Clause 73: Order requiring name to be changed

171.     This clause is a new provision. If an objection made under clause 70 is upheld, then the adjudicator is to direct the company with the offending name to change its name to one that does not similarly offend. A deadline must be set for the change. If the offending name is not changed, then the adjudicator will determine a new name for the company.

Clause 74: Appeal from adjudicator's decision

172.     This clause is a new provision. It enables a company that has received a direction from the company names adjudicator to appeal to a court against the decision. The court will either uphold or reverse the adjudicator's decision.

CHAPTER 4: OTHER POWERS OF THE SECRETARY OF STATE

Clause 75: Provision of misleading information etc

173.     This clause replaces section 28(3) of the 1985 Act and, insofar as it supports that section, section 28 (4) - (6). It provides power for the Secretary of State to direct a company to change its name within a specified period in two circumstances. First, if misleading information was given to enable the adoption of the name. Second, if an undertaking or assurance given to enable the adoption of the name has not been fulfilled. The direction can only be made up to five years after the adoption of the name. It is an offence not to comply with the direction.

Clause 76: Misleading indication of activities

174.     This clause replaces section 32 of the 1985 Act. It provides power for the Secretary of State to direct a company to change its name, regardless of how long the company has had the name, in the specified circumstances. The circumstances are that, in his opinion, not only does the name give a misleading indication of the nature of the company's activities but also that the public are likely to suffer harm as a result. It is an offence not to comply with the direction but the company is able to appeal to the court, who may either confirm the direction or set it aside.

175.     The clause also sets time limits for compliance with the direction (6 weeks) and the application to the court (3 weeks). If the court confirms the direction, it specifies the deadline for compliance.

CHAPTER 5: CHANGE OF NAME

Clause 77: Change of name

176.     This clause replaces section 28(1) of the 1985 Act. Under the existing provision, companies can only change their names:

• by special resolution; or

• following a direction by the Secretary of State in the restricted circumstances provided by section 31 of the 1985 Act which apply only to companies exempt from their name concluding in "limited."

177.     This clause provides for two further means:

• whatever means are provided in the company's articles (this means that the company will be able to determine the procedures for changing its own name);

• by an order of the company names adjudicator if an objection under clause 73 is upheld.

Clause 78: Change of name by special resolution

178.     This clause is a new provision. It requires the company to notify the registrar of a special resolution for a change of name. This requirement is in addition to the obligation under Chapter 3 of Part 3 to forward a copy of the special resolution to the registrar.

179.     Subsections (2) and (3) address the particular situation where a company has passed a special resolution to change its name but the change is not to take place until some other event has occurred (e.g. a merger). It introduces a special procedure for such a special resolution. This clause does not provide a means by which a company can reserve a name. Rather it provides for the situation where a special resolution to change a name has been passed - and therefore must be notified - but where its conditions have not been met. The statutory restrictions on the choice of name, including the prohibition of a the new name being the same as a name already on the register, will be applied only after this clause's requirements have been satisfied. Subsection (3) provides that the Registrar will not act on the notice to change the name until she has been notified that the specified event has occurred and that she can do so as soon as she receives such notice.

Clause 79: Change of name by means provided for in company's articles

180.     This clause is a new provision, supplementing the new provision (clause 75(1)(b)) whereby a company may change its name by any means provided for in its articles. Subsection (1) requires the company to provide the registrar with both a notice of the name change and a statement that the change has been made in accordance with the company's articles.

181.     Subsection (2) ensures the registrar can act on the notice to change the name as soon as she receives it.

Clause 80: Change of name: registration and issue of new certificate of incorporation

182.     This clause, which partly replaces section 28(6) of the 1985 Act, provides for the procedures that the registrar must perform before a company's proposed new name is effective. Subsection (2) provides for the checks both that the name meets all the requirements for a company's name in this Part of the Act and that the necessary documents have been provided. Subsection (3) provides for the company to be issued a certificate of incorporation with the new name.

Clause 81: Change of name: effect

183.     This clause, which replaces section 28(6) in part and section 28(7) of the 1985 Act, provides that the new name is effective as soon as the altered certificate of incorporation is issued. It also provides that the change of name does not affect the company's rights or obligations or legal proceedings by or against it in its previous name.

CHAPTER 6: TRADING DISCLOSURES

Clause 82: Requirement to disclose company name etc

184.     This clause replaces sections 348(1), 349(1), 351(1)&(2) and 693 of the 1985 Act and, insofar as it applies to companies, section 4(1) of the Business Names Act 1985. It provides power for the Secretary of State to make regulations requiring every company:

• to display a sign with its name and specified other information at specified locations;

• to include its name and specified other information in specified documents and communications;

• to provide its name and specified other information to those who request it in the course of business (this is a new provision insofar as it applies to companies doing business under their registered names).

Clause 83: Civil consequences of failure to make required disclosure

185.     This clause replaces section 349(4) of the 1985 Act and, insofar as it applies to companies, section 5 of the Business Names Act 1985. As recommended by the CLR (Final Report, paragraph 11.57), it follows the precedent of the Business Names Act as regards the civil remedy for failure to comply with the information requirements made in regulations under clause 82. This differs from the 1985 Act in that the right to compensation is limited to when the breach has resulted in financial loss.

Clause 84: Criminal consequences of failure to make required disclosures

186.     This clause replaces sections 348(2), 349(2) and (3) and 351(5) of the 1985 Act and, insofar as it applies to companies, part of section 7 of the Business Names Act 1985. It makes it an offence not to comply with the requirements, to be specified in Regulations, for every company to disclose its name and specified other information.

Clause 85: Minor variations in form of name to be left out of account

187.     This clause is a new provision. It means that the company's name as used to comply with the disclosure requirements need not be exactly the same as the registered name. The permitted differences are the case of the letters, the use of punctuation, accents, etc and formatting. However the differences must not result in there being a risk of confusion.

PART 6: A COMPANY'S REGISTERED OFFICE

Clause 86: A company's registered office

188.     This clause replaces section 287(1) of the 1985 Act. It requires every company to have a registered office and for that office to be the company's address to which communications and notices may be sent. Clause 746 provides that the service of a document on a company is effective if it is sent to its registered office.

Clause 87: Change of address of registered office

189.     This clause replaces section 287(3), (4), (5) and (6) of the 1985 Act. It retains the procedure in the 1985 Act for a company wishing to change the address of its registered office where both the new and old addresses are in the same part of the UK, i.e. Northern Ireland, Scotland, or England and Wales. In the case of a Welsh company (see clause 88) both the new and old addresses must be in Wales. The company must give notice to the registrar of the intended address.

190.     The change of registered office does not take effect until the new address is on the public record: this is to ensure that there cannot be any period during which a company does not have an address that is effective for the service of documents on the company.

191.     Subsection (2) provides for a fortnight overlap between the new and old addresses: during this period, both addresses are effective for the service of documents on the company.

192.     Subsection (3) provides the company with a fortnight, starting from the date of the notice under subsection (2), in which to make changes arising from changing the address of its registered office (for example, to its documents for correspondence, etc).

193.     Subsection (4) covers the possibility of an unplanned change in registered office, for example in the event of a fire. It provides the company with a fortnight in which to regularise its arrangements as regards the duty in subsection (3)(a) (the duty of a company to make available for inspection at its registered office any register, index or other document). It provides the company with a 14 day breathing space where they are not be treated as having failed to comply with the duty to make certain records available for inspection at their registered office.

194.     Subsections (3) and (4) are necessary as there are criminal sanctions if the company fails to make certain records available for inspection at its registered office or to comply with requirements to include its address in certain documents (such requirements may be imposed by regulations under clause 82 (requirement to disclose company name etc)).

Welsh companies

Clause 88: Welsh companies

195.     This clause provides a definition of a Welsh company. This is a company whose registered office address must be in Wales. A company can be set up as a Welsh company by delivering to the registrar a statement on formation that its registered office is to be situated in Wales (see subsection (2)(b) of clause 9).

196.     Subsection (2) retains the existing provision whereby a company may become a Welsh company by passing a special resolution (so that the register states that its registered office is to be situated "in Wales"). As recommended by the CLR, subsection (3) provides a mechanism whereby a company can cease to be a Welsh company (i.e. so that the register states that its registered office is to be situated in "England and Wales"). This is new. At present, while a company may choose to restrict the address of its registered office to Wales on formation or subsequently by special resolution, it is not possible under the 1985 Act for a Welsh company to drop the restriction so that its registered office address can be changed to anywhere in England and Wales.

197.     Welsh companies may deliver documents to the registrar in Welsh (see clause 712). Welsh companies may also end their company name with Welsh versions of the statutory indicators of legal status. For example, "cyfyngedig" in place of "limited" or "c.c.c." in place of "p.l.c." (see clauses 59 and 60). When a company ceases to be a Welsh company using the procedure under this clause, it may no longer take advantage of these provisions.

198.     Where a company passes a special resolution under subsection (2) or (3) (and so becomes or ceases to be Welsh company) subsection (4) provides that the registrar will amend the register and issue the company with a new certificate of incorporation.

PART 7: RE-REGISTRATION AS A MEANS OF ALTERING A COMPANY'S STATUS

199.     This Part of the Bill is about the re-registration of companies. It replaces equivalent provisions in Part 2 of the 1985 Act. There are some substantive changes as well as amendments reflecting the new provisions of the Bill about registration.

Introductory

Clause 89: Alteration of status by re-registration

200.     This clause provides for various ways under the Bill by which a company may alter its status. As recommended by the CLR (Final Report, paragraph 11.16) it retains the current possibilities for re-registration, but there is one significant change to the 1985 Act regime: in line with the recommendations of the CLR (Final Report, paragraph 11.16), in future a public company will be able to re-register as an unlimited private company without first having to re-register as private limited (see clause 108).

Private company becoming public

Clause 90: Re-registration of private company as public

201.     This clause replaces section 43(1)(a) and (2), and section 48 of the 1985 Act. It does not make any substantive changes to these provisions and enables a private company to re-register as a public company providing that certain conditions are met. These conditions are set out in subsections (2)-(4). They include a requirement for the company to make such alterations to its name and articles of association ("articles") as are necessary to reflect the fact that the company will be a public company. This will be particularly important for private companies formed under the Bill who are using the model articles: in particular, the new model articles for private companies limited by shares formed under the Bill will be written with such companies in mind and are unlikely to be suitable for use by a newly re-registered public company (see note on clause 21).

202.     As now (see section 48 of the 1985 Act), an unlimited private company with a share capital will be able to re-register as a public company and this is reflected in subsection (4) of this clause.

203.     Subsection (2)(e) retains the requirement that a private company may not re-register as a public company if it has previously re-registered as an unlimited company.

Clause 91: Requirements as to share capital

204.     This clause replaces sections 45 and 47(3) of the 1985 Act. It does not make any substantive changes to these provisions and sets out the requirements as to share capital of a company that it is proposing to re-register as a public company. These requirements mirror the provisions of current companies' legislation, for example, the company's share capital must not be less than the authorised minimum (defined in clause 533) and each of the company's allotted shares must be paid up at least as to a quarter of the nominal value of that share and the whole of any premium on in.

205.     Subsection (5) of this clause replaces section 47(3) of the 1985 Act. It provides that the registrar must not issue a new certificate of incorporation on re-registration if the court has made an order confirming a reduction of capital which has the effect of bringing the company's allotted share capital below the authorised minimum (which remains at £50,000) or if the company has reduced its capital via the solvency statement procedure or in connection with a redenomination of share capital.

Clause 92: Requirements as to net assets

206.     This clause replaces section 43(3)(b)-(c) and (4) and section 46 of the 1985 Act. It makes no substantive changes to these provisions and the requirements as to net assets for a public company remain unchanged (as now, these are determined by reference to the company's most recent balance sheet).

Clause 93: Recent allotment of shares for non-cash consideration

207.     This clause replaces section 44 of the 1985 Act. It does not make any substantive changes to the provisions of that section and, as now, where there has been an allotment of shares for non-cash consideration between the date of the balance sheet required under clause 92 (requirements as to net assets) and the date that the company passed the resolution to re-register as a public company, the registrar will not entertain an application for re-registration unless the consideration for the allotment has been valued in accordance with section 108 of the 1985 Act (valuation and report).

Clause 94: Application and accompanying documents

208.     This clause replaces section 43(1)(b), (2)(a), (3)(a) and (e) and (3A) of the 1985 Act. It prescribes the contents of the application for re-registration. There is one important change, which is required as a result of the abolition of the current requirement for private companies to have a company secretary (see clause 247). In future, where a private company, which is proposing to re-register as a public company does not have a company secretary, the application for re-registration must include a statement of the company's proposed secretary. The contents of this statement are prescribed in clause 95.

209.     Subsection (3) of this clause replaces the present requirement for a statutory declaration (or its electronic equivalent) in subsections 43(3)(e) and (3A) of the 1985 Act with a requirement to make a simple statement of compliance (see note on clause 14).

Clause 95: Statement of proposed secretary

210.     This clause is a new provision, which is required as a result of the abolition of the requirement for private companies to have a company secretary. Where a private company is proposing to re-register as a public company, the application for re-registration must include details of the persons or persons who will act as company secretary or joint secretaries on re-registration. The statement of proposed secretary must also contain a consent, given by each of the persons named in the statement, to act as company secretary or joint secretaries. If all the partners in a firm are to be joint secretaries, one partner in the firm may give consent to act on behalf of all of the partners.

Clause 96: Issue of certificate of incorporation on re-registration

211.     This clause replaces section 47 of the 1985 Act. It does not make any substantive changes to the provisions of that section and, as now, where the registrar is satisfied that a company is entitled to be re-registered as a public company, he will issue a new certificate of incorporation (which must state that it is being issued on the re-registration of the company). On the issue of a new certificate of incorporation under this clause: the company becomes a public company; the change to its name and any amendments that were made to the company's articles take effect; and the person (or persons) named as secretary (or joint secretaries) in the statement of proposed secretary (see clause 95) is deemed to have been appointed as such.

212.     As now, the certificate of incorporation on re-registration is conclusive evidence that the company is now a public company and that the requirements of the Bill as regards re-registration have been met.

Public company becoming private

Clause 97: Re-registration of public company as private limited company

213.     This clause replaces section 53 of the 1985 Act. It does not make any substantive changes to that section and it enables a public company to re-register as a private limited company if the conditions specified in subsection (2) are met.

214.     As now, the company must make such changes to its name and articles of association as are necessary in connection with it becoming a private company limited by shares or, as the case may be, a private company limited by guarantee.

Clause 98: Application to court to cancel resolution

215.     This clause replaces section 54(1)-(3), (5)-(6), (8) of the 1985 Act. It does not make any substantive changes to these provisions and, as now, where a public company has passed a special resolution to re-register as a private limited company, the requisite majority of the company's members (see subsection (1)) may apply to the court for the cancellation of this resolution. Such an application to the court must be made within 28 days of the resolution to re-register being passed and on hearing the application the court may confirm or cancel the resolution or make such other order as it thinks fit.

Clause 99: Notice to registrar of court application or order

216.     This clause replaces section 54(4) (7) and (10) of the 1985 Act. It does not make any substantive changes to those provisions and makes it clear that, as now, where an application is made to the court under clause 98 (that is, to cancel a resolution for re-registration as a private limited company), the company must immediately give notice to the registrar. Similarly, where the court has made an order in connection with such an application, the company must deliver a copy of that order to the registrar within 15 days of the order being made (or such longer time as the court may direct).

217.     Under subsection (3) where the company fails to give notice to the registrar or fails to deliver a copy of the order made by the court under clause 98 to the registrar within the prescribed time limits (see subsection (1) and (2)), the company and every officer of the company who is in default commits an offence. The penalty for this offence is set out in subsection (4). This mirrors the offence in section 54(10) of the 1985 Act.

Clause 100: Application and accompanying documents

218.     This clause replaces section 53(1)(b) of the 1985 Act. It prescribes the documents/information that must accompany the application for re-registration as a public company. There is currently no requirement for a statutory declaration (or electronic equivalent) where a public company re-registers as a private limited company. Consistent with the approach taken in the Bill with other forms of re-registration, in future the application for re-registration as a private limited company must be accompanied by a statement of compliance (see note on clause 14).

Clause 101: Issue of certificate of incorporation on re-registration

219.     This clause replaces section 55 of the 1985 Act. It does not make any substantive changes to that section and, as now, where the registrar is satisfied that a company is entitled to be re-registered as a private limited company, he will issue a new certificate of incorporation (which must state that it is being issued on re-registration of the company). On the issue of a new certificate of incorporation under this clause, the company becomes a private limited company and the change to its name and any amendments that were required to be made to the articles take effect.

220.     As now, the certificate of incorporation on re-registration issued under this clause is conclusive evidence that the company is now a private limited company and that the requirements of the Bill as regards re-registration have been met.

Private limited company becoming unlimited

Clause 102: Re-registration of private limited company as unlimited

221.     This clause replaces section 49(1)-(2) and (9), of the 1985 Act. It does not make any substantive changes to those provisions and, as now, permits a private company that is limited by shares or, as the case may be, by guarantee, to re-register as an unlimited private company, providing that certain conditions are met (see subsection (2)) and all of the members have given their assent to the company being so re-registered. In the case of a deceased member, assent may be given by the personal representative of the deceased member's estate. Where a member is bankrupt, assent may be given by his trustee in bankruptcy (to the exclusion of the member in question).

222.     An "unlimited company" is a company not having any limit on the liability of its members.

223.     As now, where the company proposing to re-register as an unlimited company, it may not re-register as such if it has previously been re-registered as limited (having previously been unlimited) or as unlimited (having previously been limited).

224.     The application for re-registration as an unlimited company must be accompanied by a statement of compliance (see note on clause 14).

Clause 103: Application and accompanying documents

225.     This clause replaces section 49(4)-(8A) of the 1985 Act. It prescribes the contents of the application for re-registration and the documents/information that must accompany this application. The current requirement for a statutory declaration made by the directors on application for re-registration as an unlimited company is replaced by a requirement for a statement of compliance. Unlike other statements of compliance made under the Bill (see, for example, clause 14) the statement of compliance made on application for re-registration as an unlimited company must contain a statement made by the directors confirming that:

• the persons by whom or on whose behalf the form of assent is subscribed constitute the whole membership of the company; and

• if any of the members have not subscribed that form themselves, that the directors have taken all reasonable steps to satisfy themselves that each person who subscribed it on behalf of a member was lawfully empowered to do so.

226.     The contents of the statement of compliance mirror the provisions of section 49(8) of the 1985 Act (prescribed form of assent to company being registered as unlimited).