| Company Law Reform Bill [HL] - continued | House of Lords |
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Clause 732: Application to bodies other than companies 1386. This clause provides that clause 730 applies to persons in bodies other than companies where their role is equivalent to that of an officer of a company. It makes specific provisions for bodies corporate, partnerships and unincorporated bodies. Offences under the Companies Act 1985 Clause 733: Amendments of the Companies Act 1985 1387. This provision introduces Schedule 4, which contains amendments to the Companies Act 1985 relating to offences. 1388. The changes in Schedule 4 clarify the wording of the offences and, in some cases, introduce substantive changes. A number of the offences refer to fines "not exceeding level 3" on the standard scale. The standard scale for fines imposed on summary conviction of an offence has been set at the following levels since 1st October 1992:
1389. The table below sets out the substantive changes made by Schedule 4 to sections to the 1985 Act.
General provisions Clause 734: Meaning of "daily default fine" 1390. This clause defines "daily default fine." It replaces provision currently in section 730(4) of the 1985 Act. Clause 735: Consents required for certain prosecutions 1391. This clause provides that certain proceedings can only be brought with the consent of the Secretary of State or (in some circumstances) the Director of Public Prosecutions. It replaces section 732(1) and (2) of the 1985 Act. Clause 736: Summary proceedings: venue 1392. This clause restates section 731(1) of the 1985 Act. It specifies the possible venues for summary proceedings for any breach of Companies Acts requirements. For a body corporate the venue may be any place at which the body corporate has a place of business, and for any other person, it may be at any place that the person is. Clause 737: Summary proceedings: time limit for proceedings 1393. This clause restates section 731(2) to (4) of the 1985 Act. It sets out time limits for summary proceedings. Clause 738: Legal professional privilege 1394. This clause restates section 732(3) of the 1985 Act and applies its provisions to all offences under the Companies Acts. It provides that the Companies Acts provisions on offences are not to be read as requiring any person to disclose information that is protected by legal professional privilege. Clause 739: Proceedings against unincorporated bodies 1395. This clause restates section 734(1) to (4) of the 1985 Act. It provides for proceedings for offences under certain provisions (which may be committed by unincorporated bodies) to be brought against such bodies as if they were corporate bodies. Clause 740: Imprisonment on summary conviction in England and Wales: transitory provision 1396. This clause provides for the period before the commencement of section 154(1) of the Criminal Justice Act 2003, which makes new provision about the powers of magistrates' courts in England and Wales to impose sentences of imprisonment on summary conviction. In the interim, the maximum term of imprisonment in England and Wales for a person guilty of an offence on summary conviction under the Companies Acts is to be 6 months (as it is at present) instead of 12 months. Supplementary Clause 741: Transitional provision 1397. This clause provides that this Part of the Bill does not apply to offences committed before the commencement of the provision relevant to the offence. PART 28: COMPANIES: SUPPLEMENTARY PROVISIONS Company records Clause 742: Meaning of "company records" 1398. This clause is a new provision and defines the scope of the clauses that follow. Clause 743: Form of company records 1399. This clause replaces sections 722(1) and 723 of the 1985 Act. It enables a company to use electronic storage or paper for its records provided that there can be paper printouts of electronic records. Clause 745 also applies if the records are not kept in bound books. Clause 744: Regulations about inspection of records and provision of copies 1400. This clause replaces section 723A of the 1985 Act. The amendments, combined with clause 742, do not change the effect of the existing provision. Clause 745: Duty to take precautions against falsification 1401. This clause replaces section 722(2) of the 1985 Act. It makes it an offence not to take measures that protect records from falsification or help trace any falsification. This provision applies to records that are not kept in bound books, whether or not they are kept electronically, but does not apply either to the company's copy of the director's service contract or to its copy of any qualifying third party indemnity provisions benefiting a director. Service addresses Clause 746: Service of documents on company 1402. This clause replaces sections 694A, 695 and 725 of the 1985 Act. It ensures that there is a place at which a document may be served for all companies registered in the UK (including registered oversea companies). Clause 747: Service of documents on directors, secretaries and others 1403. This clause is a new provision. It ensures that the address on the public record for any director or secretary is effective for the service of documents on that person. Subsection (3) provides that the address is effective even if the document has no bearing on the person's responsibilities as director or secretary. This provision also applies to the address on the public record of various other persons for whom the 1985 Act requires an address on the public record. Clause 748: Service addresses 1404. This clause replaces part of section 723C(7) of the 1985 Act (as amended by the Criminal Justice and Police Act 2001, section 45). It defines "service address" and provides a power for regulations to specify conditions with which a service address must comply. Sending or supplying documents or information 1405. Clauses 749 to 755 and Schedules 5 to 7 make new provision for how companies may communicate, typically with their members but also with debenture-holders and others. Specific requirements as to what information must be communicated are contained within relevant individual provisions of the Bill. 1406. The Companies Act 1985 (Electronic Communications) Order 2000 facilitated the use of electronic and website communications in certain contexts, but there has been uncertainty as to whether other provisions under the 1985 Act for information to be communicated 'in writing' required the use of paper or could be satisfied by electronic communications. This Part makes new general provisions about communications, including electronic and website communications, for the Act as a whole. 1407. The general principle behind the provisions of the Bill is that companies should be able, subject to shareholder approval, to use electronic communications. This is the default position. This will permit but not require companies to use websites and email to communicate with their members. However, since electronic communications will not suit everyone, individuals will be able to request communication on paper if they wish. Clause 749: The company communications provisions 1408. This clause introduces clauses 750 to 754 and specifies that they apply for the purposes of communications authorised or required to be sent or supplied by or to a company under the Companies Acts. As regards communications between companies and Companies House, they have effect subject to the provisions of Part 26 of the Bill. Clause 750: Sending or supplying documents or information 1409. This clause introduces three schedules, which apply irrespective of the company's articles:
1410. These Schedules, described below, use key terms defined under clause 751 (meaning of "in hard copy form", "in electronic form" and "by means of a website"), clause 753 (meaning of "authenticated") and clause 754 (other definitions). Schedule 5: Documents and information sent or supplied to a company 1411. This Schedule brings together the rules on communications to a company. In some cases a company will have other companies as members, debenture holders etc, and paragraph 1 of the Schedule makes clear that communications by such members etc is governed by Schedules 6 (communications by a company other than a traded company) and 7 (communications by a traded company). 1412. Part 2 of the Schedule sets out the position for communications sent or supplied in hard copy form. These are very similar to the present position. Part 3 sets out rules for communications in electronic form. Part 4 is a more general provision and means that unless the Companies Acts specify a means of communication, for example under clause 275(3)(a) (publication of written resolution on website), then a communication to the company can be sent or supplied in any way agreed by the company. Schedule 6: Communications by a company other than a traded company 1413. This Schedule sets out provisions on how most companies communicate with their members, debenture holders etc. These rules do not apply to "traded" companies, to whom Schedule 7 applies. 1414. Part 2 of the Schedule sets out standard rules for communications in hard copy. Paragraph 4 defines the addresses to which the company may send or supply documents or information. Where the company has no address for the intended recipient, the company may use the recipient's last known address. This provision does not prevent a company making provision in its articles, for example, not to send notice of general meeting or the annual report and accounts to members for whom the company no longer has a valid address. 1415. Part 3 of the Schedule relates to communications by e-mail or similar methods, and Part 4 to publication on a website. Paragraph 10 allows the company, either by members' resolution or through the articles, to default to website communication if it has asked a member to agree to communications in this way and the member has either agreed or not responded within 28 days of the company's request. Where a member has not agreed to communications in this way, the company may not ask the member again within a period of twelve months. Paragraph 14 enables the company and a member to agree alternative methods of communication, for example other than website communication where a company has defaulted to website communications. In addition, clause 752 (right to hard copy version) gives a member the right to request a hard copy of the communication, unless this is specifically ruled out by legislation. Paragraph 11 and clause 752 make equivalent provision for debenture holders. Paragraph 12 requires companies to notify shareholders when material is published on a website. Schedule 7: Communications by a traded company 1416. This Schedule makes separate provision about "traded companies" so that the Bill will not be inconsistent with the Transparency Directive, implementation of which is required by 20th January 2007. 1417. A "traded company" is defined in clause 754 (interpretation of company communications provisions) as a company whose securities are admitted to trading in a regulated market as defined in European legislation. The Transparency Directive (2004/109/EC) sets out in Article 17(3) rules on when issuers whose shares are admitted to trading on a regulated market can use electronic communications with their members. Article 18(4) contains similar provisions in relation to issuers communicating with the holders of certain debt securities admitted to trading on regulated markets. The Directive provisions cover both issuers who are companies and those who are not. 1418. The rules for communications by a traded company are similar to those for companies other than traded companies as set out under Schedule 6. However, the key additional requirement for traded companies is that, as required by the Transparency Directive (2004/109/EC), members or holders of debt securities (defined in paragraph 8(4)) must pass separate resolutions permitting the company both to send documents in electronic form, for example by e-mail, and to use website publication before the company begins to use either of these forms of communication with them. This is set out in paragraphs 7(2), 8(2), and 11(2), and 12(2) of the Schedule. 1419. In the case of communications with holders of debentures that are not debt securities, that is, not covered by the requirements of the Transparency Directive (2004/109/EC), the requirements for a traded company are the same as for any other company. Clause 752: Right to hard copy version 1420. This clause provides individual members or debenture holders the right to require information to be sent in paper copy form. A company is required to send a paper copy of the document or information within 21 days of receiving a member's request. Subsections (4) and (5) impose a penalty on every officer in default. Subsection (6) provides that other statutory provisions take precedence over the requirements of this clause. |
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| © Parliamentary copyright 2005 | Prepared: 17 November 2005 |