Made | 14th April 2003 | ||
Laid before Parliament | 15th April 2003 | ||
Coming into force | 1st December 2003 |
(2A) The terms and manner of a purchase under this section need not be determined by the articles as required by section 160(3).
(2B) Where a company makes a purchase of qualifying shares out of distributable profits under this section, section 162A applies to the shares purchased; and accordingly section 160(4) does not apply to those shares.".
(3) At the end of subsection (3) insert "or shares held as treasury shares".
(4) After subsection (3) insert the following subsection -
and in paragraph (a) "the official list" has the meaning given in section 103(1) of the Financial Services and Markets Act 2000.".
Insertion of sections 162A, 162B, 162C, 162D, 162E, 162F and 162G
3.
After section 162 of the 1985 Act insert the following sections -
(2) Where shares are held under subsection (1)(a) then, for the purposes of section 352, the company must be entered in the register as the member holding those shares.
(3) In this Act, references to a company holding shares as treasury shares are references to the company holding shares which -
162B.
Treasury shares: maximum holdings
(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 subsection (1) or (2) is contravened by a company, the company must dispose of or cancel the excess shares, in accordance with section 162D, before the end of the period of 12 months beginning with the day on which that contravention occurs.
162C.
Treasury shares: voting and other rights
(1) This section 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 subsection (2) applies include any right to attend or vote at meetings (including meetings under section 425).
(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 section 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 Act as if they were purchased by the company at the time they were allotted, in circumstances in which section 162A(1) applied.
162D.
Treasury shares: disposal and cancellation
(1) Where shares are held as treasury shares, a company may at any time -
(2) For the purposes of subsection (1)(a), "cash", in relation to a sale of shares by a company, means -
(3) But if the company receives a notice under section 429 (right of offeror to buy out minority shareholders) that a person desires to acquire any of the shares, the company must not, under subsection (1), sell or transfer the shares to which the notice relates except to that person.
(4) If under subsection (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 subsection (1) without complying with sections 135 and 136 (resolution to reduce issued share capital; application to court for approval).
162E.
Treasury shares: mandatory cancellation
(1) If shares held as treasury shares cease to be qualifying shares, the company must forthwith cancel the shares in accordance with section 162D.
(2) For the purposes of subsection (1), shares are not to be regarded as ceasing to be qualifying shares by virtue only of -
(3) For the purposes of this section "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.
162F.
Treasury shares: proceeds of sale
(1) Where shares held as treasury shares are sold, the proceeds of sale shall be dealt with in accordance with this section.
(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 8 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 subsection (4), be treated as being nil.
162G.
Treasury shares: penalty for contravention
If a company contravenes any provision of sections 162A to 162F every officer of it who is in default is liable to a fine.".
Consequential amendments
4.
The Schedule to these Regulations (which contains consequential amendments) has effect.
Melanie Johnson,
Parliamentary Under Secretary of State for Competition, Consumers and Markets,Department of Trade and Industry
14th April 2003
Amendment of section 24 of the 1985 Act
2.
In section 24 of the 1985 Act (minimum membership for carrying on business)[7], the existing provision becomes subsection (1) of that section, and at the end insert -
Amendment of section 54 of the 1985 Act
3.
In section 54 of the 1985 Act (litigated objection to resolution under section 53) after subsection (2) insert -
Amendment of section 89 of the 1985 Act
4.
In section 89 of the 1985 Act (offers to shareholders to be on pre-emptive basis) after subsection (5) insert -
Amendment of section 94 of the 1985 Act
5.
- (1) Amend section 94 of the 1985 Act (definitions for sections 89-96) as follows.
(2) At the end of subsection (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".
(3) After subsection (3) insert -
Amendment of section 95 of the 1985 Act
6.
In section 95 of the 1985 Act (disapplication of pre-emption rights) after subsection (2) insert -
Amendment of section 103 of the 1985 Act
7.
In section 103(4) of the 1985 Act (non-cash consideration to be valued before allotment)[8] -
(b) for the second sentence substitute -
(c) shares held as treasury shares by the relevant company.".
Amendment of section 125 of the 1985 Act
8.
- (1) Amend section 125 of the 1985 Act (variation of class rights) as follows.
(2) In subsection (2)(a) after the word "class" insert the words "(excluding any shares of that class held as treasury shares)".
(3) In subsection (5) after the word "company" insert the words "(excluding any member holding shares as treasury shares)".
(4) In subsection (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 section 127 of the 1985 Act
9.
In section 127 of the 1985 Act (shareholders' right to object to variation) after subsection (2) insert -
Amendment of section 131 of the 1985 Act
10.
In section 131 of the 1985 Act (merger relief)[9], at the end of subsection (4) insert "(excluding any shares in that company held as treasury shares)".
Amendment of section 143 of the 1985 Act
11.
In section 143 of the 1985 Act (general rule against company acquiring own shares) -
Amendment of section 169 of the 1985 Act
12.
- (1) Amend section 169 of the 1985 Act (disclosure by company of purchase of own shares)[10] as follows.
(2) After subsection (1) insert the following subsections -
(3) In subsection (2) for "the return" substitute "any return under subsection (1) or (1B)".
(4) In subsection (3) after "return" insert "under either subsection (1) or (1B)".
Insertion of section 169A of the 1985 Act
13.
After section 169 of the 1985 Act insert the following section -
(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 of companies 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 section, 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 section 170 of the 1985 Act
14.
In section 170(1) of the 1985 Act (the capital redemption reserve) before the words "shall be transferred" insert ", or in accordance with section 162D(4) on cancellation of shares held as treasury shares,".
Amendment of section 198 of the 1985 Act
15.
In section 198(2) of the 1985 Act (obligations of disclosure: the cases in which it may arise and the "the relevant time")[11] -
Amendment of section 214 of the 1985 Act
16.
In section 214 of the 1985 Act (company investigation on requisition by members) at the end of subsection (1) insert "(excluding any shares in the company held as treasury shares)".
Amendment of section 346 of the 1985 Act
17.
In section 346 of the 1985 Act ("connected persons", etc) -
Amendment of section 352 of the 1985 Act
18.
In section 352 of the 1985 Act (obligation to keep and enter up register of members) after subsection (3) insert -
Amendment of section 368 of the 1985 Act
19.
In section 368 of the 1985 Act (extraordinary general meeting on members' requisition)[12] after subsection (2) insert -
Amendment of section 369 of the 1985 Act
20.
In section 369 of the 1985 Act (length of notice for calling meetings)[13] in subsection (4)(a) after "meeting" insert "(excluding any shares in the company held as treasury shares)".
Amendment of section 370 of the 1985 Act
21.
In section 370 of the 1985 Act (general provisions as to meetings and votes) in subsection (3) after the first "capital" insert "(excluding any shares in the company held as treasury shares)".
Amendment of section 373 of the 1985 Act
22.
In section 373 of the 1985 Act (right to demand a poll)[14]
Amendment of section 376 of the 1985 Act
23.
In section 376 of the 1985 Act (circulation of members' resolutions) in subsection (2)(a) after "relates" insert "(excluding any voting rights attached to any shares in the company held as treasury shares)".
Amendment of section 378 of the 1985 Act
24.
In section 378 of the 1985 Act (extraordinary and special resolutions)[15] in subsection (3)(a) after "right" insert "(excluding any shares in the company held as treasury shares)".
Amendment of section 380 of the 1985 Act
25.
In section 380 of the 1985 Act (registration, etc of resolutions and agreements)[16] after subsection (4) insert -
Amendment of section 429 of the 1985 Act
26.
In section 429 of the 1985 Act (right of offeror to buy out minority shareholders)[17] -
Amendment of section 430A of the 1985 Act
27.
In section 430A of the 1985 Act (right of minority shareholder to be bought out by offeror)[18] -
Amendment of section 431 of the 1985 Act
28.
In section 431 of the 1985 Act (investigation of a company on its own application or that of its members) at the end of subsection (2)(a) insert "(excluding any shares held as treasury shares)".
Amendment of section 744A of the 1985 Act
29.
In section 744A of the 1985 Act (index of defined expressions), at the appropriate place in the Table insert -
Amendment of paragraph 38, Schedule 4 to the 1985 Act
30.
In Schedule 4 to the 1985 Act (form and content of company accounts)[19] -
(c) where shares are held as treasury shares, the number and aggregate nominal value of the treasury shares and, where shares of more than one class have been allotted, the number and aggregate nominal value of the shares of each class held as treasury shares.".
Amendment of paragraph 10, Schedule 4A to the 1985 Act
31.
In Schedule 4A to the 1985 Act (form and content of group accounts)[20] 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 1985 Act
32.
In Schedule 15B to the 1985 Act (provisions subject to which sections 425-427 have effect in their application to mergers and divisions of public companies)[21] -
Amendment of Schedule 24 to the 1985 Act
33.
In Schedule 24 to the 1985 Act (punishment of offences under the 1985 Act[22] at the appropriate place in the Table insert -
"162G | Contravention of any provision of sections 162A-162F (dealings by company in treasury shares, etc) |
1. On indictment 2. Summary |
A fine The statutory maximum" |
|
"169A(4) | Default by company's officer in delivering to registrar the return required by section 169A (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.". |
[2] 1972 c. 68: as amended by the European Economic Area Act 1993 (c. 51).back
[4] Section 162 was amended from a day to be appointed by section 133(4) of the Companies Act 1989 (c. 40).back
[6] OJ 141, 11 June 1993, p.27.back
[7] Section 24 was amended by paragraph 2 of the Schedule to the Companies (Single Member Private Limited Companies) Regulations 1992 (S.I. 1992/1669).back
[8] Section 103 has been amended in a manner not relevant to these Regulations.back
[9] Section 131 was amended by section 439(1) of, and Schedule 13 to, the Insolvency Act 1986 (c. 45) and section 145 of, and Schedule 19 to, the Companies Act 1989 (c. 40).back
[10] Section 169 was amended by sections 143(2) and 212 of, and Schedule 24 to, the Companies Act 1989.back
[11] Section 198 has been amended in a manner not relevant to these Regulations.back
[12] Section 368 has been amended in a manner not relevant to these Regulations.back
[13] Section 369 has been amended in a manner not relevant to these Regulations.back
[14] Section 373 has been amended in a manner not relevant to these Regulations.back
[15] Section 378 has been amended in a manner not relevant to these Regulations.back
[16] Section 380 was amended by section 116(3) of the Companies Act 1989, Schedule 11 to the Insolvency Act 1986 and paragraph 10 of Schedule 7 to the Uncertificated Securities Regulations 2001 (S.I. 2001/3755).back
[17] Section 429 was substituted by section 172(1) of, and Schedule 12 to, the Financial Services Act 1986 (c. 60).back
[18] Section 430A was substituted by section 172(1) of, and Schedule 12 to, the Financial Services Act 1986.back
[19] Schedule 4 has been variously amended in a manner not relevant to these Regulations.back
[20] Schedule 4A was inserted by section 5(2) of, and Schedule 2 to, the Companies Act 1989 and subsequently amended in a manner not relevant to these Regulations.back
[21] Schedule 15B has been amended in a manner not relevant to these Regulations.back
[22] Schedule 24 has been variously amended in a manner not relevant to these Regulations.back
© Crown copyright 2003 | Prepared 24 April 2003 |