Companies Act 2006 (c. 46)

(The document as of February, 2008)

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(3) This is without prejudice to any obligation imposed apart from this section on a member of a company to repay a distribution unlawfully made to him.

(4) This section does not apply in relation to--

(a) financial assistance given by a company in contravention of section 678 or 679, or

(b) any payment made by a company in respect of the redemption or purchase by the company of shares in itself.

Other matters

848 Saving for certain older provisions in articles

(1) Where immediately before the relevant date a company was authorised by a provision of its articles to apply its unrealised profits in paying up in full or in part unissued shares to be allotted to members of the company as fully or partly paid bonus shares, that provision continues (subject to any alteration of the articles) as authority for those profits to be so applied after that date.

(2) For this purpose the relevant date is--

(a) for companies registered in Great Britain, 22nd December 1980;

(b) for companies registered in Northern Ireland, 1st July 1983.

849 Restriction on application of unrealised profits

A company must not apply an unrealised profit in paying up debentures or any amounts unpaid on its issued shares.

850 Treatment of certain older profits or losses

(1) Where the directors of a company are, after making all reasonable enquiries, unable to determine whether a particular profit made before the relevant date is realised or unrealised, they may treat the profit as realised.

(2) Where the directors of a company, after making all reasonable enquiries, are unable to determine whether a particular loss made before the relevant date is realised or unrealised, they may treat the loss as unrealised.

(3) For the purposes of this section the relevant date is--

(a) for companies registered in Great Britain, 22nd December 1980;

(b) for companies registered in Northern Ireland, 1st July 1983.

851 Application of rules of law restricting distributions

(1) Except as provided in this section, the provisions of this Part are without prejudice to any rule of law restricting the sums out of which, or the cases in which, a distribution may be made.

(2) For the purposes of any rule of law requiring distributions to be paid out of profits or restricting the return of capital to members--

(a) section 845 (distributions in kind: determination of amount) applies to determine the amount of any distribution or return of capital consisting of or including, or treated as arising in consequence of the sale, transfer or other disposition by a company of a non-cash asset; and

(b) section 846 (distributions in kind: treatment of unrealised profits) applies as it applies for the purposes of this Part.

(3) In this section references to distributions are to amounts regarded as distributions for the purposes of any such rule of law as is referred to in subsection (1).

852 Saving for other restrictions on distributions

The provisions of this Part are without prejudice to any enactment, or any provision of a company's articles, restricting the sums out of which, or the cases in which, a distribution may be made.

853 Minor definitions

(1) The following provisions apply for the purposes of this Part.

(2) References to profit or losses of any description--

(a) are to profits or losses of that description made at any time, and

(b) except where the context otherwise requires, are to profits or losses of a revenue or capital character.

(3) "Capitalisation", in relation to a company's profits, means any of the following operations (whenever carried out)--

(a) applying the profits in wholly or partly paying up unissued shares in the company to be allotted to members of the company as fully or partly paid bonus shares, or

(b) transferring the profits to capital redemption reserve.

(4) References to "realised profits" and "realised losses", in relation to a company's accounts, are to such profits or losses of the company as fall to be treated as realised in accordance with principles generally accepted at the time when the accounts are prepared, with respect to the determination for accounting purposes of realised profits or losses.

(5) Subsection (4) is without prejudice to--

(a) the construction of any other expression (where appropriate) by reference to accepted accounting principles or practice, or

(b) any specific provision for the treatment of profits or losses of any description as realised.

(6) "Fixed assets" means assets of a company which are intended for use on a continuing basis in the company's activities.

Part 24 A company's annual return

854 Duty to deliver annual returns

(1) Every company must deliver to the registrar successive annual returns each of which is made up to a date not later than the date that is from time to time the company's return date.

(2) The company's return date is--

(a) the anniversary of the company's incorporation, or

(b) if the company's last return delivered in accordance with this Part was made up to a different date, the anniversary of that date.

(3) Each return must--

(a) contain the information required by or under the following provisions of this Part, and

(b) be delivered to the registrar within 28 days after the date to which it is made up.

855 Contents of annual return: general

(1) Every annual return must state the date to which it is made up and contain the following information--

(a) the address of the company's registered office;

(b) the type of company it is and its principal business activities;

(i) the directors of the company, and

(ii) in the case of a private company with a secretary or a public company, the secretary or joint secretaries;

(d) if the register of members is not kept available for inspection at the company's registered office, the address of the place where it is kept available for inspection;

(e) if any register of debenture holders (or a duplicate of any such register or a part of it) is not kept available for inspection at the company's registered office, the address of the place where it is kept available for inspection.

(2) The information as to the company's type must be given by reference to the classification scheme prescribed for the purposes of this section.

(3) The information as to the company's principal business activities may be given by reference to one or more categories of any prescribed system of classifying business activities.

856 Contents of annual return: information about share capital and shareholders

(1) The annual return of a company having a share capital must also contain--

(a) a statement of capital, and

(b) the particulars required by subsections (3) to (6) about the members of the company.

(2) The statement of capital must state with respect to the company's share capital at the date to which the return is made up--

(a) the total number of shares of the company,

(b) the aggregate nominal value of those shares,

(i) prescribed particulars of the rights attached to the shares,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class, and

(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(3) The return must contain the prescribed particulars of every person who--

(a) is a member of the company on the date to which the return is made up, or

(b) has ceased to be a member of the company since the date to which the last return was made up (or, in the case of the first return, since the incorporation of the company).

The return must conform to such requirements as may be prescribed for the purpose of enabling the entries relating to any given person to be easily found.

(4) The return must also state--

(a) the number of shares of each class held by each member of the company at the date to which the return is made up,

(b) the number of shares of each class transferred--

(i) since the date to which the last return was made up, or

(ii) in the case of the first return, since the incorporation of the company,

by each member or person who has ceased to be a member, and

(5) If either of the two immediately preceding returns has given the full particulars required by subsections (3) and (4), the return need only give such particulars as relate--

(a) to persons ceasing to be or becoming members since the date of the last return, and

(b) to shares transferred since that date.

(6) Where the company has converted any of its shares into stock, the return must give the corresponding information in relation to that stock, stating the amount of stock instead of the number or nominal value of shares.

857 Contents of annual return: power to make further provision by regulations

(1) The Secretary of State may by regulations make further provision as to the information to be given in a company's annual return.

(2) The regulations may--

(a) amend or repeal the provisions of sections 855 and 856, and

(b) provide for exceptions from the requirements of those sections as they have effect from time to time.

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

858 Failure to deliver annual return

(1) If a company fails to deliver an annual return before the end of the period of 28 days after a return date, an offence is committed by--

(a) the company,

(b) subject to subsection (4)--

(i) every director of the company, and

(ii) in the case of a private company with a secretary or a public company, every secretary of the company, and

(2) A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 5 on the standard scale.

(3) The contravention continues until such time as an annual return made up to that return date is delivered by the company to the registrar.

(4) It is a defence for a director or secretary charged with an offence under subsection (1)(b) to prove that he took all reasonable steps to avoid the commission or continuation of the offence.

(5) In the case of continued contravention, an offence is also committed by every officer of the company who did not commit an offence under subsection (1) in relation to the initial contravention but is in default in relation to the continued contravention.

A person guilty of an offence under this subsection is liable on summary conviction to a fine not exceeding one-tenth of level 5 on the standard scale for each day on which the contravention continues and he is in default.

859 Application of provisions to shadow directors

For the purposes of this Part a shadow director is treated as a director.

Part 25 Company charges

Chapter 1 Companies registered in England and Wales or in Northern Ireland

Requirement to register company charges

860 Charges created by a company

(1) A company that creates a charge to which this section applies must deliver the prescribed particulars of the charge, together with the instrument (if any) by which the charge is created or evidenced, to the registrar for registration before the end of the period allowed for registration.

(2) Registration of a charge to which this section applies may instead be effected on the application of a person interested in it.

(3) Where registration is effected on the application of some person other than the company, that person is entitled to recover from the company the amount of any fees properly paid by him to the registrar on registration.

(4) If a company fails to comply with subsection (1), an offence is committed by--

(a) the company, and

(b) every officer of it who is in default.

(5) 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.

(6) Subsection (4) does not apply if registration of the charge has been effected on the application of some other person.

(7) This section applies to the following charges--

(a) a charge on land or any interest in land, other than a charge for any rent or other periodical sum issuing out of land,

(b) a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale,

(d) a charge on uncalled share capital of the company,

(e) a charge on calls made but not paid,

(f) a charge on book debts of the company,

(g) a floating charge on the company's property or undertaking,

(h) a charge on a ship or aircraft, or any share in a ship,

(i) a charge on goodwill or on any intellectual property.

861 Charges which have to be registered: supplementary

(1) The holding of debentures entitling the holder to a charge on land is not, for the purposes of section 860(7)(a), an interest in the land.

(2) It is immaterial for the purposes of this Chapter where land subject to a charge is situated.

(3) The deposit by way of security of a negotiable instrument given to secure the payment of book debts is not, for the purposes of section 860(7)(f), a charge on those book debts.

(4) For the purposes of section 860(7)(i), "intellectual property" means--

(a) any patent, trade mark, registered design, copyright or design right;

(b) any licence under or in respect of any such right.

(5) In this Chapter--

"charge" includes mortgage, and
"company" means a company registered in England and Wales or in Northern Ireland.

862 Charges existing on property acquired

(1) This section applies where a company acquires property which is subject to a charge of a kind which would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Chapter.

(2) The company must deliver the prescribed particulars of the charge, together with a certified copy of the instrument (if any) by which the charge is created or evidenced, to the registrar for registration.

(3) Subsection (2) must be complied with before the end of the period allowed for registration.

(4) If default is made in complying with this section, an offence is committed by--

(a) the company, and

(b) every officer of it who is in default.

(5) 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.

Special rules about debentures

863 Charge in series of debentures

(1) Where a series of debentures containing, or giving by reference to another instrument, any charge to the benefit of which debenture holders of that series are entitled pari passu is created by a company, it is for the purposes of section 860(1) sufficient if the required particulars, together with the deed containing the charge (or, if there is no such deed, one of the debentures of the series), are delivered to the registrar before the end of the period allowed for registration.

(2) The following are the required particulars--

(a) the total amount secured by the whole series, and

(b) the dates of the resolutions authorising the issue of the series and the date of the covering deed (if any) by which the series is created or defined, and

(d) the names of the trustees (if any) for the debenture holders.

(3) Particulars of the date and amount of each issue of debentures of a series of the kind mentioned in subsection (1) must be sent to the registrar for entry in the register of charges.

(4) Failure to comply with subsection (3) does not affect the validity of the debentures issued.

(5) Subsections (2) to (6) of section 860 apply for the purposes of this section as they apply for the purposes of that section, but as if references to the registration of a charge were references to the registration of a series of debentures.

864 Additional registration requirement for commission etc in relation to debentures

(1) Where any commission, allowance or discount has been paid or made either directly or indirectly by a company to a person in consideration of his--

(a) subscribing or agreeing to subscribe, whether absolutely or conditionally, for debentures in a company, or

(b) procuring or agreeing to procure subscriptions, whether absolute or conditional, for such debentures,

the particulars required to be sent for registration under section 860 shall include particulars as to the amount or rate per cent. of the commission, discount or allowance so paid or made.

(2) The deposit of debentures as security for a debt of the company is not, for the purposes of this section, treated as the issue of debentures at a discount.

(3) Failure to comply with this section does not affect the validity of the debentures issued.

865 Endorsement of certificate on debentures

(1) The company shall cause a copy of every certificate of registration given under section 869 to be endorsed on every debenture or certificate of debenture stock which is issued by the company, and the payment of which is secured by the charge so registered.

(2) But this does not require a company to cause a certificate of registration of any charge so given to be endorsed on any debenture or certificate of debenture stock issued by the company before the charge was created.

(3) If a person knowingly and wilfully authorises or permits the delivery of a debenture or certificate of debenture stock which under this section is required to have endorsed on it a copy of a certificate of registration, without the copy being so endorsed upon it, 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 3 on the standard scale.

Charges in other jurisdictions

866 Charges created in, or over property in, jurisdictions outside the United Kingdom

(1) Where a charge is created outside the United Kingdom comprising property situated outside the United Kingdom, the delivery to the registrar of a verified copy of the instrument by which the charge is created or evidenced has the same effect for the purposes of this Chapter as the delivery of the instrument itself.

(2) Where a charge is created in the United Kingdom but comprises property outside the United Kingdom, the instrument creating or purporting to create the charge may be sent for registration under section 860 even if further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situated.

867 Charges created in, or over property in, another United Kingdom jurisdiction

(1) Subsection (2) applies where--

(a) a charge comprises property situated in a part of the United Kingdom other than the part in which the company is registered, and

(b) registration in that other part is necessary to make the charge valid or effectual under the law of that part of the United Kingdom.

(2) The delivery to the registrar of a verified copy of the instrument by which the charge is created or evidenced, together with a certificate stating that the charge was presented for registration in that other part of the United Kingdom on the date on which it was so presented has, for the purposes of this Chapter, the same effect as the delivery of the instrument itself.

Orders charging land: Northern Ireland

868 Northern Ireland: registration of certain charges etc. affecting land

(1) Where a charge imposed by an order under Article 46 of the 1981 Order or notice of such a charge is registered in the Land Registry against registered land or any estate in registered land of a company, the Registrar of Titles shall as soon as may be cause two copies of the order made under Article 46 of that Order or of any notice under Article 48 of that Order to be delivered to the registrar.

(2) Where a charge imposed by an order under Article 46 of the 1981 Order is registered in the Registry of Deeds against any unregistered land or estate in land of a company, the Registrar of Deeds shall as soon as may be cause two copies of the order to be delivered to the registrar.

(3) On delivery of copies under this section, the registrar shall--

(a) register one of them in accordance with section 869, and

(b) not later than 7 days from that date of delivery, cause the other copy together with a certificate of registration under section 869(5) to be sent to the company against which judgment was given.

(4) Where a charge to which subsection (1) or (2) applies is vacated, the Registrar of Titles or, as the case may be, the Registrar of Deeds shall cause a certified copy of the certificate of satisfaction lodged under Article 132(1) of the 1981 Order to be delivered to the registrar for entry of a memorandum of satisfaction in accordance with section 872.

(5) In this section--

"the 1981 Order" means the Judgments Enforcement (Northern Ireland) Order 1981 (S.I. 1981/226 (N.I. 6));
"the Registrar of Deeds" means the registrar appointed under the Registration of Deeds Act (Northern Ireland) 1970 (c. 25);
"Registry of Deeds" has the same meaning as in the Registration of Deeds Acts;
"Registration of Deeds Acts" means the Registration of Deeds Act (Northern Ireland) 1970 and every statutory provision for the time being in force amending that Act or otherwise relating to the registry of deeds, or the registration of deeds, orders or other instruments or documents in such registry;
"the Land Registry" and "the Registrar of Titles" are to be construed in accordance with section 1 of the Land Registration Act (Northern Ireland) 1970 (c. 18);
"registered land" and "unregistered land" have the same meaning as in Part 3 of the Land Registration Act (Northern Ireland) 1970.

The register of charges

869 Register of charges to be kept by registrar

(1) The registrar shall keep, with respect to each company, a register of all the charges requiring registration under this Chapter.

(2) In the case of a charge to the benefit of which holders of a series of debentures are entitled, the registrar shall enter in the register the required particulars specified in section 863(2).

(3) In the case of a charge imposed by the Enforcement of Judgments Office under Article 46 of the Judgments Enforcement (Northern Ireland) Order 1981, the registrar shall enter in the register the date on which the charge became effective.

(4) In the case of any other charge, the registrar shall enter in the register the following particulars--

(a) if it is a charge created by a company, the date of its creation and, if it is a charge which was existing on property acquired by the company, the date of the acquisition,

(b) the amount secured by the charge,

(d) the persons entitled to the charge.

(5) The registrar shall give a certificate of the registration of any charge registered in pursuance of this Chapter, stating the amount secured by the charge.

(6) The certificate--

(a) shall be signed by the registrar or authenticated by the registrar's official seal, and

(b) is conclusive evidence that the requirements of this Chapter as to registration have been satisfied.

(7) The register kept in pursuance of this section shall be open to inspection by any person.

870 The period allowed for registration

(1) The period allowed for registration of a charge created by a company is--

(a) 21 days beginning with the day after the day on which the charge is created, or

(b) if the charge is created outside the United Kingdom, 21 days beginning with the day after the day on which the instrument by which the charge is created or evidenced (or a copy of it) could, in due course of post (and if despatched with due diligence) have been received in the United Kingdom.

(2) The period allowed for registration of a charge to which property acquired by a company is subject is--

(a) 21 days beginning with the day after the day on which the acquisition is completed, or

(b) if the property is situated and the charge was created outside the United Kingdom, 21 days beginning with the day after the day on which the instrument by which the charge is created or evidenced (or a copy of it) could, in due course of post (and if despatched with due diligence) have been received in the United Kingdom.

(3) The period allowed for registration of particulars of a series of debentures as a result of section 863 is--

(a) if there is a deed containing the charge mentioned in section 863(1), 21 days beginning with the day after the day on which that deed is executed, or

(b) if there is no such deed, 21 days beginning with the day after the day on which the first debenture of the series is executed.

871 Registration of enforcement of security

(1) If a person obtains an order for the appointment of a receiver or manager of a company's property, or appoints such a receiver or manager under powers contained in an instrument, he shall within 7 days of the order or of the appointment under those powers, give notice of the fact to the registrar.

(2) Where a person appointed receiver or manager of a company's property under powers contained in an instrument ceases to act as such receiver or manager, he shall, on so ceasing, give the registrar notice to that effect.

(3) The registrar must enter a fact of which he is given notice under this section in the register of charges.

(4) A person who makes default in complying with the requirements of this section commits an offence.

(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 and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

872 Entries of satisfaction and release

(1) Subsection (2) applies if a statement is delivered to the registrar verifying with respect to a registered charge--

(a) that the debt for which the charge was given has been paid or satisfied in whole or in part, or

(b) that part of the property or undertaking charged has been released from the charge or has ceased to form part of the company's property or undertaking.

(2) The registrar may enter on the register a memorandum of satisfaction in whole or in part, or of the fact part of the property or undertaking has been released from the charge or has ceased to form part of the company's property or undertaking (as the case may be).

(3) Where the registrar enters a memorandum of satisfaction in whole, the registrar shall if required send the company a copy of it.

873 Rectification of register of charges

(1) Subsection (2) applies if the court is satisfied--

(a) that the failure to register a charge before the end of the period allowed for registration, or the omission or mis-statement of any particular with respect to any such charge or in a memorandum of satisfaction--

(i) was accidental or due to inadvertence or to some other sufficient cause, or

(ii) is not of a nature to prejudice the position of creditors or shareholders of the company, or

(b) that on other grounds it is just and equitable to grant relief.

(2) The court may, on the application of the company or a person interested, and on such terms and conditions as seem to the court just and expedient, order that the period allowed for registration shall be extended or, as the case may be, that the omission or mis-statement shall be rectified.

Avoidance of certain charges

874 Consequence of failure to register charges created by a company

(1) If a company creates a charge to which section 860 applies, the charge is void (so far as any security on the company's property or undertaking is conferred by it) against--

(a) a liquidator of the company,

(b) an administrator of the company, and

unless that section is complied with.

(2) Subsection (1) is subject to the provisions of this Chapter.

(3) Subsection (1) is without prejudice to any contract or obligation for repayment of the money secured by the charge; and when a charge becomes void under this section, the money secured by it immediately becomes payable.

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