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13 1983

COMPANIES (AMENDMENT) ACT, 1983

PART III

The capital of a company

Authorised share capital and the issue of share capital

Meaning of “authorised minimum”.

19. —(1) In this Act “the authorised minimum” means £30,000 or such greater sum as may be specified by order made by the Minister under subsection (2).

(2) The Minister may by order specify that the authorised minimum for the purposes of this Act shall be an amount other than £30,000 and such an order may—

(a) require any public limited company having an allotted share capital of which the nominal value is less than the amount specified in the order as the authorised minimum to increase that value to not less than that amount or make an application to be re-registered as another form of company;

(b) make, in connection with any such requirement, provision for any of the matters for which provision is made by any enactment in the Companies Acts relating to a company's registration, re-registration or change of name, to payment for any share comprised in a company's capital and to offers of shares in or debentures of a company to the public, including provision as to the consequences (whether in criminal law or otherwise) of a failure to comply with any requirement of the order; and

(c) contain such supplemental and transitional provision as the Minister thinks appropriate, make different provision for different cases and, in particular, provide for any provision of the order to come into operation on different days for different purposes.

Authority of company required for allotment of certain securities by directors.

20. —(1) The directors of a company shall not exercise any power of the company to allot relevant securities, unless the directors are, in accordance with this section, authorised to do so by—

(a) the company in general meeting; or

(b) the articles of the company.

(2) Authority for the purposes of this section may be given for a particular exercise of that power or for the exercise of that power generally, and may be unconditional or subject to conditions.

(3) Any such authority shall state the maximum amount of relevant securities that may be allotted thereunder and the date on which the authority will expire, which shall be not more than five years from whichever is relevant of the following dates—

(a) in the case of an authority contained at the time of the original incorporation of the company in the articles of the company, the date of that incorporation; and

(b) in any other case, the date on which the resolution is passed by virtue of which that authority is given;but any such authority (including an authority contained in the articles of the company) may be previously revoked or varied by the company in general meeting.

(4) Any such authority (whether or not it has been previously renewed under this subsection) may be renewed by the company in general meeting for a further period not exceeding five years; but the resolution must state (or restate) the amount of relevant securities which may be allotted under the authority or, as the case may be, the amount remaining to be allotted thereunder, and must specify the date on which the renewed authority will expire.

(5) The directors may allot relevant securities, notwithstanding that any authority for the purposes of this section has expired, if the relevant securities are allotted in pursuance of an offer or agreement made by the company before the authority expired and the authority allowed it to make an offer or agreement which would or might require relevant securities to be allotted after the authority expired.

(6) A resolution of a company to give, vary, revoke or renew such an authority may, notwithstanding that it alters the articles of the company, be an ordinary resolution but section 143 of the Principal Act shall apply to it.

(7) Any director who knowingly and wilfully contravenes, or permits or authorises a contravention of, this section shall be guilty of an offence.

(8) Nothing in this section shall affect the validity of any allotment of relevant securities.

(9) This section does not apply to any allotment of relevant securities by a company, other than a public limited company registered as such on its original incorporation, if it is made in pursuance of an offer or agreement made before the date on which the earlier of the following events occurs, that is to say, the holding of the first general meeting of the company after its re-registration or registration as a public limited company and the end of the general transitional period; but any resolution to give, vary or revoke an authority for the purposes of this section shall have effect for those purposes if it is passed at any time after the passing of this Act.

(10) In this section “relevant securities” means, in relation to a company,—

(a) shares in the company other than shares shown in the memorandum to have been taken by the subscribers thereto or shares allotted in pursuance of an employees' share scheme; and

(b) any right to subscribe for, or to convert any security into, shares in the company other than shares so allotted;

and any reference to the allotment of relevant securities shall include a reference to the grant of such a right but shall not include any reference to the allotment of shares pursuant to such a right.

Shares and debentures of private company not to be offered to public.

21. —(1) A private company and any officer of the company who is in default shall be guilty of an offence if the company—

(a) offers to the public (whether for cash or otherwise) any shares in or debentures of the company; or

(b) allots, or agrees to allot, (whether for cash or otherwise) any shares in or debentures of the company with a view to all or any of those shares or debentures being offered for sale to the public.

(2) Sections 51(2) and 61 of the Principal Act shall apply for the purposes of this section as they apply for the purposes of that Act.

(3) Nothing in this section shall affect the validity of any allotment or sale of shares or debentures or of any agreement to allot or sell shares or debentures.

(4) A person guilty of an offence under subsection (1) shall be liable on summary conviction to a fine not exceeding £500.

Document containing offer to state whether shares will be allotted where issue not fully subscribed.

22. —(1) Without prejudice to section 53 of the Principal Act no allotment shall be made of any share capital of a public limited company offered for subscription unless—

(a) that capital is subscribed for in full; or

(b) the offer states that, even if the capital is not subscribed for in full, the amount of that capital subscribed for may be allotted in any event or in the event of the conditions specified in the offer being satisfied;

and, where conditions are so specified, no allotment of the capital shall be made by virtue of paragraph (b) unless those conditions are satisfied.

(2) Section 53 (4) and section 55 of the Principal Act shall apply where shares are prohibited from being allotted by subsection (1) as they apply where the conditions mentioned in subsection (1) of the said section 53 are not complied with; and subsection (5) of the said section 53 shall apply to this section as it applies to that section.

(3) The provisions of this section shall apply in the case of shares offered as wholly or partly payable otherwise than in cash as they apply in the case of shares offered for subscription and—

(a) in subsection (1), the word “subscribed” shall be construed accordingly; and

(b) in the said section 53 (4), as it applies by virtue of subsection (2) to the former case, references to the repayment of money received from applicants for shares shall include references to the return of any other consideration so received (including, if the case so requires, the release of the applicant from any undertaking) or, if it is not reasonably practicable to return the consideration, the payment of money equal to the value of the consideration at the time it was so received, and references to interest shall have effect accordingly.

Pre-emption rights

Pre-emption rights.

23. —(1) Subject to the following provisions of this section and sections 24 and 25 , a company proposing to allot any equity securities—

(a) shall not allot any of those securities on any terms to any person unless it has made an offer to each person who holds relevant shares or relevant employee shares to allot to him on the same or more favourable terms a proportion of those securities which is as nearly as practicable equal to the proportion in nominal value held by him of the aggregate of relevant shares and relevant employee shares; and

(b) shall not allot any of those securities to any person unless the period during which any such offer may be accepted has expired or the company has received notice of the acceptance or refusal of every offer so made.

(2) Subsection (3) applies to any provision of the memorandum or articles of a company which requires the company, when proposing to allot equity securities consisting of relevant shares of any particular class, not to allot those securities on any terms unless it has complied with the condition that it makes such an offer as is described in subsection (1) to each person who holds relevant shares or relevant employee shares of that class.

(3) If, in accordance with a provision to which this subsection applies—

(a) a company makes an offer to allot any securities to such a holder; and

(b) he or anyone in whose favour he has renounced his right to their allotment accepts the offer,

subsection (1) shall not apply to the allotment of those securities and the company may allot them accordingly; but this subsection is without prejudice to the application of subsection (1) in any other case.

(4) Subsection (1) shall not apply in relation to a particular allotment of equity securities if the securities are, or are to be, wholly or partly paid up otherwise than in cash.

(5) Securities which a company has offered to allot to a holder of relevant shares or relevant employee shares may be allotted to him or anyone in whose favour he has renounced his right to their allotment without contravening subsection (1) (b).

(6) Subsection (1) shall not apply in relation to the allotment of any securities which would apart from a renunciation or assignment of the right to their allotment be held under an employees' share scheme.

(7) An offer which is required by subsection (1) or by any provision to which subsection (3) applies to be made to any person shall be made by serving it on him in the manner in which notices are authorised to be given by regulations 133, 134 and 135 of Table A; but where he is the holder of a share warrant the offer may instead be made by causing the offer, or a notice specifying where a copy of the offer can be obtained or inspected, to be published in Iris Oifigiúil.

(8) Any such offer as is mentioned in subsection (7) must state a period of not less than 21 days during which the offer may be accepted; and the offer shall not be withdrawn before the end of that period.

(9) Subsections (7) and (8) shall not invalidate a provision to which subsection (3) applies by reason that that provision requires or author-ises an offer thereunder to be made in contravention of one or both of those subsections, but, to the extent that the provision requires or authorises such an offer to be so made, it shall be of no effect.

(10) Subsection (1), (7) or (8) may, in its application in relation to allotments by a private company of equity securities or to such allotments of a particular description, be excluded by a provision contained in the memorandum or articles of that company; and a requirement or authority contained in the memorandum or articles of a private company shall, if it is inconsistent with any of those subsections, have effect as a provision excluding that subsection, but a provision to which subsection (3) applies shall not be treated as being inconsistent with subsection (1).

(11) Where there is a contravention of subsections (1), (7) or (8) or of a provision to which subsection (3) applies, the company, and every officer of the company who knowingly authorised or permitted the contravention, shall be jointly and severally liable to compensate any person to whom an offer should have been made under the subsection or provision contravened for any loss, damage, costs or expenses which that person has sustained or incurred by reason of the contravention; but no proceedings to recover any such loss, damage, costs or expenses shall be commenced after the expiration of two years from the delivery to the registrar of companies of the return of allotments in question or, where equity securities other than shares are granted, from the date of the grant.

(12) In relation to any offer to allot any securities required by subsection (1) or by any provision to which subsection (3) applies, references in this section (however expressed) to the holder of shares of any description shall be read as including references to any person who held shares of that description on any day within the period of twenty-eight days ending with the day immediately preceding the date of the offer.

(13) In this section and sections 24 and 25

equity security”, in relation to a company, means a relevant share in the company (other than a share shown in the memorandum to have been taken by a subscriber thereto or a bonus share) or a right to subscribe for, or to convert any securities into, relevant shares in the company, and references to the allotment of equity securities or of equity securities consisting of relevant shares of a particular class shall include references to the grant of a right to subscribe for, or to convert any securities into, relevant shares in the company or, as the case may be, relevant shares of a particular class, but shall not include references to the allotment of any relevant shares pursuant to such a right;

relevant employee shares”, in relation to a company, means shares of the company which would be relevant shares in the company but for the fact that they are held by a person who acquired them in pursuance of an employees' share scheme; and

relevant shares”, in relation to a company, means shares in the company other than—

(a) shares which as respects dividends and capital carry a right to participate only up to a specified amount in a distribution; and

(b) shares which are held by a person who acquired them in pursuance of an employees' share scheme, or, in the caseof shares which have not been allotted, are to be allotted in pursuance of such a scheme;

and any reference to a class of shares shall be construed as a reference to shares to which the same rights are attached as to voting and as to participation, both as respects dividends and as respects capital, in a distribution.

Further provisions relating to pre-emption rights.

24. —(1) Where the directors of a company are generally authorised for the purposes of section 20 , they may be given power by the articles or by a special resolution of the company to allot equity securities pursuant to that authority as if—

(a) section 23 (1) did not apply to the allotment;

or

(b) that subsection applied to the allotment with such modifications as the directors may determine;

and where the directors make an allotment under this subsection, the said section 23 shall have effect accordingly.

(2) Where the directors of a company are authorised for the purposes of section 20 (whether generally or otherwise), the company may by special resolution resolve either—

(a) that section 23 (1) shall not apply to a specified allotment of equity securities to be made pursuant to that authority; or

(b) that that subsection shall apply to the allotment with such modifications as may be specified in the resolution;

and where such a resolution is passed the said section 23 shall have effect accordingly.

(3) A power conferred by virtue of subsection (1) or a special resolution under subsection (2) shall cease to have effect when the authority to which it relates is revoked or would, if not renewed, expire, but if that authority is renewed, the power or, as the case may be, the resolution may also be renewed, for a period not longer than that for which the authority is renewed, by a special resolution of the company.

(4) Notwithstanding that any such power or resolution has expired, the directors may allot equity securities in pursuance of an offer or agreement previously made by the company, if the power or resolution enabled the company to make an offer or agreement which would or might require equity securities to be allotted after it expired.

(5) A special resolution under subsection (2), or a special resolution to renew such a resolution, shall not be proposed unless it is recommended by the directors and there has been circulated, with the notice of the meeting at which the resolution is proposed, to the members entitled to have that notice a written statement by the directors setting out—

(a) their reasons for making the recommendation;

(b) the amount to be paid to the company in respect of the equity securities to be allotted; and

(c) the directors' justification of that amount.

(6) A person who knowingly or recklessly authorises or permits the inclusion in a statement circulated under subsection (5) of any matter which is misleading, false or deceptive in a material particular shall be guilty of an offence.

Transitional provisions relating to pre-emption rights.

25. —(1) Sections 23 and 24 shall not apply—

(a) to any allotment of equity securities made by a company, other than a public limited company registered as such on its original incorporation, before the date on which the earlier of the following events occurs, that is to say, the holding of the first general meeting of the company after its re-registration or registration as a public limited company and the end of the general transitional period; or

(b) where subsection (2) applies, to an allotment of the equity securities which are subject to the requirement mentioned in that subsection.

(2) This subsection applies where any company which is re-registered or registered as a public limited company is or, but for the provisions of this Act, would be subject at the time of re-registration or, as the case may be, registration to a requirement imposed (whether by the company's memorandum or articles or otherwise) before the relevant time by virtue of which it must, when making an allotment of equity securities, make an offer to allot those securities or some of them in a manner which (otherwise than by virtue of its involving a contravention of section 23 (7) or (8)) is inconsistent with section 23 .

(3) Any requirement which—

(a) is imposed on a private company before the relevant time otherwise than by the company's memorandum or articles; and

(b) if contained in the memorandum or articles of the company, would have effect by virtue of section 23 (10) to the exclusion of any provision of that section,

shall have effect, so long as the company remains a private company, as if it were contained in the memorandum or articles of the company.

(4) If at the relevant time a company, other than a public limited company registered as such on its original incorporation, is subject to a requirement such as is mentioned in section 23 (2) and which was imposed otherwise than by the company's memorandum or articles, the requirement shall be treated for the purposes of that section as if it were contained in the company's memorandum or articles.

(5) In this section “the relevant time” means—

(a) except in a case falling within paragraph (b), the end of the general transitional period;

and

(b) in the case of a company which is re-registered or registered as a public limited company in pursuance of an application made before the end of that period, the time at which the application is made.

Payment for share capital

Subscription of share capital.

26. —(1) Subject to the following provisions of this Part, shares allotted by a company and any premium payable on them may be paid up in money or money's worth (including goodwill and expertise).

(2) A public limited company shall not accept at any time in payment up of its shares or any premium on them, an undertaking given by any person that he or another should do work or perform services for the company or any other person.

(3) Where a public limited company accepts such an undertaking as payment up of its shares or any premium payable on them, the holder of the shares when they or the premium are treated as paid up, in whole or in part, by the undertaking—

(a) shall be liable to pay the company in respect of those shares an amount equal to their nominal value, together with the whole of any premium or, if the case so requires, such proportion of that amount as is treated as paid up by the undertaking; and

(b) shall be liable to pay interest at the appropriate rate on the amount payable under paragraph (a).

(4) Where any person becomes a holder of any shares in respect of which—

(a) there has been a contravention of this section; and

(b) by virtue of that contravention, another is liable to pay any amount under this section,

that person also shall be liable to pay that amount (jointly and severally with any other person so liable) unless either he is a purchaser for value and, at the time of the purchase, he did not have actual notice of the contravention or he derived title to the shares (directly or indirectly) from a person who became a holder of them after the contravention and was not so liable.

(5) Subsection (1) shall not prevent a company from allotting bonus shares in the company to its members or from paying up, with sums available for the purpose, any amounts for the time being unpaid on any of its shares (whether on account of the nominal value of the shares or by way of premium).

(6) References in this section to a holder, in relation to any shares in a company, include references to any person who has an unconditional right to be included in the company's register of members in respect of those shares or to have an instrument of transfer of the shares executed in his favour.

Prohibition on allotment of shares at a discount.

27. —(1) Subject to subsection (4) the shares of a company shall not be allotted at a discount.

(2) Where shares are allotted in contravention of subsection (1), the allottee shall be liable to pay the company an amount equal to the amount of the discount and shall be liable to pay interest thereon at the appropriate rate.

(3) Section 26 (4) shall apply for the purposes of this section as it applies for the purposes of that section.

(4) The repeal of section 63 of the Principal Act effected by section 3 (2) shall not affect an application for an order sanctioning the issue of shares at a discount which has been made to the court under that section and which has not been withdrawn or disposed of before the appointed day, or an order made on or after that day in pursuance of any such application, and—

(a) any such application may be proceeded with and any such order, if not made before the appointed day, may be made as if that section had not been repealed; and

(b) shares may be allotted at a discount in accordance with any such order (whether made, before, on or after the appointed day) accordingly.

Payment for allotted shares.

28. —(1) Subject to subsection (4), a public limited company shall not allot a share except as paid up at least as to one-quarter of the nominal value of the share and the whole of any premium on it.

(2) Where a public limited company allots a share in contravention of subsection (1), the share shall be treated as if one-quarter of its nominal value together with the whole of any premium had been received, but the allottee shall be liable to pay the company the minimum amount which should have been received in respect of the share under that subsection less the value of any consideration actually applied in payment up (to any extent) of the share and any premium on it, and interest at the appropriate rate on the amount payable under this subsection.

(3) Subsection (2) shall not apply in relation to the allotment of a bonus share in contravention of subsection (1) unless the allottee knew or ought to have known the share was so allotted.

(4) Subsections (1) to (3) shall not apply to shares allotted in pursuance of an employees' share scheme.

(5) Section 26 (4) shall apply for the purposes of this section as it applies for the purposes of that section.

Payment of non-cash consideration.

29. —(1) A public limited company shall not allot shares as fully or partly paid up (as to their nominal value or any premium payable on them) otherwise than in cash if the consideration for the allotment is or includes an undertaking which is to be or may be performed more than five years after the date of the allotment.

(2) Where a public limited company allots shares in contravention of subsection (1), the allottee of the shares shall be liable to pay the company an amount equal to their nominal value, together with the whole of any premium, or, if the case so requires, such proportion of that amount as is treated as paid up by the undertaking and shall be liable to pay interest at the appropriate rate on the amount payable under this subsection.

(3) Where a contract for the allotment of shares does not contravene subsection (1), any variation of the contract which has the effect that the contract would have contravened that subsection if the terms of the contract as varied had been its original terms shall be void.

(4) Subsection (3) shall apply to the variation by a public limited company of the terms of a contract entered into before the company was registered or re-registered as a public limited company.

(5) Where a public limited company allots shares for a consideration which consists of or includes (in accordance with subsection (1)) an undertaking which is to be performed within five years of the allotment but that undertaking is not performed within the period allowed by the contract for the allotment of the shares, the allottee of the shares in question shall be liable to pay the company at the end of that period an amount equal to the nominal value of the shares, together with the whole of any premium, or, if the case so requires, such proportion of that amount as is treated as paid up by the undertaking, together with interest at the appropriate rate on the amount payable under this subsection.

(6) Section 26 (4) shall apply in relation to a contravention of this section and to a failure to carry out a term of a contract as mentioned in subsection (5) as it applies in relation to a contravention of that section.

(7) Any reference in this section to a contract for the allotment of shares includes a reference to an ancillary contract relating to payment in respect of those shares.

Experts' reports on non-cash consideration before allotment of shares.

30. —(1) Subject to subsection (2), a public limited company shall not allot shares as fully or partly paid up (as to their nominal value or any premium payable on them) otherwise than in cash unless—

(a) the consideration for the allotment has been valued in accordance with the following provisions of this section;

(b) a report with respect to its value has been made to the company by a person appointed by the company in accordance with those provisions during the six months immediately preceding the allotment of the shares; and

(c) a copy of the report has been sent to the proposed allottee of the shares.

(2) Subject to subsection (3), subsection (1) shall not apply to the allotment of shares by a company in connection with—

(a) an arrangement providing for the allotment of shares in that company on terms that the whole or part of the consideration for the shares allotted is to be provided by the transfer to that company or the cancellation of all or some of the shares, or of all or some of the shares of a particular class, in another company (with or without the issue to that company of shares, or of shares of any particular class, in that other company); or

(b) a proposed merger of that company with another company.

(3) Subsection (2) (a) does not exclude the application of subsection (1) to the allotment of shares by a company in connection with any such arrangement as is there mentioned unless it is open to all the holders of the shares in the other company in question or, where the arrangement applies only to shares of a particular class, to all the holders of shares in that other company of that class, to take part in the arrangement. In determining whether that is the case, shares heldby or by a nominee of the company proposing to allot the shares in connection with the arrangement, or by or by a nominee of a company which is that company's holding company or subsidiary or a company which is a subsidiary of its holding company, shall be disregarded.

(4) For the purposes of subsection (2) (b) there is a proposed merger of two companies when one of them proposes to acquire all the assets and liabilities of the other in exchange for the issue of shares or other securities in that one to shareholders of the other, with or without any cash payment to those shareholders.

(5) The valuation and report required by subsection (1) shall be made by an independent person, that is to say, a person qualified at the time of the report to be appointed or to continue to be auditor of the company, except that where it appears to him to be reasonable for the valuation of the consideration, or a valuation of part of the consideration, to be made, or to accept such a valuation made, by any person who—

(a) appears to him to have the requisite knowledge and experience to value the consideration or that part of the consideration; and

(b) is not an officer or servant of the company or any other body corporate which is that company's subsidiary or holding company or a subsidiary of that company's holding company or a partner or employee of such an officer or servant,

that independent person may arrange for or accept such a valuation, together with a report which will enable him to make his own report under that subsection and provide a note in accordance with subsection (8).

(6) The independent person's report under subsection (1) shall state—

(a) the nominal value of the shares to be wholly or partly paid for by the consideration in question;

(b) the amount of any premium payable on those shares;

(c) the description of the consideration and, as respects so much of the consideration as he himself has valued, a description of that part of the consideration, the method used to value it and the date of the valuation; and

(d) the extent to which the nominal value of the shares and any premium are to be treated as paid up—

(i) by the consideration;

(ii) in cash.

(7) Where any consideration is valued under this section by a person other than the independent person, the latter's report under subsection (1) shall state that fact and shall also—

(a) state the former's name and what knowledge and experience he has to carry out the valuation; and

(b) describe so much of the consideration as was valued by that other person, the method used to value it and state the date of valuation.

(8) The report of the independent person made under subsection (1) shall contain or be accompanied by a note by him—

(a) in the case of a valuation made by another person, that it appeared to the independent person reasonable to arrange for it to be so made, or to accept a valuation so made;

(b) whoever made the valuation, that the method of valuation was reasonable in all the circumstances;

(c) that it appears to the independent person that there has been no material change in the value of the consideration in question since the valuation; and

(d) that on the basis of the valuation the value of the consideration, together with any cash by which the nominal value of the shares or any premium payable on them is to be paid up, is not less than so much of the aggregate of the nominal value and the whole of any such premium as is treated as paid up by the consideration and any such cash.

(9) Subsection (10) applies where a public limited company allots any share in contravention of subsection (1) and either—

(a) the allottee has not received a report under this section; or

(b) there has been some other contravention of this section and the allottee knew or ought to have known that it amounted to a contravention.

(10) Where this subsection applies, the allottee shall be liable to pay the company an amount equal to the nominal value of the shares, together with the whole of any premium or, if the case so requires, such proportion of that amount as is treated as paid up by the consideration, and shall be liable to pay interest at the appropriate rate on the amount payable under this subsection.

(11) Section 26 (4) shall apply for the purposes of this section as it applies for the purposes of that section.

(12) Where the consideration is accepted partly in payment up of the nominal value of the shares and any premium and partly for some other consideration given by the company, the provisions of this section shall apply as if references to the consideration accepted by the company included references to the proportion of that consideration which is properly attributable to the payment up of that value and any premium; and

(a) the independent person shall carry out or arrange for such other valuations as will enable him to determine that proportion; and

(b) his report under subsection (1) shall state what valuations have been made by virtue of this subsection and also the reason for and method and date of any such valuation and any other matters which may be relevant to that determination.

(13) It is hereby declared for the avoidance of doubt that subsection (1) does not apply by reference to the application of an amount for the time being standing to the credit of any of the company's reserve accounts or to the credit of its profit and loss account in paying up (to any extent) any shares allotted to members of the company or any premiums on any shares so allotted; and in relation to any such allotment references in this section to the consideration for the allotment do not include any such amount so applied.

(14) In this section—

(a) “arrangement” means any agreement, scheme or arrangement (including an arrangement sanctioned in accordance with section 201 or 260 of the Principal Act);

(b) any reference to a company, except where it is or is to be construed as a reference to a public limited company, includes a reference to any body corporate and any body to which letters patent have been issued under the Chartered Companies Act, 1837; and

(c) any reference to an officer or servant shall not include a reference to an auditor.

Experts' reports: supplementary.

31. —(1) Any person carrying out a valuation or making a report under section 30 with respect to any consideration proposed to be accepted or given by a company shall be entitled to require from the officers of the company such information and explanation as he thinks necessary to enable him to carry out the valuation or to make the report and provide a note, under that section.

(2) A company to which such a report is made as to the value of any consideration for which, or partly for which, it proposes to allot shares shall deliver a copy of the report to the registrar of companies for registration at the same time that it files the return of the allotments of those shares under section 58 of the Principal Act, and subsections (3) and (4) of that section shall apply to a default in complying with this subsection as they apply to a default in complying with that section.

(3) Any person who knowingly or recklessly makes a statement which—

(a) is misleading, false or deceptive in a material particular, and

(b) is a statement to which this subsection applies,

shall be guilty of an offence.

(4) Subsection (3) applies to any statement made (whether orally or in writing) to any person carrying out a valuation or making a report under section 30 , being a statement which conveys or purports to convey any information or explanation which that person requires, or is entitled to require, under subsection (1).

Experts' reports on non-cash assets acquired from subscribers, etc.

32. —(1) A public limited company, other than a company re-registered under section 12 , shall not, unless the conditions mentioned in subsection (3) have been complied with, enter into an agreement with a relevant person for the transfer by him during the initial period of one or more non-cash assets to the company or another for a consideration to be given by the company equal in value at the time of the agreement to at least one-tenth of the nominal value of the company's share capital issued at that time.

(2) In this section—

(a) in relation to a company formed as a public limited company, “relevant person” means any subscriber to the memorandum of the company and “initial period” means the period of two years beginning with the date on which the company is issued with a certificate under section 6 that it is entitled to do business;

(b) in relation to a company re-registered, or registered in accordance with section 18 , as a public limited company, “relevant person” means any person who was a member of the company on the date of the re-registration or registration and “initial period” means the period of two years beginning with that date.

(3) The conditions referred to in subsection (1) are that—

(a) the consideration to be received by the company (that is to say, the asset to be transferred to the company or the advantage to the company of its transfer to another person) and any consideration other than cash to be given by the company have been valued under the following provisions of this section (without prejudice to any requirement to value any consideration under section 30 );

(b) a report with respect to the consideration to be so received and given has been made to the company in accordance with those provisions during the six months immediately preceding the date of the agreement;

(c) the terms of the agreement have been approved by an ordinary resolution of the company; and

(d) not later than the giving of the notice of the meeting at which the resolution is proposed, copies of the resolution and report have been circulated to the members of the company entitled to receive that notice and, if the relevant person is not then such a member, to that person.

(4) Subsection (1) shall not apply to the following agreements for the transfer of an asset for a consideration to be given by the company, that is to say—

(a) where it is part of the ordinary business of the company to acquire or arrange for other persons to acquire assets of a particular description, an agreement entered into by the company in the ordinary course of its business for the transfer of an asset of that description to it or such a person, as the case may be; or

(b) an agreement entered into by the company under the supervision of the court or an officer authorised by the court for the purpose, for the transfer of an asset to the company or to another.

(5) Section 30 (5) and (7) shall apply to a valuation and report of any consideration under this section as those subsections apply to a valuation of and report on any consideration under subsection (1) of that section.

(6) The report of the independent person under this section shall—

(a) state the consideration to be received by the company, describing the asset in question, specifying the amount to be received in cash, and the consideration to be given by the company, specifying the amount to be given in cash;

(b) state the method and date of valuation;

(c) contain or be accompanied by a note as to the matters mentioned in section 30 (8) (a) to (c); and

(d) contain or be accompanied by a note that on the basis of the valuation the value of the consideration to be received by the company is not less than the value of the consideration to be given by it.

(7) If a public limited company enters into an agreement with any relevant person in contravention of subsection (1) and either he has not received a report under this section or there has been some other contravention of this section or section 30 (5) or (7) which he knew or ought to have known amounted to a contravention, then, subject to subsection (8)

(a) the company shall be entitled to recover from the relevant person any consideration given by the company under the agreement or an amount equivalent to its value at the time of the agreement; and

(b) the agreement, so far as not carried out, shall be void.

(8) Where a company enters into an agreement in contravention of subsection (1) and that agreement is or includes an agreement for the allotment of shares in that company, then, whether or not the agreement also contravenes section 30

(a) subsection (7) shall not apply to the agreement insofar as it is an agreement for the allotment of shares; and

(b) section 26 (4) and section 30 (10) shall apply in relation to the shares as if they had been allotted in contravention of section 30 .

Provisions supplementary to section 32 .

33. —(1) Any person carrying out a valuation or making a report under section 32 shall be entitled to require from the officers of the company such information and explanation as he thinks necessary to enable him to carry out the valuation or make the report and provide the note required by that section; and section 31 (3) shall apply in relation to any such valuation and report as it applies in relation to a valuation and report under section 30 (1) with the substitution of a reference to this subsection for the reference in section 31 (4) to section 31 (1).

(2) A company which has passed a resolution under section 32 with respect to the transfer of an asset shall, within 15 days of the passing of the resolution, deliver to the registrar of companies a copy of the resolution together with the report required by that section and, if it fails to do so, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding £250 together with, in the case of a continuing offence, a fine not exceeding £25 for every day on which the offence continues, but not exceeding £500 in total.

(3) Any reference in section 32 or this section to consideration given for the transfer of an asset includes a reference to consideration given partly for its transfer but—

(a) the value of any consideration partly so given shall be taken to be the proportion of that consideration properly attributable to its transfer;

(b) the independent person shall carry out or arrange for such valuations of anything else as will enable him to determine that proportion; and

(c) his report under that section shall state what valuation has been made by virtue of this paragraph and also the reason for and method and date of any such valuation and any other matters which may be relevant to that determination.

Relief.

34. —(1) Where any person is liable to a company under section 26 , 29 , 30 or 32 in relation to payment in respect of any shares in the company or is liable by virtue of any undertaking given to the company in, or in connection with, payment for any such shares, the person so liable may make an application to the court under this subsection to be exempted in whole or in part from that liability.

(2) Where the liability mentioned in subsection (1) arises under any of those sections in relation to payment in respect of any shares, the court may, on an application under that subsection, exempt the applicant from that liability only—

(a) if and to the extent that it appears to the court just and equitable to do so having regard to the following, namely—

(i) whether the applicant has paid, or is liable to pay, any amount in respect of any other liability arising in relation to those shares under any of those sections or of any liability arising by virtue of any undertaking given in or in connection with payment for those shares;

(ii) whether any person other than the applicant has paid or is likely to pay (whether in pursuance of an order of the court or otherwise) any such amount; and

(iii) whether the applicant or any other person has performed, in whole or in part, or is likely so to perform any such undertaking or has done or is likely to do any other thing in payment or part payment in respect of those shares;

(b) if and to the extent that it appears to the court just and equitable to do so in respect of any interest which he is liable to pay to the company under any of those sections.

(3) Where the liability mentioned in subsection (1) arises by virtue of an undertaking given to the company in, or in connection with, payment for any shares in the company, the court may, on an application under that subsection, exempt the applicant from that liability only if and to the extent that it appears to the court just and equitable to do so having regard to the following, namely—

(a) whether the applicant has paid or is liable to pay any amount in respect of any liability arising in relation to those shares under section 26 , 29 , 30 or 32 ; and

(b) whether any person other than the applicant has paid or is likely to pay (whether in pursuance of an order of the court or otherwise) any such amount.

(4) In determining in pursuance of an application under subsection (1) whether it should exempt the applicant in whole or in part from any liability, the court shall have regard to the following overriding principles, namely—

(a) that a company which has allotted shares should receive money or money's worth at least equal in value to the aggregate of the nominal value of those shares and the whole of any premium or, if the case so requires, so much of that aggregate as is treated as paid up; and

(b) subject to paragraph (a), that where such a company would, if the court did not grant that exemption, have more than one remedy against a particular person, it should be for the company to decide which remedy it should remain entitled to pursue.

(5) Where a person brings any proceedings against another (“the contributor”) for a contribution in respect of any liability to a company arising under any of sections 26 to 30 and 32 and it appears to the court that the contributor is liable to make such a contribution, the court may, if and to the extent that it appears to the court, having regard to the respective culpability in respect of the liability to the company of the contributor and the person bringing the proceedings, that it is just and equitable to do so—

(a) exempt the contributor in whole or in part from his liability to make such a contribution; or

(b) order the contributor to make a larger contribution than, but for this subsection, he would be liable to make.

(6) Where a person is liable to a company by virtue of section 32 (7)(a), the court may, on an application under this subsection, exempt that person in whole or in part from that liability if and to the extent that it appears to the court just and equitable to do so having regard to any benefit accruing to the company by virtue of anything done by that person towards the carrying out of the agreement mentioned in that subsection.

Special provisions as to issue of shares to subscribers.

35. —Any shares taken by a subscriber to the memorandum of a public limited company in pursuance of an undertaking of his in the memorandum and any premium on the shares shall be paid up in cash.

Contravention of sections 26 to 35 .

36. —(1) Where a company contravenes any of the provisions of sections 26 to 30 , 32 and 35 , the company and any officer of the company who is in default shall be guilty of an offence.

(2) Subject to section 34 , an undertaking given by any person in or in connection with payment for shares in a company to do work or perform services or to do any other thing shall, if it is enforceable by the company apart from this Act, be so enforceable notwithstanding that there has been a contravention in relation thereto of section 26 , 29 or 30 and where such an undertaking is given in contravention of section 32 in respect of the allotment of any shares it shall be so enforceable notwithstanding that contravention.

Application of sections 26 to 36 in special cases.

37. —(1) Subject to subsection (2), sections 26 , 28 to 31 and 34 to 36 shall apply—

(a) to a company which has passed and not revoked a special resolution to be re-registered under section 9 or section 11 ;

(b) to a company whose directors have passed and not revoked a resolution to be re-registered under section 12 ; and

(c) to a joint stock company (within the meaning of section 329 of the Principal Act) which has passed and not revoked a resolution that the company be a public limited company;

as those sections apply to a public limited company.

(2) Section 26 and sections 28 to 31 shall not apply to the allotment of shares by a company, other than a public limited company registered as such on its original incorporation, where the contract for their allotment was entered into—

(a) except in a case falling within paragraph (b), before the end of the general transitional period;

(b) in the case of a company re-registered or registered as a public limited company in pursuance of a resolution of any description mentioned in subsection (1) that is passed before the end of that period, before the date on which that resolution is passed.

Class rights

Variation of rights attached to special classes of shares.

38. —(1) This section shall have effect with respect to the variation of the rights attached to any class of shares in a company whose share capital is divided into shares of different classes.

(2) Where the rights are attached to a class of shares in the company otherwise than by the memorandum, and the articles of the company do not contain provision with respect to the variation of the rights, those rights may be varied if, but only if—

(a) the holders of three-quarters in nominal value of the issued shares of that class consent in writing to the variation; or

(b) a special resolution passed at a separate general meeting of the holders of that class sanctions the variation;

and any requirement (howsoever imposed) in relation to the variation of those rights is complied with to the extent that it is not comprised in paragraphs (a) and (b).

(3) Where—

(a) the rights are attached to a class of shares in the company by the memorandum or otherwise;

(b) the memorandum or articles contain provision for the variation of those rights; and

(c) the variation of those rights is connected with the giving, variation, revocation or renewal of an authority for the purposes of section 20 or with a reduction of the company's share capital under section 72 of the Principal Act,

those rights shall not be varied unless—

(i) the condition mentioned in subsection (2) (a) or (b) is satisfied; and

(ii) any requirement of the memorandum or articles in relation to the variation of rights of that class is complied with to the extent that it is not comprised in the condition in subparagraph (i).

(4) Where the rights are attached to a class of shares in the company by the memorandum or otherwise and—

(a) where they are so attached by the memorandum, the articles contain provision with respect to their variation which had been included in the articles at the time of the company's original incorporation; or

(b) where they are so attached otherwise, the articles contain such provision (whenever first so included);

and in either case the variation is not connected as mentioned in subsection (3) (c), those rights may only be varied in accordance with that provision of the articles.

(5) Where the rights are attached to a class of shares in the company by the memorandum and the memorandum and articles do not contain provision with respect to the variation of the rights, those rights may be varied if all the members of the company agree to the variation.

(6) The provisions of sections 133 and 134 of the Principal Act and the provisions of the articles relating to general meetings shall, so far as applicable, apply in relation to any meeting of shareholders required by this section or otherwise to take place in connection with the variation of the rights attached to a class of shares, and shall so apply with the necessary modifications and subject to the following provisions, namely—

(a) the necessary quorum at any such meeting other than an adjourned meeting shall be two persons holding or representing by proxy at least one-third in nominal value of the issued shares of the class in question and at an adjourned meeting one person holding shares of the class in question or his proxy;

(b) any holder of shares of the class in question present in person or by proxy may demand a poll.

(7) Any alteration of a provision contained in the articles of a company for the variation of the rights attached to a class of shares or the insertion of any such provision into the company's articles shall itself be treated as a variation of those rights.

(8) Section 78 of the Principal Act shall apply in relation to subsection (2) as it applies in relation to a provision of the memorandum or articles of a company to the like effect.

(9) In this section and, except where the context otherwise requires,in any provision for the variation of the rights attached to a class of shares contained in the company's memorandum or articles references to the variation of those rights shall include references to their abrogation.

(10) Nothing in subsections (2) to (5) shall be construed as derogating from the powers of the court under section 15 or any of the following sections of the Principal Act, that is to say, sections 10, 201, 203 and 205.

(11) This section shall not apply in relation to any variation made by a company, other than a public limited company registered as such on its original incorporation, before the date on which the earlier of the following events occurs, that is to say, the re-registration or registration of the company as a public limited company and the end of the general transitional period.

Registration of particulars of special rights.

39. —(1) Where a company allots shares with rights which are not stated in its memorandum or articles or in any resolution or agreement to which section 143 of the Principal Act applies, the company shall, unless the shares are in all respects uniform with shares previously allotted, deliver to the registrar of companies within one month from allotting the shares a statement in the prescribed form containing particulars of those rights.

(2) Shares allotted with such rights shall not be treated for the purposes of subsection (1) as different from shares previously allotted by reason only of the fact that the former do not carry the same rights to dividends as the latter during the twelve months immediately following the former's allotment.

(3) Where the rights attached to any shares of a company are varied otherwise than by an amendment of the company's memorandum or articles or by resolution or agreement to which the said section 143 applies, the company shall within one month from the date on which the variation is made deliver to the registrar of companies a statement in the prescribed form containing particulars of the variation.

(4) Where a company (otherwise than by any such amendment, resolution or agreement as is mentioned in subsection (3)) assigns a name or other designation, or a new name or other designation, to any class of its shares it shall within one month from doing so deliver to the registrar of companies a notice in the prescribed form giving particulars thereof.

(5) If a company fails to comply with this section, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £250 together with, in the case of a continuing offence, a fine not exceeding £25 for every day on which the offence continues but not exceeding £500 in total.

Maintenance of capital

Obligation to convene extraordinary general meeting in event of serious loss of capital.

40. —(1) Subject to subsection (4), where the net assets of a company are half or less of the amount of the company's called-up share capital, the directors of the company shall, not later than 28 days from the earliest day on which that fact is known to a director of the company, duly convene an extraordinary general meeting of the company for a date not later than 56 days from that day for thepurpose of considering whether any, and if so what, measures should be taken to deal with the situation.

(2) If there is a failure to convene an extraordinary general meeting of a company as required by subsection (1), each of the directors of the company who—

(a) knowingly and wilfully authorises or permits that failure; or

(b) after the expiry of the period during which that meeting should have been convened, knowingly and wilfully authorises or permits that failure to continue,

shall be guilty of an offence.

(3) Nothing in this section shall be taken as authorising the consideration, at a meeting convened in pursuance of subsection (1), of any matter which could not have been considered at that meeting apart from this section.

(4) This section shall not apply where the day mentioned in subsection (1) is before the appointed day.

Restriction on company acquiring its own shares.

41. —(1) Subject to the following provisions of this section, no company limited by shares or limited by guarantee and having a share capital shall acquire its own shares (whether by purchase, subscription or otherwise).

(2) A company limited by shares may acquire any of its own fully paid shares otherwise than for valuable consideration.

(3) If a company purports to act in contravention of this section the company and every officer of the company who is in default shall be guilty of an offence and the purported acquisition shall be void.

(4) Subsection (1) shall not apply in relation to—

(a) the redemption of preference shares in pursuance of the articles;

(b) the acquisition of any shares in a reduction of capital duly made;

(c) the purchase of any shares in pursuance of an order of the court under section 15 or under section 10 or section 205 of the Principal Act; or

(d) the forfeiture of any shares, or the acceptance of any shares surrendered in lieu, in pursuance of the articles for failure to pay any sum payable in respect of those shares.

Acquisition of shares in a company by company's nominee.

42. —(1) Subject to subsections (5) and (6), where shares are issued to a nominee of a company referred to in section 41 (1) or are acquired by a nominee of such a company from a third party as partly paid up, then, for all purposes the shares shall be treated as held by the nominee on his own account and the company shall be regarded as having no beneficial interest in them.

(2) Subject to subsection (6), if a person is called on to pay any amount for the purpose of paying up, or paying any premium on, any shares in any such company which were issued to him, or which he otherwise acquired, as the nominee of the company and he fails to pay that amount within 21 days from being called on to do so, then—

(a) if the shares were issued to him as a subscriber to the memorandum by virtue of an undertaking of his in the memorandum, the other subscribers to the memorandum; or

(b) if the shares were otherwise issued to or acquired by him, the directors of the company at the time of the issue or acquisition,

shall be jointly and severally liable with him to pay that amount.

(3) If in proceedings for the recovery of any such amount from any such subscriber or director under this section it appears to the court that he is or may be liable to pay that amount, but that he has acted honestly and reasonably and that, having regard to all the circumstances of the case, he ought fairly to be excused from liability, the court may relieve him, either wholly or partly, from his liability on such terms as the court thinks fit.

(4) Where any such subscriber or director has reason to apprehend that a claim will or might be made for the recovery of any such amount from him, he may apply to the court for relief and on the application the court shall have the same power to relieve him as it would have had in proceedings for the recovery of that amount.

(5) Subsection (1) shall not apply to shares acquired otherwise than by subscription by a nominee of a public limited company in a case falling within section 43 (1) (d).

(6) Subsections (1) and (2) shall not apply—

(a) to shares acquired by a nominee of a company where the company has no beneficial interest in those shares (disregarding any right which the company itself may have as trustee, whether as personal representative or otherwise, to recover its expenses or be remunerated out of the trust property); or

(b) to shares issued in consequence of an application made before the appointed day or transferred in pursuance of an agreement to acquire them made before that day.

Treatment of shares held by or on behalf of a public limited company.

43. —(1) Subject to subsections (12) and (15), this section applies to a public limited company—

(a) where shares in the company are forfeited, or are surrendered to the company in lieu, in pursuance of the articles for failure to pay any sum payable in respect of those shares;

(b) where shares in the company are acquired by the company otherwise than by any of the methods mentioned in section 41 (4) and the company has a beneficial interest in those shares;

(c) where the nominee of the company acquires shares in the company from a third person without financial assistance being given directly or indirectly by the company and the company has a beneficial interest in those shares; or

(d) where any person acquires shares in the company with financial assistance given to him directly or indirectly by the company for the purpose of or in connection with the acquisition and the company has a beneficial interest in those shares.

(2) In determining for the purposes of subsection (1) (b) and (c) whether a company has a beneficial interest in any shares, there shall be disregarded, in any case where the company is a trustee (whether as personal representative or otherwise), any right of the company (as trustee) to recover its expenses or be remunerated out of the trust property.

(3) Unless the shares or any interest of the company in them are previously disposed of, the company must not later than the end of the relevant period from their forfeiture or surrender or, in a case to which subsection (1) (b), (c) or (d) applies, their acquisition—

(a) cancel them and reduce the amount of the share capital by the nominal value of the shares; and

(b) where the effect of cancelling the shares will be that the nominal value of the company's allotted share capital is brought below the authorised minimum, apply for re-registration as another form of company, stating the effect of the cancellation,

and the directors may take such steps as are requisite to enable the company to carry out its obligations under this subsection without complying with sections 72 and 73 of the Principal Act, including passing a resolution in accordance with subsection (5).

(4) The company and, in a case falling within subsection (1) (c) or (d), the company's nominee or, as the case may be, the other shareholder must not exercise any voting rights in respect of the shares and any purported exercise of those rights shall be void.

(5) The resolution authorised by subsection (3) may alter the company's memorandum so that it no longer states that the company is to be a public limited company and may make such other alterations in the memorandum and articles as are requisite in the circumstances.

(6) The application for re-registration required by subsection (3) (b) must be in the prescribed form and signed by a director or secretary of the company and must be delivered to the registrar together with a printed copy of the memorandum and articles of the company as altered by the resolution.

(7) If a public limited company required to apply to be re-registered as another form of company under this section fails to do so before the end of the relevant period, section 21 shall apply to it as if it were a private company such as is mentioned in that section, but, except as aforesaid, the company shall continue to be treated for the purposes of the Companies Acts as a public limited company until it is re-registered as another form of company.

(8) If a company when required to do so by subsection (3) fails to cancel any shares in accordance with paragraph (a) of that subsection or to make an application for re-registration in accordance with paragraph (b) of that subsection, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £250 together with, in the case of a continuing offence, a fine not exceeding £25 forevery day on which the offence continues, but not exceeding £500 in total.

(9) If the registrar is satisfied that a company may be re-registered in accordance with this section he shall—

(a) retain the application and other documents delivered to him under subsection (6); and

(b) issue the company with an appropriate certificate of incorporation.

(10) Upon the issue of a certificate of incorporation under subsection (9)

(a) the company shall by virtue of the issue of that certificate become the form of company stated in the certificate; and

(b) the alterations in the memorandum and articles set out in the resolution shall take effect accordingly.

(11) A certificate of incorporation issued to a company under subsection (9) shall be conclusive evidence—

(a) that the requirements of this section in respect of re-registration and of matters precedent and incidental thereto have been complied with; and

(b) that the company is the form of company stated in the certificate.

(12) Where, after shares in a company—

(a) are forfeited in pursuance of the articles of the company or are surrendered to the company in lieu of forfeiture or are otherwise acquired by the company;

(b) are acquired by a nominee of the company in the circumstances mentioned in subsection (1)(c); or

(c) are acquired by any person in the circumstances mentioned in subsection (1) (d),

the company is re-registered as a public limited company, the foregoing provisions of this section shall apply to the company as if it had been a public limited company at the time of the forfeiture, surrender or acquisition and as if for any reference to the relevant period from the forfeiture, surrender or acquisition there were substituted a reference to the relevant period from the re-registration of the company as a public limited company.

(13) Where a public limited company or a nominee of a public limited company acquires shares in the company or an interest in such shares and those shares are or that interest is shown in a balance sheet of the company as an asset, an amount equal to the value of the shares or, as the case may be, the value to the company of its interest in the shares shall be transferred out of profits available for dividend to a reserve fund and shall not be available for distribution.

(14) In this section “relevant period”, in relation to any shares, means—

(a) in the case of shares forfeited or surrendered to the company in lieu of forfeiture or acquired as mentioned in subsection (1) (b) or (c), three years;

(b) in the case of shares acquired as mentioned in subsection (1)(d), one year.

(15) Notwithstanding anything in section 12 (2), a reference in this section to a public limited company does not include a reference to an old public limited company.

Charges taken by public limited companies on own shares.

44. —(1) A lien or other charge of a public limited company on its own shares (whether taken expressly or otherwise), except a charge permitted by subsection (2), is void.

(2) The following are permitted charges, that is to say—

(a) in the case of every description of company, a charge on its own shares (not being fully paid) for any amount payable in respect of the shares;

(b) in the case of a public limited company whose ordinary business includes the lending of money or consists of the provision of credit or the bailment or hiring of goods under a hire-purchase agreement, or both, a charge of the company on its own shares (whether fully paid or not) which arises in connection with a transaction entered into by the company in the ordinary course of its business;

(c) in the case of a company (other than a company in relation to which paragraph (d) applies) which is re-registered or is registered under section 18 as a public limited company, a charge on its own shares which was in existence immediately before its application for re-registration or, as the case may be, registration;

(d) in the case of any company which after the end of the re-registration period remains or remained an old public limited company and did not before the end of that period apply to be re-registered under section 12 as a public limited company, any charge on its own shares which was in existence immediately before the end of that period.