting, if purporting to be signed by a director of the company or by the company secretary, is evidence (in Scotland, sufficient evidence) of the passing of the resolution.

(3) Where there is a record of a written resolution of a private company, the requirements of this Act with respect to the passing of the resolution are deemed to be complied with unless the contrary is proved.

(4) The minutes of proceedings of a general meeting, if purporting to be signed by the chairman of that meeting or by the chairman of the next general meeting, are evidence (in Scotland, sufficient evidence) of the proceedings at the meeting.

(5) Where there is a record of proceedings of a general meeting of a company, then, until the contrary is proved--

(a) the meeting is deemed duly held and convened,

(b) all proceedings at the meeting are deemed to have duly taken place, and

357 Records of decisions by sole member

(1) This section applies to a company limited by shares or by guarantee that has only one member.

(2) Where the member takes any decision that--

(a) may be taken by the company in general meeting, and

(b) has effect as if agreed by the company in general meeting,

he must (unless that decision is taken by way of a written resolution) provide the company with details of that decision.

(3) If a person fails to comply with this section he commits an offence.

(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 2 on the standard scale.

(5) Failure to comply with this section does not affect the validity of any decision referred to in subsection (2).

358 Inspection of records of resolutions and meetings

(1) The records referred to in section 355 (records of resolutions etc) relating to the previous ten years must be kept available for inspection--

(a) at the company's registered office, or

(b) at a place specified in regulations under section 1136.

(2) The company must give notice to the registrar--

(a) of the place at which the records are kept available for inspection, and

(b) of any change in that place,

unless they have at all times been kept at the company's registered office.

(3) The records must be open to the inspection of any member of the company without charge.

(4) Any member may require a copy of any of the records on payment of such fee as may be prescribed.

(5) If default is made for 14 days in complying with subsection (2) or an inspection required under subsection (3) is refused, or a copy requested under subsection (4) is not sent, an offence is committed by every officer of the company who is in default.

(6) 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.

(7) In a case in which an inspection required under subsection (3) is refused or a copy requested under subsection (4) is not sent, the court may by order compel an immediate inspection of the records or direct that the copies required be sent to the persons who requested them.

359 Records of resolutions and meetings of class of members

The provisions of this Chapter apply (with necessary modifications) in relation to resolutions and meetings of--

(a) holders of a class of shares, and

(b) in the case of a company without a share capital, a class of members,

as they apply in relation to resolutions of members generally and to general meetings.

Chapter 7 Supplementary provisions

360 Computation of periods of notice etc: clear day rule

(1) This section applies for the purposes of the following provisions of this Part--

section 307(1) and (2) (notice required of general meeting),
section 312(1) and (3) (resolution requiring special notice),
section 314(4)(d) (request to circulate members' statement),
section 316(2)(b) (expenses of circulating statement to be deposited or tendered before meeting),
section 338(4)(d)(i) (request to circulate member's resolution at AGM of public company), and
section 340(2)(b)(i) (expenses of circulating statement to be deposited or tendered before meeting).

(2) Any reference in those provisions to a period of notice, or to a period before a meeting by which a request must be received or sum deposited or tendered, is to a period of the specified length excluding--

(a) the day of the meeting, and

(b) the day on which the notice is given, the request received or the sum deposited or tendered.

361 Meaning of "quoted company"

In this Part "quoted company" has the same meaning as in Part 15 of this Act.

Part 14 Control of political donations and expenditure

Introductory

362 Introductory

This Part has effect for controlling--

(a) political donations made by companies to political parties, to other political organisations and to independent election candidates, and

(b) political expenditure incurred by companies.

Donations and expenditure to which this Part applies

363 Political parties, organisations etc to which this Part applies

(1) This Part applies to a political party if--

(a) it is registered under Part 2 of the Political Parties, Elections and Referendums Act 2000 (c. 41), or

(b) it carries on, or proposes to carry on, activities for the purposes of or in connection with the participation of the party in any election or elections to public office held in a member State other than the United Kingdom.

(2) This Part applies to an organisation (a "political organisation") if it carries on, or proposes to carry on, activities that are capable of being reasonably regarded as intended--

(a) to affect public support for a political party to which, or an independent election candidate to whom, this Part applies, or

(b) to influence voters in relation to any national or regional referendum held under the law of the United Kingdom or another member State.

(3) This Part applies to an independent election candidate at any election to public office held in the United Kingdom or another member State.

(4) Any reference in the following provisions of this Part to a political party, political organisation or independent election candidate, or to political expenditure, is to a party, organisation, independent candidate or expenditure to which this Part applies.

364 Meaning of "political donation"

(1) The following provisions have effect for the purposes of this Part as regards the meaning of "political donation".

(2) In relation to a political party or other political organisation--

(a) "political donation" means anything that in accordance with sections 50 to 52 of the Political Parties, Elections and Referendums Act 2000--

(i) constitutes a donation for the purposes of Chapter 1 of Part 4 of that Act (control of donations to registered parties), or

(ii) would constitute such a donation reading references in those sections to a registered party as references to any political party or other political organisation,

and

(b) section 53 of that Act applies, in the same way, for the purpose of determining the value of a donation.

(3) In relation to an independent election candidate--

(a) "political donation" means anything that, in accordance with sections 50 to 52 of that Act, would constitute a donation for the purposes of Chapter 1 of Part 4 of that Act (control of donations to registered parties) reading references in those sections to a registered party as references to the independent election candidate,

and

(b) section 53 of that Act applies, in the same way, for the purpose of determining the value of a donation.

(4) For the purposes of this section, sections 50 and 53 of the Political Parties, Elections and Referendums Act 2000 (c. 41) (definition of "donation" and value of donations) shall be treated as if the amendments to those sections made by the Electoral Administration Act 2006 (which remove from the definition of "donation" loans made otherwise than on commercial terms) had not been made.

365 Meaning of "political expenditure"

(1) In this Part "political expenditure", in relation to a company, means expenditure incurred by the company on--

(a) the preparation, publication or dissemination of advertising or other promotional or publicity material--

(i) of whatever nature, and

(ii) however published or otherwise disseminated,

that, at the time of publication or dissemination, is capable of being reasonably regarded as intended to affect public support for a political party or other political organisation, or an independent election candidate, or

(b) activities on the part of the company that are capable of being reasonably regarded as intended--

(i) to affect public support for a political party or other political organisation, or an independent election candidate, or

(ii) to influence voters in relation to any national or regional referendum held under the law of a member State.

(2) For the purposes of this Part a political donation does not count as political expenditure.

Authorisation required for donations or expenditure

366 Authorisation required for donations or expenditure

(1) A company must not--

(a) make a political donation to a political party or other political organisation, or to an independent election candidate, or

(b) incur any political expenditure,

unless the donation or expenditure is authorised in accordance with the following provisions.

(2) The donation or expenditure must be authorised--

(a) in the case of a company that is not a subsidiary of another company, by a resolution of the members of the company;

(b) in the case of a company that is a subsidiary of another company by--

(i) a resolution of the members of the company, and

(ii) a resolution of the members of any relevant holding company.

(3) No resolution is required on the part of a company that is a wholly-owned subsidiary of a UK-registered company.

(4) For the purposes of subsection (2)(b)(ii) a "relevant holding company" means a company that, at the time the donation was made or the expenditure was incurred--

(a) was a holding company of the company by which the donation was made or the expenditure was incurred,

(b) was a UK-registered company, and

(5) The resolution or resolutions required by this section--

(a) must comply with section 367 (form of authorising resolution), and

(b) must be passed before the donation is made or the expenditure incurred.

(6) Nothing in this section enables a company to be authorised to do anything that it could not lawfully do apart from this section.

367 Form of authorising resolution

(1) A resolution conferring authorisation for the purposes of this Part may relate to--

(a) the company passing the resolution,

(b) one or more subsidiaries of that company, or

(2) A resolution may be expressed to relate to all companies that are subsidiaries of the company passing the resolution--

(a) at the time the resolution is passed, or

(b) at any time during the period for which the resolution has effect,

without identifying them individually.

(3) The resolution may authorise donations or expenditure under one or more of the following heads--

(a) donations to political parties or independent election candidates;

(b) donations to political organisations other than political parties;

(4) The resolution must specify a head or heads--

(a) in the case of a resolution under subsection (2), for all of the companies to which it relates taken together;

(b) in the case of any other resolution, for each company to which it relates.

(5) The resolution must be expressed in general terms conforming with subsection (2) and must not purport to authorise particular donations or expenditure.

(6) For each of the specified heads the resolution must authorise donations or, as the case may be, expenditure up to a specified amount in the period for which the resolution has effect (see section 368).

(7) The resolution must specify such amounts--

(a) in the case of a resolution under subsection (2), for all of the companies to which it relates taken together;

(b) in the case of any other resolution, for each company to which it relates.

368 Period for which resolution has effect

(1) A resolution conferring authorisation for the purposes of this Part has effect for a period of four years beginning with the date on which it is passed unless the directors determine, or the articles require, that it is to have effect for a shorter period beginning with that date.

(2) The power of the directors to make a determination under this section is subject to any provision of the articles that operates to prevent them from doing so.

Remedies in case of unauthorised donations or expenditure

369 Liability of directors in case of unauthorised donation or expenditure

(1) This section applies where a company has made a political donation or incurred political expenditure without the authorisation required by this Part.

(2) The directors in default are jointly and severally liable--

(a) to make good to the company the amount of the unauthorised donation or expenditure, with interest, and

(b) to compensate the company for any loss or damage sustained by it as a result of the unauthorised donation or expenditure having been made.

(3) The directors in default are--

(a) those who, at the time the unauthorised donation was made or the unauthorised expenditure was incurred, were directors of the company by which the donation was made or the expenditure was incurred, and

(b) where--

(i) that company was a subsidiary of a relevant holding company, and

(ii) the directors of the relevant holding company failed to take all reasonable steps to prevent the donation being made or the expenditure being incurred,

the directors of the relevant holding company.

(4) For the purposes of subsection (3)(b) a "relevant holding company" means a company that, at the time the donation was made or the expenditure was incurred--

(a) was a holding company of the company by which the donation was made or the expenditure was incurred,

(b) was a UK-registered company, and

(5) The interest referred to in subsection (2)(a) is interest on the amount of the unauthorised donation or expenditure, so far as not made good to the company--

(a) in respect of the period beginning with the date when the donation was made or the expenditure was incurred, and

(b) at such rate as the Secretary of State may prescribe by regulations.

Section 379(2) (construction of references to date when donation made or expenditure incurred) does not apply for the purposes of this subsection.

(6) Where only part of a donation or expenditure was unauthorised, this section applies only to so much of it as was unauthorised.

370 Enforcement of directors' liabilities by shareholder action

(1) Any liability of a director under section 369 is enforceable--

(a) in the case of a liability of a director of a company to that company, by proceedings brought under this section in the name of the company by an authorised group of its members;

(b) in the case of a liability of a director of a holding company to a subsidiary, by proceedings brought under this section in the name of the subsidiary by--

(i) an authorised group of members of the subsidiary, or

(ii) an authorised group of members of the holding company.

(2) This is in addition to the right of the company to which the liability is owed to bring proceedings itself to enforce the liability.

(3) An "authorised group" of members of a company means--

(a) the holders of not less than 5% in nominal value of the company's issued share capital,

(b) if the company is not limited by shares, not less than 5% of its members, or

(4) The right to bring proceedings under this section is subject to the provisions of section 371.

(5) Nothing in this section affects any right of a member of a company to bring or continue proceedings under Part 11 (derivative claims or proceedings).

371 Enforcement of directors' liabilities by shareholder action: supplementary

(1) A group of members may not bring proceedings under section 370 in the name of a company unless--

(a) the group has given written notice to the company stating--

(i) the cause of action and a summary of the facts on which the proceedings are to be based,

(ii) the names and addresses of the members comprising the group, and

(iii) the grounds on which it is alleged that those members constitute an authorised group; and

(b) not less than 28 days have elapsed between the date of the giving of the notice to the company and the bringing of the proceedings.

(2) Where such a notice is given to a company, any director of the company may apply to the court within the period of 28 days beginning with the date of the giving of the notice for an order directing that the proposed proceedings shall not be brought, on one or more of the following grounds--

(a) that the unauthorised amount has been made good to the company;

(b) that proceedings to enforce the liability have been brought, and are being pursued with due diligence, by the company;

(3) Where an application is made on the ground mentioned in subsection (2)(b), the court may as an alternative to directing that the proposed proceedings under section 370 are not to be brought, direct--

(a) that such proceedings may be brought on such terms and conditions as the court thinks fit, and

(b) that the proceedings brought by the company--

(i) shall be discontinued, or

(ii) may be continued on such terms and conditions as the court thinks fit.

(4) The members by whom proceedings are brought under section 370 owe to the company in whose name they are brought the same duties in relation to the proceedings as would be owed by the company's directors if the proceedings were being brought by the company.

But proceedings to enforce any such duty may be brought by the company only with the permission of the court.

(5) Proceedings brought under section 370 may not be discontinued or settled by the group except with the permission of the court, which may be given on such terms as the court thinks fit.

372 Costs of shareholder action

(1) This section applies in relation to proceedings brought under section 370 in the name of a company ("the company") by an authorised group ("the group").

(2) The group may apply to the court for an order directing the company to indemnify the group in respect of costs incurred or to be incurred by the group in connection with the proceedings.

The court may make such an order on such terms as it thinks fit.

(3) The group is not entitled to be paid any such costs out of the assets of the company except by virtue of such an order.

(4) If no such order has been made with respect to the proceedings, then--

(a) if the company is awarded costs in connection with the proceedings, or it is agreed that costs incurred by the company in connection with the proceedings should be paid by any defendant, the costs shall be paid to the group; and

(b) if any defendant is awarded costs in connection with the proceedings, or it is agreed that any defendant should be paid costs incurred by him in connection with the proceedings, the costs shall be paid by the group.

(5) In the application of this section to Scotland for "costs" read "expenses" and for "defendant" read "defender".

373 Information for purposes of shareholder action

(1) Where proceedings have been brought under section 370 in the name of a company by an authorised group, the group is entitled to require the company to provide it with all information relating to the subject matter of the proceedings that is in the company's possession or under its control or which is reasonably obtainable by it.

(2) If the company, having been required by the group to do so, refuses to provide the group with all or any of that information, the court may, on an application made by the group, make an order directing--

(a) the company, and

(b) any of its officers or employees specified in the application,

to provide the group with the information in question in such form and by such means as the court may direct.

Exemptions

374 Trade unions

(1) A donation to a trade union, other than a contribution to the union's political fund, is not a political donation for the purposes of this Part.

(2) A trade union is not a political organisation for the purposes of section 365 (meaning of "political expenditure").

(3) In this section--

"trade union" has the meaning given by section 1 of Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52) or Article 3 of the Industrial Relations (Northern Ireland) Order 1992 (S.I. 1992/807 (N.I. 5));
"political fund" means the fund from which payments by a trade union in the furtherance of political objects are required to be made by virtue of section 82(1)(a) of that Act or Article 57(2)(a) of that Order.

375 Subscription for membership of trade association

(1) A subscription paid to a trade association for membership of the association is not a political donation for the purposes of this Part.

-- Back --

Stat