Made | 28th June 2004 | ||
Coming into operation | 2nd August 2004 |
(2A) The terms and manner of a purchase under this Article need not be determined by the Articles as required by Article 170(3).
(2B) Where a company makes a purchase of qualifying shares out of distributable profits under this Article, Article 172A applies to the shares purchased and accordingly Article 170(4) does not apply to those shares.".
(3) At the end of paragraph (3) insert "or shares held as treasury shares".
(4) After paragraph (3) insert the following paragraph -
and in sub-paragraph (a) "the official list" has the meaning given in section 103(1) of the Financial Services and Markets Act 2000.".
Insertion of Articles 172A to 172G
3.
After Article 172 of the 1986 Order insert the following Articles -
(2) Where shares are held under paragraph (1)(a) then, for the purposes of Article 360, the company must be entered in the register as the member holding those shares.
(3) In this Order, references to a company holding shares as treasury shares are references to the company holding shares which -
Treasury shares: maximum holdings
172B.
- (1) Where a company has shares of only one class, the aggregate nominal value of shares held as treasury shares must not at any time exceed 10 per cent of the nominal value of the issued share capital of the company at that time.
(2) Where the share capital of a company is divided into shares of different classes, the aggregate nominal value of the shares of any class held as treasury shares must not at any time exceed 10 per cent of the nominal value of the issued share capital of the shares in that class at that time.
(3) Where paragraph (1) or (2) is contravened by a company, the company must dispose of or cancel the excess shares, in accordance with Article 172D, before the end of the period of 12 months beginning with the day on which that contravention occurs.
Treasury shares: voting and other rights
172C.
- (1) This Article applies to shares which are held by a company as treasury shares ("the treasury shares").
(2) The company must not exercise any right in respect of the treasury shares and any purported exercise of such a right is void.
(3) The rights to which paragraph (2) applies include any right to attend or vote at meetings (including meetings under Article 418).
(4) No dividend may be paid, and no other distribution (whether in cash or otherwise) of the company's assets (including any distribution of assets to members on a winding up) may be made, to the company in respect of the treasury shares.
(5) Nothing in this Article is to be taken as preventing -
(6) Any shares allotted as fully paid bonus shares in respect of the treasury shares shall be treated for the purposes of this Order as if they were purchased by the company at the time they were allotted, in circumstances in which Article 172A(1) applied.
Treasury shares: disposal and cancellation
172D.
- (1) Where shares are held as treasury shares, a company may at any time -
(2) For the purposes of paragraph (1)(a), "cash", in relation to a sale of shares by a company, means -
(3) But if the company receives a notice under Article 422 (right of offeror to buy out minority shareholders)[7] that a person desires to acquire any of the shares, the company must not, under paragraph (1), sell or transfer the shares to which the notice relates except to that person.
(4) If under paragraph (1) the company cancels shares held as treasury shares, the company must diminish the amount of the issued share capital by the nominal value of the shares cancelled; but the cancellation is not to be taken as reducing the amount of the company's authorised share capital.
(5) The directors may take such steps as are requisite to enable the company to cancel its shares under paragraph (1) without complying with Articles 145 and 146 (special resolution for reduction of share capital; application to court for order of confirmation).
Treasury shares: mandatory cancellation
172E.
- (1) If shares held as treasury shares cease to be qualifying shares, the company must forthwith cancel the shares in accordance with Article 172D.
(2) For the purposes of paragraph (1), shares are not to be regarded as ceasing to be qualifying shares by virtue only of -
(3) For the purposes of this Article "regulated market" means a market which is a regulated market for the purposes of Article 16 of Council Directive 93/22/EEC on investment services in the securities field.
Treasury shares: proceeds of sale
172F.
- (1) Where shares held as treasury shares are sold, the proceeds of sale shall be dealt with in accordance with this Article.
(2) Where the proceeds of sale are equal to or less than the purchase price paid by the company for the shares, the proceeds shall be treated for the purposes of Part IX as a realised profit of the company.
(3) Where the proceeds of sale exceed the purchase price paid by the company for the shares -
(4) The purchase price paid by the company for the shares shall be determined by the application of a weighted average price method.
(5) Where the shares were allotted to the company as fully paid bonus shares, the purchase price paid for them shall, for the purposes of paragraph (4), be treated as being nil.
Treasury shares: penalty for contravention
172G.
If a company contravenes any provision of Articles 172A to 172F every officer of it who is in default is liable to a fine.".
Consequential amendments
4.
The Schedule (which contains consequential amendments) has effect.
Sealed with the Official Seal of the Department of Enterprise, Trade and Investment on
28th June 2004.
L.S.
Michael Bohill
A senior officer of the Department of Enterprise, Trade and Investment
Amendment of Article 34 of the 1986 Order
2.
In Article 34 of the 1986 Order (minimum membership for carrying on business)[8], the existing provision becomes paragraph (1) of that Article, and at the end insert -
Amendment of Article 64 of the 1986 Order
3.
In Article 64 of the 1986 Order (litigation objection to resolution under Article 63) after paragraph (2) insert -
Amendment and operation of Article 99 of the 1986 Order
4.
- (1) In Article 99 of the 1986 Order (offers to shareholders to be on a pre-emptive basis) after paragraph (5) insert -
(2) Where -
that provision shall have effect as if it had been modified so as to comply with the requirements of that paragraph as it has effect after these Regulations came into operation.
Amendment of Article 104 of the 1986 Order
5.
- (1) Amend Article 104 of the 1986 Order (interpretation for Articles 99 to 106) as follows.
(2) After paragraph (3) insert -
(3) At the end of paragraph (5)(b) insert "or, in the case of shares held by the company as treasury shares, are to be transferred in pursuance of such a scheme".
Amendment of Article 105 of the 1986 Order
6.
In Article 105 of the 1986 Order (disapplication of pre-emption rights) after paragraph (2) insert -
Amendment of Article 113 of the 1986 Order
7.
In Article 113(4) of the 1986 Order (non-cash consideration to be valued before allotment) -
(b) for the second sentence substitute -
(c) shares held as treasury shares by the relevant company.".
Amendment of Article 135 of the 1986 Order
8.
- (1) Amend Article 135 of the 1986 Order (variation of class rights) as follows.
(2) In paragraph (2)(a) after the word "class" insert the words "(excluding any shares of that class held as treasury shares)".
(3) In paragraph (5) after the word "company" insert the words "(excluding any member holding shares as treasury shares)".
(4) In paragraph (6)(a) after the word "question" where it first appears insert the words "(excluding any shares of that class held as treasury shares)".
Amendment of Article 137 of the 1986 Order
9.
In Article 137 of the 1986 Order (shareholders' right to object to variation) after paragraph (2) insert -
Amendment of Article 141 of the 1986 Order
10.
In Article 141 of the 1986 Order (merger relief)[9] at the end of paragraph (4) insert "(excluding any shares in that company held as treasury shares)".
Amendment of Article 153 of the 1986 Order
11.
In Article 153 of the 1986 Order (general rule against company acquiring own shares) -
Amendment of Article 179 of the 1986 Order
12.
- (1) Amend Article 179 of the 1986 Order (disclosure by company of purchase of own shares)[10] as follows.
(2) After paragraph (1) insert the following paragraphs -
(3) In paragraph (2) for "the return" substitute "any return under paragraph (1) or (1B)".
(4) In paragraph (3) after "single return" insert "under either paragraph (1) or (1B)".
Insertion of Article 179A of the 1986 Order
13.
After Article 179 of the 1986 Order insert the following Article -
(2) Within the period of 28 days beginning with the date on which such shares are cancelled or disposed of, the company shall deliver to the registrar for registration a return in the prescribed form stating with respect to shares of each class cancelled or disposed of -
(3) Particulars of shares cancelled or disposed of on different dates may be included in a single return to the registrar.
(4) If default is made in delivering to the registrar any return required by this Article, every officer of the company who is in default is liable to a fine and, for continued contravention, to a daily default fine.".
Amendment of Article 180 of the 1986 Order
14.
In Article 180(1) of the 1986 Order (the capital redemption reserve) before the words "shall be transferred" insert ", or in accordance with Article 172D(4) on cancellation of shares held as treasury shares,".
Amendment of Article 206 of the 1986 Order
15.
In Article 206(2) of the 1986 Order (obligation of disclosure: the cases in which it may arise and "the relevant time") -
Amendment of Article 222 of the 1986 Order
16.
In Article 222 of the 1986 Order (company investigation on requisition by members) at the end of paragraph (1) insert "(excluding any shares in the company held as treasury shares)".
Amendment of Article 331 of the 1986 Order
17.
In Article 331 of the 1986 Order (prohibition on directors dealing in share options) after paragraph (5) insert -
Amendment of Article 354 of the 1986 Order
18.
In Article 354 of the 1986 Order ("connected persons", etc) -
Amendment of Article 360 of the 1986 Order
19.
In Article 360 of the 1986 Order (obligation to keep and enter up register) after paragraph (3) insert -
Amendment of Article 376 of the 1986 Order
20.
In Article 376 of the 1986 Order (extraordinary general meeting on members' requisition) after paragraph (2) insert -
Amendment of Article 377 of the 1986 Order
21.
In Article 377 of the 1986 Order (length of notice for calling meetings) in paragraph (4)(a) after "meeting" insert "(excluding any shares in the company held as treasury shares)".
Amendment of Article 378 of the 1986 Order
22.
In Article 378 of the 1986 Order (general provisions as to meetings and votes) in paragraph (3) after the first "capital" insert "(excluding any shares in the company held as treasury shares)".
Amendment of Article 381 of the 1986 Order
23.
In Article 381 of the 1986 Order (right to demand a poll) -
Amendment of Article 384 of the 1986 Order
24.
In Article 384 of the 1986 Order (circulation of members' resolutions) in paragraph (2)(a) after "relates" insert "(excluding any voting rights attached to any shares in the company held as treasury shares)".
Amendment of Article 386 of the 1986 Order
25.
In Article 386 of the 1986 Order (extraordinary and special resolutions) in paragraph (3)(a) after "right" insert "(excluding any shares in the company held as treasury shares)".
Amendment of Article 388 of the 1986 Order
26.
In Article 388 of the 1986 Order (registration etc. of resolutions and agreements)[12] after paragraph (4) insert -
Amendment of Article 421 of the 1986 Order
27.
For Article 421(2) of the 1986 Order (takeover offers)[13] substitute -
(2A) In this Article -
Amendment of Article 423A of the 1986 Order
28.
- (1) In Article 423A of the 1986 Order (right of minority shareholder to be bought out by offeror)[14] after paragraph (1) insert -
(2) Insert after paragraph (2) -
Amendment of Article 424 of the 1986 Order
29.
In Article 424 of the 1986 Order (investigation of a company on its own application or that of its members) at the end of paragraph (2)(a) insert "(excluding any shares held as treasury shares)".
Amendment of paragraph 38, Schedule 4 to the 1986 Order
30.
In paragraph 38 of Schedule 4 to the 1986 Order (form and content of company accounts)[15] -
Amendment of paragraph 10, Schedule 4A to the 1986 Order
31.
In Schedule 4A to the 1986 Order (form and content of group accounts)[16] in paragraph 10(1)(a) after "acquired" insert "(excluding any shares in the undertaking held as treasury shares)".
Amendment of paragraphs 10 and 12, Schedule 15B to the 1986 Order
32.
In Schedule 15B to the 1986 Order (provisions subject to which Articles 418 to 420 have effect in their application to mergers and divisions of public companies)[17] -
Amendment of Schedule 23 to the 1986 Order
33.
In Schedule 23 to the 1986 Order (punishment of offences under the 1986 Order) at the appropriate place in the Table insert -
"172G | Contravention of any provision of Articles 172A to 172F (dealings by company in treasury shares, etc.) |
1.
On indictment 2. Summary |
A fine The statutory maximum" |
"179A(4) | Default by company's officer in delivering to registrar the return required by Article 179A (disclosure by company of cancellation or disposal of treasury shares) |
1.
On indictment 2. Summary |
A fine The statutory maximum |
One-tenth of the statutory maximum.". |
Repeal of Article 68(4) of the Companies (No. 2) (Northern Ireland) Order 1990
34.
Article 68(4) of the Companies (No. 2) (Northern Ireland) Order 1990[18], which substituted a new Article 172(2) of the 1986 Order as from a day to be appointed, is repealed.
[2] 1972 c. 68 as amended by the European Economic Area Act 1993 (c. 51)back
[3] S.I. 1986/1032 (N.I. 6)back
[6] O.J. No. L141, 11.6.93, p. 27back
[7] Article 422 was substituted by Article 26 of the Companies (Northern Ireland) Order 1989 (S.I. 1989/2404 (N.I. 18))back
[8] Article 34 was amended by paragraph 2 of the Schedule to S.R. 1992 No. 405back
[9] Article 141 was amended by paragraph 6 of Part I of Schedule 9 to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19))back
[10] Article 179 was amended by Article 113 of, and Schedule 6 to, the Companies (No. 2) (Northern Ireland) Order 1990 (S.I. 1990/1504 (N.I. 10))back
[11] O.J. No. L26/77 with amendments 291/79, 345/80, 302/85, 347/92back
[12] Article 388 was amended by Part I of Schedule 10 to the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I. 5)), Part II of Schedule 4 to the Companies (Northern Ireland) Order 1989, Part I of Schedule 9 to the Insolvency (Northern Ireland) Order 1989, S.I. 1995/3272 and S.I. 2001/3755back
[13] Article 421 was substituted by Article 26 of the Companies (Northern Ireland) Order 1989back
[14] Article 423A was inserted by Article 26 of the Companies (Northern Ireland) Order 1989back
[15] Schedule 4 was amended by Article 6(2) of, and Schedule 1 to, the Companies (Northern Ireland) Order 1990back
[16] Schedule 4A was substituted by Article 7(2) of, and Schedule 2 to, the Companies (Northern Ireland) Order 1990 and amended by S.R. 1992 No. 436 and S.R. 1997 No. 314back
[17] Schedule 15B was inserted by Regulation 3(c) of S.R. 1987 No. 442 and was renumbered 15B by Article 49(2) of the Companies (No. 2) (Northern Ireland) Order 1990back
[18] S.I. 1990/1504 (N.I. 10)back