Companies Act 2006 (c. 46)

(The document as of February, 2008)

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(3) The re-issue of a debenture or the issue of another debenture in its place under this section is treated as the issue of a new debenture for the purposes of stamp duty.

It is not so treated for the purposes of any provision limiting the amount or number of debentures to be issued.

(4) A person lending money on the security of a debenture re-issued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect of it, unless he had notice (or, but for his negligence, might have discovered) that the debenture was not duly stamped.

In that case the company is liable to pay the proper stamp duty and penalty.

753 Deposit of debentures to secure advances

Where a company has deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures are not treated as redeemed by reason only of the company's account having ceased to be in debit while the debentures remained so deposited.

754 Priorities where debentures secured by floating charge

(1) This section applies where debentures of a company registered in England and Wales or Northern Ireland are secured by a charge that, as created, was a floating charge.

(2) If possession is taken, by or on behalf of the holders of the debentures, of any property comprised in or subject to the charge, and the company is not at that time in the course of being wound up, the company's preferential debts shall be paid out of assets coming to the hands of the persons taking possession in priority to any claims for principal or interest in respect of the debentures.

(3) "Preferential debts" means the categories of debts listed in Schedule 6 to the Insolvency Act 1986 (c. 45) or Schedule 4 to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

For the purposes of those Schedules "the relevant date" is the date of possession being taken as mentioned in subsection (2).

(4) Payments under this section shall be recouped, as far as may be, out of the assets of the company available for payment of general creditors.

Part 20 Private and public companies

Chapter 1 Prohibition of public offers by private companies

755 Prohibition of public offers by private company

(1) A private company limited by shares or limited by guarantee and having a share capital must not--

(a) offer to the public any securities of the company, or

(b) allot or agree to allot any securities of the company with a view to their being offered to the public.

(2) Unless the contrary is proved, an allotment or agreement to allot securities is presumed to be made with a view to their being offered to the public if an offer of the securities (or any of them) to the public is made--

(a) within six months after the allotment or agreement to allot, or

(b) before the receipt by the company of the whole of the consideration to be received by it in respect of the securities.

(3) A company does not contravene this section if--

(a) it acts in good faith in pursuance of arrangements under which it is to re-register as a public company before the securities are allotted, or

(b) as part of the terms of the offer it undertakes to re-register as a public company within a specified period, and that undertaking is complied with.

(4) The specified period for the purposes of subsection (3)(b) must be a period ending not later than six months after the day on which the offer is made (or, in the case of an offer made on different days, first made).

(5) In this Chapter "securities" means shares or debentures.

756 Meaning of "offer to the public"

(1) This section explains what is meant in this Chapter by an offer of securities to the public.

(2) An offer to the public includes an offer to any section of the public, however selected.

(3) An offer is not regarded as an offer to the public if it can properly be regarded, in all the circumstances, as--

(a) not being calculated to result, directly or indirectly, in securities of the company becoming available to persons other than those receiving the offer, or

(b) otherwise being a private concern of the person receiving it and the person making it.

(4) An offer is to be regarded (unless the contrary is proved) as being a private concern of the person receiving it and the person making it if--

(a) it is made to a person already connected with the company and, where it is made on terms allowing that person to renounce his rights, the rights may only be renounced in favour of another person already connected with the company; or

(b) it is an offer to subscribe for securities to be held under an employees' share scheme and, where it is made on terms allowing that person to renounce his rights, the rights may only be renounced in favour of--

(i) another person entitled to hold securities under the scheme, or

(ii) a person already connected with the company.

(5) For the purposes of this section "person already connected with the company" means--

(a) an existing member or employee of the company,

(b) a member of the family of a person who is or was a member or employee of the company,

(d) an existing debenture holder of the company, or

(e) a trustee (acting in his capacity as such) of a trust of which the principal beneficiary is a person within any of paragraphs (a) to (d).

(6) For the purposes of subsection (5)(b) the members of a person's family are the person's spouse or civil partner and children (including step-children) and their descendants.

757 Enforcement of prohibition: order restraining proposed contravention

(1) If it appears to the court--

(a) on an application under this section, or

(b) in proceedings under Part 30 (protection of members against unfair prejudice),

that a company is proposing to act in contravention of section 755 (prohibition of public offers by private companies), the court shall make an order under this section.

(2) An order under this section is an order restraining the company from contravening that section.

(3) An application for an order under this section may be made by--

(a) a member or creditor of the company, or

(b) the Secretary of State.

758 Enforcement of prohibition: orders available to the court after contravention

(1) This section applies if it appears to the court--

(a) on an application under this section, or

(b) in proceedings under Part 30 (protection of members against unfair prejudice),

that a company has acted in contravention of section 755 (prohibition of public offers by private companies).

(2) The court must make an order requiring the company to re-register as a public company unless it appears to the court--

(a) that the company does not meet the requirements for re-registration as a public company, and

(b) that it is impractical or undesirable to require it to take steps to do so.

(3) If it does not make an order for re-registration, the court may make either or both of the following--

(a) a remedial order (see section 759), or

(b) an order for the compulsory winding up of the company.

(4) An application under this section may be made by--

(a) a member of the company who--

(i) was a member at the time the offer was made (or, if the offer was made over a period, at any time during that period), or

(ii) became a member as a result of the offer,

(b) a creditor of the company who was a creditor at the time the offer was made (or, if the offer was made over a period, at any time during that period), or

759 Enforcement of prohibition: remedial order

(1) A "remedial order" is an order for the purpose of putting a person affected by anything done in contravention of section 755 (prohibition of public offers by private company) in the position he would have been in if it had not been done.

(2) The following provisions are without prejudice to the generality of the power to make such an order.

(3) Where a private company has--

(a) allotted securities pursuant to an offer to the public, or

(b) allotted or agreed to allot securities with a view to their being offered to the public,

a remedial order may require any person knowingly concerned in the contravention of section 755 to offer to purchase any of those securities at such price and on such other terms as the court thinks fit.

(4) A remedial order may be made--

(a) against any person knowingly concerned in the contravention, whether or not an officer of the company;

(b) notwithstanding anything in the company's constitution (which includes, for this purpose, the terms on which any securities of the company are allotted or held);

(c) whether or not the holder of the securities subject to the order is the person to whom the company allotted or agreed to allot them.

(5) Where a remedial order is made against the company itself, the court may provide for the reduction of the company's capital accordingly.

760 Validity of allotment etc not affected

Nothing in this Chapter affects the validity of any allotment or sale of securities or of any agreement to allot or sell securities.

Chapter 2 Minimum share capital requirement for public companies

761 Public company: requirement as to minimum share capital

(1) A company that is a public company (otherwise than by virtue of re-registration as a public company) must not do business or exercise any borrowing powers unless the registrar has issued it with a certificate under this section (a "trading certificate").

(2) The registrar shall issue a trading certificate if, on an application made in accordance with section 762, he is satisfied that the nominal value of the company's allotted share capital is not less than the authorised minimum.

(3) For this purpose a share allotted in pursuance of an employees' share scheme shall not be taken into account unless paid up as to--

(a) at least one-quarter of the nominal value of the share, and

(b) the whole of any premium on the share.

(4) A trading certificate has effect from the date on which it is issued and is conclusive evidence that the company is entitled to do business and exercise any borrowing powers.

762 Procedure for obtaining certificate

(1) An application for a certificate under section 761 must--

(a) state that the nominal value of the company's allotted share capital is not less than the authorised minimum,

(b) specify the amount, or estimated amount, of the company's preliminary expenses,

(c) specify any amount or benefit paid or given, or intended to be paid or given, to any promoter of the company, and the consideration for the payment or benefit, and

(d) be accompanied by a statement of compliance.

(2) The statement of compliance is a statement that the company meets the requirements for the issue of a certificate under section 761.

(3) The registrar may accept the statement of compliance as sufficient evidence of the matters stated in it.

763 The authorised minimum

(1) "The authorised minimum", in relation to the nominal value of a public company's allotted share capital is--

(a) £50,000, or

(b) the prescribed euro equivalent.

(2) The Secretary of State may by order prescribe the amount in euros that is for the time being to be treated as equivalent to the sterling amount of the authorised minimum.

(3) This power may be exercised from time to time as appears to the Secretary of State to be appropriate.

(4) The amount prescribed shall be determined by applying an appropriate spot rate of exchange to the sterling amount and rounding to the nearest 100 euros.

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

(6) This section has effect subject to any exercise of the power conferred by section 764 (power to alter authorised minimum).

764 Power to alter authorised minimum

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

(a) alter the sterling amount of the authorised minimum, and

(b) make a corresponding alteration of the prescribed euro equivalent.

(2) The amount of the prescribed euro equivalent shall be determined by applying an appropriate spot rate of exchange to the sterling amount and rounding to the nearest 100 euros.

(3) An order under this section that increases the authorised minimum may--

(a) require a public company having an allotted share capital of which the nominal value is less than the amount specified in the order to--

(i) increase that value to not less than that amount, or

(ii) re-register as a private company;

(b) make provision in connection with any such requirement for any of the matters for which provision is made by this Act relating to--

(i) a company's registration, re-registration or change of name,

(ii) payment for shares comprised in a company's share capital, and

(iii) offers to the public of shares in or debentures of a company,

including provision as to the consequences (in criminal law or otherwise) of a failure to comply with any requirement of the order;

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

765 Authorised minimum: application of initial requirement

(1) The initial requirement for a public company to have allotted share capital of a nominal value not less than the authorised minimum, that is--

(a) the requirement in section 761(2) for the issue of a trading certificate, or

(b) the requirement in section 91(1)(a) for re-registration as a public company,

must be met either by reference to allotted share capital denominated in sterling or by reference to allotted share capital denominated in euros (but not partly in one and partly in the other).

(2) Whether the requirement is met is determined in the first case by reference to the sterling amount and in the second case by reference to the prescribed euro equivalent.

(3) No account is to be taken of any allotted share capital of the company denominated in a currency other than sterling or, as the case may be, euros.

(4) If the company could meet the requirement either by reference to share capital denominated in sterling or by reference to share capital denominated in euros, it must elect in its application for a trading certificate or, as the case may be, for re-registration as a public company which is to be the currency by reference to which the matter is determined.

766 Authorised minimum: application where shares denominated in different currencies etc

(1) The Secretary of State may make provision by regulations as to the application of the authorised minimum in relation to a public company that--

(a) has shares denominated in more than one currency,

(b) redenominates the whole or part of its allotted share capital, or

(2) The regulations may make provision as to the currencies, exchange rates and dates by reference to which it is to be determined whether the nominal value of the company's allotted share capital is less than the authorised minimum.

(3) The regulations may provide that where--

(a) a company has redenominated the whole or part of its allotted share capital, and

(b) the effect of the redenomination is that the nominal value of the company's allotted share capital is less than the authorised minimum,

the company must re-register as a private company.

(4) Regulations under subsection (3) may make provision corresponding to any provision made by sections 664 to 667 (re-registration as private company in consequence of cancellation of shares).

(5) Any regulations under this section have effect subject to section 765 (authorised minimum: application of initial requirement).

(6) Regulations under this section are subject to negative resolution procedure.

767 Consequences of doing business etc without a trading certificate

(1) If a company does business or exercises any borrowing powers in contravention of section 761, an offence is committed by--

(a) the company, and

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

(2) A person guilty of an offence under subsection (1) is liable--

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

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

(3) A contravention of section 761 does not affect the validity of a transaction entered into by the company, but if a company--

(a) enters into a transaction in contravention of that section, and

(b) fails to comply with its obligations in connection with the transaction within 21 days from being called on to do so,

the directors of the company are jointly and severally liable to indemnify any other party to the transaction in respect of any loss or damage suffered by him by reason of the company's failure to comply with its obligations.

(4) The directors who are so liable are those who were directors at the time the company entered into the transaction.

Part 21 Certification and transfer of securities

Chapter 1 Certification and transfer of securities: general

Share certificates

768 Share certificate to be evidence of title

(1) In the case of a company registered in England and Wales or Northern Ireland, a certificate under the common seal of the company specifying any shares held by a member is prima facie evidence of his title to the shares.

(2) In the case of a company registered in Scotland--

(a) a certificate under the common seal of the company specifying any shares held by a member, or

(b) a certificate specifying any shares held by a member and subscribed by the company in accordance with the Requirements of Writing (Scotland) Act 1995 (c. 7),

is sufficient evidence, unless the contrary is shown, of his title to the shares.

Issue of certificates etc on allotment

769 Duty of company as to issue of certificates etc on allotment

(1) A company must, within two months after the allotment of any of its shares, debentures or debenture stock, complete and have ready for delivery--

(a) the certificates of the shares allotted,

(b) the debentures allotted, or

(2) Subsection (1) does not apply--

(a) if the conditions of issue of the shares, debentures or debenture stock provide otherwise,

(b) in the case of allotment to a financial institution (see section 778), or

(c) in the case of an allotment of shares if, following the allotment, the company has issued a share warrant in respect of the shares (see section 779).

(3) If default is made in complying with subsection (1) an offence is committed by every officer of the company who is in default.

(4) A person guilty of an offence under subsection (3) 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.

Transfer of securities

770 Registration of transfer

(1) A company may not register a transfer of shares in or debentures of the company unless--

(a) a proper instrument of transfer has been delivered to it, or

(b) the transfer--

(i) is an exempt transfer within the Stock Transfer Act 1982 (c. 41), or

(ii) is in accordance with regulations under Chapter 2 of this Part.

(2) Subsection (1) does not affect any power of the company to register as shareholder or debenture holder a person to whom the right to any shares in or debentures of the company has been transmitted by operation of law.

771 Procedure on transfer being lodged

(1) When a transfer of shares in or debentures of a company has been lodged with the company, the company must either--

(a) register the transfer, or

(b) give the transferee notice of refusal to register the transfer, together with its reasons for the refusal,

as soon as practicable and in any event within two months after the date on which the transfer is lodged with it.

(2) If the company refuses to register the transfer, it must provide the transferee with such further information about the reasons for the refusal as the transferee may reasonably request.

This does not include copies of minutes of meetings of directors.

(3) If a company fails to comply 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.

(5) This section does not apply--

(a) in relation to a transfer of shares if the company has issued a share warrant in respect of the shares (see section 779);

(b) in relation to the transmission of shares or debentures by operation of law.

772 Transfer of shares on application of transferor

On the application of the transferor of any share or interest in a company, the company shall enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.

773 Execution of share transfer by personal representative

An instrument of transfer of the share or other interest of a deceased member of a company--

(a) may be made by his personal representative although the personal representative is not himself a member of the company, and

(b) is as effective as if the personal representative had been such a member at the time of the execution of the instrument.

774 Evidence of grant of probate etc

The production to a company of any document that is by law sufficient evidence of the grant of--

(a) probate of the will of a deceased person,

(b) letters of administration of the estate of a deceased person, or

shall be accepted by the company as sufficient evidence of the grant.

775 Certification of instrument of transfer

(1) The certification by a company of an instrument of transfer of any shares in, or debentures of, the company is to be taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on their face show a prima facie title to the shares or debentures in the transferor named in the instrument.

(2) The certification is not to be taken as a representation that the transferor has any title to the shares or debentures.

(3) Where a person acts on the faith of a false certification by a company made negligently, the company is under the same liability to him as if the certification had been made fraudulently.

(4) For the purposes of this section--

(a) an instrument of transfer is certificated if it bears the words "certificate lodged" (or words to the like effect);

(b) the certification of an instrument of transfer is made by a company if--

(i) the person issuing the instrument is a person authorised to issue certificated instruments of transfer on the company's behalf, and

(ii) the certification is signed by a person authorised to certificate transfers on the company's behalf or by an officer or employee either of the company or of a body corporate so authorised;

(i) it purports to be authenticated by his signature or initials (whether handwritten or not), and

(ii) it is not shown that the signature or initials was or were placed there neither by himself nor by a person authorised to use the signature or initials for the purpose of certificating transfers on the company's behalf.

Issue of certificates etc on transfer

776 Duty of company as to issue of certificates etc on transfer

(1) A company must, within two months after the date on which a transfer of any of its shares, debentures or debenture stock is lodged with the company, complete and have ready for delivery--

(a) the certificates of the shares transferred,

(b) the debentures transferred, or

(2) For this purpose a "transfer" means--

(a) a transfer duly stamped and otherwise valid, or

(b) an exempt transfer within the Stock Transfer Act 1982 (c. 41),

but does not include a transfer that the company is for any reason entitled to refuse to register and does not register.

(3) Subsection (1) does not apply--

(a) if the conditions of issue of the shares, debentures or debenture stock provide otherwise,

(b) in the case of a transfer to a financial institution (see section 778), or

(c) in the case of a transfer of shares if, following the transfer, the company has issued a share warrant in respect of the shares (see section 779).

(4) Subsection (1) has effect subject to section 777 (cases where the Stock Transfer Act 1982 applies).

(5) If default is made in complying with subsection (1) 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.

777 Issue of certificates etc: cases within the Stock Transfer Act 1982

(1) Section 776(1) (duty of company as to issue of certificates etc on transfer) does not apply in the case of a transfer to a person where, by virtue of regulations under section 3 of the Stock Transfer Act 1982, he is not entitled to a certificate or other document of or evidencing title in respect of the securities transferred.

(2) But if in such a case the transferee--

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