422

Part IV: Management and Administration

Registered Office and Name

89 Registered office of company

(1) A company shall, as from the day on which it begins to carry on business or as from the twenty-eighth day after the date of its incorporation, whichever is the earlier, have a registered office in Gibraltar to which all communications and notices may be addressed.

(2) Notice of the situation of the registered office, and of any change therein, shall be given within twenty-eight days after the date of the incorporation of the company or of the change, as the case may be, to the Registrar who shall record the same. The inclusion in the annual return of a company of a statement as to the address of its registered office shall not be taken to satisfy the obligation imposed by this subsection unless that return shall have been due and made within 28 days of the change.

(3) If default is made in complying with this section, the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction to default fines.

423

90 Publication of name by company

(1) Every company—

(a) shall paint or affix, and keep painted or affixed, its name on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible;

(b) shall have its name engraven in legible characters on its seal, if any;

(c) shall have its name mentioned in legible characters in an notices, advertisements and other official publications of the company, and in all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, and in all bills of parcels, invoices, receipts and letters of credit of the company.

(2) If a company does not paint or affix its name in manner directed by this Ordinance, the company and every officer of the company who is in default are guilty of offences and are each liable on summary conviction to a fine of £5 one half of the amount at level 1 on the standard scale, and if a company does not keep its name painted or affixed in manner so directed, the company and every officer of the company  who is in default are likewise guilty of an offence and liable on summary conviction to default fines.

(3) If a company fails to comply with paragraph (b) or paragraph (c) of subsection (1), the company is liable on summary conviction to a fine of £50 at level 2 on the standard scale.

(4) A director, manager or officer of a company or any person on its behalf who—

(a) uses or authorizes the use of any seal purporting to be a seal of the company whereon its name is not so engraven as aforesaid;

or

(b) issues or authorizes the issue of any notice, advertisement or other official publication of the company, or signs or authorizes to be signed on behalf of the company any bill of exchange, promissory note, endorsement, cheque or order for money or goods, wherein its name is not mentioned in manner aforesaid, or

(c) issues or authorizes the issue of any bill of parcels, invoice, receipt or letter of credit of the company, wherein its name is not mentioned in manner aforesaid,

is guilty of an offence and is liable on summary conviction to a fine at level 2 on the standard scale, and is further personally liable to the holder of the bill of exchange, promissory note, cheque or order for money or goods, for the amount thereof, unless it is duly paid by the company.

424

90A Particulars to be shown on letter heads, etc.

(1) Every company shall have the following particulars mentioned in legible characters in all business letters and order forms of the company, that is to say,—

(a) the place of registration of the company, and the number with which it is registered;

(b) the address of its registered office; and

(c) in the case of a limited company exempt from the obligation to use the word “Limited” as part of its name, the fact that it is a limited company;

(d) in the case of an investment company (as defined in section 147B) the fact that it is such a company1;

and, if in the case of a company having a share capital there is on the stationery used for any such letters or on the order forms a reference to the amount of the share capital, the reference shall be to paid-up share capital.

(2) If a company fails to comply with subsection (1), the company is guilty of an offence and is liable on summary conviction to a fine at level 2 on the standard scale, and if an officer of a company or any person on its behalf issues or authorizes the issue of any business letter or order form not complying with this subsection, he is guilty of an offence and is liable on summary conviction to a fine at level 2 on the standard scale.

Notes

1 Subsection (1)(d) inserted by Ordinance No 20 of 1998 s 10. Not yet in force

424A

Restrictions on Commencement of Business

91 Restrictions on commencement of business

(1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers unless—

(a) shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription; and

(b) every director of the company has paid to the company on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription; and

(c) there has been delivered to the Registrar for registration a statutory declaration by the secretary or one of the directors, in the prescribed form, that the aforesaid conditions have been complied with.

(2) Where a company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless—

(a) there has been delivered to the Registrar for registration a statement in lieu of prospectus (sic); and

(b) every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and

(c) there has been delivered to the Registrar for registration a statutory declaration by the secretary or one of the directors in the prescribed form that paragraph (b) of this subsection has been complied with.

(3) The Registrar shall, on the delivery to him of the said statutory declaration, and, in the case of a company which is required by this section to deliver a statement in lieu of prospectus, of such a statement, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled.

(4) Nothing in this section affects the validity of any transaction entered into by a company; but if a company enters into a transaction in contravention of this section and fails to comply with its obligations within 21 days from being called upon to do so, the directors of the company are jointly and severally liable to indemnity (sic) the other party to the transaction in respect of any loss or damage suffered by him by reason of the company’s failure to comply with those obligations.1

(5) Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on application for debentures.

(6) If a company commences business or exercises borrowing powers in contravention of this section, every person who is responsible for the contravention is guilty of an offence and, without prejudice to any other liability, is liable on summary conviction to a fine at level 2 on the standard scale for every day during which the contravention continues.

(7) Nothing in this section shall apply to a private company.

Notes

1 Subsection 4 substituted by Ordinance No 20 of 1998 s 11. Not yet in force.

425

Register of Members

92 Register of members

(1) Every company shall keep in one or more books a register of its members, and enter therein the following particulars:—

(a) the names and addresses, and the occupations (if any) of the members, and in the case of a company having a share capital a statement of the shares held by each member, distinguishing each share by its number and of the amount paid or agreed to be considered as paid on the shares of each member;

(b) the date at which each person was entered in the register as a member; and

(c) the date at which any person ceased to be a member:

Provided that, where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the register shall show the amount of stock held by each member instead of the amount of shares and the particulars relating to  shares specified in paragraph (a) of this subsection.

(2) If default is made in complying with this section, the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction to default fines.

426

92A Changes in membership of private company

(1) If the number of members of a private company, limited by shares or by guarantee falls to one there shall upon the occurrence of that event be entered in the company’s register of members—

(a) the name and address of the sole member,

(b) a statement that the company has only one member,

and

(c) the date on which the company became a company having only one member.

(2) If the membership of the private company limited by shares or by guarantee increases from one to two or more members there shall upon the occurrence of that event be entered in the company’s register of members, with the name and address of the person who was formerly the sole member, a statement that the company has ceased to have only one member together with the date on which that event occurred.

(3) If a company makes default in complying with this section the company and every officer of it who is in default is liable on summary conviction to a fine not exceeding level 2 on the standard scale and, for continued contravention, to a daily fine not exceeding one-tenth of level 2 on the standard scale.

426A

93 Index of members of company

(1) Every company having more than fifty members shall, unless the register of members is in such a form as to constitute in itself an index, keep  an index of the names of the members of the company and shall, within fourteen days after the date on which any alteration is made in the register of members, make any necessary alteration in the index.

(2) The index, which may be in the form of a card index, shall in respect of each member contain a sufficient indication to enable the account of that member in the register to be readily found.

(3) If default is made in complying with this section, the company and every officer of the company who is in default are guilty of an offence and are liable on summary conviction to default fines.

427

94 Provisions as to entries in register in relation to share warrants

(1) On the issue of a share warrant the company shall strike out of its register of members the name of the member then entered therein as holding the shares specified in the warrant as if he had ceased to be a member, and shall enter in the register the following particulars, namely:—

(a) the fact of the issue of the warrant;

(b) a statement of the shares included in the warrant, distinguishing each share by its number; and

(c) the date of the issue of the warrant.

(2) The bearer of a share warrant shall, subject to the articles of the company, be entitled, on surrendering it for cancellation, to have his name entered as a member in the register of members.

(3) The company shall be responsible for any loss incurred by any person by reason of the company entering in the register the name of a bearer of a share warrant in respect of the shares therein specified without the warrant being surrendered and cancelled.

(4) Until the warrant is surrendered, the particulars specified in subsection (1) shall be deemed to be the particulars required by this Ordinance to be entered in the register to members, and, on the surrender, the date of the surrender must be entered.

(5) Subject to the provisions of this Ordinance, the bearer of a share warrant may, if the articles of the company so provide, be deemed to be a member of the company within the meaning of this Ordinance, either to the full extent or for any purposes defined in the articles.

428

95 Inspection of register of members

(1) The register of members, commencing from the date of the registration of the company, and the index of the names of members, shall be kept at the registered office of the company, and, except when the register is closed under the provisions of this Ordinance, shall during business hours (subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day be allowed for inspection) be open to the inspection of any member without charge and of any other person on payment of five pence, or such less sum as the company may prescribe, for each inspection.

(2) Any member or other person may require a copy of the register, or of any part thereof, on payment of three pence, or such less sum as the company may prescribe, for every hundred words or fractional part thereof required to be copied. The company shall  cause any copy so required by any person to be sent to that person within a period of ten days commencing on the day next after the day on which the requirement is received by the company.

(3) If any inspection required under this section is refused or if any copy required under this section is not sent within the proper period, the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction in respect of each offence to a fine of one fifth of the amount at level 1 on the standard scale, and further to a default fine of the same amount.

(4) In the case of any such refusal or default, the court may by order compel an immediate inspection of the register and index or direct that the copies required shall be sent to the persons requiring them.

429

96 Power to close register

A company may, on giving notice by advertisement in some newspaper circulating in Gibraltar, close the register of members for any time or times not exceeding in the whole thirty days in each year.

430

97 Power of court to rectify register

(1) If—

(a) the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or

(b) default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member,

the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register.

(2) Where an application is made under this section, the court may either refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved.

(3) On an application under this section the court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.

(4) In the case of a company required by this Ordinance to send a list of its members to the Registrar, the court when making an order for rectification of the register, shall by its order direct notice of the rectification to be given to the Registrar.

431

98 Trusts not to be entered on register

No notice of any trust, expressed, implied or constructive, shall be entered on the register, or be receivable by the Registrar.

432

99 Register to be evidence

The register of members shall be prima facie evidence of any matters by this Ordinance directed or authorized to be inserted therein.

433

Annual Return

100 Annual return to be made by company having a share capital

(1) Every company having a share capital shall deliver to the Registrar successive annual returns each of which is made up to a date not later than the date which is from time to time the company’s “return date”, that is—

(a) the anniversary of the company’s incorporation, or

(b) if the company’s last return delivered in accordance with this Ordinance was made up to a different date, the anniversary of that date.1

[(1A) Each return shall—

(a) be in the form prescribed in Schedule 5;

(b) contain the information required by or under this Ordinance; and

(c) be signed by a director or the secretary of the company,

and shall be delivered to the Registrar within 28 days after the date to which it is made up.2

(2) The list must state the names, addresses and occupations of all the past and present members therein mentioned, and the number of shares held by each of the existing members at the date of the return, specifying shares transferred since the date of the last return, or, in the case of the first return, of the incorporation of the company by persons who are still members and have ceased to be members respectively and the dates of registration of the transfers, and, if the names therein are not arranged in alphabetical order, must have annexed to it an index sufficient to enable the name of any person in the list to be readily found:

Provided that where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the list must state the amount of stock held by each of the existing members instead of the amount of shares and the particulars relating to shares hereinbefore required.

(3) The return must also state the address of the registered office of the company and must contain a summary distinguishing between shares issued for cash and shares issued as fully or partly paid up otherwise than in cash, and specifying the following particulars:—

(a) the amount of the share capital of the company, and the number of the shares into which it is divided;

(b) the number of shares taken from the commencement of the company up to the date of the return;

(c) the amount called up on each share;

(d) the total amount of calls received;

(e) the total amount of calls unpaid;

(f) the total amount of the sums (if any) paid by way of commission in respect of any shares or debentures;

(g) particulars of the discount allowed on the issue of any shares issued at a discount, or of so much of that discount as has not been written off at the date on which the return is made;

(h) the total amount of the sums (if any) allowed by way of discount in respect of any debentures, since the date of the last return;

(i) the total number of shares forfeited;

(j) the total amount of shares for which share warrants are outstanding at the date of the return;

(k) the total amount of share warrants issued and surrendered respectively since the date of the last return;

(l) the number of shares comprised in each share warrant;

(m) all such particulars with respect to the persons who at the date of the return are the directors and secretaries of the company as are by this Ordinance required to be contained with respect to directors and secretaries in the registers of the directors and secretaries of a company;

(n) the total amount of the indebtedness of the company in respect of all mortgages and charges which are required to be registered with the Registrar under this Ordinance.

(4) The references in this section to a return being delivered “in accordance with this Ordinance” are—

(a) in relation to a return made on or after the 1st day of August 1992, to a return with respect to which all of the requirements of subsection (1A) are complied with;

(b) in relation to a return made before the 1st day of August 1992, to a return with respect to which the formal and substantive requirements of this Ordinance as it then had effect were complied with, whether or not the return was delivered in time.3

Notes

1 Subsection (1) substituted by Ordinance No 7 of 1992 s 28(a). Not yet in force.

2 Subsection (1A) inserted by Ordinance No 7 of 1992 s 28(a) and further amended by Ordinance No 30 of 1999 s 24. Not yet in force.

3 Subsection (4) substituted by Ordinance No 7 of 1992 s 29(b). Not yet in force.

434

101 Annual return to be made by company not having share capital

(1) Every company not having a share capital shall deliver to the Registrar successive annual returns each of which is made up to a date not later than the date which is from time to time the company’s “return date”, that is, the anniversary of the company’s incorporation and each return shall be in the prescribed form and shall state—

(a) the address of the registered office of the company;

(b) such particulars with respect to the persons who at the date of the return are the directors and secretaries of the company as are by this Ordinance required to be contained with respect to directors and secretaries in the registers of directors and secretaries of a company, and

it shall be delivered to the Registrar within 28 days after the date to which it is made up.1

(2) There shall be annexed to the return a statement containing particulars of the total amount of the indebtedness of the company in respect of all mortgages and charges which are required to be registered with the Registrar under this Ordinance.

Notes

1 Subsection (1) as amended by Ordinance No 7 of 1992 s 29 and as further amended by Ordinance No 30 of 1999 s 25. Not yet in force.

435

102 General provisions as to annual returns

(1) The annual return must be contained in a separate part of the register of members.

(2) Section 95 shall apply to the annual return as it applies to the register of members.

(3) Except where the company is a private company, the annual return shall include a written copy, certified by a director or the manager or secretary of the company to be a true copy, of the last balance sheet which has been audited by the company’s auditors, including every document required by law to be annexed thereto, together with a copy of the report of the auditors thereon certified as aforesaid, and if any such balance sheet is in a foreign language there shall also be annexed to it a translation thereof in English, certified in the prescribed manner to be a correct translation:

Provided that, if the last balance sheet did not comply with the requirements of the law as in force at the date of the audit with respect to the form of balance sheets there shall be made such additions to and corrections in the copy as would have been required to be made in the balance sheet in order to make it comply with such requirements, and the fact that the copy has been so amended shall be stated thereon.

(4) If a company fails to comply with this section or section 100 or 101

(a) the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction to a fine at level 3 on the standard scale and for continued contravention, to a daily fine of an amount of one half of the amount at level 3 on the standard scale;

(b) in the case of a failure to comply with section 100 or 101, the Registrar may regard that failure as reasonable cause to believe that the company is not carrying on business or in operation.2

(5) For the purposes of subsection (4) of this section, “officer”, and for the purposes of sections 100 and 101, “director” shall include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

Notes

1 Subsection (1) amended by Ordinance No 7 of 1992 s 30(a). Not yet in force.

2 Subsection (4) amended by Ordinance No 7 of 1992 s 30(b). Not yet in force.

436

103 Certificates to be sent by private company with annual return

A private company shall send with the annual return required by section 100 a certificate in the form prescribed in Schedule 51 signed by a director or the secretary of the company that the company has not, since the date of the last return, or, in the case of a first return, since the date of the incorporation of the company, issued any invitation to the public to subscribe for any shares or debentures of the company, and, where the annual return discloses the fact that the number of members of the company exceeds fifty, also a certificate so signed that the excess consists wholly of persons who under paragraph (b) of section 26(1), are not to be included in reckoning the number of fifty.

Notes

1 S 103 amended by Ordinance No 7 of 1992 s 31. Not yet in force.

437

Meetings and Proceedings

104 Annual general meetings

(1) Every company shall, subject to the provisions of subsection (5), in each year, hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it.

(2) So long as a company holds its first annual general meeting within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.

(3) Not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next.

(4) If default is made in holding a meeting in accordance with this section, the company and every officer of it who is in default is liable on summary conviction to a fine, in the case of the company, at level 5 on the standard scale, and in the case of an officer of the company, at level 3 on the standard scale.

(5) A private company may, by special resolution dispense with the holding of annual general meetings and where the company has passed such a special resolution —

(a) sections 115 and 124(1) shall be deemed to have no effect in respect of that company for such time and in respect of such years as the resolution shall have effect in accordance with this section; and

(b) the special resolution is subject to section 110 (copy to be forwarded to the Registrar within fifteen days).

(6) A special resolution dispensing with the holding of annual general meetings, shall have effect for the year in which it is made and subsequent years, but shall not affect any liability already incurred by reason of default in holding an annual general meeting.

(7) In any year in which an annual general meeting would be required to be held but for the special resolution and in which no such meeting has been held, any member of the company may, by notice to the company not later than three months before the end of  the year, require the holding of an annual general meeting in that year.

(8) If a notice provided for in subsection (7) is given, the provisions of subsections (1) and (4) shall apply with respect to the calling of the meeting and the consequences of default.

(9) If the effect of the special resolution ceases, the company is not obliged under the provisions of this section to hold an annual general meeting in that year if when the special resolution ceases to have effect, less than three months of the year remains:

Provided that this does not affect any obligation of the company to hold an annual general meeting in that year in pursuance of a notice given under subsection (7).

438

105 Statutory meeting and statutory report

(1) Every company limited by shares and every company limited by guarantee and having a share capital shall, within a period of not less than one month nor more than three months from the date at which the company is entitled to commence business, hold a general meeting of the members of the company, which shall be called “the statutory meeting”.

(2) The directors shall, at least seven days before the day on which the meeting is held, forward a report (in this Ordinance referred to as “the statutory report”) to every member of the company.

(3) The statutory report shall be certified by not less than two directors of the company or, where there are less than two directors, by the sole director and manager, and shall state—

(a) the total number of shares allotted, distinguishing shares allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up the extent to which they are so paid up, and either case the consideration for which they have been allotted;

(b) the total amount of cash received by the company in respect of all the shares allotted, distinguished as aforesaid;

(c) an abstract of the receipts of the company and of the payments made thereout, up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made thereout, and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company;

(d) the names, addresses and descriptions of the directors, auditors (if any), managers (if any) and secretary of the company; and

(e) the particulars of any contract, the modification of which is to be submitted to the meeting for its approval, together with the particulars of the modification or proposed modification.

(4) The statutory report shall, so far as it relates to the shares allotted by the company, and to the cash received in respect of such shares, and to the receipts and payments of the company on capital account, be certified as correct by the auditors (if any) of the company.

(5) The directors shall cause a copy of the statutory report, certified as required by this section, to be delivered to the Registrar for registration forthwith after the sending thereof of the members of the company.

(6) The directors shall cause a list showing the names, descriptions and addresses of the members of the company, and the number of shares held by them respectively, to be produced at the commencement of the meeting, and to remain open and accessible to any member of the company during the continuance of the meeting.

(7) The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company, or arising out of the statutory report, whether previous notice has been given or not, but no resolution of which notice has not been given in accordance with the articles may be passed.

(8) The meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the articles, either before or subsequently to the former meeting, may be passed, and the adjourned meeting shall have the same powers as an original meeting.

(9) In the event of any default in complying with the provisions of this section every director of the company who is guilty of or who knowingly and wilfully authorizes or permits the default is guilty of an offence and is liable on summary conviction to a fine at level 2 on the standard scale.

(10) This section shall not apply to a private company.

439

106 Convening of extraordinary general meeting on requisition

(1) The directors of a company, notwithstanding anything in its articles, shall, on the requisition of members of the company holding at the date of the deposit of the requisition not less than one-tenth of such of the paid-up capital of the company as at the date of the deposit carries the right of voting at general meetings of the company, or, in the case  of a company not having a share capital, members of the company representing not less than one-tenth of the voting rights of all the members having at the said date a right to vote at general meetings of the company, forthwith proceed duly to convene an extraordinary general meeting of the company.

(2) The requisition must state the objects of the meetings, and must be signed by the requisitionists and deposited at the registered office of the company, and may consist of several documents in like form, each signed by one or more requisitionists.

(3) If the directors do not within twenty-one days from the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a meeting, but any meeting so convened shall not be held after the expiration of three months from the said date.

(4) A meeting convened under this section by the requisitionists shall be convened in the same manner, as nearly as possible, as that in which meetings are to be convened by directors.

(5) Any reasonable expenses incurred by the requisitionists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration in respect of their services to such of the directors as were in default.

(6) For the purposes of this section, the directors shall, in the case of a meeting at which a resolution is to be proposed as a special resolution, be deemed not to have duly convened the meeting if they do not give such notice thereof as is required by section 109.

440

107 Provisions as to meetings and votes

(1) The following provisions shall have effect in so far as the articles of the company do not make other provision in that behalf:—

(a) a meeting of a company, other than a meeting for the passing of a special resolution, may be called by seven days’ notice in writing,

(b) notice of the meeting of a company shall be served on every member of the company in the manner in which notices are required to be served by Table A, and for the purpose of this paragraph, “Table A” means that Table as for the time being in force;

(c) two or more members holding not less than one-tenth of the issued share capital or, if the company has not a share capital, not less than five per cent in number of the members of the company may call a meeting;

(d) in the case of a private company one member, and in the case of any other company three members, personally present shall be a quorum;

(e) any member elected by the members present at a meeting may be chairman thereof,

(f) in the case of a company originally having a share capital, every member shall have one vote in respect of each share or each £10 of stock held by him, and in any other case every member shall have one vote.

(2) If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called, or to conduct the meeting of the company in manner prescribed by the articles or this Ordinance, the Registrar of the court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the Registrar of the court thinks fit, and where any such order is made may  give such ancillary or consequential directions as he thinks expedient, and any meeting called, held and conducted in accordance with any such order shall for all purposes be deemed to be a meeting of the company duly called, held and conducted.

441

107A Quorum at meetings of sole member

Notwithstanding any provision to the contrary in the articles of a private company limited by shares or by guarantee having only one member, one member present in person or by proxy shall be a quorum.

441A

108 Representation of companies at meetings of other companies and of creditors

(1) A corporation, whether a company within the meaning of this Ordinance or not, may—

(a) if it is a member of another corporation, being a company within the meaning of this Ordinance, by resolution of its directors or other governing body authorize such person as it thinks fit to act as its representative at any meeting of the company or at any meeting of any class of members of the company;

(b) if it is a creditor (including a holder of debentures)of another corporation, being a company within the meaning of this Ordinance, by resolution of its directors or other governing body authorize such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of this Ordinance or of any rules made thereunder, or in pursuance of the provisions contained in any debenture or trust deed, as the case may be.

(2) A person authorized as aforesaid shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual shareholder, creditor or holder of debentures, of that other company.

442

109 Provisions as to extraordinary and special resolutions

(1) A resolution shall be an extraordinary resolution when it has been passed by a majority of not less than three-fourths of such members as, being entitled so to do, vote in person or, where proxies are allowed, by proxy, at a general meeting of which notice specifying the intention to propose the resolution as an extraordinary resolution has been duly given.

(2) A resolution shall be a special resolution when it has been passed by such a majority as is required for the passing of an extraordinary resolution and at a general meeting of which not less than twenty-one day’s notice, specifying the intention to propose the resolution as a special resolution, has been duly given:

Provided that, if all the members entitled to attend and vote at any such meeting so agree, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one days’  notice has been given.

(3) At any meeting at which an extraordinary resolution or a special resolution is submitted to be passed, a declaration of the chairman that the resolution is carried shall, unless a poll is demanded, be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

(4) At any meeting at which an extraordinary resolution or a special resolution is submitted to be passed a poll shall be taken to be effectively demanded, if demanded—

(a) by such number of members for the time being entitled under the articles to vote at the meeting as may be specified in the articles, so, however, that it shall not in any case be necessary for more than five members to make the demand, or

(b) if no provision is made by the articles with respect to the right to demand the poll, by three members so entitled or by one member or two members so entitled, if that member holds or those two members together hold not less than fifteen per cent of the paid-up share capital of the company.

(5) When a poll is demanded in accordance with this section, in computing the majority on the poll reference shall be had to the number of votes to which each member is entitled by virtue of this Ordinance or the articles of the company.

(6) For the purposes of this section, notice of a meeting shall be deemed to be duly given and the meeting to be duly held when the notice is given and the meeting held in manner provided by the Ordinance or the articles.

443

109A Written approval

(1) Notwithstanding anything contained in section 109 it shall not be necessary for the case of a private company to hold a general meeting in order to pass an extraordinary or a special resolution but such a resolution may, if it is so provided in the articles of the company, be passed by approval of such resolution being signified in writing by all members of the company who would be entitled to vote if such resolution were submitted to a general meeting.

(2) Where a resolution has been passed in accordance with the provisions of subsection (1) the printed copy of such resolution forwarded to the Registrar in accordance with the provisions of section 110 shall be accompanied by—

(a) the written approval of all the members; and

(b) a statement by the secretary of the company that the members whose written approval is attached are all the members who would be entitled to vote at a general meeting.

(3) No resolution forwarded in accordance with the provisions of subsection (2) shall be recorded by the Registrar unless it complies with the provisions of that subsection.

(4) For the purpose of section 110 a resolution passed by written approval shall be deemed to have been passed on the date on which the last written approval thereto was given and be forwarded to the Registrar within thirty days of such passing.

443A

110 Registration and copies of certain resolutions and agreements

(1) A printed copy of every resolution or agreement to which this section applies shall, within fifteen days after the passing or making thereof be forwarded to the Registrar and recorded by him.

(2) Where articles have been registered, a copy of every such resolution or agreement for the time being in force shall be embodied in or annexed to every copy of the articles issued after the passing of the resolution or the making of the agreement.

(3) Where articles have not been registered, a printed copy of every such resolution or agreement shall be forwarded to any member at his request, on payment of five pence or such less sum as the company may direct.

(4) This section shall apply to—

(a) special resolutions;

(b) extraordinary resolutions;

(c) resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless, as the case may be, they had been passed as special resolutions, or as extraordinary resolutions;

(d) resolutions or agreements which have been agreed to by all the members of some class of shareholders, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by some particular majority or otherwise in some particular manner, and all resolutions or agreements which effectively bind all the members of any class of shareholders though not agreed to by all those members;

(e) resolutions requiring a company to be wound up voluntarily, passed under paragraph (a) of section 204(l).

(5) If a company fails to comply with subsection (1), the company and every officer of the company who is in default are guilty of offences and are each liable on summary conviction to a default fine of £2.

(6) If a company fails to comply with subsection (2) or (3), the company and every officer of the company who is in default are guilty of offences and are each liable on summary conviction to a fine of one tenth of the amount at level 1 on the standard scale for each copy in respect of which default is made.

(7) For the purpose of subsections (5) and (6), a liquidator of the company shall be deemed to be an officer of the company.

444

111 Resolutions passed at adjourned meetings

Where a resolution is passed at an adjourned meeting of—

(a) a company;

(b) the holders of any class of shares in a company;

(c) the directors of a company;

the resolution shall for all purposes be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.

445

112 Minutes of proceedings of meetings and directors

(1) Every company shall cause minutes of all proceedings of general meetings, and where there are directors or managers, of all proceedings at meetings of its directors or of its managers, to be entered in books kept for that purpose.

(2) Any such minute if purporting to be signed by the chairman of the meeting at which the proceedings were had, or by the chairman of the next succeeding meeting, shall be evidence of the proceedings.

(3) Where minutes have been made in accordance with the provisions of this section of the proceedings at any general meeting of the company or meeting of directors or managers, then, until the contrary is proved, the meeting shall be deemed to have been duly held and convened, and all proceedings had thereat to have been duly had, and all appointments of directors, managers or liquidators, shall be deemed to be valid.

446

112A Recording of decisions by the sole member

(1) Where a private company limited by shares or by guarantee has only one member and he takes any decision which may be taken by the company in general meeting and which has effect as if agreed by the company in general meeting, he shall (unless that decision is taken by way of a written resolution) provide the company with a written record of that decision.

(2) If the sole member fails to comply with subsection (1) he shall be liable, on summary conviction, to a fine not exceeding level 2 on the standard scale.

(3) Any failure by the sole member to comply with subsection (1) shall not affect the validity of any decision referred to in that subsection.

446A

113 Inspection of minute books

(1) The books containing the minutes of proceedings of any general meeting of a company shall be kept at the registered office of the company, and shall during business hours (subject to such reasonable restrictions as the company may by its articles or in  general meeting impose, so that no less than two hours in each day be allowed for inspection) be open to the inspection of any member without charge.

(2) Any member shall be entitled to be furnished, within seven days after he has made a request in that behalf to the company, with a copy of any such minutes as aforesaid at a charge not exceeding three pence for every hundred words.

(3) If any inspection required under this section is refused or if any copy required under this section is not sent within the proper time, the company and every officer of the company who is in default are guilty of offences and are each liable on summary conviction in respect of each offence to a fine of one fifth of the amount at level 1 on the standard scale and further to a default fine of the same amount.

(4) In the case of any such refusal or default, the court may by order compel an immediate inspection of the books in respect of all proceedings of general meetings or direct that the copies required shall be sent to the persons requiring them.

447

Accounts and Audit

114 Keeping of books of account

(1) Every company shall cause to be kept proper books of account with respect to—

(a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;

(b) all sales and purchases of goods by the company;

(c) the assets and liabilities of the company.

(2) The books of account shall be kept at the registered office of the company or at such other place as the directors think fit, and shall at all times be open to inspection by the directors.

(3) A person who, being a director of a company, fails to take all reasonable steps to secure compliance by the company with the requirements of this section, or has by his own wilful act been the cause of any default by the company thereunder, is in respect of each offence, liable on summary conviction to imprisonment for six months or to a fine at level 4 on the standard scale.

Provided that a person shall not be sentenced to imprisonment for an offence under this section unless, in the opinion of the court dealing with the case, the offence was committed wilfully.

448

115 Profit and loss account and balance sheet

(1) The directors of every company shall at some date not later than eighteen months after the incorporation of the company and subsequently once at least in every calendar year lay before the company in general meeting a profit and loss account or, in the case of a company not trading for profit, an income and expenditure account for the period, in the case of the first account, since the incorporation of the company, and, in any other case, since the preceding account, made up to a date not earlier than the date of the meeting by more than nine months, or, in the case of a company carrying on business or having interests abroad, by more than twelve months:

Provided that the Governor, if for any special reason he thinks fit so to do, may, in the case of any company, extend the period of eighteen months aforesaid, and in the case of any company and with respect to any year extend the periods of nine and twelve  months aforesaid.

(2) The directors shall cause to be made out in every calendar year, and to be laid before the company in general meeting, a balance sheet as at the date to which the profit and loss account, or the income and expenditure account, as the case may be, is made up, and there shall be attached to every such balance sheet a report by the directors with respect to the state of the company’s affairs, the amount (if any) which they recommend should be paid by way of dividend, and the amount (if any) which they propose to carry to the reserve fund, general reserve or reserve account shown specifically on the balance sheet, or to a reserve fund, general reserve or reserve account to be shown specifically on a subsequent balance sheet.

(3) A person who, being a director of a company, fails to take all reasonable steps to comply with the provisions of this section, is guilty of an offence and is in respect of each offence, liable on summary conviction to imprisonment for six months or to a fine at level 4 on the standard scale.

Provided that a person shall not be sentenced to imprisonment for an offence under this section unless, in the opinion of the court dealing with the case, the offence was committed wilfully.

449

116 Contents of balance sheet

(1) Every balance sheet of a company shall contain a summary of the authorized share capital and of the issued share capital of the company, its liabilities and its assets, together with such particulars as are necessary to disclose the general nature of the  liabilities and the assets of the company and to distinguish between the amounts respectively of the fixed assets and of the floating assets, and shall state how the values of the fixed assets have been arrived at.

(2) There shall be stated under separate headings in the balance sheet, so far as they are not written off,—

(a) the preliminary expenses of the company; and

(b) any expenses incurred in connection with any issue of share capital or debentures; and

(c) if it is shown as a separate item in or is otherwise ascertainable from the books of the company, or from any contract for the sale or purchase of any property to be acquired by the company, or from any documents in the possession of the company relating to the stamp duty payable in respect of any such contract or the conveyance of any such property, the amount of the goodwill and of any patents and trademarks as so shown or ascertained.

(3) Where any liability of the company is secured otherwise than by operation of law on any assets of the company, the balance sheet shall include a statement that that liability is so secured, but it shall not be necessary to specify in the balance sheet the assets on which the liability is secured.

(4) The provisions of this section are in addition to other provisions of this Ordinance requiring other matters to be stated in balance sheets.

450

117 Assets consisting of shares in subsidiary companies to be set out separately in balance sheet

Where any of the assets of a company consist of shares in, or amounts owing (whether on account of a loan or otherwise) from a subsidiary company or subsidiary companies, the aggregate amount of those assets, distinguishing shares and indebtedness, shall be set out in the balance sheet of the first-mentioned company separately from all its other assets, and where a company is indebted, whether on account of a loan or otherwise to a subsidiary company or subsidiary companies, the aggregate amount of that indebtedness shall be set out in the balance sheet of that company separately from all its other liabilities.

451

118 Balance sheet to include particulars as to subsidiary companies

(1) Where a company (in this section referred to as “the holding company”) holds shares either directly or through a nominee in a subsidiary company or in two or  more subsidiary companies, there shall be annexed to the balance sheet of the holding company a statement, signed by the persons by whom in pursuance of section 121 the balance sheet is signed, stating how the profits and losses of the subsidiary company,  or, where there are two or more subsidiary companies, the aggregate profits and losses of those companies, have, so far as they concern the holding company, been dealt with in, or for the purposes of, the accounts of the holding company, and in particular  how, and to what extent,—

(a) provision has been made for the losses of a subsidiary company either in the accounts of that company or of the holding company or of both; and

(b) losses of a subsidiary company have been taken into account by the directors of the holding company in arriving at the profits and losses of the holding company as disclosed in its accounts:

Provided that it shall not be necessary to specify in any such statement the actual amount of the profits or losses of any subsidiary company,  or the actual amount of any part of any such profits or losses which has been dealt with in any particular manner.

(2) If in the case of a subsidiary company the auditors report on the balance sheet of the company does not state without qualification that the auditors have obtained all the information and explanations they have required and that the balance sheet is properly drawn up so as to exhibit a true and correct view of the state of the company’s affairs according to the best of their information and the explanation given to them and as shown by the books of the company, the statement which is to be annexed to the balance sheet of the holding company shall contain particulars of the manner in which the report is qualified.

(3) For the purposes of this section, the profits or losses of a subsidiary company mean the profits or losses shown in any accounts of the subsidiary company made up to a date within the period to which the accounts of the holding company relate, or, if there are no such accounts of the subsidiary company available at the time when the accounts of the holding company are made up, the profits or losses shown in the last previous accounts of the subsidiary company which became available within that period.

(4) If for any reason the directors of the holding company are unable to obtain such information as is necessary for the preparation of such statement, the directors who sign the balance sheet shall so report in writing and their report shall be annexed to  the balance sheet in lieu of the statement.

452

119 Meaning of subsidiary company

(1) Where the assets of a company consist in whole or in part of shares in another company, whether held directly or through a nominee and whether that other company is a company within the meaning of this Ordinance or not, and—

(a) the amount of the shares so held is at the time when the accounts of the holding company are made up more than fifty per cent of the issued share capital of that other company or such as to entitle the company to more than fifty  per cent of the voting power in that other company; or

(b) the company has power (not being power vested in it by virtue only of the provisions of a debenture trust deed or by virtue of shares issued to it for the purpose in pursuance of those provisions) directly or indirectly to appoint the majority of the directors of that other company,

that other company shall be deemed to be a subsidiary company within the meaning of this Ordinance, and the expression “subsidiary company” in this Ordinance means a company in the case of which the conditions of this section are satisfied.

(2) Where a company the ordinary business of which includes the lending of money holds shares in another company as security only, no account shall for the purpose of determining under this section whether that other company is a subsidiary company be taken of the shares so held.

453

120 Accounts to contain particulars as to loans to, and remuneration of directors

(1) The accounts which in pursuance of this Ordinance are to be laid before every company in general meeting shall, subject to the provisions of this section, contain particulars showing—

(a) the amount of any loans which during the period to which the accounts relate have been made either by the company or by any other person under a guarantee from or on a security provided by the company to any director or officer of the company, including any such loans which were repaid during the said period; and

(b) the amount of any loans so made to any director or officer at any time before the period aforesaid and outstanding at the expiration thereof; and

(c) the total of the amount paid to the directors as remuneration for their services, inclusive of all fees, percentages or other emoluments, paid to or receivable by them by or from the company or by or from any subsidiary company.

(2) The provisions of subsection (1) with respect to loans shall not apply—

(a) in the case of a company the ordinary business of which includes the lending of money, to a loan made by the company in the ordinary course of its business; or

(b) to a loan made by the company to any employee of the company if the loan does not exceed £2,000 and is certified by the directors of the company to have been made in accordance with any practice adopted or about to be adopted by the company with respect to loans to its employees.

(3) The provisions of subsection (1) with respect to the remuneration paid to directors shall not apply in relation to a managing director of the company, and in the case of any other director who holds any salaried employment or office in the company there shall not be required to be included in the said total amount any sums paid to him except sums paid by way of directors’ fees.

(4) If in the case of any such accounts as aforesaid the requirements of this section are not complied with, it shall be the duty of the auditors of the company by whom the accounts are examined to include in their report on the balance sheet of the company, so far as they are reasonably able to do so, a statement giving the required particulars.

(5) In this section, “emoluments”  include fees, percentages and other payments made or consideration given, directly or indirectly, to a director as such, and the money value of any allowances or perquisites belonging to his office.

454

121 Signing of balance sheet

(1) Every balance sheet of a company shall be signed on behalf of the board by two of the directors of the company, or if there is only one director, by that director, and the auditors’ report shall be attached to the balance sheet, and the report shall be read before the company in general meeting, and shall be open to inspection by any member.

(2) If any copy of a balance sheet which has not been signed as required by this section is issued, circulated or published, or if any copy of a balance sheet is issued, circulated or published without having a copy of the auditors’ report attached thereto, the company and every director, manager, secretary or other officer of the company who is knowingly a party to the default, are guilty of offences and are each liable on summary conviction to a fine of £50.

455

122 Right to receive copies of balance sheets and auditors’ report

(1) In the case of a company not being a private company—

(a) a copy of every balance sheet including every document required by law to be annexed thereto, which is to be laid before the company in general meeting, together with a copy of the auditors’  report, shall, not less than seven days before the date of the meeting, be sent to all persons entitled to receive notices of general meetings of the company;

(b) any member of the company, whether he is or is not entitled to have sent to him copies of the company’s balance sheets, and any holder of debentures of the company shall be entitled to be furnished on demand without charge with a copy of the last balance sheet of the company, including every document required by law to be annexed thereto, together with a copy of the auditors’ report on the balance sheet.

If default is made in complying with paragraph (a) of this subsection, the company and every officer of the company who is in default are guilty of offences and are each liable on summary conviction to a fine at level 1 on the standard scale and if, where any person makes a demand for a document with which he is by virtue of paragraph (b) of this subsection entitled to be furnished, default is made in complying with the demand within seven days after the making thereof, the company and every director, manager, secretary or other officer of the company who is knowingly a party to the default are guilty of offences and are each liable on summary conviction to a fine of one half the amount at level 1 on the standard scale for every day during which the default continues, unless it is proved that that person has already made a demand for and been furnished with a copy of the document.

(2) In the case of a company being a private company, any member shall be entitled to be furnished, within seven days after he has made a request in that behalf to the company, with a copy of the balance sheet and auditors’  report at a charge not exceeding three pence for every hundred words. If default is made in furnishing such a copy to any member who demands it and tenders to the company the amount of the proper charge therefor, the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction to a default fine.

456

123 Certain other companies to publish periodical statement

(1) Every company, being an insurance company or a deposit, provident or benefit society, shall before it commences business, and also on the first Monday in February and the first Tuesday in August in every year during which it carries on business, make a statement in the form set out in Schedule 6, or as near thereto as circumstances admit.

(2) A copy of the statement shall be put up in a conspicuous place in the registered office of the company, and in every branch office or place where the business of the company is carried on.

(3) Every member and every creditor of the company shall be entitled to a copy of the statement, on payment of a sum not exceeding three pence.

(4) If default is made in complying with this section, the company and every director and manager of the company who knowingly and wilfully authorizes or permits the default are guilty of offences and are each liable on summary conviction to a fine one half of the amount at level 1 on the standard scale for every day during which the default continues.

(5) For the purposes of this Ordinance, a company which carries on the business of insurance in common with any other business or businesses shall be deemed to be in (sic) an insurance company.

457

124 Appointment and remuneration of auditors

(1) Every company shall at each annual general meeting appoint an auditor or auditors to hold office until the next annual general meeting,

(1A) A person or firm shall not be qualified for appointment as an auditor of a company, other than a company registered under Part IX, unless he is or the firm is registered in Part I, II or III of the Register maintained under the provisions of the Auditors Approval and Registration Ordinance, 1998.

(1B) A company which appoints as auditor, a person or firm who or which under subsection (1A) is not qualified to be an auditor, shall be guilty of an offence and shall be liable on summary conviction to a fine at level 5 on the standard scale.

(2) If an appointment of auditors is not made at an annual general meeting, the Registrar may, on the application of any member of the company, appoint an auditor of the company for the current year.

(3) A person, other than a retiring auditor, shall not be capable of being appointed auditor at an annual general meeting unless notice of an intention to nominate that person to the office of auditor has been given by a member to the company not less than  fourteen days before the annual general meeting, and the company shall send a copy of any such notice to the retiring auditor, and shall give notice thereof to the members, either by advertisement or in any other mode allowed by the articles, not less than seven days before the annual general meeting:

Provided that if, after notice of the intention to nominate an auditor has been so given, an annual general meeting is called for a date fourteen days or less after the notice has been given, the notice, though not given within the time required by this subsection, shall be deemed to have been properly given for the purposes thereof, and the notice to be sent or given by the company may, instead of being sent or given within the time required by this subsection, be sent or given at the same time as the notice of the annual general meeting.

(4) Subject as hereinafter provided, the first auditors of the company may be appointed by the directors at any time before the first annual general meeting, and auditors so appointed shall hold office until that meeting:

Provided that—

(a) the company may at a general meeting of which notice has been served on the auditors in the same manner as on members of the Company remove any such auditors and appoint in their place any other persons being persons who have been nominated for appointment by any member of the company and of whose nomination notice has been given to the members of the company not less than seven days before the date of the meeting; and

(b) if the directors fail to exercise their powers under this subsection, the company in general meeting may appoint the first auditors, and thereupon those powers of the directors shall cease.

(5) The directors may fill any casual vacancy in the office of auditor, but while any such vacancy continues the surviving or continuing auditor or auditors (if any) may act.

(6) The remuneration of the auditors of a company shall be fixed by the company in general meeting except that the remuneration of an auditor appointed before the first annual general meeting, or of an auditor appointed to fill a casual vacancy, may be fixed by the directors, and that the remuneration of an auditor appointed by the Registrar may be fixed by Registrar.

458

125 Disqualification for appointment as auditor

(1) None of the following persons shall be qualified for appointment as auditor of a company:—

(a) a director or officer or the secretary of the company;

(b) except where the company is a private company, a person who is a partner of or in the employment of an officer or the secretary of the company;

(c) [Repealed by Ord. 1998 No. 39 Sch. 2 as from 01-01-00.]

(2) [Repealed by Ord. 1998 No. 39 Sch. 2 as from 01-01-00.]

459

126 Auditors’ report and right of access to books and right to attend general meetings

(1) The auditors shall make a report to the members on the accounts examined by them, and on every balance sheet laid before the company in general meeting during their tenure of office, and the report shall state—

(a) whether or not they have obtained all the information and explanations they have required; and

(b) whether, in their opinion, the balance sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the company’s affairs according to the best of their information and the explanations given to them, and as shown by the books of the company.

(2) Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company, and shall be entitled to require from the directors and officers of the company such information and explanation as may be necessary for the performance of the duties of the auditors.

(3) The auditors of a company shall be entitled to  attend any general meeting of the company at which any accounts which have been examined or reported on by them are to be laid before the company and to make any statement or explanation they desire with respect to the accounts.

460

Inspection

127 Investigation of companies and their affairs, etc.

Schedule 10 shall have effect with respect to the investigation of companies and their affairs, requisition of documents and other matters provided therein.

461

128 Proceedings on report by inspectors.

If from any report made under the provisions of Schedule 10, it appears to the Attorney-General that any person has been guilty of any offence in relation to the company or any other body corporate whose affairs have been investigated by virtue of those provisions and that the case is one in which a prosecution ought to be instituted and, further, that it is desirable in the public interest that the proceedings in the prosecution should be conducted by him, he shall institute proceedings accordingly, and it shall be the duty  of all officers and agents of the company or other body corporate past and present (other than the defendant in the proceedings), to give to him all assistance in connection with the prosecution which they are reasonably able to give.

For the purposes of this section, the expression “agents”  in relation to a company or other body corporate is deemed to include its bankers and solicitors and any persons employed by it as auditors, whether those persons are or are not officers of the company or other body corporate.

462

129 Power of company to appoint inspectors

(1) A company may by special resolution appoint inspectors to investigate its affairs.

(2) Inspectors so appointed shall have the same powers and duties as inspectors appointed by the Governor, except that, instead of reporting to him or the Attorney-General they shall report in such manner and to such persons as the company in general meeting may direct.

(3) An officer or agent of the company who refuses to produce to the inspectors any book or document which it is his duty under this section so to produce, or refuses to answer any question which is put to him by the inspectors with respect to the affairs of the company, is liable to be proceeded against in the same manner as if the inspectors had been inspectors appointed by the Governor.

463

130 Report of inspectors to be evidence

A copy of the report of any inspectors appointed under this Ordinance, authenticated in accordance with section 33 by the company whose affairs they have investigated, shall be admissible in any legal proceeding as evidence of the opinion of the inspectors in relation to any matter contained in the report.

464

Directors and Managers

131 Number of directors

Every company shall have at least two directors except in the case of a private company in which case the company shall have at least one director.

465

131A Secretaries

(Companies Act 1985, s 283)

(1) Every company shall have a secretary.

(2) A sole director of a company shall not also be the secretary of that company.

(3) Anything authorized to be done by or to the secretary may, if there is no secretary for the time being or there is for any other reason no secretary capable of acting, be done by or to any assistant or deputy secretary or, if there is no assistant or deputy secretary capable of acting, by or to a person authorized generally or specifically in that behalf by the directors.

(4) No company shall—

(a) have as secretary to the company a corporation the sole director of which is a sole director of the company;

(b) have as sole director of the company a corporation the sole director of which is secretary to the company.

(5) A person shall not be capable of being appointed secretary to a company by the articles, and, in the case of a public company, shall not be named as secretary or proposed secretary of a company in a prospectus issued by or on behalf of the company, or as proposed secretary of an intended public company in a prospectus issued in relation to that intended company, or in a statement in lieu of prospectus delivered to the Registrar by or on behalf of a company, unless, before the registration of the articles or the publication of the prospectus, or the delivery of the statement in lieu of prospectus, as the case may be he has by himself or by his agent authorized in writing signed and delivered to the Registrar for registration a consent in writing to act as such secretary.

465A

131B Qualifications of company secretaries

(Companies Act 1985, s 286)

(1) The directors of a company shall take all reasonable steps to secure that the secretary (or each joint secretary) of the company is a person that appears to them to have the knowledge and experience to discharge the functions of secretary of the company.

(2) The directors of a public company shall take all reasonable steps to secure that the secretary (or each joint secretary) of the company is a person that appears to them to have the requisite knowledge and experience to discharge the functions of secretary of the company, that is to say—

(a) for at least three out of the five years preceding his appointment as secretary he held the appointment of secretary in a company other than a private company; or

(b) he is a person who by reason of previous appointments held appears to the directors to be a person capable of discharging the functions of secretary; or

(c) he is a barrister, advocate or solicitor admitted in Gibraltar or in any part of the United Kingdom; or

(d) he is a member of a recognised accounting body or of the Institute of Chartered Secretaries and Administrators of the United Kingdom.

465B

132 Restrictions on appointment or advertisement of director

(1) A person shall not be capable of being appointed director of a company by the articles, and shall not be named as a director or proposed director of a company in a prospectus issued by or on behalf of the company, or as proposed director of an intended  company in a prospectus issued in relation to that intended company, or in a statement in lieu of prospectus delivered to the Registrar by or on behalf of a company, unless, before the registration of the articles or the publication of the prospectus, or the delivery of the statement in lieu of prospectus, as the case may be, he has by himself or by his agent authorized in writing—

(a) signed and delivered to the Registrar for registration a consent in writing to act as such director, and

(b) either—

(i) signed the memorandum for a number of shares not less than his qualification (if any); or

(ii) taken from the company and paid or agreed to pay for his qualification shares (if any); or

(iii) signed and delivered to the Registrar for registration an undertaking in writing to take from the company and pay for his qualification shares (if any); or

(iv) made and delivered to the Registrar for registration a statutory declaration to the effect that a number of shares, not less than his qualification (if any) are registered in his name.

(2) Where a person has so signed and delivered an undertaking to take and pay for his qualification shares, he shall, as regards those shares, be in the same position as if he had signed the memorandum for that number of shares.

(3) On the application for registration of the memorandum and articles of a company the applicant shall deliver to the Registrar a list of the persons who have consented to be directors of the company, and, if this list contains the name of any person who has not so consented, the applicant is guilty of an offence and is liable on summary conviction to a fine at level 2 on the standard scale.

(4) This section shall not apply to—

(a) a company not having a share capital; or

(b) a private company; or

(c) a company which was a private company before becoming a public company; or

(d) a prospectus issued by or on behalf of a company after the expiration of one year from the date on which the company was entitled to commence business.

466

133 Qualification of director or manager

(1) Without prejudice to the restrictions imposed by section 132, it shall be the duty of every director who is by the articles of the company required to hold a specified share qualification, and who is not already qualified, to obtain his qualification within two months after  his appointment or such shorter time as may be fixed by the articles.

(2) For the purpose of any provision in the articles requiring a director or manager to hold a specified share qualification, the bearer of a share warrant shall not be deemed to be the holder of the shares specified in the warrant.

(3) The office of director of a company shall be vacated if the director does not within two months from the date of his appointment or within such shorter time as may be fixed by the articles, obtain his qualification, or if after the expiration of the said period or shorter time he ceases at any time to hold his qualification.

(4) A person vacating office under this section shall be incapable of being re-appointed director of the company until he has obtained his qualification.

(5) If after the expiration of the said period or shorter time any unqualified person acts as a director of the company, he is guilty of an offence and is liable on summary conviction to a fine of £5 for every day between the expiration of the said period or shorter time or the day on which he ceased to be qualified, as the case may be, and the last day on which it is proved that he acted as a director.

467

134 Provisions as to undischarged bankrupts acting as directors or secretary

(1) A person who, being an undischarged bankrupt, acts as director or secretary of, or directly or indirectly takes part in or is concerned in the management of, any company except with the leave of the court by which he was adjudged bankrupt, is guilty of an offence and is liable on conviction on indictment to imprisonment for two years, or on summary conviction to imprisonment for six months and to a fine at level 5 on the standard scale.

(2) The leave of the court for the purposes of this section shall not be given unless notice of intention to apply therefor has been served on the official receiver and it shall be the duty of the official receiver, if he is of opinion that it is contrary to the public interest that any such application should be granted, to attend on the hearing of and oppose the granting of the application.

(3) In this section, “company” includes an unregistered company and a company incorporated outside Gibraltar which has an established place of business within Gibraltar, and “official receiver”  means the official receiver appointed under this Ordinance.

468

135 Validity of acts of directors

The acts of a director or manager shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.

469

136 Register of directors

(1) Every company shall keep at its registered office a register of its directors or managers containing with respect to each of them the following particulars, that is to say:—

(a) in the case of an individual, his present fore name and surname, any former fore name or surname, his usual residential address, his nationality, and, if that nationality is not the nationality of origin, his nationality of origin, and his business occupation (if any) or, if he has no business occupation but holds  any other directorship or directorships, particulars of that directorship or of some one of those directorships; and

(b) in the case of a corporation, its corporate name and registered or principal office.

(2) The company shall, within the periods respectively mentioned in this subsection, send to the Registrar a return in the prescribed form containing the particulars specified in such register and a notification in the prescribed form of any change among its directors or in any of the particulars (sic)contained in the register. The period within which the return is to be sent is fourteen days from the appointment of the first directors of the company, and the period within which the notification of a change is to be sent is fourteen days from the happening thereof.

(3) The register to be kept under this section shall during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than two hours in each day be allowed for inspection) be open to the inspection of any member of the company without charge and of any other person on payment of five pence, or such less sum as the company may prescribe, for each inspection.

(4) If any inspection required under this section is refused or if default is made in complying with subsection (1) or subsection (2) the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction to default fines.

(5) In the case of any such refusal, the court may by order compel an immediate inspection of the register.

(6) For the purposes of this section, a person in accordance with whose directions or instructions the directors of a company are accustomed to act shall be deemed to be a director and officer of the company.

470

136A Register of secretaries

(1) Every company shall keep at its registered office a register of its secretary or secretaries containing with respect to each of them the following particulars, that is to say—

(a) in the case of an individual, his present fore name and surname, any former fore name or surname, his usual residential address, his nationality, and, if that nationality is not the nationality of origin, his nationality of origin, and his occupation (if any); and

(b) in the case of a corporation, its corporate name and the address of its registered or principal office.

(2) The company shall, within the periods respectively mentioned in this subsection, send to the Registrar a return in the form prescribed by the Registrar containing the particulars specified in such register and a notification in the form so prescribed of any change among its secretaries or in any of the particulars contained in the register. The period within which the return is to be sent is fourteen days from  the appointment of the first secretary of the company, and the period within which the notification of a change is to be sent is fourteen days from the happening thereof.

(3) The register to be kept under this section shall during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than two hours each day be allowed for inspection) be open  to the inspection of any member of the company without charge and of any other person on payment of five pence, or such less sum as the company may prescribe, for each inspection.

(4) If any inspection required under this section is refused or if default is made in complying with subsection (1) or subsection (2), the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction to default fines.

(5) In the case of any such refusal, the court may by order compel an immediate inspection of the register.

(6) The form and notification to be prescribed by the Registrar for the purposes of subsection (2) shall be the form of return required by rules made under section 269 for the purposes of section 136(2), with the addition to that form of the requirement to provide in respect of a secretary the particulars specified in the register required to be kept by this section, and where there is a requirement under the Ordinance that within the same period of time a return be made in respect of—

(a) a director under section 136; and

(b) a secretary under this section,

the particulars of both may be sent on the same form, indicating under which section such particulars are sent.

470A

137 Particulars with respect to directors in trade catalogues and circulars

(1) Every company to which this section applies shall, in all trade catalogues, trade circulars, showcards and business letters on or in which the company’s name appears and which are issued or sent by the company to any person in any of Her Majesty’s dominions, state in legible characters with respect to every director being a corporation, the corporate name, and with respect to every director being an individual, the following particulars:—

(a) his present fore name, or the initials thereof, and present surname;

(b) any former fore names and surnames;

(c) his nationality of origin, if his nationality is not the nationality of origin:

Provided that, if special circumstances exist which render it in the opinion of the Governor expedient that such an exemption should be granted, the Governor may by order  grant subject to such conditions as may be specified in the order, exemption from the obligations imposed by this subsection.

(2) This section shall apply to—

(a) every company registered under this Ordinance;

(b) every company incorporated outside Gibraltar which has an established place of business within Gibraltar; and

(c) every company licensed under the Moneylending Ordinance.

(3) If a company makes default in complying with this section, every director of the company is guilty of an offence and is liable on summary conviction for each offence to a fine of £5, and in the case of a director being a corporation, every director (,) secretary and officer of the corporation, who is knowingly a party to the default is liable to a like penalty.

Provided that no proceedings shall be instituted under this section except by, or with the consent of, the Attorney-General.

(4) For the purposes of this section—

(a) Deleted by Ord. 1999 No. 30 s. 37 as from 01-01-00.

(b) “director” includes any person in accordance with whose directions or instructions the directors of the company are accustomed to act;

(c) “initials” include a recognised abbreviation of a forename;

(d) “showcards” mean cards containing or exhibiting articles dealt with, or samples or representations thereof,

(e) in the case of a peer or person usually known by a title different from his surname, 91 surname” means that title;

(f) references to a former fore name or surname do not include—

(i) in the case of a peer or a person usually known by a British title different from his surname, the name by which he was known previous to the adoption of or succession to the title; or

(ii) in the case of natural born British subjects, a former fore name or surname where that name or surname was changed or disused before the person bearing the name attained the age of eighteen years; or

(iii) in the case of a married woman, the name or surname by which she was known previous to the marriage.

471

138 Limited company may have directors with unlimited liability

(1) In a limited company the liability of the directors or managers, or of the managing director, may, if so provided by the memorandum, be unlimited.

(2) In a limited company in which the liability of a director or manager is unlimited, the directors or managers of the company (if any) and the member who proposes a person for election or appointment to the office of director or manager, shall add to that proposal a statement that the liability of the person holding that office will be unlimited, and the promoters, directors, managers and secretary (if any) of the company, or one of them, shall before the person accepts the office or acts therein, give him notice in writing that his liability will be unlimited.

(3) A director, manager or proposer who makes default in adding such a statement, or a promoter, director or manager who makes default in giving such a notice, is guilty of an offence and is liable on summary conviction to a fine at level 3 on the standard  scale and is also liable for any damage which the person so elected or appointed may sustain from the default, but the liability of the person elected or appointed shall not be affected by the default.

472

139 Special resolution of limited company making liability of directors unlimited

(1) A limited company, if so authorized by its articles, may, by special resolution, alter its memorandum so as to render unlimited the liability of its directors or managers, or of any managing director.

(2) Upon the passing of any such special resolution the provisions thereof shall be as valid as if they had been originally contained in the memorandum.

473

140 Statement as to remuneration of directors to be furnished to shareholders

(1) Subject as hereinafter provided, the directors of a company shall, on demand in that behalf made to them in writing by members of the company entitled to not less than one-fourth of the aggregate number of votes to which all the members of the company are together entitled, furnish to all the members of the company within a period of one month from the receipt of the demand a statement, certified as correct or with such qualifications as may be necessary, by the auditors of the company, showing as respect each of the last three preceding years in respect of which the accounts of the company have been made up the aggregate amount received in that year by way of remuneration or other emoluments by persons being directors of the company, whether as such directors or otherwise in connection with the management of the affairs of the company, and there shall, in respect of any such director who is—

(a) a director of any other company which is in relation to the first-mentioned company a subsidiary company; or

(b) by virtue of the nomination, whether direct or indirect, of the company a director of any other company;

be included in the said aggregate amount any remuneration or other emoluments received by him for his own use whether as a director of, or otherwise in connection with the management of the affairs of, that other company:

Provided that—

(i) a demand for a statement under this section shall be of no effect if the company within one month after the date on which the demand is made resolve that the statement shall not be furnished; and

(ii) it shall be sufficient to state the total aggregate of all sums paid to or other emoluments received by all the directors in each year without specifying the amount received by any individual.

(2) In computing for the purpose of this section the amount of any remuneration or emoluments received by any director, the amount  actually received by him shall, if the company has paid on his behalf any sum by way of income tax (including super-tax and sur-tax) in respect of the remuneration or emoluments, be increased by the amount of the sum so paid.

(3) A director who fails to comply with the requirements of this section, is guilty of an offence and is liable on summary conviction to a fine at level 2 on the standard scale.

(4) In this section, “emoluments” include fees, percentages and other payments made or consideration given, directly or indirectly, to a director as such, and the money value of any allowances or perquisites belonging to his office.

474

141 Disclosure by directors of interest in contracts

(1) Subject to the provisions of this section, it shall be the duty of a director of a company who is in any way, whether directly, or indirectly, interested in a contract or proposed contract with the company to declare the nature of his interest at a meeting of the directors of the company.

(2) In the case of a proposed contract the declaration required by this section to be made by a director shall be made at the meeting of the directors at which the question of entering into the contract is first taken into consideration, or if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he became so interested, and in a case where the director becomes interested in a contract after it is made, the said declaration shall be made at the first meeting of the directors held after the director becomes so interested.

(3) For the purpose of this section, a general notice given to the directors of a company by a director to the effect that he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm shall be deemed to be a sufficient declaration of interest in relation to any contract so made.

(4) A director who fails to comply with the provisions of this section is guilty of an offence and is liable on summary conviction to a fine at level 3 on the standard scale.

(5) Nothing in this section shall be taken to prejudice the operation of any rule of law restricting directors of a company from having any interest in contracts with the company.

475

141A Contracts with sole members who are directors

(1) Subject to the provisions of subsection (2) below, where a private company limited by shares or by guarantee having only one member enters into a contract with the sole member of the company and the sole member is also a director of the company, the company shall, unless the contract is in writing, ensure that the terms of the contract are either set out in a written memorandum or are recorded in the minutes of the first meeting of the directors of the company following the making of the contract.

(2) Subsection (1) shall not apply to contracts entered into in the ordinary course of the company’s business.

(3) Subject to subsection (4) below, nothing in this section shall be construed as excluding the operation of any other enactment or rule of law applying to contracts between a company and a director of that company.

(4) Any failure to comply with subsection (1) with respect to a contract shall not affect the validity of that contract.

(5) If a company fails to comply with subsection (1), the company and every officer of it who is in default shall be liable, on summary conviction, to a fine not exceeding level 5 on the standard scale.

475A

142 Provision as to payments received by directors for loss of office or on retirement

(1) It is hereby declared that it is not lawful in connection with the transfer of the whole or any part of the undertaking or property of a company for any payment to be made to any director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, unless particulars with respect to the proposed payment, including the amount thereof, have been disclosed to the members of the company and the proposal approved by the company.

(2) Where a payment which is hereby declared to be illegal is made to a director of the company, the amount received shall be deemed to have been received by him in trust for the company.

(3) Where a payment is to be made to a director of a company in connection with the transfer to any persons, as a result of an offer made to the general body of shareholders, of all or any of the shares in the company, it shall be the duty of that director  to take all reasonable steps to secure that particulars with respect to the proposed payment, including the amount thereof, shall be included in or sent with any notice of the offer made for their shares which is given to any shareholders.

(4) Any such director who fails to take reasonable steps as aforesaid or any person who has been properly required by any such director to include the said particulars in or send them with any such notice and who fails so to do, is guilty of an offence and  is liable on summary conviction to a fine at level 1 on the standard scale, and if the requirements of subsection (3) are not complied with in relation to any such payment as is mentioned in that subsection, any sum received by the director on account of the payment shall be deemed to have been received by him in trust for any persons who have sold their shares as a result of the offer made.

(5) If in connection with any such transfer as aforesaid the price to be paid to a director of the company whose office is to be abolished or who is to retire from office for any shares in the company held by him is in excess of the price which could at the time have been obtained by other holders of the like shares or any valuable consideration is given to any such director, the excess or the money value of the consideration, as the case may be, shall, for the purposes of this section, be deemed to have been a payment made to him by way of compensation for loss of office or as consideration for or in connection with his retirement from office.

(6) Nothing in this section shall be taken to prejudice the operation of any rule of law requiring disclosure to be made with respect to any such payments as are mentioned in this section or with respect to any other like payments made or to be made to the directors of a company.

476

143 Provisions as to assignment of office by directors

If in the case of any company provision is made by the articles or by any agreement entered into between any person and the company for empowering a director or manager of the company to assign his office as such to another person, any assignment of office made in pursuance of the provision shall, notwithstanding anything to the contrary contained in the provision, be of no effect unless and until it is approved by a special resolution of the company.

Avoidance of provisions in Articles or Contracts, relieving Officers from Liability

477

144 Provisions as to liability of officers and auditors

Subject as hereinafter provided, any provision, whether contained in the articles of a company or in any contract with a company or otherwise, for exempting any director, manager or officer of the company, or any person (whether an officer of the company or not) employed by the company as auditor from, or indemnifying him against, any liability which by virtue of any rule of law would otherwise attach to him in  respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company, shall be void:

Provided that notwithstanding anything in this section, a company may, in pursuance of any such provision as aforesaid, indemnify any such director, manager, officer or auditor against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connection with any application under section 308 in which relief is granted to him by the court.

Arrangements and Reconstructions

478

145 Power to compromise with creditors and members

(1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the court may, on the application in a summary way of the company or of any creditor or member of the company, or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be summoned in such manner as the court directs.

(2) If a majority in number representing three-fourths in value of the creditors or class of creditors, or members or class of members, as the case may be, present and voting either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the court, be binding on all the creditors or the class of creditors, or on the members or class of members, as the case may be, and also on the company or, in the case of a company in the course of being wound up, on the liquidator and contributories of the company.

(3) An order made under subsection (2) shall have no effect until an office copy of the order has been delivered to the Registrar for registration, and a copy of every such order shall be annexed to every copy of the memorandum of the company issued after the order has been made, or, in the case of a company not having a memorandum, of every copy so issued of the instrument constituting or defining the constitution of the company.

(4) If a company makes default in complying with subsection (3), the company and every officer of the company who is in default are guilty of offences and are each liable on summary conviction to a fine of one tenth of the amount at level 1 on the standard scale for each copy in respect of which default is made.

(5) In this section, “company” means any company liable to be wound up under this Ordinance, and “arrangement”  includes a re-organisation of the share capital of the company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both those methods.

479

146 Provisions for facilitating reconstruction and amalgamation of companies

(1) Where an application is made to the court under section 145 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the court that the compromise or arrangement has been proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies, and that under the scheme the whole or any part of the undertaking or the property of any company concerned in the scheme (in this section referred to as “a transferor company”) is to be transferred to another company (in this section referred to as “the transferee company”), the court may, either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision for all or any of the following matters:—

(a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company;

(b) the allotting or appropriation by the transferee company of any shares, debentures, policies or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person;

(c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company;

(d) the dissolution, without winding up, of any transferor company;

(e) the provision to be made for any persons, who within such time and in such manner as the court directs, dissent from the compromise or arrangement;

(f) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out.

(2) Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of, the transferee company, and in the case of any property, if the order so directs, freed from any charge which is by virtue of the compromise or arrangement to cease to have effect.

(3) Where an order is made under this section, every company in relation to which the order is made shall cause an office copy thereof to be delivered to the Registrar for registration within seven days after the making of the order, and if default is made  in complying with this subsection, the company and every officer of the company who is in default are guilty of offences and are liable on summary conviction to default fines.

(4) In this section, “property” includes property, rights and powers of every description, and “liabilities” include duties.

(5) Notwithstanding the provisions of section 145(5) “company” in this section does not include any company other than a company within the meaning of this Ordinance.

480

146A Application of sections 144 and 145 to mergers and divisions

(1) Where—

(a) a compromise or arrangement is proposed between a public company and any such persons as are mentioned in section 145(1) for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies or  the amalgamation of any two or more companies,

(b) the circumstances are as specified in any of the Cases described in subsection (2), and

(c) the consideration for the transfer or each of the transfers envisaged in the Case in question is to be shares in the transferee company or any of the transferor companies receivable by members of the transfer company or transferor companies, with or without any  cash payment to members,

sections 145 and 146 shall, as regards that compromise or arrangement, have effect subject to the provisions of this section and Schedule 17.

(2) The Cases referred to in subsection (1) are as follows:

Case 1

Where under the scheme the undertaking, property and liabilities of the company in respect of which the compromise or arrangement in question is proposed are to be transferred to another public company, other than one formed for the purpose of, or in connection with, the scheme.

Case 2

Where under the scheme the undertaking, property and liabilities of each of two or more public companies concerned in the scheme, including the company in respect of which the compromise or arrangement in question is proposed, are to be transferred to a company (whether or not a public company)formed for the purpose of, or in connection with, the scheme.

Case 3

Where under the scheme the undertaking, property and liabilities of the company in respect of which the compromise or arrangement in question is proposed are to be divided among and transferred to two or more companies each of which is either —

(a) a public company, or

(b) a company (whether or not a public company) formed for the purposes of, or in connection with, the scheme.

(3) Before sanctioning any compromise or arrangement under section 145 the court may, on the application of any pre-existing transferee company or any member or creditor of it or,  an administration order being in force in relation to the company, the administrator, order a meeting of the members of the company or any class of them or of the creditors of the company or any class of them to be summoned in such manner as the court directs.

(4) This section does not apply where the company in respect of which the compromise or arrangement is proposed is being wound up.

(5) This section does not apply to compromises or arrangements in respect of which an application has been made to the court for an order under section 145(1) before the date this Ordinance comes into force.

(6) In this section and Schedule 17—

“transferor company” means a company whose undertaking. property and liabilities are to be transferred by means of a transfer envisaged in any of the Cases specified in subsection (2).

“transferee company” means a company to which a transfer envisaged in any of those Cases is to be made;

“pre-existing transferee company” means a transferee company other than one formed for the purpose of, or in connection with, the scheme;

“compromise or arrangement” means a compromise or arrangement to which subsection (1) applies;

“the scheme” means the scheme mentioned in subsection (1)(a);

“Case 1 Scheme”, “Case 2 Scheme” and “Case 3 Scheme” mean a scheme of the kind described in Cases 1, 2 and 3 of subsection (2) respectively;

“property” and “liabilities” have the same meaning as in section 146.

480A

147 Power to acquire shares of shareholders dissenting from scheme or contract approved by majority

(1) Where a scheme or contract involving the transfer of shares or any class of shares in a company (in this section referred to as “the transferor company”) to another company, whether a company within the meaning of this Ordinance or not (in this section referred to as “the transferee company”) has within four months after the making of the offer in that behalf by the transferee company been approved by the holders of not less than nine-tenths in value of the shares affected, the transferee company may, at any time within two months after the expiration of such four months, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares, and where such a notice is given the transferee company shall, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given the court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which under the scheme or contract the shares of the approving shareholders are to be transferred to the transferee company.

(2) Where a notice has been given by the transferee company under this section and the court has not, on an application made by the dissenting shareholder, ordered to the contrary, the transferee company shall, on the expiration of one month from the date on which the notice has been given, or, if an application to the court by the dissenting shareholder is then pending, after that application has been disposed of, transmit a copy of the notice to the transferor company and pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares  which by virtue of this section that company is entitled to acquire, and the transferor company shall thereupon register the transferee company as the holder of those shares.

(3) Any sums received by the transferor company under this section shall be paid into a separate bank account, and any such sums and any other consideration so received shall be held by that company on trust for the several persons entitled to the shares in respect of which the said sums or other consideration were respectively received.

(4) In this section, “dissenting shareholder” includes a shareholder who has not assented to the scheme or contract and any shareholder who has failed or refused to transfer his shares to the transferee company in accordance with the scheme or contract.