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Gibraltar Companies Act *

Companies

AN ACT TO RE-ENACT, WITH AMENDMENTS, THE PROVISIONS OF THE COMPANIES ACT (1930-07) AS AMENDED; TO INCORPORATE THE COMPANIES (ACCOUNTS) ACT 1999 AND THE COMPANIES (CONSOLIDATED ACCOUNTS) ACT 1999; TO TAKE ACCOUNT OF THE EFFECT OF THE INSOLVENCY ACT; TO INCORPORATE AMENDMENTS PROPOSED BY A LAW REFORM COMMITTEE OF THE GIBRALTAR FINANCE CENTER COUNCIL; AND FOR CONNECTED PURPOSES.

PART I PRELIMINARY

Introductory

Short title and Commencement.

1.(1) This Act may be cited as the Companies Act 2014.

(2) This Act shall come into force on a day to be appointed by the Minister by notice in the Gazette and different days may be so appointed for different provisions of this Act.

Interpretation.

2.(1) In this Part, unless the context otherwise requires,–

(a) in the case of a public company, the name of the company must end with the words “Public Limited Company” or the abbreviation “plc”; and

(b) in the case of a private limited company, the name of the company must end with the word “Limited” or the abbreviation “Ltd”;

(c) “articles” means the articles of association of a company, as originally framed or as altered by special resolution, including, so far as they apply to the company, the regulations derived from the model Articles prescribed by the Minister or, from the Tables in the former Companies Act; “annual return” means the return required to be made, in the case of a company having a share capital, under section 188, and, in the case of a company not having a share capital, under section 190; “the Commission” means the Financial Services Commission established under the Financial Services Commission Act; “Companies Rules” means the Companies Rules 1980 made under section 334 of the former Companies Act and rules, described as Companies Rules, made under section 417 of this Act; “company” means a company formed and registered under this Act or the former Companies Act, or, in the case of a company formed outside Gibraltar, registered under this Act or the former Companies Act;

“the Court”, used in relation to a company, means the Supreme Court; “debenture” includes debenture stock, bonds and any other securities of a company whether constituting a charge on the assets of the company or not; “director” includes any person occupying the position of director by whatever name called; “document” includes summons, notice, order and other legal process and registers; “the former Companies Act” means the Companies Act, 1930-07, as amended; “Insolvency Act” means the Insolvency Act 2011; “liquidator” includes a liquidator appointed under the Insolvency Act and a voluntary liquidator;

“memorandum” means the memorandum of association of a company, as originally framed or as altered in pursuance of any enactment; “the Minister” means the Minister responsible for finance; “proper books of account” means such books or accounts as are necessary to exhibit and explain the transactions and financial position of the trade or business of the company and includes books containing entries from day to day of all cash received and cash paid and any contracts, invoices or other underlying documentation significant to the trade or business of the company. If the company’s business involves dealing in goods, this also includes statements of annual stocktaking and, except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased showing sufficient detail to enable those goods, buyers and sellers to be identified;

“prescribed” means prescribed by regulations made by the Minister; “prospectus” means any prospectus, notice, circular, advertisement or other invitation, offering to the public for subscription or purchase any shares or debentures of a company; “Registrar” means the Registrar of Companies; “share” means share in the share capital of a company, and includes stock except where a distinction between stock and shares is expressed or implied; “subsidiary”, except in the expression “subsidiary undertaking”, shall be construed in accordance with subsections (4) and (5); “voluntary liquidation” means the liquidation of a company under Part X; “voluntary liquidator” means a liquidator appointed under Part X.

(2) Any reference in this Act to a numbered section or Schedule or other provision of the former Companies Act is a reference to the section, Schedule or other provision which bears that number in the text of the former Companies Act in force immediately prior to the date appointed by the Minister for this Act to come into force.

(3) Any reference in this Act–

(a) to the winding up of a company is a reference to the liquidation of the company under the Insolvency Act or the voluntary liquidation of a company under this Act; and

(b) to a company being wound up, is a reference to the company being liquidated under the Insolvency Act or liquidated voluntarily under this Act.

(4) 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 Act 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 50 per cent of the issued share capital of that other company or such as to entitle the company to more than 50 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 for the purposes of this Act.

(5) Where a company, the ordinary business of which includes the lending of money holds shares in another company as security only, no account shall be taken of the shares so held in determining under subsection (4) whether that other company is its subsidiary.

Types of company Limited and unlimited companies.

3.(1) A company is a limited company if the liability of its members is limited by its constitution and that limitation may be by shares or by guarantee.

(2) If the liability of a company’s members is limited to the amount, if any, unpaid on the shares respectively held by them, the company is “limited by shares”.

(3) If the liability of a company’s members is limited to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up, the company is “limited by guarantee”.

(4) If there is no limit on the liability of its members, the company is an “unlimited company”.

(5) A company limited by guarantee may have a share capital.

(6) An unlimited company may have a share capital. Public and private companies.

4.(1) For the purposes of this Act, a “public company” is a company limited by shares or limited by guarantee and having a share capital, being a company–

(a) whose certificate of incorporation states that it is a public company; and

(b) in relation to which the provisions of this Act or the former Companies Act as to the registration or re-registration of a company as a public company have been complied with;

(2) A “private company” is any company that is not a public company and complies with the requirements of this Act as to private companies.

PART II FORMATION OF COMPANIES

Memorandum of Association Mode of forming incorporated company.

5.(1) Any one or more persons associated for a lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration, form an incorporated company with or without limited liability.

Memorandum of association.

6.(1) A memorandum of association is a memorandum stating that the subscribers–

(a) wish to form a company under this Act; and

(b) agree to become members of the company and, in the case of a company that is to have a share capital, to take at least one share each.

(2) The memorandum must be in a form prescribed by the Minister. Requirements with respect to the memorandum.

7.(1) The memorandum of every company must state–

(a) the name of the company (complying with the following provisions of this Act); and

(b) that the registered office of the company is to be situated in Gibraltar.

(2) The memorandum of a public company must also state the fact that it is a public company.

(3) The memorandum of a company limited by shares or by guarantee must also state that the liability of its members is limited.

(4) The memorandum of a company limited by guarantee must also state that each member undertakes to contribute to the assets of the company if it should be wound up while he is a member, or within 1 year after he ceases to be a member, for payment of the debts and liabilities of the company contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.

(5) In the case of a company having a share capital–

(a) the memorandum must also (unless it is an unlimited company) state the amount of the share capital with which the company proposes to be registered and the division of the share capital into shares of a fixed amount;

(b) subject to section 128, no member of the company may take less than one share; and

(6) The memorandum must be signed by each subscriber in the presence of at least one witness, who must attest the signature.

(7) A company may not alter the conditions contained in its memorandum except in the cases, in the mode and to the extent for which express provision is made by this Act.

Existing companies: provisions of memorandum treated as provisions of articles.

8. Provisions that, immediately before the commencement of this Part, were contained in a company’s memorandum but are not provisions of a kind mentioned in section 7 are to be treated after the commencement of this Part as provisions of the company’s articles.

Requirements as to registration Registration documents.

9.(1) The memorandum of association must be delivered to the Registrar together with an application for registration of the company, the documents required by this section and a statement of compliance.

(2) The application for registration must state–

(a) the company’s proposed name;

(b) whether the liability of the members of the company is to be limited, and if so whether it is to be limited by shares or by guarantee; and

(3) If the application is delivered by a person as agent for the subscribers to the memorandum of association, it must state his name and address.

(4) The application must contain–

(a) in the case of a company that is to have a share capital, a statement of capital and initial shareholdings, in accordance with section 10;

(b) in the case of a company that is to be limited by guarantee, a statement of guarantee, in accordance with section 11;

(5) The application must also contain–

(a) a statement of the intended address of the company’s registered office; and

(b) a copy of any proposed articles of association (to the extent that these are not supplied by the default application of model articles as mentioned in section 22).

Statement of capital and initial shareholdings.

10.(1) The statement of capital and initial shareholdings required to be delivered in the case of a company that is to have a share capital must comply with this section.

(2) It must state–

(a) the total number of shares of the company to be taken on formation by the subscribers to the memorandum of association;

(b) the aggregate nominal value of those shares;

(i) prescribed particulars of the rights attached to the shares;

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class, and

(d) the amount to be paid up and the amount (if any) to be unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(3) It must contain such information as may be prescribed for the purpose of identifying the subscribers to the memorandum of association.

(4) It must state, with respect to each subscriber to the memorandum–

(a) the number, nominal value (of each share) and class of shares to be taken by him on formation; and

(b) the amount to be paid up and the amount (if any) to be unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(5) Where a subscriber to the memorandum is to take shares of more than one class, the information required under subsection (4)(a) is required for each class.

Statement of guarantee.

11.(1) The statement of guarantee required to be delivered in the case of a company that is to be limited by guarantee must comply with this section.

(2) It must contain such information as may be prescribed for the purpose of identifying the subscribers to the memorandum of association.

(3) It must state that each member undertakes that, if the company is wound up while he is a member, or within 1 year after he ceases to be a member, he will contribute to the assets of the company such amount as may be required for–

(a) payment of the debts and liabilities of the company contracted before he ceases to be a member;

(b) payment of the costs, charges and expenses of winding up; and

12. Repealed.

Statement of compliance.

**13.(1)**The statement of compliance required to be delivered to the Registrar is a statement that the requirements of this Act as to registration have been complied with.

(2) The statement of compliance must be made by–

(a) a solicitor of the Supreme Court; or

(b) a barrister lawfully acting as a solicitor of the Supreme Court engaged in the formation of the company; or

(3) The statement of compliance shall be produced to the Registrar, and the Registrar shall be entitled to rely on the statement as sufficient evidence of compliance.

Registration and its effect Registration.

14. If the Registrar is satisfied that the requirements of this Act as to registration are complied with, he shall register the documents delivered to him.

Issue of certificate of incorporation.

15.(1) On the registration of a company, the Registrar shall give a certificate that the company is incorporated.

(2) The certificate must state–

(a) the name and registered number of the company;

(b) the date of its incorporation;

(c) whether it is a limited or unlimited company, and if it is limited whether it is limited by shares or limited by guarantee;

(d) when it is a company limited by guarantee, whether it has a share capital or not; and

(e) whether it is a private or a public company.

(3) The certificate must be signed by the Registrar or authenticated by his official seal.

(4) The certificate is conclusive evidence that the requirements of this Act as to registration have been complied with and that the company is duly registered under this Act.

Effect of registration.

16.(1) The registration of a company has the following effects as from the date of incorporation.

(2) The subscribers to the memorandum, together with such other persons as may from time to time become members of the company, are a corporate body by the name stated in the certificate of incorporation, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Act or, as the case may be, the Insolvency Act 2011.

(3) That corporate body is capable of exercising all the functions of an incorporated company.

(4) Unless a company’s articles specifically restrict the objects of the company, its objects are unrestricted.

(5) The status and registered office of the company are as stated in, or in connection with, the application for registration.

(6) In the case of a company having a share capital, the subscribers to the memorandum become holders of the shares specified in the statement of capital and initial shareholdings.

(7) The persons named in the statement of proposed officers–

(a) as director; or

(b) as secretary or joint secretary of the company, are deemed to have been appointed to that office.

(8) A company may, but need not, have a seal for use in Gibraltar. Membership of a company

Definition of member.

17.(1) The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.

(2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.

Companies that are collective investment schemes Notification that company is a Collective Investment Scheme.

18.(1) Subject to subsection (3), a company that is a collective investment scheme licensed, authorised or otherwise regulated under the Financial Services (Collective Investment Schemes) Act 2011 may notify the Registrar in writing within 30 days of the establishment of the scheme that it is a collective investment scheme.

(2) Any notification so given shall confirm whether the company is–

(i) a “private scheme” (as defined in section 2(1) of the Financial Services (Collective Investment Schemes) Act 2011); or

(ii) any other type of collective investment scheme licensed, authorised or otherwise regulated under the Financial Services (Collective Investment Schemes) Act 2011.

(3) Where a company which is registered as a collective investment scheme licensed, authorised or otherwise regulated under the Financial Services (Collective Investment Schemes) Act 2011, ceases to be such a scheme, the company shall apply in writing to the Registrar within 30 days requesting that it no longer be treated as such a scheme.

(4) If a company fails to comply with subsection (4), the company and every officer who is in default shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale.

Private companies Meaning of “private company”.

19.(1) For the purposes of this Act a “private company” means a company limited by shares or limited by guarantee (whether or not having a share capital), being a company which by its articles–

(a) restricts the right to transfer its shares; and

(b) prohibits any invitation to the public to subscribe for any shares or debentures of the company.

(2) Where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this section, be treated as a single member.

(3) Subject to subsection (4), a company that is or will be a collective investment scheme licensed, authorised or otherwise regulated under the Financial Services Act 1989 or the Financial Services (Collective Investment Schemes) Act 2011 is entitled to be a private company where its articles of association so provide, notwithstanding that it does not comply with subsection (1).

(4) A company that is a private company by virtue of subsection (3) shall comply with subsection (1) until it is licensed, authorised or otherwise regulated as the case may be.

Circumstances in which company ceases to be, or to enjoy privileges of a private company.

20.(1) If a company, being a private company, alters its articles in such manner that they no longer include the provisions which, under section 19, are required to be included in the articles of a company in order to constitute it a private company (“the private company provisions”), the company shall, as on the date of the alteration, cease to be a private company and shall, within a period of 14 days after that date, deliver to the Registrar for registration a prospectus or a statement in lieu of prospectus in the form and containing the prescribed particulars.

(2) Where the articles of a company include the private company provisions but default is made in complying with any of those provisions, then, subject to subsection (4), the company shall cease to be entitled to the privileges and exemptions conferred on private companies under section 242(1), and the company shall, as on the date of the alteration, cease to be a private company and shall, within a period of 14 days after that date, deliver to the Registrar for registration a prospectus or a statement in lieu of prospectus in the form and containing the prescribed particulars.

(3) If default is made in complying with subsection (1) or (2), the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a default fine at level 2 on the standard scale.

(4) On being satisfied that the failure to comply with the private company provisions was accidental or due to inadvertence or to some other sufficient cause, or that on other grounds it is just and equitable to grant relief, the Court may, on the application of the company or any other person interested and on such terms and conditions as seem to the court just and expedient, order that the company be relieved from those consequences.

(5) Nothing in this section shall prejudice the application of section 19(3) and (4).

PART III A COMPANY’S CONSTITUTION AND POWERS

CHAPTER 1 Introductory

A company’s constitution.

21.(1) Unless the context otherwise requires, references in this Act to a company’s constitution include–

(a) the company’s articles; and

(b) any relevant resolutions and agreements.

(2) In this section “relevant resolutions and agreements” means–

(a) any special resolution;

(b) any resolution or agreement agreed to by all the members of a company that, if not so agreed to, would not have been effective for its purpose unless passed as a special resolution;

(c) any resolution or agreement agreed to by all the members of a class of shareholders that, if not so agreed to, would not have been effective for its purpose unless passed by some particular majority or otherwise in some particular manner;

(d) any resolution or agreement that effectively binds all members of a class of shareholders though not agreed to by all those members;

(e) any other resolution or agreement prescribed for the purposes of this section.

(3) The validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company’s constitution.

CHAPTER 2 ARTICLES OF ASSOCIATION

General Articles of association.

22.(1) A company must have articles of association prescribing regulations for the company.

(2) Unless it is a company to which model articles apply by virtue of section 24, it must register articles of association.

(3) Articles of association registered by a company must–

(a) be printed;

(b) be divided into paragraphs numbered consecutively; and

(c) be signed by each subscriber to the memorandum of association in the presence of at least one witness who must attest his signature.

(4) References in this Act to a company’s “articles” are to its articles of association.

Power of Minister to prescribe model articles.

23.(1) The Minister may by regulations prescribe model articles of association for companies.

(2) Different model articles may be prescribed for different descriptions of company.

(3) A company may adopt all or any of the provisions of model articles.

(4) Any amendment of model articles by regulations under this section does not affect a company registered before the amendment takes effect; and for this purpose “amendment” includes addition, alteration or repeal.

Default application of model articles.

24.(1) On the formation of a limited company–

(a) if articles are not registered; or

(b) if articles are registered, in so far as they do not exclude or modify the relevant model articles, the relevant model articles (so far as applicable) form part of the company’s articles in the same manner and to the same extent as if articles in the form of those articles had been duly registered.

(2) The “relevant model articles” means the model articles prescribed for a company of that description as in force at the date on which the company is registered.

Alteration of articles Amendment of articles.

25.(1) Subject to the provisions of this Act and any conditions contained in its constitution, a company may amend its articles by special resolution.

(2) Any amendment so made in a company’s articles shall, subject to the provisions of this Act, be as valid as if originally contained in the articles, and, subject to the provisions of this Act and the company’s constitution, be subject to amendment by special resolution.

(3) A member of a company is not bound by any amendment to its articles after the date on which he became a member, if and so far as the amendment–

(a) would require him to take or subscribe for more shares than the number held by him at the date on which the amendment is made; or

(b) would in any way increase his liability as at that date to contribute to the company’s share capital or otherwise to pay money to the company.

(4) Subsection (3) does not apply in a case where the member agrees in writing, either before or after the amendment is made, to be bound by the amendment.

(5) In this section “amend” includes alteration, addition and repeal and “amendment” shall be construed accordingly.

Registrar to be sent copy of amended articles.

26.(1) Where a company amends its articles it must send to the Registrar a copy of the articles as amended not later than 30 days after the amendment takes effect.

(2) This section does not require a company to set out in its articles any provisions of model articles that–

(a) are applied by the articles; or

(b) apply by virtue of section 24.

(3) If a company fails to comply with this section an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

Provisions with respect to names of companies Restriction on registration of companies by certain names.

27.(1) No company shall be registered by a name–

(a) which includes, otherwise than at the end of the name, the word “limited”; or

(b) which includes, otherwise than at the end of the name, an abbreviation of the word “limited”; or

(c) which is the same as the name appearing in the Registrar’s index of company names, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the Registrar requires; or

(d) the use of which by the company would in the opinion of the Registrar constitute a criminal offence; or

(e) which in the opinion of the Registrar is offensive; or

(f) which contains the words “Chamber of Commerce”, unless the company is a company which is to be registered under a licence granted in pursuance of section 28 without the addition of the word “Limited” to its name.

(2) In determining for the purposes of subsection (1)(c) whether one name is the same as another, there shall be disregarded–

(a) the definite article, where it is the first word of the name;

(b) the following words and expressions where they appear at the end of a name, that is to say–

“company” or “and company” “company limited” or “and company limited” “limited”;

(d) type and case of letters, accents, spaces between letters and punctuation marks, and “and” and “&” are to be taken as the same.

(3) Except with the consent of the Minister no company shall be registered by a name which–

(a) contains the words “Royal” or “Imperial” or “Empire” or “Windsor” or “Crown” or in the opinion of the Registrar suggests, or is calculated to suggest, the patronage of Her Majesty or of any member of the Royal Family or connection with Her Majesty’s Government or the Government of Gibraltar or any department of either of those Governments; or

(b) contains the words “Municipal” or “Chartered” or in the opinion of the Registrar suggests, or is calculated to suggest, connection with any municipality or other local authority or with any society or body incorporated by Royal Charter; or

(d) contains the word “co-operative”; or

(e) includes any word or expression for the time being specified in regulations made under subsection (4) of this section.

(4) The Minister shall not consent under subsection (3)(a) to the use of the words “Royal” or “Windsor” or “Crown” or to any name which suggests or is calculated to suggest the patronage of Her Majesty or of any member of the Royal Family or connection with Her Majesty’s Government in the United Kingdom without the prior written consent of the Governor.

(5) The Minister may by regulations specify words or expressions for the registration of which as or as part of a company’s corporate name his approval is required under subsection (3) of this section.

(6) Regulations made under subsection (5) may contain such transitional provisions and savings as the Minister thinks appropriate and may make different provisions for different cases or classes of case.

(7) Nothing in this section affects the continuing operation of section 264 of the Insolvency Act 2011 (restriction on re-use of company names).

(8) The Registrar shall keep an index of the names of the following bodies–

(a) companies as defined by this Act;

(b) companies incorporated outside Gibraltar which have complied with Part XII of this Act, and which do not appear to the Registrar to have a place of business in Gibraltar;

(d) limited partnerships registered under the Limited Partnerships Act;

(e) societies registered under the Co-operative Societies Act and the Friendly Societies Act.

(9) Nothing in this section affects a restriction contained in any other enactment (whether passed before or after this Act) which limits the names which companies may use.

Power to dispense with “Limited” in name of charitable and other companies.

28.(1) Where it is proved to the satisfaction of the Minister that an association about to be formed as a limited company is to be formed for promoting commerce, art, science, religion, charity or any other useful object, and intends to apply its profits (if any) or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Minister may by licence direct that the association may be registered as a company with limited liability, without the addition of the word “Limited” to its name, and the association may be registered accordingly.

(2) A licence by the Minister under this section may be granted on such conditions and subject to such regulations as the Minister thinks fit, and those conditions and regulations shall be binding on the association, and shall, if the Minister so directs, be inserted in the memorandum and articles, or in one of those documents.

(3) The association shall on registration enjoy all the privileges of limited companies, and be subject to all their obligations, except those of using the word “Limited” as any part of its name, and of publishing its name, and of sending lists of members to the Registrar.

(4) A licence under this section may at any time be revoked by the Minister, and upon revocation the Registrar shall enter the word “Limited” at the end of the name of the association upon the register, and the association shall cease to enjoy the exemptions and privileges granted by this section: but, before a licence is so revoked, the Minister shall give to the association notice in writing of his intention, and shall afford the association an opportunity of being heard in opposition to the revocation.

(5) Where the name of the association contains the words “Chamber of Commerce”, the notice to be given shall include a statement of the effect of the provisions of section 29(5).

Change of name.

29.(1) A company may change its name–

(a) by special resolution; or

(b) by other means provided by the company’s articles.

(2) Where a change of name has been agreed to by a company by special resolution, then, without prejudice to the obligation to forward a copy of the special resolution to the Registrar, the company must give notice of the change to the Registrar within 7 days of the passing of the special resolution.

(3) Where a change of name by special resolution is conditional on the occurrence of an event, the notice given to the Registrar must specify that the change is conditional and state whether the event has occurred; and if the notice states that the event has not occurred–

(a) the Registrar is not required to register the change of name and issue a new certificate of incorporation until further notice;

(b) when the event occurs, the company must give notice of that to the Registrar; and

(4) Where a company’s change of name has been made by other means provided for by its articles–

(a) the company must give notice to the Registrar;

(b) the notice must be accompanied by a statement that the change of name has been made by means provided for by the company’s articles; and

(5) Where a licence granted in pursuance of section 28 to a company the name of which contains the words “Chamber of Commerce” is revoked, the company shall, within a period of 6 weeks from the date of the revocation or such longer period as the Minister may think fit to allow, change its name to a name which does not contain those words; and a company which makes default in complying with the requirements of this subsection shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale for every day during which the default continues.

(6) Where a company changes its name, the Registrar shall enter the new name on the register in place of the former name, and shall issue a certificate of incorporation altered to meet the circumstances of the case.

(7) A change of a company’s name has effect from the date on which the new certificate of incorporation with the new name is issued; but the change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name.

Power to require company to change name – general.

30.(1) Where a company has been registered by a name which–

(a) is the same as or, in the opinion of the Registrar, too like a name appearing at the time of registration in the Registrar’s index of companies names; or

(b) is the same as or, in the opinion of the Registrar, too like a name which should have appeared in that index at that time; or

(c) is in the opinion of the Registrar undesirable, the Registrar may within 12 months of the time of registration, in writing, direct the company to change its name within such period as he may specify.

(2) Section 27(2) applies in determining under subsection (1) whether the name is the same as or too like another.

(3) If it appears to the Registrar that–

(a) misleading information has been given for the purpose of a company’s registration with a particular name; or

(b) that undertakings or assurances have been given for that purpose and have not been fulfilled, he may within 5 years of the date of its registration with that name in writing direct the company to change its name within such period as he may specify.

(4) Where a direction has been given under subsections (1) or (3) the Registrar may by a further direction in writing extend the period within which the company has to change its name at any time before the end of that period.

(5) A company which fails to comply with a direction under this section, and any officer of it who is in default shall be liable on summary conviction to a fine at level 4 on the standard scale and, for continued contravention, to a daily penalty of one twentieth of the amount of level 4 on the standard scale.

(6) Subsections (2), (4), (6) and (7) of section 29 shall apply to any change of name under this section.

Power to require company to change misleading name.

31.(1) If in the Registrar’s opinion the name by which a company is registered gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public he may direct it to change its name.

(2) The direction must, if not duly made the subject of an application to the court under the following subsection, be complied with within a period of 6 weeks from the date of the direction or such longer period as the Registrar may see fit to allow.

(3) The company may within a period of 3 weeks from the date of the direction, apply to the court to set it aside; and the court may set the direction aside or confirm it and, if it confirms the direction, shall specify the period within which it must be complied with.

(4) If a company defaults in complying with the direction under this section, it shall be liable on summary conviction to a fine at level 4 on the standard scale, and for continued contravention, to a daily penalty of one twentieth of the amount of level 4 on the standard scale.

(5) Subsections (2), (4), (6) and (7) of section 29 shall apply to any change of name under this section.

Penalty for misuse of “Limited”.

32. If any person trades or carries on business under a name or title of which “Limited” or any contraction or imitation of that word, is the last word, that person unless duly incorporated with limited liability, shall be liable on summary conviction to a fine at level 4 on the standard scale, and for continued default to a daily penalty of one twentieth of the amount of level 4 on the standard scale.

General provisions with respect to company’s constitution Effect of company’s constitution.

33.(1) The provisions of a company’s constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions.

(2) Money payable by a member to the company under its constitution is a debt due from him to the company.

(3) Such a debt is of the nature of a specialty debt.

Provision as to memorandum and articles of companies limited by guarantee.

34. For the purpose of the provisions of this Act relating to the memorandum of a company limited by guarantee and of this section, every provision in the memorandum or articles, or in any resolution, of a company limited by guarantee, purporting to divide the undertaking of the company into shares or interests shall be treated as a provision for a share capital, notwithstanding that the nominal amount or number of the shares or interests is not specified by that provision.

Constitutional documents to be provided to members.

35.(1) A company must, on request by any member, and subject to payment of the prescribed sum, send to him the following documents–

(a) an up-to-date copy of the company’s memorandum and articles;

(b) a copy of any resolution or agreement relating to the company to which Chapter 1 of Part III applies (resolutions and agreements affecting a company’s constitution) and that is for the time being in force;

(d) a copy of any court order under either or both of sections 299 and 300 (order sanctioning compromise or arrangement, reconstruction or amalgamation);

(e) a copy of the company’s current certificate of incorporation, and of any past certificates of incorporation;

(f) in the case of a company with a share capital, a current statement of capital; or

(g) in the case of a company limited by guarantee, a copy of the statement of guarantee.

(2) The statement of capital required by subsection (1)(f) is a statement containing the information set out in section 10(2).

(3) If a company makes default in complying with this section, the company and every officer of the company who is in default shall be guilty of offences and each liable on summary conviction for each offence to a fine of one tenth of the amount at level 1 on the standard scale.

Statutory alterations.

36.(1) Where any alteration is made in a company’s memorandum or articles of association by any statutory provision, whether contained in an Act or in an instrument made under an Act, a printed copy of the Act or instrument shall not later than 30 days after that provision comes into force be forwarded to the Registrar and recorded by him.

(2) Where a company is required by this section or otherwise to send to the Registrar any document making or evidencing an alteration in the company’s memorandum or articles of association the company shall send with it a printed copy of the memorandum or articles as altered.

(3) If a company fails to comply with this subsection, the company and any officer of the company who is in default shall be liable to a default fine.

CHAPTER 3 RE-REGISTRATION AS A MEANS OF ALTERING A COMPANY’S STATUS

Introductory Alteration of status by re-registration.

37. A company may by re-registration under this Part alter its status–

(a) from a private company to a public company;

(b) from a public company to a private company;

(d) from an unlimited private company to a limited company;

(e) from a public company to an unlimited private company;

(f) from a company limited by shares to a company limited by guarantee not having a share capital;

(g) from a company limited by shares to a company limited by guarantee having a share capital;

(h) from a company limited by guarantee not having a share capital to a company limited by shares; and

(i) from a company limited by guarantee having a share capital to a company limited by shares.

Private company becoming public Re-registration of private company as public.

38.(1) A private company (whether limited or unlimited) may be registered as a public company limited by shares if–

(a) a special resolution that it should be so re-registered is passed;

(b) the conditions specified below are met; and

(i) the other documents required by that section, and

(ii) a statement of compliance.

(2) The conditions are–

(a) that the company has a share capital;

(b) that the requirements of section 39 are met as regards its share capital;

(d) if section 41 applies (recent allotment of shares for non-cash consideration), that the requirements of that section are met; and

(e) that the company has not previously been re-registered as unlimited.

(3) The company must make such changes–

(a) in its name; and

(b) in its articles, as are necessary in connection with its becoming a public company.

(4) If the company is unlimited it must also make such changes in its articles as are necessary in connection with its becoming a company limited by shares.

Requirements as to share capital.

39.(1) The following requirements must be met at the time the special resolution is passed that the company should be re-registered as a public company–

(a) the nominal value of the company’s allotted share capital must be not less than the authorised minimum;

(b) each of the company’s allotted shares must be paid up at least as to one quarter of the nominal value of that share and the whole of any premium on it;

(c) if any shares in the company or any premium on them have been fully or partly paid up by an undertaking given by any person that he or another should do work or perform services (whether for the company or any other person), the undertaking must have been performed or otherwise discharged;

(d) if shares have been allotted as fully or partly paid up as to their nominal value or, if shares have been allotted as fully or partly paid up as to their nominal value or any premium on them otherwise than in cash, and the consideration for the allotment consists of or includes an undertaking to the company (other than one to which paragraph (c) applies), then either–

(i) the undertaking must have been performed or otherwise discharged, or

(ii) there must be a contract between the company and some person pursuant to which the undertaking is to be performed within 5 years from the time the special resolution is passed.

(2) For the purpose of determining whether the requirements in subsection (1)(b),(c) and (d) are met, shares may be disregarded if they were allotted in pursuance of an employees’ share scheme by reason of which the company would, but for this subsection, be precluded under subsection (1)(b) (but not otherwise) from being re-registered as a public company; and shares disregarded under this subsection shall be treated as not forming part of the allotted share capital for the purposes of subsection (1)(a).

(3) A company must not be re-registered as a public company if it appears to the Registrar that–

(a) the company has resolved to reduce its share capital;

(b) the reduction–

(i) is made in connection with a re denomination of share capital,

(ii) is supported by a solvency statement, as defined in subsection (4), or

(iii) has been confirmed by an order of the court; and

(c) the effect of the reduction is, or will be, that the nominal value of the company’s allotted share capital is below the authorised minimum.

(4) A solvency statement is a statement that each of the directors–

(a) has formed the opinion, as regards the company’s situation at the date of the statement, that there is no ground on which the company could be found to be unable to pay (or otherwise discharge) its debts; and

(b) has also formed the opinion–

(i) if it is intended to commence the winding up of the company within twelve months of that date, that the company will be able to pay (or otherwise discharge) its debts in full within twelve months of the commencement of the winding up, or

(ii) in any other case, that the company will be able to pay (or otherwise discharge) its debts as they fall due during the year immediately following that date, and, in forming those opinions, the directors must take into account all of the company’s liabilities (including any contingent or prospective liabilities).

(5) The solvency statement must be in the prescribed form and must state–

(a) the date on which it is made; and

(b) the name of each director of the company, and if the directors make a solvency statement without having reasonable grounds for the opinions expressed in it, and the statement is delivered to the Registrar, every director who is in default commits an offence.

(6) A person guilty of an offence under subsection (5) is liable–

(a) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both);

(b) on summary conviction to imprisonment for a term not exceeding 12 months or to a fine at level 5 on the standard scale (or both).

Requirements as to net assets.

40.(1) A company applying to re-register as a public company must obtain–

(a) a balance sheet prepared as at a date not more than 7 months before the date on which the application is delivered to the Registrar;

(b) an unqualified report by the company’s auditor on that balance sheet; and

(c) a written statement by the company’s auditor that in his opinion at the balance sheet date the amount of the company’s net assets was not less than the aggregate of its called-up share capital and undistributable reserves.

(2) Between the balance sheet date and the date on which the application for re-registration is delivered to the Registrar, there must be no change in the company’s financial position that results in the amount of its net assets becoming less than the aggregate of its called-up share capital and undistributable reserves.

(3) In subsection (1)(b) an “unqualified report” means–

(a) if the balance sheet was prepared for a financial year of the company, a report stating without material qualification the auditor’s opinion that the balance sheet has been properly prepared in accordance with the requirements of this Act;

(b) if the balance sheet was not prepared for a financial year of the company, a balance sheet has been properly prepared in accordance with the provisions of this Act which would have applied if it had been prepared for a financial year of the company.

(4) For the purposes of an auditor’s report on a balance sheet that was not prepared for a financial year of the company, the provisions of this Act apply with such modifications as are necessary by reason of that fact.

(5) For the purposes of subsection (3), a qualification is material unless the auditor for the purpose of determining (by reference to the company’s balance sheet) whether at the balance sheet date the amount of the company’s net assets was not less than the aggregate of its called-up share capital and undistributable reserves.

(6) In this Chapter– “net assets” means the aggregate of the company’s assets less the aggregate of its liabilities; “undistributable reserves” of a company means–

(a) its share premium account;

(b) its capital redemption reserve;

(c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by capitalisation) exceed its accumulated, unrealised losses (so far as not previously written off in a reduction or reorganisation of capital); and

(d) any other reserve that the company is prohibited from distributing by any enactment (other than contained in this Part) or by its articles.

Recent allotment of shares for non-cash consideration.

41.(1) This section applies where–

(a) shares are allotted by the company in the period between the date as at which the balance sheet required by section 40 is prepared and the passing of the resolution that the company should re-register as a public company; and

(b) the shares are allotted as fully or partly paid up as to their nominal value or any premium on them otherwise than in cash.

(2) The Registrar shall not entertain an application by the company for reregistration as a public company unless–

(a) the requirements of section 91 (valuation of non-cash consideration) have been complied with; or

(b) the allotment is in connection with–

(i) a share exchange, or

(ii) a proposed merger with another company.

(3) An allotment is in connection with a share exchange if–

(a) the shares are allotted in connection with an arrangement under which the whole or part of the consideration for the shares allotted is provided by–

(i) the transfer to the company allotting the shares of shares (or shares of a particular class) in another company, or

(ii) the cancellation of shares (or shares of a particular class) in another company; and

(b) the allotment is open to all the holders of the shares of the other company in question (or, where the arrangement applies only to shares of a particular class, to all the holders of the company’s shares of that class) to take part in the arrangement in connection with which the shares are allotted.

(4) In determining whether a person is a holder of shares for the purposes of subsection (3), there shall be disregarded–

(a) shares held by, or by a nominee of, the company allotting the shares;

(b) shares held by, or by a nominee of–

(i) the holding company of the company allotting the shares,

(ii) a subsidiary of the company allotting the shares, or

(iii) a subsidiary of the holding company of the company allotting the shares.

(5) It is immaterial, for the purposes of deciding whether an allotment is in connection with a share exchange, whether or not the arrangement in connection with which the shares are allotted involves the issue to the company allotting the shares of shares (or shares of a particular class) in the other company.

(6) There is a proposed merger with another company if one of the companies concerned proposes to acquire all the assets and liabilities of the other in exchange for the issue of its shares or other securities to shareholders of the other (whether or not accompanied by a cash payment); and for this purpose “another company” includes any corporate body.

(7) For the purposes of this section–

(a) the consideration for an allotment does not include any amount standing to the credit of any of the company’s reserve accounts, or of its profit and loss account, that has been applied in paying up (to any extent) any of the shares allotted or any premium on those shares; and

(b) “arrangement” means any agreement, scheme or arrangement, including an arrangement sanctioned in accordance with–

(i) Part VIII (arrangements and reconstructions), or

(ii) section 384.

Application and accompanying documents.

42.(1) An application for re-registration as a public company must contain–

(a) a statement of the company’s proposed name on reregistration; and

(b) a statement of the company’s proposed secretary.

(2) The application must be accompanied by–

(a) a copy of the special resolution that the company should reregister as a public company (unless a copy has already been forwarded to the Registrar under section 206);

(b) a copy of the company’s articles as proposed to be amended;

(d) a copy of the balance sheet and other documents referred to in section 40(1);

(e) if section 41 applies, a copy of the valuation report (if any) under subsection (2)(a) of that section; and

(f) where the company carries on in or from Gibraltar a business which is licensed or authorised under the Financial Services (Investment and Fiduciary Services) Act 1991, the Financial Services (Banking) Act 1992 or the Financial Services (Markets in Financial Instruments) Act 2006, evidence of the consent of the competent authority under the relevant legislation or requirement to the company reregistering as a public company.

(3) The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as a public company have been complied with.

(4) The Registrar may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a public company.

Statement of proposed secretary.

43.(1) The statement of the company’s proposed secretary must contain the required particulars of the person who is or the persons who are to be the secretary or joint secretaries of the company.

(2) The required particulars are the particulars that will be required to be stated in the company’s register of secretaries (as described in section 223).

(3) The statement must also contain a consent by the person named as secretary, or each of the persons named as joint secretaries, to act in the relevant capacity.

(4) If all the partners in a firm are to be joint secretaries, consent may be given by one partner on behalf of all of them.

Issue of certificate of incorporation on re-registration.

44.(1) If on an application for re-registration as a public company the Registrar is satisfied that the company is entitled to be so re-registered, the company shall be re-registered accordingly.

(2) The Registrar must issue a certificate of incorporation altered to meet the circumstances of the case.

(3) The certificate must state that it is issued on re-registration and the date on which it is issued.

(4) On the issue of the certificate–

(a) the company by virtue of the issue of the certificate becomes a public company;

(b) the changes in the company’s name and articles take effect; and

(c) where the application contained a statement under section 43, the person or persons named in the statement as secretary or joint secretary of the company are deemed to have been appointed to that office.

(5) The certificate is conclusive evidence that the requirements of this Act as to re-registration have been complied with.

Public company becoming private Re-registration of public company as private limited company.

45.(1) A public company may be re-registered as a private limited company if–

(a) a special resolution that it should be so re-registered is passed;

(b) the conditions specified below are met; and

(i) the other documents required by that section, and

(ii) a statement of compliance.

(2) The conditions are that–

(a) where no application under section 46 for cancellation of the resolution has been made–

(i) having regard to the number of members who consented to or voted in favour of the resolution, no such application may be made, or

(ii) the period within which such an application could be made has expired; or

(b) where such an application has been made–

(i) the application has been withdrawn, or

(ii) an order has been made confirming the resolution and a copy of that order has been delivered to the Registrar.

(3) The company must make such changes in its name and in its articles, as are necessary in connection with its becoming a private company limited by shares or, as the case may be, by guarantee.

Application to court to cancel resolution.

46.(1) Where a special resolution by a public company to be re-registered as a private limited company has been passed, an application to the court for the cancellation of the resolution may be made–

(a) by the holders of not less in the aggregate than 5% in nominal value of the company’s issued share capital or any class of the company’s issued share capital;

(b) if the company is not limited by shares, by not less than 5% of its members; or

(c) by not less than 50 of the company’s members, but not by a person who has consented to or voted in favour of the resolution.

(2) The application must be made within 28 days after the passing of the resolution and may be made on behalf of the persons entitled to make it by such one or more of their number as they may appoint for the purpose.

(3) On the hearing of the application the court shall make an order either cancelling or confirming the resolution.

(4) The court may–

(a) make that order on such terms and conditions as it thinks fit;

(b) if it thinks fit adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court for the purchase of the interests of dissentient members; and

(c) give such directions, and make such orders, as it thinks expedient for facilitating or carrying into effect any such arrangement.

(5) The court’s order may, if the court thinks fit–

(a) provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company’s capital; and

(b) make such alteration in the company’s articles as may be required in consequence of that provision.

(6) The court’s order may, if the court thinks fit, require the company not to make any, or any specified, amendments to its articles without the leave of the court.

Notice to Registrar of court application or order.

47.(1) On making an application under section 46 the applicants, or the person making the application on their behalf, must immediately give notice to the Registrar; but this is without prejudice to any provision of rules of court as to service of notice of the application.

(2) On being served with notice of any such application, the company must immediately give notice to the Registrar.

(3) Within 15 days of the making of the court’s order on the application, or such longer period as the court may at any time direct, the company must deliver to the Registrar a copy of the order.

(4) If a company fails to comply with subsection (2) or (3) an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

Application and accompanying documents.

48.(1) An application for re-registration as a private limited company must contain a statement of the company’s proposed name on re-registration.

(2) The application must be accompanied by–

(a) a copy of the resolution that the company should re-register as a private limited company (unless a copy has already been forwarded to the Registrar under section 206);

(b) a copy of the company’s articles as proposed to be amended; and

(c) where the company carries on in or from Gibraltar a business which is licensed or authorised under the Financial Services (Investment and Fiduciary Services) Act 1991, the Financial Services (Banking) Act 1992 or the Financial Services (Markets in Financial Instruments) Act 2006, evidence of the consent of the competent authority under the relevant legislation or requirement to the company re-registering as a public company.

(3) The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as a private limited company have been complied with.

(4) The Registrar may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a private limited company.

Issue of certificate of incorporation on re-registration.

49.(1) If on an application for re-registration as a private limited company the Registrar is satisfied that the company is entitled to be so re-registered, the company shall be re-registered accordingly.

(2) The Registrar must issue a certificate of incorporation altered to meet the circumstances of the case.

(3) The certificate must state that it is issued on re-registration and the date on which it is issued.

(4) On the issue of the certificate–

(a) the company by virtue of the issue of the certificate becomes a private limited company; and

(b) the changes in the company’s name and articles take effect.

(5) The certificate is conclusive evidence that the requirements of this Act as to re-registration have been complied with.

Private limited company becoming unlimited Re-registration of private limited company as unlimited.

50.(1) A private limited company may be re-registered as an unlimited company if–

(a) all the members of the company have assented to its being so re-registered;

(b) the condition specified below is met; and

(i) the other documents required by that section, and

(ii) a statement of compliance.

(2) The condition is that the company has not previously been reregistered as limited.

(3) The company must make such changes in its name and its articles–

(a) as are necessary in connection with its becoming an unlimited company; and

(b) if it is to have a share capital, as are necessary in connection with its becoming an unlimited company having a share capital.

(4) For the purposes of this section–

(a) a trustee in bankruptcy of a member of the company is entitled, to the exclusion of the member, to assent to the company’s becoming unlimited; and

(b) the personal representative of a deceased member of the company may assent on behalf of the deceased.

Application and accompanying documents.

51.(1) An application for re-registration as an unlimited company must contain a statement of the company’s proposed name on re-registration.

(2) The application must be accompanied by–

(a) the prescribed form of assent to the company’s being registered as an unlimited company, authenticated by or on behalf of all the members of the company;

(b) a copy of the company’s articles as proposed to be amended; and

(3) The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as an unlimited company have been complied with.

(4) The statement must contain a statement by the directors of the company–

(a) that the persons by whom or on whose behalf the form of assent is authenticated constitute the whole membership of the company; and

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

(5) The Registrar may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as an unlimited company.

Issue of certificate of incorporation on re-registration.

52.(1) If on an application for re-registration of a private limited company as an unlimited company the Registrar is satisfied that the company is entitled to be so re-registered, the company shall be re-registered accordingly.

(2) The Registrar must issue a certificate of incorporation altered to meet the circumstances of the case.

(3) The certificate must state that it is issued on re-registration and the date on which it is issued.

(4) On the issue of the certificate–

(a) the company by virtue of the issue of the certificate becomes an unlimited company; and

(b) the changes in the company’s name and articles take effect.

(5) The certificate is conclusive evidence that the requirements of this Act as to re -registration have been complied with.

Unlimited private company becoming limited Re-registration of unlimited company as limited.

53.(1) An unlimited company may be re-registered as a private limited company if–

(a) a special resolution that it should be so re-registered is passed;

(b) the condition specified below is met; and

(c) an application for re-registration is delivered to the Registrar in accordance with section 54, together with - (i) the other documents required by that section, and

(ii) a statement of compliance.

(2) The condition is that the company has not previously been reregistered as unlimited.

(3) The special resolution must state whether the company is to be limited by shares or by guarantee (whether or not having a share capital).

(4) The company must make such changes in its name and in its articles as are necessary in connection with its becoming a company limited by shares or, as the case may be, by guarantee.

Application and accompanying documents.

54.(1) An application for re-registration as a limited company must contain a statement of the company’s proposed name on re-registration.

(2) The application must be accompanied by–

(a) a copy of the resolution of the company confirming that the company should re-register as a private limited company (unless a copy has already been forwarded to the Registrar under section 206);

(b) if the company is to be limited by guarantee, a statement of guarantee;

(d) where the company carries on in or from Gibraltar a business which is licensed or authorised under the Financial Services (Investment and Fiduciary Services) Act 1991, the Financial Services (Banking) Act 1992 or the Financial Services (Markets in Financial Instruments) Act 2006, evidence of the consent of the competent authority under the relevant legislation or requirement to the company re-registering as a public company.

(3) The statement of guarantee required to be delivered in the case of a company that is to be limited by guarantee must state that each member undertakes that, if the company is wound up while he is a member, or within 1 year after he ceases to be a member, he will contribute to the assets of the company such amount as may be required for–

(a) payment of the debts and liabilities of the company contracted before he ceases to be a member;

(b) payment of the costs, charges and expenses of winding up; and

(4) The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as a limited company have been complied with.

(5) The Registrar may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a limited company.

Issue of certificate of incorporation on re-registration.

55.(1) If on an application for re-registration of an unlimited company as a limited company the Registrar is satisfied that the company is entitled to be so re-registered, the company shall be re-registered accordingly.

(2) The Registrar must issue a certificate of incorporation altered to meet the circumstances of the case.

(3) The certificate must state that it is issued on re-registration and the date on which it is so issued.

(4) On the issue of the certificate–

(a) the company by virtue of the issue of the certificate becomes a limited company; and

(b) the changes in the company’s name and articles take effect.

(5) The certificate is conclusive evidence that the requirements of this Act as to re-registration have been complied with.

Statement of capital required where company already has share capital.

56.(1) A company which on re-registration under section 55 already has allotted share capital must within 30 days after the re-registration deliver a statement of capital to the Registrar.

(2) This does not apply if the information which would be included in the statement has already been sent to the Registrar in–

(a) a statement of capital and initial shareholdings (as described in section 10); or

(b) a statement of capital contained in an annual return.

(3) The statement of capital must state with respect to the company’s share capital on re-registration–

(a) the total number of shares of the company;

(b) the aggregate nominal value of those shares;

(i) prescribed particulars of the rights attached to the shares,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class; and

(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(4) If default is made in complying with this section, an offence is committed by the company, and every officer of the company who is in default.

Public company becoming private and unlimited Re-registration of public company as private and unlimited.

57.(1) A public company limited by shares may be re-registered as an unlimited private company with a share capital if–

(a) all the members of the company have assented to its being so re-registered;

(b) the condition specified in subsection (2) is met; and

(i) the other documents required by that subsection, and

(ii) a statement of compliance.

(2) The condition referred to in subsection (1)(b) is that the company has not previously been re-registered as limited or as unlimited.

(3) The company must make such changes in its name and in its articles as are necessary in connection with its becoming an unlimited private company.

(4) For the purposes of this section–

(a) a trustee in bankruptcy of a member of the company is entitled, to the exclusion of the member, to assent to the company’s re-registration; and

(b) the personal representative of a deceased member of the company may assent on behalf of the deceased.

(5) An application for re-registration of a public company as an unlimited private company must contain a statement of the company’s proposed name on re-registration and must be accompanied by–

(a) the prescribed form of assent to the company’s being registered as an unlimited company, authenticated by or on behalf of all the members of the company;

(b) a copy of the company’s articles as proposed to be amended; and

(6) The statement of compliance required to be delivered together with the application is a statement that the requirements of this Part as to reregistration as an unlimited private company have been complied with and must include a statement by the directors of the company–

(a) that the persons by whom or on whose behalf the form of assent is authenticated constitute the whole membership of the company; and

(7) The Registrar may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as an unlimited private company.

Issue of certificate of incorporation on re-registration.

58.(1) If on an application for re-registration of a public company as an unlimited private company the Registrar is satisfied that the company is entitled to be so re-registered, the company shall be re-registered accordingly.

(2) The Registrar must issue a certificate of incorporation altered to meet the circumstances of the case.

(3) The certificate must state that it is issued on re-registration and the date on which it is so issued.

(4) On the issue of the certificate–

(a) the company by virtue of the issue of the certificate shall become an unlimited private company; and

(b) the changes in the company’s name and articles shall take effect.

(5) The certificate is conclusive evidence that the requirements of this Act as to re-registration have been complied with. Company limited by shares becoming a company limited by guarantee and not having a share capital Re-registration of company limited by shares as company limited by guarantee and not having a share capital.

59.(1) Subject to the provisions of this section and section 60, a company which is registered as a company limited by shares or as limited by shares and by guarantee may be re-registered as limited by guarantee and not having a share capital if–

(a) a special resolution that it should be so re-registered is passed by the vote of each member entitled to receive notice of an extraordinary meeting of the company; and

(b) the requirements of this section are complied with in respect of the resolution and otherwise.

(2) A public company shall not be re-registered under this section.

(3) A company is precluded from re-registering under this section if it is limited by shares by virtue of re-registration under section 63.

(4) The special resolution referred to in subsection (1)(a) shall provide–

(a) that the total amount of the guarantee of the members from time to time shall not fall below the amount of the share capital of the company at the date of the resolution; and

(b) for the making of such alterations–

(i) in the memorandum as are necessary to bring it (in substance and in form) into conformity with the requirements of this Act with respect to the memorandum of a company limited by guarantee and not having a share capital, and

(ii) in the articles as are requisite in the circumstances.

(5) The special resolution referred to in subsection (1)(a) is subject to section 206.

(6) An application for the company to be re-registered as limited by guarantee and having no share capital, framed in the prescribed form and signed by a director or by the secretary of the company, shall be lodged with the Registrar, together with–

(a) the necessary documents; and

(b) the prescribed fee, not earlier than the day on which the copy of the special resolution forwarded under section 206 is received by him.

(7) The documents required to be lodged with the Registrar for the purposes of subsection (6)(a) are–

(a) a printed copy of the memorandum as altered in pursuance of the special resolution;

(b) a printed copy of the articles so altered;

(c) where the company carries on in or from within Gibraltar a business which is licensed or authorised under the Financial Services (Investment and Fiduciary Services) Act 1991, the Financial Services (Banking) Act 1992 or the Financial Services (Markets in Financial Instruments) Act 2006, evidence of the consent of the competent authority under the relevant legislation or requirement to the company reregistering as a public company; and

(d) evidence to the satisfaction of the Registrar that any mortgage or other charge recorded in respect of that company has been discharged in accordance with the Act.

(8) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

(9) For the purposes of this section “share capital” shall include–

(a) the nominal value of the allotted shares of every class in the company, whether or not paid up and whether or not paid up in cash or otherwise; and

(b) any amount in the share premium account (as defined by section 125(1)) of the company.

Certificate of re-registration under section 59.

60.(1) The Registrar shall retain the application and other documents lodged with him under section 59 and shall issue to the company a certificate of incorporation appropriate to the status to be assumed by it by virtue of that section.

(2) On the issue of the certificate under subsection (1)–

(a) the status of the company, by virtue of the issue, is changed from limited by shares or limited by shares and by guarantee, as the case may be, to limited by guarantee with no share capital; and

(b) the alterations in the memorandum of the company specified in the special resolution and the alterations in, and additions to, the articles of the company so specified take effect.

(3) The certificate issued under subsection (1) is conclusive evidence that the requirements of section 59 in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be registered in pursuance of that section and was duly so registered.

(4) For the avoidance of doubt it is hereby declared that a company reregistered by virtue of section 59 and in respect of which a certificate has been issued under subsection (1) is a continuation of that company prior to that re-registration. Company limited by shares becoming a company limited by guarantee and having a share capital Re-registration of company limited by shares as company limited b guarantee and having a share capital.

61.(1) Subject to the provisions of this section and section 62, a company which is registered as a company limited by shares or as limited by shares and by guarantee may be re-registered as limited by guarantee and having a share capital if–

(a) a special resolution that it should be so re-registered is passed by the vote of each member entitled to receive notice of an extraordinary meeting of the company; and

(b) the requirements of this section are complied with in respect of the resolution and otherwise.

(2) A public company shall not be re-registered under this section.

(3) A company is precluded from re-registering under this section if it is limited by shares by virtue of re registration under section 65.

(4) The special resolution referred to in subsection (1)(a) shall provide–

(a) that the total amount of the guarantee of the members from time to time shall not fall below the amount of the share capital of the company at the date of the resolution; and

(b) for the making of such alterations–

(ii) in the articles as are requisite in the circumstances.

(5) The special resolution referred to in subsection (1)(a) is subject to section 206.

(6) An application for the company to be re-registered as limited by guarantee and having a share capital, framed in the prescribed form and signed by a director or by the secretary of the company, shall be lodged with the Registrar, together with–

(a) the necessary documents; and

(b) the prescribed fee, not earlier than the day on which the copy of the special resolution forwarded under section 206 is received by him.

(7) The documents required to be lodged with the Registrar for the purposes of subsection (6)(a) are–

(a) a printed copy of the memorandum as altered in pursuance of the special resolution;

(b) a printed copy of the articles so altered;

(d) where the company carries on in or from within Gibraltar a business which is licensed or authorised under the Financial Services (Investment and Fiduciary Services) Act 1991, the Financial Services (Banking) Act 1992 or the Financial Services (Markets in Financial Instruments) Act 2006, evidence of the consent of the competent authority under the relevant legislation or requirement to the company reregistering as a public company; and

(e) evidence to the satisfaction of the Registrar that any mortgage or other charge recorded in respect of that company has been discharged in accordance with the Act.

(8) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

(9) For the purposes of this section “share capital” shall include–

(a) the nominal value of the allotted shares of every class in the company, whether or not paid up and whether or not paid up in cash or otherwise; and

(b) any amount in the share premium account (as defined by section 125(1)) of the company.

Certificate of re-registration under section 61.

62.(1) The Registrar shall retain the application and other documents lodged with him under section 61 and shall issue to the company a certificate of incorporation appropriate to the status to be assumed by it by virtue of that section.

(2) On the issue of the certificate under subsection (1)–

(a) the status of the company, by virtue of the issue, is changed from limited by shares or limited by shares and by guarantee, as the case may be, to limited by guarantee with a share capital; and

(b) the alterations in the memorandum of the company specified in the special resolution and the alterations in, and additions to, the articles of the company so specified take effect.

(3) The certificate issued under subsection (1) is conclusive evidence that the requirements of section 61 in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be registered in pursuance of that section and was duly so registered.

(4) For the avoidance of doubt it is hereby declared that a company reregistered by virtue of section 61 and in respect of which a certificate has been issued under subsection (1) is a continuation of that company prior to that re-registration.

Company limited by guarantee and not having a share capital becoming a company limited by shares Re-registration of company limited by guarantee and not having share capital as company limited by shares.

63.(1) Subject to the provisions of this section and section 64, a company which is registered as limited by guarantee and not having share capital may be re-registered as a company limited by shares if–

(a) a special resolution that it should be so re-registered is passed; and

(b) the requirements of this section are complied with in respect of the resolution and otherwise.

(2) A company shall not be re-registered under this section as a public company.

(3) A company is precluded from re-registering under this section if it is limited by guarantee by virtue of re-registration under section 59

(4) The special resolution referred to in subsection (1)(a) shall state the total amount of the guarantee of the members at the date of the resolution and shall provide–

(a) that the amount of the share capital of the company from time to time shall not fall below the total amount of the guarantee of the members at the date of the resolution; and

(b) for the making of such alterations–

(i) in the memorandum as are necessary to bring it (in substance and in form) into conformity with the requirements of this Act with respect to the memorandum of a company limited by shares, and

(ii) are requisite to bring the articles (in substance and in form) into conformity with the requirements of this Act with respect to the articles of a company to be formed as an unlimited company having a share capital.

(5) The special resolution referred to in subsection (1)(a) is subject to section 206.

(6) An application for the company to be re-registered as limited by shares, framed in the prescribed form and signed by a director or by the secretary of the company, shall be lodged with the Registrar, together with–

(a) the necessary documents; and

(b) the prescribed fee, not earlier than the day on which the copy of the special resolution forwarded under section 206 is received by him.

(7) The documents required to be lodged with the Registrar for the purposes of subsection (6) are–

(a) a printed copy of the memorandum as altered in pursuance of the special resolution;

(b) a printed copy of the articles so altered;

Certificate of re-registration under section 63.

64.(1) The Registrar shall retain the application and other documents lodged with him under section 63 and shall issue to the company a certificate of incorporation appropriate to the status to be assumed by it by virtue of that section.

(2) On the issue of the certificate under subsection (1)–

(a) the status of the company, by virtue of the issue, is changed from limited by guarantee to limited by shares; and

(b) the alterations in the memorandum of the company specified in the special resolution and the alterations in, and additions to, the articles of the company so specified take effect.

(3) The certificate issued under subsection (1) is conclusive evidence that the requirements of section 63 in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be registered in pursuance of that section and was duly so registered.

(4) For the avoidance of doubt it is hereby declared that a company reregistered by virtue of section 63, and in respect of which a certificate has been issued under subsection (1), is a continuation of that company prior to that re-registration.

Company limited by guarantee and having a share capital becoming a company limited by shares Re-registration of company limited by guarantee and having share capital as company limited by shares.

65.(1) Subject to the provisions of this section and section 66, a company which is registered as limited by guarantee and has a share capital may be re-registered as a company limited by shares if–

(a) a special resolution that it should be so re-registered is passed; and

(b) the requirements of this section are complied with in respect of the resolution and otherwise.

(2) A company shall not be re-registered under this section as a public company.

(3) A company is precluded from re-registering under this section if it is limited by guarantee by virtue of re-registration under section 61.

(4) The special resolution referred to in subsection (1)(a) shall state the total amount of the guarantee of the members at the date of the resolution and shall provide–

(a) that the amount of the share capital of the company from time to time shall not fall below the total amount of the guarantee of the members at the date of the resolution; and

(b) for the making of such alterations–

(i) in the memorandum as are necessary to bring it (in substance and in form) into conformity with the requirements of this Act with respect to the memorandum of a company limited by shares, and

(5) The special resolution referred to in subsection (1)(a) is subject to section 206.

(a) the necessary documents; and

(b) the prescribed fee, not earlier than the day on which the copy of the special resolution forwarded under section 206 is received by him.

(7) The documents required to be lodged with the Registrar for the purposes of subsection (6) are–

(a) a printed copy of the memorandum as altered in pursuance of the special resolution;

(b) a printed copy of the articles so altered;

Certificate of re-registration under section 65.

66.(1) The Registrar shall retain the application and other documents lodged with him under section 65 and shall issue to the company a certificate of incorporation appropriate to the status to be assumed by it by virtue of that section.

** (2)** On the issue of the certificate under subsection (1)–

(a) the status of the company, by virtue of the issue, is changed from limited by guarantee to limited by shares; and

(b) the alterations in the memorandum of the company specified in the special resolution and the alterations in, and additions to, the articles of the company so specified take effect.

(3) The certificate issued under subsection (1) is conclusive evidence that the requirements of section 65 in respect of re-registration and of matters precedent and incidental to it have been complied with, and that the company was authorised to be registered in pursuance of that section and was duly so registered.

(4) For the avoidance of doubt it is hereby declared that a company reregistered by virtue of section 65, and in respect of which a certificate has been issued under subsection (1), is a continuation of that company prior to that re-registration.

De-registration and registration as limited partnership De-registration of company limited by shares or guarantee on registration as a limited partnership.

67. The provisions of Schedule 1 shall have effect for the purpose of enabling a company limited by shares or by guarantee to be de-registered on being registered as a limited partnership under the Limited Partnerships Act.

De-registration of limited partnership on registration as a company limited by shares or guarantee.

68. The provisions of Schedule 1 shall have effect for the purpose of enabling a limited partnership which is registered as a limited partnership under the Limited Partnership Act to be de-registered on being registered as a company limited by shares or by guarantee.

CHAPTER 4 CONTRACTS ETC.

Contracts Pre-incorporation actions.

69.(1) Where–

(a) prior to the date of incorporation mentioned in the certificate of incorporation of a company, any action has been carried out in the name of that company and purportedly by or on behalf of that company; and

(b) that company is not precluded from doing so by its memorandum or articles, the company may after that date by resolution ratify that action, and that action shall then be deemed to be the action of the company; and–

(d) the company shall be liable in respect of that action; and

(e) any failure to take any steps necessary to give effect to that action shall be a failure by the company.

(2) Except–

(a) where a company has ratified that action, as provided for in subsection (1); or

(b) there is an agreement to the contrary, an action carried out in the name of a company and purportedly by or on behalf of that company prior to the date of incorporation mentioned in the certificate of incorporation of that company shall be the action of the person or persons by whom it was carried out and that person or those persons shall be jointly and severally liable in respect of that action and shall be entitled to the benefit of that action.

Power of directors to bind the company.

70.(1) In favour of a person dealing with a company in good faith, the power of the board of directors to bind the company, or authorise others to do so, shall be deemed to be free of any limitations under the company’s constitution.

(2) For this purpose–

(a) a person “deals with” a company if he is a party to any transaction or other act to which the company is a party;

(b) a person shall not be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company’s constitution; and

(3) The reference above to limitations on the directors’ powers under the company’s constitution includes limitations deriving–

(a) from the resolution of the company in general meeting or a meeting of any class of shareholders; or

(b) from any agreement between the members of the company or any class of shareholders.

(4) Subsection (1) does not affect any right of a member of the company to bring proceedings to restrain the doing of an act which is beyond the powers of the directors: except that no such proceedings shall lie in respect of any act to be done in fulfilment of a legal obligation arising from a previous act of the company.

(5) Subsection (1) does not affect any liability incurred by the directors, or any other person, by reason of the directors’ exceeding of their powers.

No duty to enquire as to capacity of company or authority of directors.

71. A party to a transaction with a company is not bound to enquire as to whether the transaction is permitted by the company’s constitution or as to any limitation on the powers of the board of directors to bind the company or to authorise others to do so. Execution of documents by companies

Company contracts.

72.(1) A contract may be made–

(a) by a company, by writing under its common seal; or

(b) on behalf of a company, by a person acting under its authority, express or implied.

(2) Any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of a company.

Execution of documents.

73.(1) A document may be executed by a company–

(a) by the affixing of its common seal; or

(b) by signature in accordance with the following provisions.

(2) A document is validly executed by a company if it is signed on behalf of the company–

(a) by two authorised signatories; or

(b) by a director of the company in the presence of a witness who attests the signature.

(3) The following are “authorised signatories” for the purposes of subsection (2)–

(a) every director of the company;

(b) the persons authorised by the company to sign as resolved by the company from time to time, on behalf of, and to the extent so resolved; and

(4) A document signed in accordance with subsection (2) and expressed, in whatever words, to be executed by the company has the same effect as if executed under the common seal of the company.

(5) In favour of a purchaser a document is deemed to have been duly executed by a company if it purports to be signed in accordance with subsection (2); and for this purpose, a “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.

(6) Where a document is to be signed by a person on behalf of more than one company, it is not duly signed by that person for the purposes of this section unless he signs it separately in each capacity.

(7) References in this section to a document being (or purporting to be) signed by a director or secretary are to be read, in a case where that office is held by a firm, as references to its being (or purporting to be) signed by an individual authorised by the firm to sign on its behalf.

(8) This section applies to a document that is (or purports to be) executed by a company in the name of or on behalf of another person, whether or not that person is also a company.

Common seal.

74.(1) A company may have a common seal, but need not have one.

(2) A company which has a common seal shall have its name engraved in legible characters on the seal.

(3) If a company fails to comply with subsection (2) an offence shall be committed by–

(a) the company; and

(b) every officer of the company who is in default.

(4) An officer of a company, or a person acting on behalf of a company, commits an offence if he uses, or authorises the use of, a seal purporting to be a seal of the company on which its name is not engraved as required by subsection (2).

(5) A person guilty of an offence under this section shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Execution of deeds.

75.(1) A document is validly executed by a company as a deed if, and only if–

(a) it is duly executed by the company; and

(b) it is delivered as a deed.

(2) For the purposes of subsection (1)(b) a document is presumed to be delivered upon its being executed, unless a contrary intention is proved.

Execution of deeds or other documents by attorney.

76.(1) A company may, by instrument executed as a deed, empower a person, either generally or in respect of specified matters, as its attorney to execute deeds or other documents on its behalf.

(2) A deed or other document so executed, whether in Gibraltar or elsewhere, has effect as if executed by the company.

PART IV PROSPECTUSES, SHARE CAPITAL AND DEBENTURES

Prospectus Dating and registration of prospectus.

77.(1) A prospectus issued by or on behalf of a company or in relation to an intended company shall be dated, and that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus.

(2) A copy of every such prospectus, signed by every person who is named therein as a director or proposed director of the company, or by his agent authorised in writing, shall be delivered to the Registrar for registration on or before the date of its publication, and no such prospectus shall be issued until a copy thereof has been so delivered for registration.

(3) The Registrar shall not register any prospectus unless it is dated, and the copy thereof signed, in manner required by this section.

(4) Every prospectus shall state on the face of it that a copy has been delivered for registration as required by this section.

(5) If a prospectus is issued without a copy thereof being so delivered, the company and every person who is knowingly a party to the issue of the prospectus, are guilty of offences and are each liable on summary conviction to a fine of £5 for every day from the date of the issue of the prospectus until a copy thereof is so delivered.

(6) The provisions of this section and sections 78 to 82 are in addition to any requirements arising under the Prospectus Act 2005 and in this section and sections 78 to 82, “prospectus” has the same meaning as in that Act. Exemptions for collective investment schemes.

78. Sections 77 and 79 to 85 do not apply to a company that is licensed, authorised or otherwise regulated under the Financial Services (Collective Investment Schemes) Act 2011.

Specific requirements as to particulars in prospectus.

79.(1) Every prospectus issued by or on behalf of a company, or by or on behalf of any person who is or has been engaged or interested in the formation of the company, must state the matters specified in Part I of Schedule 2 and set out the reports specified in Part II of that Schedule, and Parts I and II shall have effect subject to the provisions contained in Part III of that Schedule.

(2) A condition requiring or binding an applicant for shares in or debentures of a company to waive compliance with any requirement of this section, or purporting to affect him with notice of any contract, or matter not specifically referred to in the prospectus, shall be void.

(3) It shall not be lawful to issue any form of application for shares in or debentures of a company unless the form is issued with a prospectus which complies with the requirements of this section; except that this subsection shall not apply if it is shown that the form of application was issued either–

(a) in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or

(b) in relation to shares or debentures which were not offered to the public.

(4) A person who acts in contravention of the provisions of subsection (3), shall be guilty of an offence and liable on summary conviction to a fine at level 5 on the standard scale.

(5) In the event of non-compliance with or contravention of any of the requirements of this section, a director or other person responsible for the prospectus shall not incur any liability by reason of the non–compliance or contravention, if–

(a) as regards any matter not disclosed, he proves that he was not aware of it; or

(b) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part; or

(c) the non-compliance or contravention was in respect of matters which in the opinion of the court dealing with the case were immaterial or was otherwise such as ought, in the opinion of that court, having regard to all the circumstances of the case, reasonably to be excused:

except that, in the event of failure to include in a prospectus a statement with respect to the matters specified in paragraph 15 of Part I of Schedule 2, no director or other person shall incur any liability in respect of the failure unless it be proved that he had knowledge of the matters not disclosed.

(6) This section shall not apply to the issue to existing members or debenture holders of a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures will or will not have the right to renounce in favour of other persons, but subject to that, this section shall apply to a prospectus or a form of application whether issued on or with reference to the formation of a company or subsequently.

(7) Nothing in this section shall limit or diminish any liability which any person may incur under the general law or this Act apart from this section.

Restriction on alteration of terms mentioned in prospectus or statement.

80.(1) A company limited by shares or a company limited by guarantee and having a share capital shall not prior to the statutory meeting vary the terms of a contract referred to in the prospectus or statement in lieu of prospectus, except subject to the approval of the statutory meeting.

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

Liability for statements in prospectus.

81.(1) Where a prospectus invites persons to subscribe for shares in or debentures of a company–

(a) every person who is a director of the company at the time of the issue of the prospectus; and

(b) every person who has authorised himself to be named and is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time; and

(d) every person who has authorised the issue of the prospectus, shall be liable to pay compensation to all persons who subscribe for any shares or debentures on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement therein, or in any report or memorandum appearing on the face thereof, or by reference incorporated therein or issued therewith, unless it is proved–

(i) that having consented to become a director of the company he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent, or

(ii) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue he forthwith gave reasonable public notice that it was issued without his knowledge or consent, or

(iii) that after the issue of the prospectus and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent thereto, and gave reasonable public notice of the withdrawal, and of the reason therefor, or

(iv) that one of the propositions in subsection (2) applies.

(2) The propositions referred to in subsection (1)(iv) are that it is proved either–

(a) as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, the person concerned had reasonable grounds to believe, and did up to the time of the allotment of the shares or debentures, as the case may be, believe, that the statement was true; or

(b) as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or extract from a report or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report or valuation; or

(c) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document– but, nevertheless, a person shall be liable to pay compensation as mentioned in subsection (1) if it is proved that he had no reasonable ground to believe that the person making any such statement, report or valuation as is mentioned in this subsection was competent to make it.

(3) Where the prospectus contains the name of a person as a director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to its issue, the directors of the company, except any without whose knowledge or consent the prospectus was issued, and any other person who authorised the issue thereof, shall be liable to indemnify the person named against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus, or in defending himself against any action or legal proceedings brought against him in respect thereof.

(4) Every person who, by reason of his being a director or named as a director or as having agreed to become a director, or of his having authorised the issue of the prospectus, becomes liable to make any payment under this section may recover contribution, as in cases of contract, from any other person who, if sued separately, would have been liable to make the same payment, unless the person who has become so liable was, and that other person was not, guilty of fraudulent misrepresentation.

(5) For the purposes of this section,– “promoter” means a promoter who was a party to the preparation of the prospectus, or of the portion thereof containing the untrue statement, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company; and “expert” includes engineer, valuer, accountant and any other person whose profession gives authority to a statement made by him.

Document containing offer of shares or debentures for sale to be deemed prospectus.

82.(1) Where a company allots or agrees to allot any shares in or debentures of the company with a view to all or any of those shares or debentures being offered for sale to the public, any document by which the offer for sale to the public is made shall for all purposes be deemed to be a prospectus issued by the company, and all enactments and rules of law as to the contents of prospectuses and to liability in respect of statements in and omissions from prospectuses, or otherwise relating to prospectuses, shall apply and have effect accordingly, as if–

(a) the shares or debentures had been offered to the public for subscription; and

(b) persons accepting the offer in respect of any shares or debentures were subscribers for those shares or debentures, but without prejudice to the liability (if any) of the persons by whom the offer is made, in respect of misstatements contained in the document or otherwise in respect thereof.

(2) For the purposes of this Act, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, shares or debentures was made with a view to the shares or debentures being offered for sale to the public if it is shown–

(a) that an offer of the shares or debentures or of any of them for sale to the public was made within 6 months after the allotment or agreement to allot; or

(b) that at the date when the offer was made the whole consideration to be received by the company in respect of the shares or debentures had not been so received.

(3) Section 77 as applied by this section shall have effect as though the persons making the offer were persons named in a prospectus as directors of a company, and section 79 as applied by this section shall have effect as if it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus–

(a) the net amount of the consideration received or to be received by the company in respect of the shares or debentures to which the offer relates; and

(b) the place and time at which the contract under which the shares or debentures have been or are to be allotted may be inspected.

(4) Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document referred to above is signed on behalf of the company or firm by two directors of the company or not less than half of the partners, as the case may be, and any such director or partner may sign by his agent authorised in writing. Allotment Prohibition of allotment unless minimum subscription received.

83.(1) No allotment shall be made of any share capital of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount which, in the opinion of the directors, must be raised by the issue of share capital in order to provide for the matters specified in paragraph 5 of Part I of Schedule 2 has been subscribed, and the sum payable on application for the amount so stated has been paid to and received by the company.

(2) For the purposes of subsection (1), a sum shall be deemed to have been paid to and received by the company if a cheque for that sum has been received in good faith by the company and the directors of the company have no reason for suspecting that the cheque will not be paid.

(3) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Act referred to as “the minimum subscription.”

(4) The amount payable on application on each share shall not be less than 5 per cent of the nominal amount of the share.

(5) If the above conditions have not been complied with at the expiry of 40 days after the first issue of the prospectus, all money received from applicants for shares shall be forthwith repaid to them without interest, and, if any such money is not so repaid within 48 days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of 5 per cent per annum from the expiration of the 48th day: except that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(6) Any condition requiring or binding any applicant for shares to waive compliance with any requirement of this section shall be void.

(7) This section, except subsection (4), shall not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

Prohibition of allotment in certain cases unless statement in lieu of prospectus delivered to Registrar.

84.(1) A company having a share capital which does not issue a prospectus on or with reference to its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless at least 3 days before the first allotment of either shares or debentures there has been delivered to the Registrar for registration a statement in lieu of prospectus, signed by every person who is named therein as a director or a proposed director of the company or by his agent authorised in writing, in the form and containing the particulars set out in Schedule 3.

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

(3) If a company acts in contravention of this section, the company and every director of the company who knowingly authorises or permits the contravention shall be guilty of offences and are each liable on summary conviction to a fine at level 3 on the standard scale.

Effect of irregular allotment.

85.(1) An allotment made by a company to an applicant in contravention of the provisions of sections 83 and 84, shall be voidable at the instance of the applicant within 1 month after the holding of the statutory meeting of the company and not later, or, in any case where the company is not required to hold a statutory meeting, or where the allotment is made after the holding of the statutory meeting, within 1 month after the date of the allotment, and not later, and shall be so voidable notwithstanding that the company is in course of being wound up.

(2) A director of a company who knowingly contravenes, or permits or authorises the contravention of, any of the provisions of those sections with respect to allotment, is liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby: but no proceedings to recover any such loss, damages or costs shall be commenced after the expiration of 2 years from the date of the allotment.

Return as to allotments.

86.(1) Except where the company has given a notification to the Registrar pursuant to section 18 that it is a Collective Investment Scheme, whenever a company limited by shares or a company limited by guarantee and having a share capital makes any allotment of its shares, the company shall within 30 days thereafter deliver to the Registrar for registration–

(a) a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and descriptions of the allottees, and the amount (if any) paid or due and payable on each share; and

(b) in the case of shares allotted as fully or partly paid up otherwise than in cash, a contract in writing constituting the title of the allottee to the allotment together with any contract of sale, or for services or other consideration in respect of which that allotment was made, such contracts being duly stamped, and a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted.

(2) Where such a contract as above mentioned is not reduced to writing, the company shall within 30 days after the allotment deliver to the Registrar for registration the prescribed particulars of the contract.

(3) Subject to subsection (4), if default is made in complying with this section, every director, manager or other officer of the company, who is knowingly a party to the default, shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale for every day during which the default continues

(4) In case of default in delivering to the Registrar within 1 month after the allotment any document required to be delivered by this section, the company, or any person liable for the default, may apply to the Registrar for leave to file the return of allotment out of time, and the Registrar, if satisfied that the omission to deliver the document was accidental or due to inadvertence or that it is just and equitable to grant relief, may make an order extending the time for the delivery of the document for such period as the court may think proper.

(5) An application made under subsection (4) shall be accompanied by–

(a) an affidavit of–

(i) the applicant’s interest in the matter,

(ii) a statement of the facts on which the application is based, and

(iii) the relief sought; and

(b) the fee prescribed in Schedule 24.

(6) The Registrar may, in his discretion, require that a person making an application under subsection (4) give notice of that application (including the facts on which the application is based and the relief sought) to such other person as the Registrar may specify, being a person who appears to the Registrar to be concerned or to have an interest and may specify the time for receipt by him of any written objection from that other person.

(7) On receipt within the time specified by virtue of subsection (6) of any written objection to the granting by the Registrar of an extension of time within which the return of allotment may be filed, the Registrar shall forthwith notify the applicant of the receipt of the objection, the terms of the objection and of the identity of the objector.

Provisions supplementary to section 86.

87.(1) Where an application for an extension of time for the filing of a return of allotment has been made under section 86 (4), the Registrar may, in his discretion, refuse to consider the application and require that the person by whom the application was made apply to the Supreme Court for an order for such an extension of time.

(2) On receipt of an application under section 86, the Registrar, if satisfied that there are good grounds for extending the time within which the return of allotment may be made, may direct that the time be extended to the extent specified in his direction.

(3) A direction given under section 86 or this section may be made subject to conditions and the Registrar may include such further directions and such provisions as seem just and equitable in the circumstances.

(4) The court may, on application under subsection (1), refuse the application or order the period of time for the filing of the return of allotment be extended by the period specified by the court.

(5) In any proceedings under this section, the court may determine any question which may be necessary or expedient to decide in connection with the extension of the time within which the return of allotment may be filed.

(6) The Registrar shall be entitled to appear and be heard on any application to the court under this section and shall appear if so directed by the court.

(7) Any order made by the court under this section shall direct that notice of the order shall be served on the Registrar in the prescribed manner and the Registrar shall, on receipt of the notice, act accordingly.

Payment for allotted shares.

88.(1) Subject to the following provisions, shares allotted by any company and any premium payable on them may be paid up in money or money’s worth (including goodwill and know-how).

(2) A public company may not at any time accept, in payment up of its shares or any premium on them, an undertaking given by any person that he or another should do work or perform services for the company or any other person.

(3) Where a public company accepts such an undertaking in payment up of its shares or any premium payable on them, the holder of the shares when they or the premium are treated as paid up, in whole or in part, by the undertaking is liable to pay the company in respect of those shares an amount equal to their nominal value, together with the whole of any premium or, if the case so requires, such proportion of that amount as is treated as paid up by the undertaking, with interest at the appropriate rate.

(4) This section does not prevent a company from allotting bonus shares to its members or from paying up, with sums available for the purpose, any amount for the time being unpaid on any of its shares (whether on their nominal value or any premium).

(5) The reference in subsection (3) to the holder of shares includes any person who has an unconditional right to be included in the company’s register of members in respect of those shares or to have an instrument of transfer of them executed in his favour.

Shares to be allotted as at least one quarter paid up.

89.(1) A public company may not allot a share except as paid up at least as to one-quarter of its nominal value and the whole of any premium on it.

(2) If a company allots a share in contravention of subsection (1), the share shall be treated as if one-quarter of its nominal value, together with the whole of any premium on it, had been received.

(3) In the circumstances of subsection (2), the allottee is liable to pay the company the minimum amount which should have been received in respect of the share under subsection (1) (less the value of any consideration actually applied in payment up, to any extent, of the share and any premium on it) with interest at the appropriate rate.

(4) Subsections (2) and (3) do not apply to the allotment of bonus shares, unless the allottee knew or ought to have known that the shares were allotted in contravention of subsection (1).

Restrictions on payment by long-term undertaking.

90.(1) A public company may not allot shares as fully or partly paid up (as to their nominal value or any premium on them) except in cash if the consideration for the allotment is or includes an undertaking which is to be, or may be, performed more than 5 years after the date of allotment.

(2) If a company allots shares in contravention of subsection (1), the allottee is liable to pay the company an amount equal to the total of their nominal value and the whole of any premium (or, if the case so requires, so much of that total as is treated as paid up by the undertaking), with interest at the appropriate rate.

(3) Where a contract for the allotment of shares does not contravene subsection (1), any variation of the contract which has that effect is void.

(4) Subsection (3) applies also to the variation by a public company of the terms of a contract entered into before the company was re-registered as a public company.

(5) Where a public company allots shares for a consideration which consists of or includes (in accordance with subsection (1)) an undertaking which is to be performed within 5 years of the allotment, but the undertaking is not performed within the period allowed by the contract for the allotment of the shares, the allottee is then liable to pay the company, at the end of the period so allowed, an amount equal to the total of the nominal value of the shares and the whole of any premium (or, if the case so requires, so much of that total as is treated as paid up by the undertaking), with interest at the appropriate rate.

(6) A reference in this section to a contract for the allotment of shares includes an ancillary contract relating to payment in respect of them.

Non-cash consideration to be valued before allotment.

91.(1) Subject to section 92 and the following provisions of this section, a public company shall not allot shares as fully or partly paid up (as to their nominal value or any premium on them) except in cash unless–

(a) the consideration for the allotment has been independently valued under Part I of Schedule 4;

(b) a report with respect to its value has been made to the company by a person appointed by the company during the 6 months immediately preceding the allotment of the shares; and

(2) Subsection (1) does not apply where an amount standing to the credit of any of the company’s reserve accounts, or of its profit and loss account, is applied in paying up (to any extent) any shares allotted to members of the company or any premiums on shares so allotted.

(3) Subsection (1) does not apply to the allotment of shares by a company in connection with an arrangement providing for the allotment of shares in that company on terms that–

(a) the whole or part of the consideration for the shares allotted is to be provided by the transfer to that company (or cancellation) of all or some of the shares, or all or some of the shares of a particular class, in another company (with or without the issue to that company of shares, or of shares of any particular class, in that other company); and

(b) the arrangement is open to all shareholders in the other company (or all shareholders of the particular class, if the arrangement is limited to a particular class of shares),and in determining whether that is the case, shares held by or by a nominee of the company proposing to allot the shares in connection with the arrangement, or held by or by a nominee of a company which is that company’s holding company or subsidiary or a company which is a subsidiary of its holding company, shall be disregarded.

(4) Subsection (1) does not apply to the allotment of shares by a company in connection with its proposed merger with another company; that is, where one of the companies proposes to acquire all the assets and liabilities of the other in exchange for the issue of shares or other securities in the first company to shareholders of the other, with or without any cash payment to those shareholders.

(5) If a company allots shares in contravention of subsection (1) and either–

(a) the allottee has not received the valuer’s report required by that subsection to be sent to him; or

(b) there has been some other contravention of this section or Part I of Schedule 4 which the allottee knew or ought to have known amounted to a contravention, the allottee shall be liable to pay the company an amount equal to the total of the nominal value of the shares and the whole of any premium (or, if the case so requires, so much of that total as is treated as paid up by the consideration), with interest at the appropriate rate.

(6) A public company shall deliver to the Registrar for registration a copy of the report mentioned in subsection (1) at the same time as a return of the documents is filed under section 86.

(7) If subsection (6) is not complied with, every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine at level 5 on the standard scale, and for continued contravention to a daily default fine of £500.

Exception to valuation requirement: Merger and Division.

92. The requirement for valuation of non-cash consideration does not apply to the allotment of shares by a company as part of a scheme to which sections 303 to 351 apply if–

(a) in the case of a scheme involving a merger, an expert’s report is drawn up as required by section 310; or

(b) in the case of a scheme involving a division, an expert’s report is drawn up as required by section 331.

Transfer to public company of non-cash asset in initial period.

93.(1) Subject to subsection (7), a public company shall not, unless the conditions of this section have been complied with, enter into an agreement with a person for the transfer by him during the initial period of one or more non-cash assets to the company or another if–

(a) that person is a subscriber to the company’s memorandum; and

(b) the consideration for the transfer to be given by the company is equal in value at the time of the agreement to one-tenth or more of the nominal value of the company’s share capital issued at the time.

(2) In subsection (1) the “initial period” is the period of 2 years beginning with the date on which the company was issued with a certificate by the Registrar under section 181(4) that it was entitled to commence business.

(3) This section applies to a company re-registered as a public company, but in that case–

(a) subsection (1)(a) shall be read as if it referred to a person who is a member of the company on the date of re-registration; and

(b) the initial period is 2 years beginning with the date of reregistration.

(4) The conditions referred to in subsection (1) are that–

(a) the consideration to be received by the company (that is to say, the asset to be transferred to the company or the advantage to the company of its transfer to another person) and any consideration other than cash to be given by the company have been independently valued under Part II of Schedule 4;

(b) a report with respect to the consideration to be so received and given has been made to the company during the 6 months immediately preceding the date of the agreement;

(d) not later than the giving of the notice of the meeting at which the resolution is proposed, copies of the resolution and report have been circulated to the members of the company entitled to receive that notice and, if the person with whom the agreement in question is proposed to be made is not then a member of the company so entitled, to that person.

(5) A company which has passed a resolution under this section with respect to the transfer of an asset shall, within 30 days of so doing, deliver to the Registrar a copy of that resolution together with the report required by this section.

(6) If subsection (5) is not complied with, the company and every officer of it who is in default is guilty of an offence and liable on summary conviction to a fine at level 3 on the standard scale and for continued contravention to a daily default fine of £100.

(7) Subsection (1) does not apply in the event of an increase in subscribed capital made in order to give effect to a merger, a division or a public offer for the purchase or exchange of shares and to pay the shareholders of the company which is being absorbed or divided or which is the object of the public offer for the purchase or exchange of shares.

(8) In the case of a merger or a division, subsection (7) shall be applied where an independent expert’s report on the draft terms of merger or division is drawn up.

Authority of company required for certain allotments.

94.(1) The directors of a public company may not use any power of the company to allot relevant securities, unless they are, in accordance with this section, authorised to do so by–

(a) the company in general meeting; or

(b) the company’s articles.

(2) In this section “relevant securities” means–

(a) shares in the company other than shares shown in the memorandum or articles to have been taken by the subscribers to it; and

(b) any right to subscribe for, or to convert any security into, shares in the company (other than shares so allotted), and a reference to the allotment of relevant securities includes the grant of such a right but (subject to subsection (6) below) not the allotment of shares under such a right.

(3) Authority under this section may be given for a general or particular exercise of the power and may be subject to conditions.

(4) The authority shall state the maximum amount of relevant securities that may be allotted under it and the date on which it will expire, which shall be not more than 5 years from whichever is relevant of the following dates–

(a) in the case of an authority contained in the company’s articles at the time of its original incorporation, the date of that incorporation; and

(b) in any other case, the date on which the resolution is passed by virtue of which the authority is given, but such an authority (including an authority contained in the articles) may be previously revoked or varied by the company in general meeting.

(5) The authority may be renewed or further renewed by the company in general meeting for a period not exceeding 5 years, but the resolution shall state (or restate) the amount of relevant securities which may be allotted under the authority or, as the case may be, the amount remaining to be allotted under it, and shall specify the date on which the renewed authority will expire.

(6) In relation to authority under this section for the grant of such rights as are mentioned in subsection (2)(b), the reference in subsection (4) (and the corresponding reference in subsection (5)), to the maximum amount of relevant securities that may be allotted under the authority is to the maximum amount of shares which may be allotted under the rights.

(7) The directors may allot relevant securities, even if authority under this section has expired, if they are allotted under an offer or agreement made by the company before the authority expired and the authority allowed it to make an offer or agreement which would or might require relevant securities to be allotted after the authority expired.

(8) A resolution of a company to give, vary, revoke or renew an authority shall be forwarded to the Registrar within 30 days of the passing of that resolution.

(9) A director who knowingly contravenes, or permits or authorises a contravention of this section is guilty of an offence and liable on summary conviction to a fine at level 5 on the standard scale.

(10) Nothing in this section affects the validity of any allotment.

Allotment where issue not fully subscribed.

95.(1) No allotment may be made of any share capital of a public company offered for subscription unless–

(a) that capital is subscribed for in full; or

(b) the offer states that, even if the capital is not subscribed for in full, the amount of that capital subscribed for may be allotted in any event or in the event of the conditions specified in the offer being satisfied, and, where conditions are so specified, no allotment of the capital may be made by virtue of paragraph (b) unless those conditions are satisfied.

(2) If shares may not be allotted under subsection (1) and 40 days have passed after the first issue of the prospectus, all money received from applicants for shares shall be immediately repaid to them without interest.

(3) If any of the money is not repaid within 48 days after the issue of the prospectus, the directors of the company are jointly and severally liable to repay it with interest at the rate of 5 per cent per annum from the expiration of the 48th day, except that a director is not so liable if he proves that the default in repayment was not due to any misconduct or negligence on his part.

(4) This section applies in the case of shares offered as wholly or partly payable otherwise than in cash as it applies in the case of shares offered for subscription (the word “subscribed” in subsection (1) being construed accordingly).

(5) In subsections (2) and (3), as they apply to the case of shares offered as wholly or partly payable otherwise than in cash, references to the repayment of money received from applicants for shares include–

(a) the return of any other consideration so received (including, if the case so requires, the release of the applicant from any undertaking); or

(b) if it is not reasonably practicable to return the consideration, the payment of money equal to its value at the time it was so received.

(6) Any condition requiring or binding an applicant for shares to waive compliance with any requirement of this section is void.

Application to certain private companies of conditions as to share capital.

96. The provisions of sections 88 to 93, 181 and Schedule 4 apply where a private company ceases to be a private company in accordance with section 20 in the same way as those provisions apply to a public company. Commissions and Discounts Power to pay certain commissions and prohibition of payment of all other commissions and discounts.

97.(1) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company if–

(a) the payment of the commission is authorised by the articles;

(b) the commission paid or agreed to be paid does not exceed 10 per cent of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is the less;

(i) in the case of shares offered to the public for subscription, disclosed in the prospectus, or

(ii) in the case of shares not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and delivered before the payment of the commission to the Registrar for registration, and, where a circular or notice, not being a prospectus, inviting subscription for the shares is issued, also disclosed in that circular or notice; and

(d) the number of shares which persons have agreed for a commission to subscribe absolutely is disclosed in the manner referred to above.

(2) Except as provided in subsection (1), no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, discount or allowance, to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money be paid out of the nominal purchase money or contract price, or otherwise.

(3) A vendor to, promoter of, or other person who receives payment in money or shares from, a company shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.

(4) If default is made in complying with the provisions of this section relating to the delivery to the Registrar of the statement in the prescribed form, 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.

Statement in balance sheet as to commissions and discounts.

98.(1) Where a company has paid any sums by way of commission in respect of any shares or debentures, or allowed any sums by way of discount in respect of any debentures, the total amount so paid or allowed, or so much thereof as has not been written off, shall be stated in every balance sheet of the company until the whole amount thereof has been written off.

(2) If default is made in complying with this section, the company and every officer of the company who is in default is guilty of an offence and shall be liable on summary conviction to a default fine.

Holding of shares in public company by another company.

99.(1) The subscription, acquisition or holding of shares in a public company by another company within the meaning of Article 1 of Council Directive 68/151/EEC of 9 March 1968 on the co-ordination of safeguards for the protection of the interests of members of companies in which that public company directly or indirectly holds a majority of the voting rights or on which it can directly or indirectly exercise a dominant influence will be regarded as having been effected by that public company itself.

(2) Subsection (1) applies where the other company is governed by the law of a country outside the European Union and has a legal form comparable to those listed in Article 1 of Directive 68/151/EEC.

(3) Subsections (1) and (2) do not apply where the subscription, acquisition or holding is effected by the other company in its capacity or in the context of its activities as a professional dealer in securities, provided that it is a member of a stock exchange situated or operating within the European Economic Area or is approved or supervised by an authority of a member State competent to supervise professional dealers in securities.

Prohibition of provision of financial assistance by company for purchase of its own shares.

100.(1) Subject as provided in this section, it shall not be lawful for a company or any of its subsidiaries to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase made or to be made by any person of any shares in the company.

(2) Nothing in this section shall be taken to prohibit–

(a) where the lending of money is part of the ordinary business of a company, the lending of money by the company in the ordinary course of its business;

(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase by trustees of fully-paid shares in the company to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the company;

(c) the making by a company of loans to persons, other than directors, bona fide in the employment of the company with a view to enabling those persons to purchase fully-paid shares in the company to be held by themselves by way of beneficial ownership.

(3) The aggregate amount of any outstanding loans made under the authority of paragraphs (b) and (c) of subsection (2) shall be shown as a separate item in every balance sheet of the company.

(4) The acceptance of the company’s own shares as security, either by the company itself or through a person acting in his own name but on the company’s behalf, shall be treated as falling within the scope of the prohibition set out in subsection (1).

(5) Subsection (4) does not apply to transactions concluded by banks and other financial institutions in the normal course of business.

(6) If a company acts in contravention of this section, the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine at level 3 on the standard scale.

Relaxations of section 100 in the case of private companies.

101.(1) Section 100 does not prohibit a private company from giving financial assistance in a case where the acquisition of the shares in question was an acquisition of shares in the company or, if it is a subsidiary of another private company, in that other company, if the following provisions of this section and sections 102 to 104 are complied with as respects the giving of that assistance.

(2) The financial assistance may only be given if the company has net assets which are not thereby reduced or to the extent that they are reduced, if the assistance is provided out of distributable profits.

(3) This section does not permit financial assistance to be given by a subsidiary in a case where the acquisition of shares in question is or was an acquisition of shares in its holding company, if it is also a subsidiary of a public company which is itself a subsidiary of that holding company.

(4) Unless the company proposing to give the financial assistance is a wholly-owned subsidiary, the giving of assistance under this section must be approved by special resolution of the company in general meeting.

(5) Where the financial assistance is to be given by the company in a case where the acquisition of shares in question is or was an acquisition of shares in its holding company, that holding company and another company which is both the company's holding company and a subsidiary of that other holding company (except, in any case, a company which is a wholly owned subsidiary) shall also approve by special resolution in general meeting the giving of the financial assistance.

(6) The directors of the company proposing to give the financial assistance and, where the shares acquired or to be acquired are shares in its holding company, the directors of that company and of any other company which is both the company's holding company and a subsidiary of that other holding company shall, before the assistance is given, make a statutory declaration in the prescribed form complying with section 102.

(7) In this section, in relation to a company,– “net assets” means the amount by which the aggregate of the company's assets exceeds the aggregate of its liabilities (taking the amount of both assets and liabilities to be as stated in the company's accounting records immediately before the financial assistance is given); “liabilities” includes any amount retained as reasonably necessary for the purpose of providing for any liability or loss which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

Statutory declaration under section 101.

102.(1) A statutory declaration made by a company’s directors under section 101(6) shall contain such particulars of the financial assistance to be given, and of the business of the company of which they are directors, as may be prescribed, and shall identify the person to whom the assistance is to be given.

(2) The declaration shall state that the directors have formed the opinion, as regards the company’s initial situation immediately following the date on which the assistance is proposed to be given, that there will be no ground on which it could then be found to be unable to pay its debts; and either–

(a) it is intended to commence the winding up of the company within 12 months of that date, that the company will be able to pay its debts in full within 12 months of the commencement of the winding up; or

(b) in any other case, that the company will be able to pay its debts as they fall due during the year immediately following that date.

(3) In forming their opinion for the purposes of subsection (2), the directors shall take into account the same liabilities (including contingent and prospective liabilities) as would be relevant in relation to a winding up by the court under section 10(1) of the Insolvency Act to the question whether the company is unable to pay its debts.

(4) The directors' statutory declaration shall have annexed to it a report addressed to them by the company's auditors stating that–

(a) they have enquired into the state of affairs of the company; and

(b) they are not aware of anything to indicate that the opinion expressed by the directors in the declaration as to any of the matters mentioned in subsection (2) is unreasonable in all the circumstances.

(5) The statutory declaration and auditors’ report shall be delivered to the Registrar–

(a) together with any special resolution passed by the company under section 101 delivered to the Registrar in compliance with any provision of this Act; or

(b) where no declaration is required to be passed, within 30 days after the making of the declaration.

(6) If a company fails to comply with subsection (5), the company and every officer of it who is in default shall be liable to a fine and, for continued contravention, to a daily default fine.

(7) A director of a company who makes a statutory declaration under section 101 without having reasonable grounds for the opinion expressed in it shall be liable to imprisonment or to a fine or both.

Special resolution under section 101.

103.(1) A special resolution required by section 101 to be passed by a company approving the giving of financial assistance must be passed on the date on which the directors of that company make the statutory declaration required by that section in connection with the giving of assistance or within the week immediately following that date.

(2) Where such a resolution has been passed, an application may be made to the court for the cancellation of the resolution–

(a) by the holders of not less in the aggregate than 10 per cent in nominal value of the company’s issued share capital or any class of it; or

(b) if the company is not limited by shares, by not less than 10 per cent of the company’s members, but the application shall not be made by a person who has consented to or voted in favour of the resolution.

(3) On the hearing of the application the court shall make an order either cancelling or confirming the resolution and the court may–

(a) make that order on such terms and conditions as it thinks fit;

(b) if it thinks fit adjourn the proceedings for such purpose as it thinks fit;

(4) A special resolution passed by a company is not effective for the purposes of section 101–

(a) unless the declaration made in compliance with subsection (6) of that section by the directors of the company, together with the auditors’ report annexed to it, is available for inspection by members of the company at the meeting at which the resolution is passed;

(b) if it is cancelled by the court on an application under this section.

Time for giving financial assistance under section 101.

104.(1) This section has effect with respect to the time before and after which financial assistance may not be given by a company in pursuance of section 101.

(2) Where a special resolution is required by section 101 to be passed approving the giving of assistance, the assistance shall not be given before the expiry of the period of 4 weeks beginning with–

(a) the date on which the special resolution is passed; or

(b) where more than one such resolution is passed, the date on which the last of them is passed, unless, as respects that resolution (or, if more than one, each of them) every member of the company which passed the resolution who is entitled to vote at general meetings of the company voted in favour of the resolution.

(3) If an application for the cancellation of any such resolution is made under section 103, the financial assistance may not be given before the final determination of the application, unless the court otherwise orders.

(4) The assistance shall not be given after the expiry of 8 weeks beginning with–

(a) the date on which the directors of the company proposing to give the assistance made their declaration under section 101; or

(b) where that company is a subsidiary and both its directors and the directors of any of its holding companies made such a declaration, the date on which the earliest of the declarations is made, unless the court, on an application under section 103, otherwise orders.

Power of company to purchase own shares and interpretation of sections 106 to 115.

105.(1) Subject to the provisions of this section, and to any requirements imposed on that company by virtue of any licence or authorisation to which it is subject under any other Act, a company limited by shares or limited by guarantee and having a share capital may, if authorised to do so by its articles, purchase its own shares (including any redeemable shares).

(2) A company may exercise the power contained in subsection (1) only if it does so in accordance with the provisions of sections 106 to 123 as to–

(a) the conditions to be met by the company and its directors in respect of any such purchase of its own shares; and

(b) the application to any such purchase of the provisions of this Act.

(3) A failure to comply with the requirements of sections 106 to 123 shall have the effect specified in that respect by those sections including, where so specified, the liability on summary conviction to a fine at level 3 on the standard scale.

(4) In this section and sections 106 to 123– “distributable profits”, in relation to the making of any payment by a company, means those profits out of which it could lawfully make a distribution equal in value to the payment; “permissible capital payment” means the payment permitted by section 116; “prescribed form” means the form prescribed by the Registrar from time to time, and references to payment out of capital are to be construed in accordance with section 116. Acquisition other than for value, in reduction of capital, alteration of objects and on forfeiture.

106. The restrictions of section 105 shall not apply to a company limited by shares or limited by guarantee and by shares which–

(a) acquires any of its own fully paid shares other than for valuable consideration;

(b) acquires its own shares in a reduction of capital duly made;

(d) accepts its own shares in forfeiture of them, or shares surrendered in lieu, in pursuance of the articles, for failure to pay any sum payable in respect of the shares.

Restrictions on power of company to purchase own shares .

107.(1) Section 124 applies to the purchase by a company under section 105 of its own shares as it applies to the redemption of redeemable shares, save that the terms and manner of purchase need not be determined by the articles as required by section 123(5).

(2) A company may not under section 105 purchase its shares if as a result of the purchase there would no longer be any member of the company holding shares other than redeemable shares.

Definitions of “off-market” and “market” purchase.

108.(1) A purchase by a company of its own shares is “off-market” if the shares either–

(a) are purchased otherwise than on a recognised investment exchange; or

(b) are purchased on a recognised investment exchange but are not subject to a marketing arrangement on that investment exchange.

(2) For this purpose, a company’s shares are subject to a marketing arrangement on a recognised investment exchange if the company has been afforded facilities for dealings in those shares to take place on that investment exchange without prior permission for individual transactions from the authority governing that investment exchange and without limit as to the time during which those facilities are to be available.

(3) A purchase by a company of its own shares is a “market purchase” if it is a purchase made on a recognised investment exchange other than a purchase which is an off-market purchase by virtue of subsection (1)(b).

(4) In this section “recognised investment exchange,” means a recognised investment exchange as so listed from time to time in Chapter 11 of Administrative Notice No. 7 issued by the Banking Commissioner under the provisions of the Banking Act, 1992.

Authority for off-market purchase.

109.(1) A company may only make an off-market purchase of its own shares in pursuance of a contract approved in advance in accordance with this section or under section 110.

(2) The terms of the proposed contract shall have been authorised by a special resolution of the company before the contract is entered into and subsections (3) to (7) apply with respect to that authority and to resolutions conferring it.

(3) Subject to subsection (4), the authority may be varied, revoked or from time to time renewed by special resolution of the company.

(4) In the case of a public company, the authority conferred by the resolution shall specify a date on which the authority is to expire, and in a resolution conferring or renewing authority the date shall not be later than 18 months after that on which the resolution is passed.

(5) A special resolution to confer, vary, revoke or renew authority is not effective if any member of the company holding shares to which the resolution relates exercised the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he had not done so, and for this purpose–

(a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll;

(b) notwithstanding anything in the company’s articles, any member of the company may demand a poll on that question; and

(c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.

(6) Such a resolution is not effective for the purposes of this section unless (if the proposed contract is in writing) a copy of the contract or (if not) a written memorandum of its terms is available for inspection by members of the company both–

(a) at the company’s registered office for not less than 15 days ending with the date of the meeting at which the resolution is passed; and

(b) at the meeting itself, and a memorandum of contract terms so made available shall include the names of any members holding shares to which the contract relates, and a copy of the contract so made available shall have annexed to it a written memorandum specifying any such names which do not appear in the contract itself.

(7) A company may agree to a variation of an existing contract so approved, but only if the variation is authorised by a special resolution of the company before it is agreed to, and subsections (3) to (6) apply to the authority for a proposed variation as they apply to the authority for a proposed contract, save that a copy of the original contract or (as the case may require) a memorandum of its terms, together with any variations previously made, shall also be available for inspection in accordance with subsection (6).

Authority for contingent purchase contract.

110.(1) A contingent purchase contract is a contract entered into by a company and relating to any of its shares–

(a) which does not amount to a contract to purchase those shares; but

(b) under which the company may (subject to any conditions) become entitled or obliged to purchase those shares.

(2) A company may only make a purchase of its own shares in pursuance of a contingent purchase contract if the contract is approved in advance by a special resolution of the company before the contract is entered into, and subsections (3) to (7) of section 109 apply to the contract and its terms.

Authority for market purchase.

111.(1) A company shall not make a market purchase of its own shares unless the purchase has first been authorised by the company in a general meeting.

(2) That authority–

(a) may be general for that purpose, or limited to the purchase of shares of any particular class or description; and

(b) may be unconditional or subject to conditions.

(3) The authority shall–

(a) specify the maximum number of shares authorised to be acquired;

(b) determine both the maximum and the minimum prices which may be paid for the shares; and

(4) The authority may be varied, revoked or from time to time renewed by the company in general meeting, but this is subject to subsection (3), and in a resolution to confer or renew authority the date on which the authority is to expire shall not be later than 18 months after that on which the resolution is passed.

(5) A company may under this section make a purchase of its own shares after the expiry of the time limit imposed to comply with subsection (3)(c) if the contract of purchase was concluded before the authority expired and the terms of the authority permitted the company to make a contract of purchase which would or might be executed wholly or partly after its expiry.

(6) A resolution to confer or vary authority under this section may determine either or both the maximum and minimum prices for purchase by–

(a) specifying a particular sum; or

(b) providing a basis or formula for calculating the amount of the price in question without reference to any person’s discretion or opinion.

(7) A resolution of a company conferring, varying, revoking or renewing authority under this section is subject to section 206 (resolution to be sent to Registrar within 30 days).

Assignment or release of company’s right to purchase own shares.

112.(1) The rights of a company under a contract approved under section 109 or 110, or under a contract for a purchase authorised under section 111, are not capable of being assigned.

(2) An agreement by a company to release its rights under a contract approved under section 109 or 110 is void unless the terms of the release agreement are approved in advance by a special resolution of the company before the agreement is entered into, and subsections (3) to (7) of section 109 apply to approval for a proposed release agreement as to authority for a proposed variation of an existing contract.

Payments apart from purchase price to be made out of distributable profits.

113.(1) A payment made by a company in consideration of–

(a) acquiring any right with respect to the purchase of its own shares in pursuance of a contract approved under section 110; or

(b) the variation of a contract approved under section 109 or 110; or

(c) the release of any of the company’s obligations with respect to the purchase of any of its own shares under a contract approved under section 109 or 110 or under a contract for a purchase authorised under section 111, shall be made out of the company’s distributable profits.

(2) If the requirements of subsection (1) are not satisfied in relation to a contract–

(a) in a case within paragraph (a) of the subsection, no purchase by the company of its own shares in pursuance of that contract is lawful under section 105;

(b) in a case within paragraph (b) of the subsection, no such purchase following the variation is lawful under section 105; and

Disclosure by company of purchase of own shares.

114.(1) Within the period of 30 days beginning with the date on which any shares purchased by a company under section 105 are delivered to it, the company shall deliver to the Registrar for registration a return in the prescribed form stating with respect to shares of each class purchased the number and nominal value of those shares and the date on which they were delivered to the company.

(2) In the case of a public company, the return shall also state–

(a) the aggregate amount paid by the company for the shares; and

(b) the maximum and minimum prices paid in respect of shares of each class purchased.

(3) Subsections (1) and (2) do not apply to a company which has given a notification to the Registrar pursuant to section 18 that it is a Collective Investment Scheme.

(4) Particulars of shares delivered to the company on different dates and under different contracts may be included in a single return to the Registrar, and in such a case the amount required to be stated under subsection (2)(a) is the aggregate amount paid by the company for all the shares to which the return relates.

(5) Where a company enters into a contract approved under section 109 or 110, or a contract for a purchase authorised under section 111, the company shall keep at its registered office–

(a) if the contract is in writing, a copy of it; and

(b) if the contract is not in writing, a memorandum of its terms, from the conclusion of the contract until the end of the period of 10 years beginning with the date on which the purchase of all the shares in pursuance of the contract is completed or (as the case may be) the date on which the contract otherwise determines.

(6) Every copy and memorandum so required to be kept shall, during business hours (subject to such reasonable restrictions as the company may in general meeting impose, provided that not less than 2 hours in each day are allowed for inspection) be open to inspection without charge–

(a) by any member of the company; and

(b) if it is a public company, by any other person.

(7) If default is made in delivering to the Registrar any return required by this section, every officer of the company who is in default is liable to a fine and, for continued contravention, to a daily default fine.

(8) If default is made in complying with subsection (5), or an inspection required under subsection (6) is refused, the company and every officer of it who is in default shall be liable to a fine and, for continued contravention, to a daily default fine.

(9) In the case of a refusal of an inspection required under subsection (6) of a copy or memorandum, the court may by order compel an immediate inspection of it.

(10) The obligation of a company under subsection (5) to keep a copy of any contract or (as the case may be) a memorandum of its terms applies to any variation of the contract so long as it applies to the contract.

The capital redemption reserve.

115.(1) Where under section 105 shares of a company are redeemed or purchased wholly out of the company’s profits, the amount by which the company’s issued share capital is diminished in accordance with section 124(6) on cancellation of the shares redeemed or purchased shall be transferred to a reserve, called “the capital redemption reserve”.

(2) If the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue and the aggregate amount of those proceeds is less than the aggregate nominal value of the shares redeemed or purchased, the amount of the difference shall be transferred to the capital redemption reserve.

(3) Subsection (2) shall not apply if the proceeds of the fresh issue are applied by the company in making a redemption or purchase of its own shares in addition to a payment out of capital under section 116. Redemption or purchase of own shares out of capital (private companies only)

Power of private companies to redeem or purchase own shares out of capital.

116.(1) Subject to–

(a) the following provisions of this section;

(b) sections 117 to 123; and

(c) any requirements imposed on a company by virtue of any licence or authorisation to which it is subject under any other Act, a private company limited by shares or limited by guarantee and having a share capital may, if so authorised by its articles, make a payment in respect of the redemption or purchase under section 105 or (as the case may be) section 124, of its own shares otherwise than out of its distributable profits or the proceeds of a fresh issue of shares.

(2) References in this section and sections 117 to 123 to payment out of capital are (subject to subsection (6)) to any payment so made, whether or not it would be regarded apart from this section as a payment out of capital.

(3) The payment which may (if authorised in accordance with the provisions of subsections (4) to (6) and sections 117 to 123) be made by a company out of capital in respect of the redemption or purchase of its own shares is such an amount, as taken together with–

(a) any available profits of the company; and

(b) the proceeds of any fresh issue of shares made for the purposes of the redemption or purchase, is equal to the price of redemption or purchase, and the payment permissible under this subsection is referred to in subsections (4) to (6) and sections 117 to 123 as the permissible capital payment for the shares.

(4) Subject to subsection (6), if the permissible capital payment for shares redeemed or purchased is less than their nominal amount, the amount of the difference shall be transferred to the company’s capital redemption reserve.

(5) Subject to subsection (6), if the permissible capital payment is greater than the nominal amount of the shares redeemed or purchased, the amount of any capital redemption reserve, share premium account or fully paid share capital of the company may be reduced by a sum not exceeding (or by sums not in the aggregate exceeding) the amount by which the permissible capital payment exceeds the nominal amount of shares.

(6) Where the proceeds of a fresh issue are applied by a company in making any redemption or purchase of its own shares in addition to a payment out of capital under this section, the references in subsections (4) and (5) to the permissible capital payment are to be read as referring to the aggregate of that payment and those proceeds.

Availability of profits for purposes of section 116.

117.(1) The reference in section 116(3)(a) to available profits of the company is to the company’s profits which are available for distribution, as determined as to availability and amount in accordance with subsections (2) to (6).

(2) Subject to subsection (3), the availability of profits for distribution and the amount thereof is to be determined by reference to–

(a) profits, losses, assets and liabilities;

(b) provisions as to depreciation, diminution in value of assets, retentions to meet liabilities, etc.; and

(c) share capital and reserves (including undistributable reserves), as stated in the relevant accounts for determining the permissible capital payment for shares.

(3) The relevant accounts for this purpose are such accounts, prepared as at any date within the period for determining the amount of the permissible capital payment, as are necessary to enable a reasonable judgement to be made as to the amounts of any of the items mentioned in paragraphs (a) to (c) of subsection (2).

(4) For the purposes of determining the amount of the permissible capital payment for shares, the amount of the company’s available profits (if any) determined in accordance with subsections (2) and (3) is treated as reduced by the amount of any distributions lawfully made by the company after the date of the relevant accounts and before the end of the period for determining the amount of that payment.

(5) The reference in subsection (4) to distributions lawfully made by the company includes–

(a) financial assistance lawfully given out of distributable profits as assistance to a person to acquire the shares of the company;

(b) any payment lawfully made by the company in respect of the purchase of any shares in the company (except a payment lawfully made otherwise than out of distributable profits); and

(6) References in this section to the period for determining the amount of the permissible capital payment for shares are to the period of 3 months ending with the date on which the statutory declaration of the directors purporting to specify the amount of that payment is made in accordance with section 118(3).

Conditions for payment out of capital.

118.(1) Subject to any order of the court under section 122, a payment out of capital by a private company for the redemption or purchase of its own shares is not lawful unless the requirements of this section and sections 119 and 120 are satisfied.

(2) The payment out of capital shall have been approved by a special resolution of the company.

(3) The company’s directors shall have made a statutory declaration specifying the amount of the permissible capital payment for the shares in question and stating that, having made full inquiry into the affairs and prospects of the company, they have formed the opinion

(a) as regards its initial situation immediately following the date on which the payment out of capital is proposed to be made, that there will be no grounds on which the company could then be found unable to pay its debts; and

(b) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to continue to carry on business as a going concern (and will accordingly be able to pay its debts as they fall due) throughout that year.

(4) In forming their opinion for purposes of subsection (3)(a), the directors shall take into account the same liabilities (including prospective and contingent liabilities) as would be relevant on any application to the court for the appointment of a liquidator under the Insolvency Act to the question whether a company is unable to pay its debts.

(5) The directors’ statutory declaration shall be in the prescribed form and contain such information with respect to the nature of the company’s business as may be so prescribed, and shall in addition have annexed to it a report addressed to the directors by the company’s auditors stating that–

(a) they have inquired into the company’s state of affairs;

(b) the amount specified in the declaration as the permissible capital payment for the shares in question is in their view properly determined in accordance with sections 116 and 117; and

(c) they are not aware of anything to indicate that the opinion expressed by the directors in the declaration as to any of the matters mentioned in subsection (3) is unreasonable in all the circumstances.

(6) A director who makes a declaration under this section without having reasonable grounds for the opinion expressed in the declaration is liable on conviction on indictment to imprisonment or a fine, or both.

Procedure for special resolution under section 118.

119.(1) The resolution required by section 118 must be passed on, or within the week immediately following, the date on which the directors make the statutory declaration required by that section; and the payment out of capital must be made no earlier than 5 nor more than 7 weeks after the date of the resolution.

(2) The resolution shall be ineffective if any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he had not done so.

(3) For purposes of subsection (2), a member who holds such shares is to be regarded as exercising the voting rights carried by them in voting on the resolution not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll, and, notwithstanding anything in a company’s articles, any member of the company may demand a poll on that question.

(4) The resolution shall be ineffective unless the statutory declaration and auditors’ report required by section 118 are available for inspection by members of the company at the meeting at which the resolution is passed.

(5) For purposes of this section a vote and a demand for a poll by a person as proxy for a member are the same (respectively) as a vote and demand by the member.

Publicity for proposed payment out of capital.

120.(1) Within the week immediately following the date of the resolution for payment out of capital the company shall cause to be published in the Gazette a notice–

(a) stating that the company has approved a payment out of capital for the purpose of acquiring its own shares by redemption or purchase or both (as the case may be);

(b) specifying the amount of the permissible capital payment for the shares in question and the date of the resolution under section 118;

(c) stating that the statutory declaration of the directors and the auditors’ report required by that section are available for inspection at the company’s registered office; and

(d) stating that any creditor of the company may at any time within the 5 weeks immediately following the date of the resolution for payment out of capital apply to the court under section 121 for an order prohibiting the payment.

(2) Within the week immediately following the date of the resolution the company shall also either cause a notice to the same effect as that required by subsection (1) to be published in a newspaper circulating in Gibraltar or give notice in writing to that effect to each of its creditors.

(3) References in subsections (4) and (5) to the first notice date are to the day on which the company first publishes the notice required by subsection (1) or first publishes or gives the notice required by subsection (2) (whichever is the earlier).

(4) Not later than the first notice date the company shall deliver to the Registrar a copy of the statutory declaration of the directors and of the auditors’ report required by section 118.

(5) The statutory declaration and auditors’ report–

(a) shall be kept at the company’s registered office throughout the period beginning with the first notice date and ending 5 weeks after the date of the resolution for payment out of capital; and

(b) shall during business hours on any day during that period be open to the inspection of any member or creditor of the company without charge.

(6) If an inspection required under subsection (5) is refused the company and every officer of it who is in default shall be liable to a fine and, for continued contravention, to a daily default fine.

(7) In the case of refusal of an inspection required under subsection (5) of a declaration or report, the court may by order compel an immediate inspection of that declaration or report.

Objections by company’s members or creditors.

121.(1) Where a private company passes a special resolution under section 118 approving any payment out of capital for the redemption or purchase of any of its shares–

(a) any member of the company other than one who consented to or voted in favour of the resolution; and

(b) any creditor of the company, may within 5 weeks of the date on which the resolution was passed apply to the court for cancellation of the resolution.

(2) The application may be made on behalf of the persons entitled to make it by such one or more of their number as they may appoint in writing for the purpose.

(3) If an application is made, the company shall–

(a) forthwith give notice in the prescribed form of that fact to the Registrar; and

(b) within 15 days from the making of any order of the court on the hearing of the application, or such longer period as the court may by order direct, deliver an office copy of the order to the Registrar.

(4) A company which fails to comply with subsection (3), and any officer of it who is in default, shall be liable to a fine and for continued contravention, to a daily default fine.

Powers of court on application under section 121.

122.(1) On the hearing of an application under section 121 the court may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the court’s satisfaction for the purchase of the interests of dissentient members or for the protection of dissentient creditors (as the case may be), and the court may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement.

(2) Without prejudice to its powers under subsection (1), the court shall make an order on such terms and conditions as it thinks fit either confirming or cancelling the resolution, and, if the court confirms the resolution, it may in particular by order alter or extend any date or period of time specified in the resolution or in any provision in sections 105 to 123 which applies to the redemption or purchase of shares to which the resolution refers.

(3) The court’s order may, if the court thinks fit, provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company’s capital, and may make such alterations in the company’s memorandum and articles as may be required in consequence of that provision.

(4) If the court’s order requires the company not to make any, or any specified alteration in its memorandum or articles, the company has not then power without leave of the court to make any such alteration in breach of the requirement.

(5) An alteration in the memorandum or articles made by virtue of an order under this section, if not made by resolution of the company, is of the same effect as if duly made by resolution, and this Act applies accordingly to the memorandum or articles as so altered.

Effect of company’s failure to redeem or purchase.

123.(1) This section has effect where a company has–

(a) issued shares on terms that they are or are liable to be redeemed; or

(b) agreed to purchase any of its own shares.

(2) The company is not liable in damages in respect of any failure on its part to redeem or purchase any of the shares.

(3) Subsection (2) is without prejudice to any right of the holder of the shares other than his right to sue the company for damages in respect of its failure, but the court shall not grant an order for specific performance of the terms of redemption or purchase if the company shows that it is unable to meet the costs of redeeming or purchasing the shares in question out of distributable profits.

(4) If the company is wound up and at the commencement of the winding up any of the shares have not been redeemed or purchased, the terms of redemption or purchase may be enforced against the company, and when shares are redeemed or purchased under this subsection they are treated as cancelled.

(5) Subsection (4) does not apply if–

(a) the terms provided for the redemption or purchase to take place at a date later than that of the commencement of the winding up; or

(b) during the period beginning with the date on which the redemption or purchase was to have taken place and ending with the commencement of the winding up, the company could not at any time have lawfully made a distribution equal in value to the price at which the shares were to have been redeemed or purchased.

(6) There shall be paid in priority to any amount which the company is liable under subsection (4) to pay in respect of any shares–

(a) all other debts and liabilities of the company (other than any due to members in their character as such); and

(b) if other shares carry rights (whether as to capital or as to income) which are preferred to the rights as to capital attaching to the first mentioned shares, any amount due in satisfaction of those preferred rights, but, subject to that, any such amount shall be paid in priority to any amounts due to members in satisfaction of their rights (whether as to capital or income) as members.

Issue of redeemable preference shares and shares at discount

Power to issue redeemable shares.

124.(1) Subject to the restrictions and conditions set out in subsection (2) and to the following provisions of this section, a company limited by shares or limited by guarantee and having a share capital, may, if so authorised by its articles, issue redeemable shares which are, or are liable, to be redeemed at the option of the company or the shareholder.

(2) The restrictions and conditions referred to above are–

(a) no such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption;

(b) no such shares shall be redeemed unless they are fully paid, and the terms of redemption must provide for payment on redemption;

(c) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall out of profits which would otherwise have been available for dividend be transferred to a reserve fund, to be called “the capital redemption reserve fund”, a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company, shall, except as provided in this section, apply as if the capital redemption reserve fund were paid-up share capital of the company; and

(d) the premium, if any, payable on redemption, shall have been provided for out of the profits of the company which would otherwise have been available for dividend, or out of the company’s share premium account before the shares are redeemed.

(3) There shall be included in the annual accounts of a company which has issued redeemable shares a statement specifying what part of the issued capital of the company consists of those shares and the date on or before which those shares are, or are to be liable, to be redeemed.

(4) If a company fails to comply with the provisions of subsection (3), the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine at level 3 on the standard scale.

(5) Subject to the provisions of this section, the redemption of redeemable shares may be effected on such terms and in such manner as may be provided by the company’s articles.

(6) Shares redeemed under this section shall be treated as cancelled on redemption, and the amount of the company’s issued share capital shall be diminished by the nominal value of those shares accordingly; but the redemption of shares by a company shall not be taken as reducing the amount of the company’s authorised share capital.

(7) Where in pursuance of this section a company has redeemed or is about to redeem any redeemable shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued.

(8) Where new shares have been issued in pursuance of subsection (7), the capital redemption reserve fund may be applied by the company in paying up unissued shares of the company to be allotted to members of the company as fully paid bonus shares.

Application of premiums received on issue of shares.

125.(1) Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account to be called “the share premium account”; and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid up share capital of the company.

(2) The share premium account may, notwithstanding anything in subsection (1), be applied by the company in paying up unissued shares of the company to be allotted to members of the company as fully paid bonus shares, in writing off–

(a) the preliminary expenses of the company; or

(b) the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; or

(c) in providing for the premium payable on redemption of any redeemable shares or of any debentures of the company. Power to issue shares at a discount.

126.(1) Subject to the conditions set out in subsection (2) and to the following provisions of this section, it shall be lawful for a private company to issue at a discount shares in the company of a class already issued.

(2) The conditions referred to above are–

(a) that the issue of the shares at a discount must be authorised by resolution passed in general meeting of the company, and must be sanctioned by the Registrar of the Court;

(b) that the resolution must specify the maximum rate of discount at which the shares are to be issued;

(c) that, at the date of the issue, not less than 1 year must have elapsed since the date on which the company was entitled to commence business; and

(d) that the shares to be issued at a discount must be issued within 1 month after the date on which the issue is sanctioned by the Registrar of the Court or within such extended time as the Registrar of the Court may allow.

(3) Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the Registrar of the Court for an order sanctioning the issue and, on any such application the Registrar of the Court, if, having regard to all the circumstances of the case, thinks proper so to do, may make an order sanctioning the issue on such terms and conditions as he thinks fit.

(4) Every prospectus relating to the issue of the shares and every balance sheet issued by the company subsequently to the issue of the shares must contain particulars of the discount allowed on the issue of the shares or of so much of that discount as has not been written off at the date of the issue of the document in question.

(5) If default is made in complying with subsection (4), the company and every officer of the company who is in default shall be guilty of offences and liable on summary conviction to default fines. Miscellaneous provisions as to share capital Power of company to arrange for different amounts being paid on shares.

127. A company, if so authorised by its articles, may do any one or more of the following things–

(a) make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares;

(b) accept from any member the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up;

(c) pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others.

Fractional shares.

128.(1) Except in so far as any provision of a company's constitution otherwise provides, a company having a share capital may issue fractional shares.

(2) A fractional share issued in accordance with subsection (1)–

(a) has the corresponding fractional rights, obligations and liabilities of a whole share of the same class; and

(b) for the purposes only of section 7(5)(b) shall be treated as a whole share.

Reserve liability of limited company.

129. A limited company may by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up, except in the event and for the purposes of the company being wound up, and thereupon that portion of its share capital shall not be capable of being called up except in that event and for those purposes.

Power of company limited by shares to alter its share capital.

130.(1) A company limited by shares or a company limited by guarantee and having a share capital, if so authorised by its articles, may alter the conditions of its constitution as follows, that is to say, it may–

(a) increase its share capital by new shares of such amount as it thinks expedient;

(b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(d) convert all or any of its paid-up shares into stock, and reconvert that stock into paid-up shares of any denomination;

(e) subdivide its shares, or any of them, into shares of smaller amount than is fixed by its constitution, so, however, that in the sub-division the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(f) cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

(2) The powers conferred by this section must be exercised by the company in general meeting.

(3) A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Act.

Notice to Registrar of consolidation of share capital and conversion of shares into stock.

131.(1) If a company having a share capital has–

(a) consolidated and divided its share capital into shares of larger amount than its existing shares; or

(b) converted any shares into stock; or

(d) re-converted stock into shares; or

(e) subdivided its shares or any of them; or

(f) redeemed any redeemable preference shares; or

(g) cancelled any shares, otherwise than in connection with a reduction of share capital under section 136, it shall within 30 days after so doing give notice thereof to the Registrar specifying, as the case may be, the shares consolidated, divided, converted, re-classified, subdivided, redeemed or cancelled, or the stock re-converted.

(2) Subsection (1)(f) shall not apply to a company which has given a notice to the Registrar pursuant to section 18 that the company is a Collective Investment Scheme.

(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.

Notice of increase of share capital.

132.(1) Where a company having a share capital, whether its shares have or have not been converted into stock, has increased its share capital beyond the registered capital, it shall within 15 days after the passing of the resolution authorising the increase, give to the Registrar notice of the increase, and the Registrar shall record the increase.

(2) The notice to be given shall include such particulars as may be prescribed with respect to the classes of shares affected and the conditions subject to which the new shares have been or are to be issued, and there shall be forwarded to the Registrar together with the notice a printed copy of the resolution authorising the increase.

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

Power of unlimited company to provide for reserve share capital on reregistration.

133. An unlimited company having a share capital may, by its resolution for registration as a limited company in pursuance of this Act, do either or both of the following things, namely–

(a) increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, but subject to the condition that no part of the increased capital shall be capable of being called up except in the event and for the purposes of the company being wound up;

(b) provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purposes of the company being wound up.

Power of company to pay interest out of capital in certain cases.

134.(1) Where any shares of a company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a lengthened period, the company may pay interest on so much of that share capital as is for the time being paid up for the period and subject to the conditions and restrictions mentioned below, and may charge the sum so paid by way of interest to capital as part of the cost of construction of the work or building, or the provision of plant.

(2) Subsection (1) is subject to the following conditions and restrictions, namely, that–

(a) no such payment as is referred to in that subsection shall be made unless it is authorised by the articles or by special resolution;

(b) no such payment, whether authorised by the articles or by special resolution, shall be made without the previous consent of the Registrar of the Court;

(c) before sanctioning any such payment the Registrar of the Court may, at the expense of the company, appoint a person to inquire and report to him as to the circumstances of the case, and may, before making the appointment, require the company to give security for the payment of the costs of the inquiry;

(d) the payment shall be made only for such period as may be determined by the Registrar of the Court, and that period shall in no case extend beyond the close of the half year next after the half year during which the works or buildings have been actually completed or the plant provided;

(e) the rate of interest shall in no case exceed 5 per cent per annum or such other rate as may for the time being be prescribed by order made by the Minister and published in the Gazette;

(f) the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid;

(g) the accounts of the company shall show the share capital on which, and the rate at which, interest has been paid out of capital during the period to which the accounts relate.

(3) If default is made in complying with paragraph (g) of subsection (2), the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale.

Authorised minimum.

135.(1) A public limited company may not commence business unless the nominal value of the company’s allotted share capital is not less than the authorised minimum.

(2) In this Act “the authorised minimum” in relation to the paid up share capital of a public company means £20,500 or such other sum as the Minister may specify by order published in the Gazette.

(3) An order under this section which increases the authorised minimum may–

(a) require any public company having an allotted share capital of which the nominal value is less than the amount specified in the order as the authorised minimum to increase that value to not less than that amount or to apply to be re-registered as a private company;

(b) make, in connection with any such requirement, provision for–

(i) any matters relating to the company’s registration, reregistration or change of name, to payment for any share comprised in a company’s capital and to offers of shares in or debentures of a company to the public, and

(ii) the consequences (whether in criminal law or otherwise) of a failure to comply; and

(c) contain such additional provisions as are appropriate, make different provisions for different cases and provide for any provision of the order to come into force on different days for different purposes.

(4) Where the court makes an order confirming a reduction of a public company’s capital which has the effect of bringing the nominal value of the company’s allotted share capital below the authorised minimum, the Registrar shall not register the order under section 139 unless the court otherwise directs or the company is first re-registered as a private company.

(5) The court making any such order in respect of a company may authorise the company to be re-registered as a private company without its having passed a special resolution and, where the court so authorises a company, the court shall specify in the order the alterations in the company’s memorandum and articles to be made in connection with that reregistration.

Reduction of share capital Special resolution for reduction of share capital.

136.(1) Subject to confirmation by the Registrar of the Court, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles, by special resolution reduce its share capital in any way, and in particular, without prejudice to the generality of the foregoing power, may–

(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or

(b) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company, and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(2) A special resolution under this section is in this Act referred to as “a resolution for reducing share capital”. Application to court for confirming order, objections by creditors, and settlement of list of objecting creditors.

137.(1) Where a company has passed a resolution for reducing share capital, it may apply by petition to the Registrar of the Court for an order confirming the reduction.

(2) Where the proposed reduction of share capital involves either diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, and in any other case if the Registrar of the Court so directs, the following provisions shall have effect, subject nevertheless to subsection (3)–

(a) every creditor of the company who−

(i) at the date fixed by the Registrar of the Court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company, and

(ii) can show that there is a real likelihood that the reduction would result in the company being unable to discharge his debt or claim when it fell due,is entitled to object to the reduction of capital;

(b) the Registrar of the Court shall settle a list of creditors so entitled to object, and for that purpose shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction;

(c) where a creditor entered on the list whose debt or claim is not discharged or has not been determined does not consent to the reduction, the Registrar of the Court may, if he thinks fit, dispense with the consent of that creditor, on the company securing payment of his debt or claim by appropriating, as the Registrar of the Court may direct, the following amount–

(i) if the company admits the full amount of the debt or claim, or, though not admitting it, is willing to provide for it, then the full amount of the debt or claim, and

(ii) if the company does not admit and is not willing to provide for the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the Registrar of the Court after the same inquiry as if the company were being wound up by the Registrar of the Court.

(3) Where a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid up share capital, the Registrar of the Court may, if having regard to any special circumstances of the case he thinks proper so to do, direct that subsection (2) shall not apply as regards any class or any classes of creditors.

(4) Where an application for an order under this section is made prior to 17 March 2011, that application shall be considered as though regulation 3(a) of the Companies Act (Amendment) Regulations 2011 had not come into operation.

Order confirming reduction and powers of court on making such order.

138.(1) The Registrar of the Court, if satisfied, with respect to every creditor of the company who under section 137 is entitled to object to the reduction, that either his consent to the reduction has been obtained or his debt or claim has been discharged or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as he thinks fit.

(2) Where the Registrar of the Court makes any such order, then–

(a) if for any special reason he thinks proper so to do, the Registrar may make an order directing that the company shall, during such period, commencing on or at any time after the date of the order, as is specified in the order, add to its name as the last words thereof, the words “and reduced”; and

(b) The Registrar may make an order requiring the company to publish as he directs the reasons for reduction or such other information in regard thereto as he may think expedient with a view to giving proper information to the public, and, if he thinks fit, the causes which led to the reduction.

(3) Where a company is ordered to add to its name the words “and reduced” those words shall, until the expiration of the period specified in the order, be deemed to be part of the name of the company.

Registration of order and minute of reduction.

139.(1) The Registrar–

(a) on production to him of an order of the Registrar of the Court confirming the reduction of the share capital of a company; and

(b) on the delivery to him of a copy of the order and of a minute approved by the Registrar of the Court showing with respect to the share capital of the company, as altered by the order,–

(i) the amount of the share capital,

(ii) the number of shares into which it is to be divided,

(iii) the amount of each share, and

(iv) the amount (if any) at the date of the registration deemed to be paid up on each share, shall register the order and minute.

(2) On the registration of the order and minute, and not before, the resolution for reducing share capital as confirmed by the order so registered shall take effect.

(3) Notice of the registration shall be published in such manner as the Registrar of the Court may direct.

(4) The Registrar shall certify under his hand the registration of the order and minute, and his certificate shall be conclusive evidence that all the requirements of this Act with respect to reduction of share capital have been complied with, and that the share capital of the company is such as is stated in the minute.

(5) The minute when registered shall be deemed to be substituted for the corresponding part of the memorandum, and shall be valid and alterable as if it had been originally contained therein.

(6) The substitution of any such minute for part of the memorandum of the company shall be deemed to be an alteration of the memorandum and, accordingly, relevant to determining what is an up-to date copy of the memorandum for the purposes of section 35(1)(a).

Liability of members in respect of reduced shares.

140.(1) Subject to subsection (2), in the case of a reduction of share capital, a member of the company, past or present, shall not be liable in respect of any share to any call or contribution exceeding in amount the difference (if any) between the amount of the share as fixed by the minute and the amount paid, or the reduced amount (if any) which is to be deemed to have been paid, on the share, as the case may be.

(2) If any creditor, entitled in respect of any debt or claim to object to the reduction of share capital, is, by reason of his ignorance of the proceedings for reduction, or of their nature and effect with respect to his claim, not entered on the list of creditors, and, after the reduction, the company is unable, within the meaning of the provisions of this Act with respect to winding up by the court, to pay the amount of his debt or claim, then, notwithstanding subsection (1),–

(a) every person who was a member of the company at the date of the registration of the order for reduction and minute, shall be liable to contribute for the payment of that debt or claim an amount not exceeding the amount which he would have been liable to contribute if the company had commenced to be wound up on the day before the said date; and

(b) if the company is wound up, the court, on the application of any such creditor and proof of his ignorance as mentioned above, may, if it thinks fit, settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the contributories settled on the list, as if they were ordinary contributories in a winding up.

(3) Nothing in this section shall affect the rights of the contributories among themselves.

Penalty on concealment of name of creditor.

141. A director, manager or other officer of the company who–

(a) wilfully conceals the name of any creditor entitled to object to the reduction; or

(b) wilfully misrepresents the nature or amount of the debt or claim of any creditor; or

Public companies reducing capital below authorised minimum.

142.(1) This section applies where the court makes an order confirming a reduction of a public company’s capital which has the effect of bringing the nominal value of its allotted share capital below the authorised minimum.

(2) The Registrar shall not register the order under section 139 unless the court otherwise directs, or the company is first re-registered as a private company.

(3) The court may authorise the company to be so re-registered without its having passed a special resolution to this effect, and where that authority is given, the court shall specify in the order the alterations in the company’s memorandum and articles to be made in connection with that re-registration.

(4) The company may then be re-registered as a private company, if an application in the prescribed form and signed by a director or secretary of the company is delivered to the Registrar in accordance with sections 45 to 49, together with a printed copy of the memorandum and articles as altered by the court’s order and the prescribed fee.

(5) On receipt of such an application, the Registrar shall retain it and the other documents delivered with it and issue the company with a certificate of incorporation appropriate to a company which is not a public company, and–

(a) the company by virtue of the issue of the certificate shall become a private company, and the alterations set out in the court’s order take effect; and

(b) the certificate is conclusive evidence that the requirements of this section in respect of re-registration and of the matters precedent and incidental thereto have been complied with and that the company is a private company.

Variation of shareholders’ rights Rights of holders of special classes of shares.

143.(1) If in the case of a company the share capital of which is divided into different classes of shares, provision is made by the articles for authorising the variation of the rights attached to any class of shares in the company subject to–

(a) the consent of any specified proportion of the holders of the issued shares of that class; or

(b) the sanction of a resolution passed at a separate meeting of the holders of those shares, and in pursuance of those provisions the rights attached to any such class of shares are at any time varied, the holders of not less in the aggregate than 15 per cent of the issued shares of that class, being persons who did not consent to or vote in favour of the resolution for the variation, may apply to the court to have the variation cancelled, and, where any such application is made, the variation shall not have effect unless and until it is confirmed by the court.

(2) An application under this section must be made within 7 days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(3) On any such application the court, after hearing the applicant and any other persons who apply to the court to be heard and appear to the court to be interested in the application, may, if it is satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the shareholders of the class represented by the applicant, disallow the variation and shall, if not so satisfied, confirm the variation.

(4) The decision of the court on any such application shall be final.

(5) The company shall within 15 days after the making of an order by the court on any such application forward a copy of the order to the Registrar and, if default is made in complying with this provision, the company and every officer of the company who is in default shall be guilty of offences and liable on summary conviction to default fines.

(6) In this section, the expression “variation” includes abrogation and the expression “varied” shall be construed accordingly.

Variation of rights attached to any class of shares.

144.(1) This section applies in relation to the variation of the rights attached to any class of shares in a company whose share capital is divided into shares of different classes.

(2) Where the rights are attached to a class of shares otherwise than by the company’s memorandum, and the company’s articles do not contain provisions with respect to the variation of the rights, those rights may be varied only if–

(a) the holders of three-quarters in nominal value of the issued shares of that class agree in writing to the variation; or

(b) an extraordinary resolution passed at a separate general meeting of the holders of that class approves the variation, and any requirement (however imposed) in relation to the variation of those rights shall be regarded as complied with to the extent that it is not comprised in subsection (2)(a) or (b).

(3) Where the variation of those rights is connected with the giving, variation, revocation, or renewal of an authority for allotment or with a reduction of capital those rights shall not be valid unless–

(a) the condition mentioned in subsection (2)(a) or (b) is satisfied; and

(b) any requirement of the memorandum or articles in relation to the variation of rights of that class shall be regarded as complied with to the extent that it is not comprised in that condition.

Protection of members against unfair prejudice Petition by company member.

145.(1) A member of a company may apply to the court by petition for an order under this Part on the ground–

(a) that the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself); or

(b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.

(2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company.

Petition by the Minister.

146.(1) This section applies to a company in respect of which the Minister has exercised his powers under section 211.

(2) If it appears to the Minister that in the case of such a company–

(a) the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members; or

(b) an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, he may apply to the court by petition for an order under this Part.

(3) The Minister may do this in addition to, or instead of, presenting a petition for the winding up of the company.

(4) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, “company” means any body corporate that is liable to be wound up under the Insolvency Act.

Powers of the court under this Part.

147.(1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of.

(2) Without prejudice to the generality of subsection (1), the court’s order may–

(a) regulate the conduct of the company’s affairs in the future;

(b) require the company–

(i) to refrain from doing or continuing an act complained of, or

(ii) to do an act that the petitioner has complained it has omitted to do;

(c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct;

(d) require the company not to make any, or any specified, alterations in its articles without the leave of the court;

(e) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company’s capital accordingly.

Supplementary provisions Application of general rule-making powers.

148. The power to make rules under section 495 of the Insolvency Act so far as relating to a winding-up petition, applies for the purposes of a petition under this Part.

Copy of order affecting company’s constitution to be delivered to Registrar.

149.(1) Where an order of the court under this Part–

(a) alters the company’s constitution; or

(b) gives leave for the company to make any, or any specified, alterations to its constitution, the company must deliver a copy of the order to the Registrar.

(2) It must do so within 14 days from the making of the order or such longer period as the court may allow.

(3) If a company makes default in complying with this section, an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

Supplementary provisions where company’s constitution altered.

150.(1) This section applies where an order under this Part alters a company’s constitution.

(2) If the order amends–

(a) a company’s articles; or

(b) any resolution or agreement to which Chapter 1 of Part III applies, the copy of the order delivered to the Registrar by the company under section 149 must be accompanied by a copy of the company’s articles, or the resolution or agreement in question, as amended.

(3) Every copy of a company’s articles issued by the company after the order is made must be accompanied by a copy of the order, unless the effect of the order has been incorporated into the articles by amendment.

(4) If a company makes default in complying with this section an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Transfer of shares and debentures and evidence of title Nature of Shares.

151.(1) The shares or other interest of any member in a company shall be personal estate, transferable in the manner provided by the articles of the company, and shall not be of the nature of real estate.

(2) Each share in a company having a share capital shall be distinguished by its appropriate number.

Miscellaneous provisions as to transfer of shares.

152.(1) Subject to subsection (2) notwithstanding anything in the articles of a company, it shall not be lawful for the company to register a transfer of shares in or debentures of the company unless a proper instrument of transfer has been delivered to the company.

(2) Nothing in subsection (1) shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in or debentures of the company has been transmitted by operation of law.

(3) A transfer of the share or other interest of a deceased member of a company made by his personal representative shall, although the personal representative is not himself a member of the company, be as valid as if he had been such a member at the time of the execution of the instrument of transfer.

(4) Subject to subsection (5), on the application of the transferor of any share or interest in a company, the company shall enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.

(5) If a company refuses to register a transfer of any shares or debentures, the company shall, within 2 months after the date on which the transfer was lodged with the company, send to the transferee notice of the refusal.

(6) If default is made in complying with subsection (5), the company and every director, manager or other officer of the company who is knowingly a party to the default shall be guilty of an offence and liable on summary conviction to a fine of one half of the amount at level 1 on the standard scale for every day during which the default continues.

Duties of company with respect to issue of certificates.

153.(1) Every company shall, within 2 months after the allotment of any of its shares, debentures or debenture stock, and within 2 months after the date on which a transfer of any of those shares, debentures or debenture stock is lodged with the company, complete and have ready for delivery the certificates of all shares, the debentures, and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures or debenture stock otherwise provide.

(2) For the purposes of this section, the expression “transfer” means a transfer duly stamped and otherwise valid, and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register.

(3) If default is made in complying with this section, the company and every director, manager or other officer of the company who is knowingly a party to the default shall be guilty of an offence and liable on summary conviction to a fine of one half of the amount at level 1 on the standard scale for every day during which the default continues.

(4) If any company on which a notice has been served requiring the company to make good any default in complying with the provisions of subsection (1) fails to make good the default within 10 days after the service of the notice, the court may, on the application of the person entitled to have the certificates or the debentures delivered to him, make an order directing the company and any officer of the company to make good the default within such time as may be specified in the order, and any such order may provide that all costs of and incidental to the application shall be borne by the company or by any officer of the company responsible for the default.

Transfer of Shares.

154.(1) Save for any company which has notified the Registrar that it is a collective investment scheme pursuant to section 18, a private company shall, within a period of 30 days of any change in any member or any particular entered in respect of any member on the register of members, send to the Registrar a return in the prescribed form of any change among its members or in any of the particulars contained in the register of members.

(2) If any default is made in complying with subsection (1), 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.

Certificate to be evidence of title.

155. A certificate, sealed or signed as provided for by sections 72 to 76 specifying any shares held by any member, shall be prima facie evidence of the title of the member to the shares.

Evidence of grant of probate.

156. The production to a company of any document which is by law sufficient evidence of probate of the will or letters of administration of the estate of a deceased person having been granted to some person shall be accepted by the company, notwithstanding anything in its memorandum or articles, as sufficient evidence of the grant.

Issue and effect of share warrants to bearer.

157.(1) A company limited by shares, shall not, with respect to any shares, issue sealed or signed as provided for in sections 72 to 76 a warrant stating that the bearer of the warrant is entitled to the shares therein specified, and shall not provide, by coupons or otherwise, for the payment of the future dividends on the shares included in the warrant.

(2) In this Act this warrant shall be referred to as a “share warrant”.

(3) No rights attached to a share warrant issued prior to 21 March 2013 shall be exercised unless the bearer has been entered in the company’s register of members.

(4) A company which fails to comply with subsection (1) shall be liable on summary conviction to a fine at level 5 on the standard scale.

Penalty for personation of shareholder.

158. A person who falsely and deceitfully personates any owner of any share or interest in any company, or of any share warrant or coupon, issued in pursuance of this Act, and thereby obtains or endeavours to obtain any share or interest or share warrant or coupon, or receives or endeavours to receive any money due to the owner, as if the offender were the true and lawful owner, shall be guilty of an offence and be liable to imprisonment for life or for any lesser term of not less than 3 years.

Redenomination of share capital Redenomination of share capital.

159.(1) Subject to subsection (6), a limited company having a share capital may by special resolution redenominate its share capital or any class of its share capital; and in this section and sections 160 to 161 “redenominate” means convert shares having a nominal fixed value in one currency to shares having a nominal fixed value in another currency.

(2) The conversion must be made at an appropriate rate of exchange specified in the resolution; and that rate must be either–

(a) a rate prevailing on a day specified in the resolution; or

(b) a rate determined by taking the average of rates prevailing on each consecutive day of a period specified in the resolution, and the day or period specified for the purposes of paragraph (a) or (b) must be within the period of 30 days ending on the day before the resolution is passed.

(3) A resolution under this section may specify conditions which must be met before the redenomination takes effect.

(4) Redenomination in accordance with a resolution under this section takes effect–

(a) on the day on which the resolution is passed; or

(b) on such later day as may be determined in accordance with the resolution.

(5) A resolution under this section lapses if the re denomination for which it provides has not taken effect at the end of the period of 30 days beginning on the date on which it is passed.

(6) A company’s articles may prohibit or restrict the exercise of the power conferred by this section.

(7) For each class of share the new nominal value of each share shall be calculated as follows:

Step One

Take the aggregate of the old nominal values of all the shares of that class.

Step Two

Translate that amount into the new currency at the rate of exchange specified in the resolution.

Step Three

Divide that amount by the number of shares in the class.

Effect of re denomination.

160.(1) The redenomination of shares under section 159 does not affect any rights or obligations of members under the company’s constitution, or any restrictions affecting members under the company’s constitution and, in particular, it does not affect entitlement to dividends (including entitlement to dividends in a particular currency), voting rights or any liability in respect of amounts unpaid on shares.

(2) For this purpose the company’s constitution includes the terms on which any shares of the company are allotted or held.

(3) Subject to subsection (1), references to the old nominal value of the shares in any agreement or statement, or in any deed, instrument or document, shall (unless the context otherwise requires) be construed after the resolution takes effect as references to the new nominal value of the shares.

Notice to Registrar of re denomination.

161.(1) If a limited company having a share capital redenominates any of its share capital, it must within 1 month after doing so give notice to the Registrar, specifying the shares redenominated.

(2) The notice must–

(a) state the date on which the resolution was passed; and

(b) be accompanied by a statement of capital.

(3) The statement of capital must state with respect to the company’s share capital as redenominated by the resolution–

(a) the total number of shares of the company;

(b) the aggregate nominal value of those shares;

(i) prescribed particulars of the rights attached to the shares,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class; and

(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(4) If default is made in complying with this section, an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(5) A person guilty of an offence under this section shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for a continued contravention, a daily default fine not exceeding onetenth of level 3 on the standard scale.

Reduction of capital in connection with redenomination.

162.(1) A limited company that passes a resolution redenominating some or all of its shares for the purpose of adjusting the nominal values of the redenominated shares, to obtain values that in the opinion of the company are more suitable, may reduce its share capital under this section.

(2) A reduction of capital under this section requires a special resolution of the company, which must be passed within 3 months of the resolution effecting the redenomination.

(3) The amount by which a company’s share capital is reduced under this section–

(a) must not exceed 10% of the nominal value of the company’s allotted share capital immediately after the reduction; and

(b) must be transferred to a reserve, called “the redenomination reserve”.

(4) A reduction of capital under this section shall not extinguish or reduce any liability in respect of share capital not paid up.

(5) The redenomination reserve may be applied by the company in paying up shares to be allotted to members as fully paid bonus shares.

(6) Nothing in sections 136 to 142 applies to a reduction of capital under this section but, subject to that and to subsection (5), the provisions of this Act relating to the reduction of a company’s share capital shall apply as if the redenomination reserve were paid-up share capital of the company.

Notice to Registrar of reduction of capital in connection with redenomination.

163.(1) A company that passes a special resolution under section 162 must give to the Registrar, within 30 days after the resolution is passed,–

(a) notice of the date of the resolution, and the date of the resolution under section 159 in connection with which it was passed;

(b) a statement of capital; and

(c) a statement by the directors confirming that the reduction in share capital is in accordance with section 161(3)(a) (reduction of capital not to exceed 10% of nominal value of allotted shares immediately after reduction).

(2) The statement of capital must state with respect to the company’s share capital as reduced by the resolution–

(a) the total number of shares of the company;

(b) the aggregate nominal value of those shares;

(i) the prescribed particulars of the rights attached to the shares,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class; and

(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(3) The Registrar must register the notice and the statement of capital on receipt.

(4) The reduction of capital shall not be effective until those documents are registered.

(5) If default is made in complying with this section, an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(6) A person guilty of an offence under this section shall be liable on conviction on indictment to a fine, and on summary conviction to a fine not exceeding the statutory maximum. Special provisions as to debentures Right of debenture holders and shareholders to inspect register of debenture holders and to have copies of trust deeds.

164.(1) Every register of holders of debentures of a company shall, except when duly closed, be open to the inspection of the registered holder of any such debentures and of any holder of shares in the company, but subject to such reasonable restrictions as the company may in general meeting impose, so that not less than 2 hours in each day shall be allowed for inspection.

(2) For the purposes of subsection (1), a register shall be deemed to be duly closed if closed in accordance with provisions contained in the memorandum or articles or in the debentures or, in the case of debenture stock, in the stock certificates or in the trust deed or other document securing the debentures or debenture stock, during the period or those periods, not exceeding in the whole 30 days in any year, as may be specified.

(3) Every registered holder of debentures and every holder of shares in a company may require a copy of the register of the holders of debentures of the company or any part thereof on payment of the prescribed sum for every hundred words required to be copied.

(4) A copy of any trust deed for securing any issue of debentures shall be forwarded to every holder of any of those debentures at his request on payment in the case of a printed trust deed of the prescribed sum, or, where the trust deed has not been printed, on payment of the prescribed sum for every hundred words required to be copied.

(5) If inspection is refused, or a copy is refused or not forwarded, the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine of one half of the amount at level 1 on the standard scale, and be further liable to a default fine of one fifth of the amount at level 1 on the standard scale for every day on which the default continues.

(6) If a company fails to comply with subsections (1) to (3), the court may by order compel an immediate inspection of the register or direct that the copies required shall be sent to the person requiring them.

Perpetual debentures.

165. Notwithstanding any enactment or rule of law relating to perpetuity, a condition contained in any debentures or in any deed for securing any debentures, whether issued or executed before or after the commencement of this Act, shall not be invalid by reason only that the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.

Power to re-issue redeemed debentures in certain cases.

166.(1) Where a company has redeemed any debentures previously issued, then–

(a) unless any provision to the contrary, whether express or implied, is contained in the memorandum or articles or in any contract entered into by the company; or

(b) unless the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled, the company shall have, and shall be deemed always to have had, power to re-issue the debentures, either by re-issuing the same debentures or by issuing other debentures in their place.

(2) On a re-issue of redeemed debentures the person entitled to the debentures shall have, and shall be deemed always to have had, the same priorities as if the debentures had never been redeemed.

(3) Where a company has power to re-issue debentures which have been redeemed, particulars with respect to the debentures which can be so reissued shall be included in every balance sheet of the company.

(4) Where a company has deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit whilst the debentures remained so deposited.

(5) Subject to subsection (6)–

(a) the re-issue of a debenture; or

(b) the issue of another debenture in its place under the power by this section given to, or deemed to have been possessed by, a company, shall be treated as the issue of a new debenture for the purposes of stamp duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued.

(6) Any person lending money on the security of a debenture reissued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp duty and penalty.

Specific performance of contracts to subscribe for debentures.

167. A contract with a company to take up and pay for any debentures may be enforced by an order for specific performance.

##PART V REGISTRATION OF CHARGES

Registration of charges with Registrar of companies Registration of charges created by companies registered in Gibraltar.

168.(1) Subject to the provisions of this Part, every charge to which this section applies which is created by a company at a time when the company is registered in Gibraltar shall, so far as any security on the company’s property or undertaking is concerned, be void against the liquidator and any creditor of the company, unless–

(a) the prescribed particulars of the charge; and

(b) the instrument (if any) by which the charge is created or evidenced, are delivered to or received by the Registrar for registration in the manner required by this Act within the period of 30 days beginning with the date of creation of the charge; and in this Part “charge” includes a “mortgage”.

(2) If a charge becomes void under subsection (1), the money secured by it shall immediately become payable but, otherwise, that subsection shall not affect the validity of any contract or obligation for the repayment of the money secured by the charge.

(3) This section applies to the following charges, whether created inside or outside Gibraltar–

(a) a charge for the purpose of securing any issue of debentures;

(b) a charge on uncalled share capital of the company;

(c) a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale;

(d) a charge on land or any other description of property (wherever situated) or any interest therein;

(e) a charge on book debts of the company;

(f) a floating charge on the undertaking or property of the company;

(g) a charge on calls made but not paid;

(h) a charge on a ship or any share in a ship;

(i) a charge on goodwill, on a patent or a licence under a patent, on a trademark or on a copyright or a licence under a copyright.

(4) In the case of a charge created out of Gibraltar comprising solely property situate outside Gibraltar, the delivery to and the receipt by the Registrar of a copy verified in the prescribed manner of the instrument by which the charge is created or evidenced, shall have the same effect for the purposes of this section as the delivery and receipt of the instrument itself, and 30 days after the date on which the instrument or copy could, in due course of post, and if despatched with due diligence, have been received in Gibraltar, shall be substituted for 30 days after the date of the creation of the charge, as the time within which the particulars and instrument or copy are to be delivered to the Registrar.

(5) Where a charge is created in Gibraltar at a time when the company is registered in Gibraltar but comprises property outside Gibraltar, the instrument creating or purporting to create the charge may be sent for registration under this section notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situated.

(6) Where a negotiable instrument has been given to secure the payment of any book debts of a company the deposit of the instrument for the purpose of securing an advance to the company shall not for the purposes of this section be treated as a charge on those book debts.

(7) The holding of debentures entitling the holder to a charge on land shall not for the purposes of this section be deemed to be an interest in land.

(8) If a company becomes registered in Gibraltar as a result of being redomiciled in accordance with Part XIII then, as regards any charge to which this section applies which was created before the date of the company’s registration,

(a) the obligation to register the charge under this Part shall apply as if the charge were created on the day following the date of registration; but

(b) the actual date of creation of the charge shall be included in the prescribed particulars referred to in subsection (1) (b).

(9) If, before the commencement of this Act, a company became registered in Gibraltar as a result of being re-domiciled in accordance with Part XI of the former Companies Act, and, before that commencement, the company had created a charge to which this section applies, the company shall take such action as may be prescribed in order to ensure the registration of the charge.

(10) If a company registers in Gibraltar either–

(a) a place of business in accordance with Part XII; or

(b) a branch in accordance with Part XIV, any charge created prior to the date of registration of the company shall not be void for lack of registration in accordance with the requirements of this Part, but particulars of the charge shall be submitted with the application for registration under Part XII or Part XIV, as the case may be.

(11) The requirements of this Part V shall not apply to any charge (including a charge on property situated in Gibraltar) created by a company which is not formed and registered under this Act or the former Companies Act, or, in the case of a company formed outside Gibraltar, registered under this Act or the former Companies Act.

168A. Section 168 shall not apply to a charge which is a registered international interest as defined in regulation 3 of the International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015.

Special rules relating to debentures.

169.(1) Subject to subsection (2), where a series of debentures containing, or giving by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled pari passu is created by a company, it shall for the purposes of this Part be sufficient if there are delivered to or received by the Registrar within 30 days after the execution of the deed containing the charge or, if there is no deed, after the execution of any debentures of the series, the following particulars–

(a) the total amount secured by the whole series;

(b) the dates of the resolutions authorising the issue of the series and the date of the covering deed (if any) by which the security is created or defined;

(d) the names of the trustees (if any) for the debenture holders, together with the deed containing the charge, or, if there is no deed, one of the debentures of the series.

(2) Where more than one issue is made of debentures in the series, there shall be sent to the Registrar for entry in the register, particulars of the date and amount of each issue.

(3) Subject to subsection (4), where any commission, allowance or discount has been paid or made either directly or indirectly by a company to any person in consideration of his–

(a) subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company; or

(b) procuring or agreeing to procure subscriptions, whether absolute or conditional, for any of those debentures, the particulars required to be sent for registration under this Part shall include particulars as to the amount or rate per cent of the commission, discount or allowance, so paid or made.

(4) For the purposes of subsection (3), the deposit of any debentures as security for any debt of the company shall not be treated as the issue of the debentures at a discount.

(5) A failure to comply with subsection (2) or subsection (3) shall not affect the validity of the debentures concerned.

Duty of company to register charges created by company.

170.(1) It shall be the duty of a company to send to the Registrar for registration the particulars of every charge created by the company and of the issues of debentures of a series, requiring registration under this Part, but registration of any such charge may be effected on the application of any person interested in the charge.

(2) Where registration is effected on the application of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Registrar on the registration.

(3) If a company makes default in sending to the Registrar for registration the particulars of any charge created by the company, or of the issues of debentures of a series, requiring registration, then, unless the registration has been effected on the application of some other person, the company and every director, manager or other person, who is knowingly a party to the default shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 2 on the standard scale for every day during which the default continues.

Duty of company to register charges existing on property acquired.

Where a company acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Part, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the prescribed manner to be a correct copy) of the instrument (if any) by which the charge was created or is evidenced, to be delivered to the Registrar for registration in the manner required by this Part within 30 days after the date on which the acquisition is completed.

(2) If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a default fine at level 2 on the standard scale.

172.(1) The Registrar shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration under this Part, and on payment of the prescribed fee shall enter in the register with respect to those charges the following particulars–

(a) in the case of a charge to the benefit of which the holders of a series of debentures are entitled, such particulars as are specified in section 168;

(b) in the case of any other charge–

(i) if the charge is a charge created by the company, the date of its creation, and if the charge was a charge existing on property acquired by the company, the date of the acquisition of the property,

(ii) the amount secured by the charge,

(iii) short particulars of the property charged, and

(iv) the persons entitled to the charge.

(2) The Registrar shall give a certificate under his hand of the registration of any charge registered in pursuance of this Part, stating the amount secured, and the certificate shall be conclusive evidence that the requirements of this Part as to registration have been complied with.

(3) The register kept in pursuance of this section shall be open to inspection by any person on payment of the prescribed fee for each inspection.

(4) The Registrar shall keep a chronological index, in the prescribed form and with the prescribed particulars of the charges entered in the register.

Endorsement of certificate of registration on debentures.

173.(1) Subject to subsection (2), the company shall cause a copy of every certificate of registration given under section 172 to be endorsed on every debenture or certificate of debenture stock which is issued by the company, and the payment of which is secured by the charge so registered.

(2) Nothing in subsection (1) shall be construed as requiring a company to cause a certificate of registration of any charge so given to be endorsed on any debenture or certificate of debenture stock issued by the company before the charge was created.

(3) A person who knowingly authorises or permits the delivery of any debenture or certificate of debenture stock which under the provisions of this section is required to have endorsed on it a copy of a certificate of registration without the copy being so endorsed upon it, shall be guilty of an offence and, without prejudice to any other liability, liable on summary conviction to a fine at level 3 on the standard scale.

Entry of satisfaction.

174. On evidence being given to the satisfaction of the Registrar that the debt for which any registered charge was given has been paid or satisfied, the Registrar may order that a memorandum of satisfaction be entered on the register, and shall, if required, furnish the company with a copy.

Rectification of register of charges.

175. If the court is satisfied–

(a) that the omission to register a charge within the time required by this Act; or

(b) that the omission or misstatement of any particular with respect to any charge or in a memorandum of satisfaction, was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief, the court may, on the application of the company or any person interested, and on such terms and conditions as seem to the court just and expedient, order that the time for registration shall be extended, or, as the case may be, that the omission or misstatement shall be rectified.

Provisions as to company’s register of charges and as to copies of instruments creating charges Copies of instruments creating charges to be kept by company and available for inspection.

176.(1) Every company shall cause a copy of every instrument creating any charge requiring registration under this Part to be kept at the registered office of the company except that, in the case of a series of uniform debentures, a copy of one debenture of the series shall be sufficient.

(2) Subject to subsection (3), the copies of instruments creating any charge requiring registration under this Part with the Registrar, and the register of charges kept in pursuance of section 177, shall be open during business hours to the inspection of any creditor or member of the company without fee, and the register of charges shall also be open to the inspection of any other person on payment of the prescribed sum for each inspection.

(3) The requirement for documents and the register to be open to inspection during business hours shall be subject to such reasonable restrictions as the company in general meeting may impose, so that not less than 2 hours in each day shall be allowed for inspection.

(4) If inspection of those copies or register referred to in subsection (2) is refused, any officer of the company refusing inspection, and every director or manager of the company authorising or knowingly permitting the refusal, shall be guilty of an offence and liable on summary conviction to a fine of one half of the amount at level 1 on the standard scale, and a further fine of one fifth of the amount at level 1 on the standard scale for every day during which the refusal continues.

(5) If any refusal occurs, the court may by order compel an immediate inspection of the copies or register.

Company’s register of charges.

177.(1) Every limited company shall keep at the registered office of the company a register of charges and enter in that register all charges specifically affecting property of the company and all floating charges on the undertaking or any property of the company, giving in each case a short description of the property charged, the amount of the charge, and, except in the case of securities to bearer, the names of the persons entitled.

(2) A director, manager or other officer of the company who knowingly authorises or permits the omission of any entry required to be made in pursuance of this section, shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale.

PART VI MANAGEMENT AND ADMINISTRATION.

Registered office and name Registered office of company.

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

(2) Notice of any change of registered office, shall be given within 30 days after the date of the change of the registered office to the Registrar who shall record the same.

(3) 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 subsection (2) unless that return shall have been due and made within 28 days of the change.

(4) If default is made in complying with this section, the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a default fine.

(5) A company or officer of a company may send a notice in the prescribed form to the Registrar stating that the company does not have authority to use the address it has registered in accordance with the preceding provisions of this section.

(6) A company or undertaking which holds a licence under the Financial Services (Investment and Fiduciary Services) Act 1991 which enables that company or undertaking to provide company or corporate administration services by way of the provision of a registered office, may send a notice in the prescribed form to the Registrar stating that the company does not have authority to use the address it has registered in accordance with the preceding provisions of this section.

(7) Notwithstanding the filing of a notice in accordance with subsections (5) and (6) the address of the registered office shall remain as registered in accordance with this section and all communications and notices may be served on the company at that address in accordance with section 475.

Publication of name by company.

179.(1) Every company–

(a) shall paint or affix or otherwise display, and keep painted or affixed or otherwise display, its name at every office or place in which its business is carried on, clearly visible, in letters easily legible; and

(b) shall have its name mentioned in legible characters in all 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 or otherwise display (and keep painted or affixed or otherwise displayed) its name in the manner directed by this Part, the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine of one half of the amount at level 1 on the standard scale.

(3) If a company fails to comply with paragraph (b) of subsection (1), the company shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale.

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

(a) issues or authorises the issue of any notice, advertisement or other official publication of the company, or signs or authorises to be signed on behalf of the company any bill of exchange, promissory note, endorsement, cheque or order for money or goods, where its name is not mentioned in the manner required by this Part; or

(b) issues or authorises the issue of any bill of parcels, invoice, receipt or letter of credit of the company, where its name is not mentioned in the manner required by this Part, shall be guilty of an offence and 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 as stated, unless it is duly paid by the company.

Particulars to be shown on letterheads, etc.

180.(1) Every company shall have the following particulars mentioned in legible characters in all business letters, order forms and on the homepage of its website (if any), that is to say–

(a) the place of registration of the company;

(b) the number with which it is registered;

(d) 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;

(e) in the case of an investment company (as defined in Article 2(14) of Directive 2013/34/EU) the fact that it is such a company;

(f) where appropriate, that the company is being wound up, 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) Company websites shall state clearly on their homepage all the information referred to in subsection (1).

(3) If a company fails to comply with subsection (1) and (2), the company shall be guilty of an offence and 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 authorises the issue of any business letter or order form not complying with subsection (1), he shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale.

(4) In this section Directive 2013/34/EU has the meaning prescribed in section 237 of this Act.

Restrictions on commencement of business

Restrictions on commencement of business.

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

(2) 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 in cash have been allotted to an amount not less in the whole than the minimum subscription;

(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 conditions referred to in this section have been complied with.

(3) 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;

(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.

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

(5) 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 shall be jointly and severally liable to indemnify 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.

(6) 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.

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

182.(1) Subject to subsection (2) every company shall keep in one or more books a register of its members, and enter 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

(2) Where a 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 subsection (1).

Inspection of register of members.

183.(1) The register of members, commencing from the date of the registration of the company shall be kept at the registered office of the company.

(2) Subject to subsection (3), except when the register is closed under the provisions of this Part, it shall during business hours be open to the inspection of any member without charge and shall also be open to the inspection of any other person on payment of the prescribed sum for each inspection.

(3) The requirement for the register to be open to inspection during business hours shall be subject to such reasonable restrictions as the company in general meeting may impose, so that not less than 2 hours in each day shall be allowed for inspection.

(4) Any member or other person may require a copy of the register, or of any part of it, on payment of the prescribed sum for every hundred words or fractional part required to be copied; and the company shall send any copy so required by any person to that person within a period of 10 days commencing on the day next after the day on which the request is received by the company.

(5) 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 shall be guilty of an offence and 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.

(6) If any refusal or default occurs, the court may by order compel an immediate inspection of the register or direct that the copies required shall be sent to the persons requiring them.

Power to close register.

184. On giving notice by advertisement in any newspaper circulating in Gibraltar, a company may close the register of members for any time or times not exceeding in the whole 30 days in each year.

Power of court to rectify register.

185.(1) If–

(a) the name of any person, without sufficient cause, is 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 Part 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.

Trusts not to be entered on register.

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

187. The register of members shall be prima facie evidence of any matters directed or authorised to be inserted by this Act.

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

188.(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 Act was made up to a different date, the anniversary of that date.

(2) Each return shall–

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

(b) contain the information required by this Act; and

(c) be signed by a director or the secretary of the company, and subject to subsection (3) shall be delivered to the Registrar within 30 days after the date to which it is made up.

(3) In the case of a company to which section 189 applies, the annual return shall be delivered to the Registrar within 6 months after the date to which it is made up.

(4) Subject to subsection (5) and (6), the list specified in Schedule 5–

(a) must state the names, addresses and occupations of all the past and present members mentioned;

(b) must state 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

(c) if the names 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.

(5) Where a 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 required.

(6) A company which is a collective investment scheme licensed, authorised or deemed authorised under the Financial Services (Collective Investment Schemes) Act 2011 (excluding, for the avoidance of doubt, private schemes as defined in section 2(1) of such Act) shall not be required to provide the information requested at subsection (4) in its return.

(7) 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;

(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 required by this Act to be contained with respect to directors and secretaries in the registers of the directors and secretaries of a company; and

(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 Act.

(8) The references in this section to a return being delivered “in accordance with this Act” are to a return with respect to which all of the requirements of subsection (2) are complied with. Statement of allotment, redemption and purchase of own shares to be made by a collective investment scheme which is a private scheme.

**189.(1)**Subject to subsection (2), this section applies to a company that is a “private scheme” as defined in Section 2(1) of the Financial Services (Collective Investment Schemes) Act 2011.

(2) This section shall not apply to a company that is a collective investment scheme (excluding private schemes) licensed, authorised or otherwise regulated under the Financial Services (Collective Investment Schemes) Act 2011.

(3) The company shall deliver to the Registrar together with every annual return a “Statement of Allotments, Redemptions and Purchase of Own Shares”, that is to say, a statement containing the information set out in subsections (3), (4) and (5) for the period to which the annual return relates.

(4) When a company has made any allotment of its shares the statement shall specify–

(a) the number and nominal amount of the shares comprised in each allotment, the names and addresses of the allottees and the amount (if any) paid or due and payable on each allotted share; and

(b) in the case of shares allotted as fully or partly paid up otherwise than in cash–

(i) a contract in writing constituting title of the allottee to the allotment together with any contract of sale, or for services or other consideration in respect of which that allotment was made,

(ii) the number and nominal amount of shares so allotted,

(iii) the extent to which they are treated as paid up, and

(iv) the consideration for which they have been allotted.

(5) When a company has made any redemption of its redeemable preference shares the statement shall specify–

(a) the number and nominal amount of the shares redeemed;

(b) the names and addresses of the persons who have redeemed the shares; and

(6) When a company has purchased shares under section 105 the statement shall specify–

(a) with respect to shares of each class purchased, the number and nominal value of those shares and the date on which they were delivered to the company; and

(b) in the case of a public company, the aggregate amount paid by the company for the shares and the maximum and minimum prices paid in respect of shares of each class purchased.

(7) The company may, in addition to the statement delivered in accordance with this section, deliver to the Registrar at any time a statement containing the information set out in subsections (4), (5) and (6) for the period specified in that statement and, in this case, the statement is referred to as a “Voluntary Statement of Allotments, Redemptions and Purchase of Own Shares”.

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

190.(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; and

(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 required by this Act to be contained with respect to directors and secretaries in the registers of directors and secretaries of a company, and the return shall be delivered to the Registrar within 28 days after the date to which it is made up.

(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 Act.

General provisions as to annual returns.

191.(1) The annual return must be contained in a separate part of the register of members and must be completed within 30 days after the first or only general meeting in the year, and the company must forward to the Registrar a copy signed by a director or by the manager or by the secretary of the company.

(2) Section 183 shall apply to the annual return as it applies to the register of members.

(3) If a company fails to comply with this section or any of sections 188, 189 and 190–

(a) the company and every officer of the company who is in default shall be guilty of an offence and 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 sections 188, 189 or 190, as the case may be, the Registrar may regard that failure as reasonable cause to believe that the company is not carrying on business or is not in operation.

(4) For the purposes of subsection (3) of this section, “officer”, and for the purposes of sections 188, 189 and 190, “director” shall include any person in accordance with whose directions or instructions the directors of the company are accustomed to act.

Certificates to be sent by private company with annual return.

192.(1) A private company shall send with the annual return required by section 188 a certificate in the form required by Schedule 5, 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.

(2) Subsection (1) shall not apply to a company which has given a notice to the Registrar pursuant to section 18 that it is a Collective Investment Scheme.Meetings and proceedings

Annual general meetings.

193.(1) Subject to the provisions of subsection (5), in each year, every company shall hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as that 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 15 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 shall be 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, by special resolution may dispense with the holding of annual general meetings and where the company has passed such a special resolution–

(a) sections 240 and 255(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 shall be subject to section 206 (copy to be forwarded to the Registrar within 30 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 meeting has been held, any member of the company may, by notice to the company not later than 3 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) Subject to subsection (10), if the effect of the special resolution ceases, the company shall not be 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 3 months of the year remains.

(10) The terms of subsection (9) do 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).

Statutory meeting and statutory report.

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

(2) Every company limited by shares and every company limited by guarantee and having a share capital, shall hold a general meeting of the members of the company, which shall be called “the statutory meeting” and that statutory meeting shall be held within a period of not less than 1 month nor more than 3 months from the date at which the company is entitled to commence business.

(3) At least 7 days before the day on which the meeting is held, the directors shall forward a report (in this Act referred to as “the statutory report”) to every member of the company.

(4) 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 in 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 referred to in paragraph

(a) of this subsection;

(c) an abstract of the receipts of the company and of the payments made, up to a date within 7 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, 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.

(5) The statutory report, 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, shall be certified as correct by the auditors (if any) of the company.

(6) The directors shall deliver a copy of the statutory report, certified as required by this section, to the Registrar for registration after sending it to the members of the company.

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

(8) 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 memorandum or articles may be passed.

(9) 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 memorandum or 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.

(10) 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 authorises or permits the default shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale.

Convening of extraordinary general meeting on requisition.

195.(1) Notwithstanding anything in the memorandum and articles of a company, the directors of the company shall, on the requisition of members of the company holding at the date of the deposit of the requisition–

(a) 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

(b) 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 that date a right to vote at general meetings of the company, proceed to convene an extraordinary general meeting of the company.

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

(3) The requisition may be in hard copy or in electronic form and must be authenticated by the persons making it.

(4) The directors shall convene a meeting within 21 days from the date of the deposit of the requisition and the meeting shall be held within 28 days after the date of the notice convening the meeting.

(5) If the directors do not within 21 days from the date of the deposit of the requisition proceed to convene a meeting, the requisitioning members, 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 expiry of 3 months from that date.

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

(7) Any reasonable expenses incurred by the requisitioning members by reason of the failure of the directors to convene a meeting shall be repaid to those members 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.

(8) For the purposes of this section, in the case of a meeting at which a resolution is to be proposed as a special resolution, the directors shall be deemed not to have convened the meeting if they do not give notice of it as is required by section 201.

Provisions as to meetings and votes.

196.(1) The following provisions shall have effect in so far as the memorandum and 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 7 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 the articles;

(c) two or more members holding not less than one-tenth of the issued share capital or, if the company does not have a share capital, not less than 5 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 3 members, personally present shall be a quorum;

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

(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 the manner prescribed by the memorandum and articles or this Act, the Registrar of the Court may–

(a) either of his own motion; or

(b) on the application of any director of the company; or

(c) on the application 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 order is made the Registrar of the Court may give such ancillary or consequential directions as the he thinks expedient, and any meeting called, held and conducted in accordance with that order shall for all purposes be deemed to be a meeting of the company duly called, held and conducted.

(3) Notice of a general meeting of a company must be given–

(a) in hard form;

(b) in electronic form;

Publication of notice of meetings on a website.

197.(1) Notice of a meeting is not validly given by a company by means of a website unless it is given in accordance with this section.

(2) When the company notifies a member of the presence of the notice on the website the notification must–

(a) state that it concerns a notice of a company meeting;

(b) specify the place, date and time of the meeting; and

(3) The notice must be available on the website throughout the period beginning with the date of that notification and ending with the conclusion of the meeting.

Quorum at meetings of sole member.

198. Notwithstanding any provision to the contrary in the memorandum or 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.

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

199.(1) A corporation, whether a company within the meaning of this Act or not, may–

(a) if it is a member of another corporation, being a company within the meaning of this Act, by resolution of its directors or other governing body authorise 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 Act, by resolution of its directors or other governing body authorise 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 Act or the Insolvency Act or of any rules made under the relevant Act, or in pursuance of the provisions contained in any debenture or trust deed, as the case may be.

(2) A person authorised as mentioned above 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.

Provisions as to ordinary resolutions.

200.(1) An ordinary resolution of the members (or of a class of members) of a company means a resolution that is passed by a simple majority.

(2) An ordinary resolution is passed by a simple majority if it is passed by members representing a simple majority of the total voting rights of the members or, as the case may be, of the class of members.

(3) A resolution passed at a meeting on a show of hands is passed by simple majority if it is passed by a simple majority of–

(a) the members who, being entitled to do so, vote in person on the resolution; and

(b) the persons who vote on the resolution as duly appointed proxies of members entitled to vote on it.

(4) A resolution passed on a poll taken at a meeting is passed by a simple majority if it is passed by members representing a simple majority of the total voting rights of members who, being entitled to do so, vote in person or by proxy on the resolution.

(5) Anything that may be done by ordinary resolution may also be done by special resolution.

Provisions as to extraordinary and special resolutions.

201.(1) A resolution shall be an extraordinary resolution when it has been passed by a majority of not less than 75% of those members who, being entitled to do so, vote in person or, where proxies are allowed, by proxy, at a general meeting of which notice specifying the terms of the resolution and the intention to propose the resolution as an extraordinary resolution has been given.

(2) Subject to subsection (3), a resolution shall be a special resolution when it has been passed by such a majority of not less than 75% and at a general meeting of which not less than 21 days’ notice, specifying the intention to propose the resolution as a special resolution, has been given.

(3) 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 21 days’ notice has been given.

(4) 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.

(5) 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 the following number of members for the time being entitled under the memorandum and articles to vote at the meeting, that is to say, at least 5 or such lesser number of members as may be specified in the memorandum and articles;

(b) if no provision is made by the memorandum and articles with respect to the right to demand the poll, by 3 members so entitled or by one member or 2 members so entitled, if that member holds or those 2 members together hold not less than 15 per cent of the paid-up share capital of the company.

(6) 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 Act or the memorandum and articles of the company.

(7) 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 the manner provided by this Act or the memorandum and articles of the company.

Written approval.

202.(1) Notwithstanding anything contained in sections 200 and 201 it shall not be necessary in the case of a private company to hold a general meeting in order to pass an ordinary, an extraordinary or a special resolution, but that resolution, if it is so provided in the articles of the company, may be passed by approval of that resolution being signified in writing by all members of the company who would be entitled to vote if that resolution were submitted to a general meeting.

(2) The resolution shall be sent to all eligible members–

(a) at the same time (so far as reasonably practicable) in hard copy form, in electronic form or by means of a website; or

(b) if it is possible to do so without undue delay, by submitting the same copy to each eligible member in turn (or different copies to each of a number of eligible members in turn); or

(c) by sending copies to some members in accordance with paragraph (a) and submitting a copy or copies to all other members in accordance with paragraph (b).

(3) A member signifies his agreement to a proposed written resolution when the company receives from him (or from someone acting on his behalf) an authenticated document–

(a) identifying the resolution to which it relates; and

(b) indicating his agreement to the resolution.

(4) The document must be sent to the company in hard form or electronic form.

(5) Where a resolution has been passed in accordance with the provisions of this section, the hard copy form or the electronic form of the resolution forwarded to the Registrar in accordance with the provisions of section 206 shall be accompanied by–

(a) an authenticated document as required by subsection (3); 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.

(6) No resolution forwarded in accordance with the provisions of subsection (5) shall be recorded by the Registrar unless it complies with the provisions of that subsection.

(7) For the purpose of section 206, a resolution passed by written approval shall be deemed to have been passed on the date on which the last written approval was given and shall be forwarded to the Registrar within 30 days of that date.

Sending documents relating to written resolutions by electronic means.

203.(1) Where a company has given an electronic address in any document containing or accompanying a proposed written resolution, it is deemed to have agreed that any document or information relating to that resolution may be sent by electronic means to that address (subject to any conditions or limitations specified in the document).

(2) In this section “electronic address” means any address or number used for the purposes of sending or receiving documents or information by electronic means.

Publication of written resolutions on website.

204.(1) This section applies where a company sends–

(a) a written resolution; or

(b) a statement relating to a written resolution, to a person by means of a website.

(2) The resolution or statement is not validly sent for the purposes of this Chapter unless the resolution is available on the website throughout the period beginning with the circulation date and ending on the date specified in the company’s articles, or if none is specified, the period of 28 days from the circulation date.

Relationship between this Part and provisions of company’s articles.

205. A provision of the articles of a private company is void in so far as it would have the effect that a resolution that is required by or otherwise provided for in an enactment could not be proposed and passed as a written resolution.

Registration and copies of certain resolutions and agreements.

206.(1) Within 30 days after the passing or making of a resolution or agreement to which this section applies, a copy of the resolution or agreement shall be forwarded to the Registrar and recorded by him.

(2) Where articles have been registered, a copy of every resolution or agreement which has been forwarded to the Registrar and which is 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 the prescribed sum.

(4) This section applies 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;

(e) all resolutions or agreements which effectively bind all the members of any class of shareholders though not agreed to by all those members; and

(f) resolutions requiring a company to be wound up voluntarily, passed under Chapter 1 of Part X.

(5) If a company fails to comply with subsection (1), the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine at level 1 on the standard scale.

(6) If a company fails to comply with subsection (2) or (3), the company and every officer of the company who is in default is guilty of an offence and shall be 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.

Resolutions passed at adjourned meetings.

207. Where a resolution is passed at an adjourned meeting of–

(a) a company;

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

(c) the directors of a company, the resolution shall for all purposes be regarded 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.

Minutes of proceedings of meetings and directors.

208.(1) Every company shall enter 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, in books kept for that purpose.

(2) Any minute referred to in subsection (1), 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) Subject to subsection (4), 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, managers or administrators, then, until the contrary is proved, the meeting shall be deemed to have been held and convened, and all proceedings had to have taken place, and all appointments of directors, managers or administrators shall be deemed to be valid.

(4) Subsection (3) is subject to any provision of the Insolvency Act providing for appointments made by a resolution of the members of a company being invalid.

Recording of decisions by the sole member.

209.(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.

Inspection of minute books.

210.(1) Subject to subsection (2), 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 be open during business hours to the inspection of any member without charge.

(2) The requirement for the books containing the minutes of proceedings to be open to inspection during business hours shall be subject to such reasonable restrictions as the company may by its memorandum and articles or in general meeting impose, so that no less than 2 hours in each day be allowed for inspection.

(3) Within 7 days after he has made a request to the company for inspection under subsection (1), any member shall be entitled to be furnished with a copy of any of those minutes referred to in subsection (1) on payment of the prescribed sum for every hundred words.

(4) 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 is guilty of an offence and shall be 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.

(5) If refusal or default is made in complying with this section, 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.

Inspection Investigation of companies and their affairs, etc.

211. Schedule 8 shall have effect with respect to the investigation of companies and their affairs, requisition of documents and other matters referred to in that Schedule.

Proceedings on report by inspectors.

212.(1) If, it appears to the Attorney-General from any report made under the provisions of Schedule 8, that any person has been guilty of any offence in relation to the company or any other corporate body whose affairs have been investigated by virtue of those provisions and–

(a) that the case is one in which a prosecution ought to be instituted; and

(b) 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 the past and present officers and agents of the company or other corporate body (other than the defendant in the proceedings), to give to him all the assistance in connection with the prosecution which they are reasonably able to give.

(2) For the purposes of this section, the expression “agents” in relation to a company or other corporate body shall be taken 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 corporate body.

Power of company to appoint inspectors.

213.(1) By special resolution a company may appoint inspectors to investigate its affairs.

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

(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 to produce, or refuses to answer any question which is put to him by the inspectors with respect to the affairs of the company, shall be liable to be proceeded against in the same manner as if the inspectors had been inspectors appointed by the Minister.

Report of inspectors to be evidence.

214. A copy of the report of any inspectors appointed under this Act, authenticated in accordance with sections 72 to 76 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.

Directors and managers Number of directors.

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

Secretaries.

216.(1) Every company shall have a secretary and in this section and section 217, except where the context otherwise requires, any reference to a secretary includes a reference to two or more joint secretaries or, as the case may require, one of them.

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

(3) If there is no secretary for the time being or for any other reason there is no secretary capable of acting, anything authorised to be done by or to the secretary may 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 authorised generally or specifically in that behalf by the directors.

(4) No company shall have–

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

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

(5) Subject to such consent as is referred to below, a person shall not be capable of–

(a) being appointed secretary to a company by the articles; and

(b) 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 consented in writing, himself or by his agent to act as such secretary and the consent has been signed and delivered to the Registrar for registration.

Qualifications of company secretaries.

217. (1) The directors of a company shall take all reasonable steps to ensure that the 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 ensure that the 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 3 out of the 5 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

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

Restrictions on appointment or advertisement of director.

218.(1) This section does not apply to–

(a) a company which does not have a share capital; or

(b) a private company; or

(d) a prospectus issued by or on behalf of a company after the expiry of 1 year from the date on which the company was entitled to commence business.

(2) 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 or his agent has authorised in writing–

(a) his consent to act as such director, which has been signed and delivered to the Registrar for registration; and

(b) either–

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

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

(iii) he has 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) he has 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.

(3) 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.

(4) 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 shall be guilty of an offence and liable on summary conviction to a fine at level 2 on the standard scale.

Qualification of director or manager.

219.(1) Without prejudice to the restrictions imposed by section 218, it shall be the duty of every director who is required by the articles of the company to hold a specified share qualification, and who is not already qualified, to obtain his qualification within 2 months after his appointment, or such shorter time as may be fixed by the articles.

(2) The office of director of a company shall be vacated if the director does not obtain his qualification within 2 months from the date of his appointment, or within such shorter time as may be fixed by the articles, or if after the expiry of that period or shorter time he ceases at any time to hold his qualification.

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

(4) If after the expiry of 2 months or shorter time as referred to in subsection (1) any unqualified person acts as a director of the company, he shall be guilty of an offence and liable on summary conviction to a fine at level 1 on the standard scale.

Provisions as to undischarged bankrupts acting as directors or secretary.

220.(1) A person being an undischarged bankrupt, who acts as director or secretary or directly or indirectly takes part in or is concerned in the management of any company, except with the leave of the court which made the bankruptcy order (within the meaning of section 318 of the Insolvency Act) against him, shall be guilty of an offence and liable on conviction on indictment to imprisonment for 2 years, or on summary conviction to imprisonment for 6 months and to a fine at level 5 on the standard scale.

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

(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 the Insolvency Act.

Validity of acts of directors.

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

222.(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–

(i) his present forename and surname,

(ii) any former forename or surname,

(iii) his usual residential address,

(iv) his nationality, and, if that nationality is not the nationality of origin, his nationality of origin, and

(v) his business occupation (if any) or, if he has no business occupation but holds any other directorship or directorships, particulars of that directorship or at least one of those directorships; and

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

(2) The company shall send to the Registrar a return in the prescribed form containing the particulars specified in the register of directors and a notification in the prescribed form of any change among its directors, or in any of the particulars contained in the register within the following periods of time–

(a) the period within which the return shall be sent is 14 days from the appointment of the first directors of the company; and

(b) the period within which the notification of a change shall be sent is 14 days from the change of directors or the change in any of the particulars contained in the register.

(3) Subject to subsection (4), the register to be kept under this section shall be open during business hours to the inspection of any member of the company without charge, and the register shall also be open to the inspection of any other person on payment of the prescribed sum for each inspection.

(4) The requirement for the register to be kept open to inspection during business hours shall be subject to such reasonable restrictions as the company by its articles or in general meeting may impose, so that not less than 2 hours in each day shall be allowed for inspection.

(5) 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 shall be guilty of an offence and liable on summary conviction to a default fine.

(6) If any refusal occurs, the court may by order compel an immediate inspection of the register.

(7) 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.

223.(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–

(i) his present forename and surname,

(ii) any former forename or surname,

(iii) his usual residential address,

(iv) his nationality, and, if that nationality is not the nationality of origin, his nationality of origin, and

(v) 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) Within the relevant period set out below, the company shall send to the Registrar a return in the form prescribed by the Registrar containing the particulars specified in the register of secretaries and a notification in the form so prescribed of any change among its secretaries or in any of the particulars contained in the register–

(a) the period within which the return shall be sent is 14 days from the appointment of the first secretary of the company; and

(b) the period within which the notification of a change shall be sent is 14 days from the change of secretary or in any of the particulars contained in the register.

(3) Subject to subsection (4), the register to be kept under this section shall be open during business hours to the inspection of any member of the company without charge, and shall also be open to the inspection of any other person on payment of the prescribed sum for each inspection.

(4) The requirement for the register to be open to inspection during business hours shall be subject to such reasonable restrictions as the company by its articles or in general meeting may impose, so that not less than 2 hours in each day shall be allowed for inspection.

(5) 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 shall be guilty of an offence and liable on summary conviction to a default fine.

(6) If a refusal occurs, the court may by order compel an immediate inspection of the register.

(7) 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 417 for the purposes of section 222(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 Act that within the same period of time a return be made in respect of–

(a) a director under section 222; 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.

Limited company may have directors with unlimited liability.

224.(1) In a limited company the liability of the directors or managers, or of the managing director, if so provided by the memorandum, may 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 as a director or manager, 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, shall be guilty of an offence and liable on summary conviction to a fine at level 3 on the standard scale, and shall also be 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.

Special resolution of limited company making liability of directors unlimited.

225.(1) A limited company, if so authorised 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 of that special resolution shall be as valid as if they had been originally contained in the memorandum.

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

226.(1) Subject to the provisions of this section, when the directors of a company receive a demand made to them in writing by members of the company entitled to not less than one quarter of the aggregate number of votes to which all the members of the company are together entitled, then, within the period of 1 month from the receipt of the demand, they shall furnish to all the members of the company a statement, certified as correct or with such qualifications as may be necessary, by the auditors of the company, showing for each of the last 3 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 the directors of the company.

(2) The reference in subsection (1) to the aggregate amount received by directors of the company by way of remuneration or other emoluments includes sums received not only in their capacity as directors but also in connection with the management of the affairs of the company; and in respect of any director of the company who is also–

(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, there shall be included in that 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.

(3) For the purposes of this section–

(a) a demand for a statement shall have no effect if the company within 1 month after the date on which the demand is made resolve that the statement shall not be furnished; and

(b) 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.

(4) For the purpose of this section, in computing the amount of any remuneration or emoluments received by any director, the amount actually received by him, if the company has paid on his behalf any sum by way of income tax in respect of the remuneration or emoluments, shall be increased by the amount of the sum so paid.

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

(6) 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.

Disclosure by directors of interest in contracts.

227.(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 required 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, after the date of the notice, may 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 shall be guilty of an offence and 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.

Contracts with sole members who are directors.

228.(1) Subject to the provisions of subsection (2), 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. Provision as to payments received by directors for loss of office or on retirement.

229.(1) In connection with the transfer of the whole or any part of the undertaking or property of a company it shall not be lawful 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, have been disclosed to the members of the company and the proposal approved by the company.

(2) Where an illegal payment 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, shall be included in or sent with any notice of the offer made for their shares which is given to any shareholders.

(4) In any case where–

(a) a director fails to take the reasonable steps referred to in subsection (3); or

(b) a person who has been properly required by a director to include the relevant particulars in or send them with any such notice as required by that subsection, fails so to do, the director or person concerned is guilty of an offence and shall be 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) In connection with any transfer referred to in subsection (3), if the price to be paid to a director of the company–

(a) whose office is to be abolished; or

(b) 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 be deemed for the purposes of this section 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.

Provisions as to assignment of office by directors.

230. In the case of any company, if 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 to another person, then, notwithstanding anything to the contrary contained in the provision, any assignment of office made in pursuance of the provision shall 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 Provisions as to liability of officers and auditors.

231.(1) Subject to the provisions of this section, 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 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.

(2) Nothing in this section shall preclude–

(a) any person, not being the company, indemnifying any director, manager or officer of the company against any such liability as referred to in subsection (1);

(b) a company from purchasing and maintaining for 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, insurance against any such liability referred to in subsection (1);

(c) a company from indemnifying any director, manager or officer of the company against any such 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 477 in which relief is granted to him by the court.

CHAPTER II DERIVATIVE CLAIMS

Commencing Derivative Claims.

232.(1) This section applies to proceedings in Gibraltar by a member of a company–

(a) in respect of a cause of action vested in the company; and

(b) seeking relief on behalf of the company.

This is referred to in sections 232 to 236 as a “derivative claim”.

(2) A derivative claim may only be brought–

(a) under this Chapter; or

(b) in pursuance of an order of the court in proceedings under section 145 (proceedings for protection of members against unfair prejudice).

(3) A derivative claim under sections 232 to 236 may be brought only in respect of a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company.

The cause of action may be against the director or another person (or both).

(4) It is immaterial whether the cause of action arose before or after the person seeking to bring or continue the derivative claim became a member of the company.

(5) For the purposes of this Chapter–

(a) “director” includes a former director;

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

(c) references to a member of a company include a person who is not a member but to whom shares in the company have been transferred or transmitted by operation of law.

Application for permission to continue derivative claim.

233.(1) A member of a company who brings a derivative claim under sections 232 to 236 must apply to the court for permission to continue it.

(2) If it appears to the court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission (or leave), the court–

(a) must dismiss the application; and

(b) may make any consequential order it considers appropriate.

(3) If the application is not dismissed under subsection (2), the court–

(a) may give directions as to the evidence to be provided by the company; and

(b) may adjourn the proceedings to enable the evidence to be obtained.

(4) On hearing the application, the court may–

(a) give permission to continue the claim on such terms as it thinks fit;

(b) refuse permission and dismiss the claim; or

Application for permission to continue claim as a derivative claim.

234.(1) This section applies where–

(a) a company has brought a claim; and

(b) the cause of action on which the claim is based could be pursued as a derivative claim under sections 232 to 236.

(2) A member of the company may apply to the court for permission to continue the claim as a derivative claim on the ground that–

(a) the manner in which the company commenced or continued the claim amounts to an abuse of the process of the court;

(b) the company has failed to prosecute the claim diligently; and

(3) If it appears to the court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission the court–

(a) must dismiss the application; and

(b) may make any consequential order it considers appropriate.

(4) If the application is not dismissed under subsection (3), the court–

(a) may give directions as to the evidence to be provided by the company; and

(b) may adjourn the proceedings to enable the evidence to be obtained.

(5) On hearing the application, the court may–

(a) give permission (or leave) to continue the claim as a derivative claim on such terms as it thinks fit;

(b) refuse permission (or leave) and dismiss the application; or

Whether permission to be given.

235.(1) The following provisions have effect where a member of a company applies for permission under section 233 or 234.

(2) Permission must be refused if the court is satisfied–

(a) that a person acting in accordance with the duty to promote the success of the company would not seek to continue the claim; or

(b) where the cause of action arises from an act or omission that is yet to occur, that the act or omission has been authorised by the company; or

(i) was authorised by the company before it occurred, or

(ii) has been ratified by the company since it occurred.

(3) In considering whether to give permission the court must take into account, in particular–

(a) whether the member is acting in good faith in seeking to continue the claim;

(b) where the cause of action results from an act or omission that is yet to occur, whether the act or omission could be, and in the circumstances would be likely to be–

(i) authorised by the company before it occurs, or

(ii) ratified by the company after it occurs;

(c) where the cause of action arises from an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be likely to be, ratified by the company;

(d) whether the company has decided not to pursue the claim;

(e) whether the act or omission in respect of which the claim is brought gives rise to a cause of action that the member could pursue in his own right rather than on behalf of the company.

(4) In considering whether to give permission the court shall have particular regard to any evidence before it as to the views of members of the company who have no personal interest, direct or indirect, in the matter.

(5) The Minister may by regulations–

(a) amend subsection (2) so as to alter or add to the circumstances in which permission is to be refused;

(b) amend subsection (3) so as to alter or add to the matters that the court is required to take into account in considering whether to give permission.

(6) Before making any such regulations the Minister shall consult such persons as he considers appropriate.

(7) Regulations under this section are subject to affirmative resolution procedure.

Application for permission to continue derivative claim brought by another member.

236.(1) This section applies where a member of a company (“the claimant”)–

(a) has brought a derivative claim;

(b) has continued as a derivative claim a claim brought by the company; or

(2) Another member of the company (“the applicant”) may apply to the court for permission to continue the claim on the ground that–

(a) the manner in which the proceedings have been commenced or continued by the claimant amounts to an abuse of the process of the court;

(b) the claimant has failed to prosecute the claim diligently; and

(3) If it appears to the court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission (or leave), the court–

(a) must dismiss the application; and

(b) may make any consequential order it considers appropriate.

(4) If the application is not dismissed under subsection (3), the court–

(a) may give directions as to the evidence to be provided by the company; and

(b) may adjourn the proceedings to enable the evidence to be obtained.

(5) On hearing the application, the court may–

(a) give permission (or leave) to continue the claim on such terms as it thinks fit;

(b) refuse permission (or leave) and dismiss the application; or

PART VII ACCOUNTS AND AUDIT

CHAPTER I Preliminary

Interpretation of Part VII.

237.(1) In this Part, except where the context otherwise requires–

“affiliated undertaking” means any two or more undertakings within a group; “annual accounts” of a company are the balance sheet, the profit and loss account together with any other primary statements and the notes on the accounts, and these documents shall constitute a composite whole;

“associated undertaking” has the meaning given in paragraph 17 of Schedule 21; “balance sheet” in relation to a company that prepares IAS accounts, includes a statement of financial position or other equivalent financial statement required to be prepared by international accounting standards;

“Directive 2013/34/EU” means Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, as amended from time to time; “fixed assets” has the meaning given in paragraph 15 of Schedule 15; “group” means a parent undertaking and its subsidiary undertakings; “group undertaking” has the meaning given by section 277 and “participating interest” has the meaning given by section 278;

“IAS accounts” means accounts prepared in accordance with international accounting standards; “IAS Regulation” means Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards; “international accounting standards” means International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and related Interpretations (SIC-IFRIC interpretations), subsequent amendments to those standards and related interpretations, future standards and related interpretations issued or adopted by the International Accounting Standards Board (IASB) within the meaning of the IAS Regulation, adopted from time to time by the European Commission in accordance with the Regulation;

“investment property” means land and/or buildings held to earn rent or for capital appreciation; “mainstream companies” shall be construed in accordance with subsection (2); “material” means the status of information where its omission or misstatement could reasonably be expected to influence decisions that users make on the basis of the financial statements of the undertaking; and the materiality of individual items shall be assessed in the context of other similar items; “medium-sized company” and “small company” have the meanings given in Schedule 9; “net turnover” has the meaning given in Schedule 9; “Non-IAS accounts” means accounts prepared in accordance with section 243;

“parent undertaking” has the meaning given in section 276; “profit and loss account”, in relation to a company that prepares IAS accounts, includes an income statement or other equivalent financial statement required to be prepared by international accounting standards; “primary currency” means any one currency out of the Gibraltar Pound, the Great British Pound, US Dollar, the Euro, the Japanese Yen, the Swiss Franc;

“public-interest entity” has the meaning given in Schedule 9; “purchase price” has the meaning given in paragraph 11 of Schedule 15; “production cost” has the meaning given in paragraph 11 of Schedule 15; “regulated market” means a regulated market as defined in the Financial Services (Markets in Financial Instruments) Act 2006 where that regulated market is in Gibraltar or an EEA State; “related party” has the meaning given in the IAS Regulation; “specified company” means a company which falls within one of paragraphs (i) to (iii) of subsection (2); “subsidiary undertaking” has the meaning given in section 276; “value adjustment” has the meaning given in paragraph 14 of Schedule 15.

(2) A company is a mainstream company for the purposes of this Part if it is–

(a) a public company limited by shares or by guarantee; or

(b) a private company limited by shares or by guarantee, and is neither–

(i) a non-profit making company, nor

(ii) a bank licensed or authorised under the Financial Services (Banking) Act, nor

(iii) an insurance company licensed under the Financial Services (Insurance Companies) Act.

(3) Any reference in this Part to a financial year of a company shall be construed as a reference to a period in respect of which a profit and loss account of the company is made up under section 240.

(4) References in this Act to accounts giving a “true and fair view” are references−

(a) in the case of Non-IAS accounts, to the requirement under section 243 to give a true and fair view; and

(b) in the case of IAS accounts, to the requirement under international accounting standards that such accounts achieve fair presentation.

(5) This Part applies to the accounts of a company in respect of each financial year beginning on or after the date on which this Act comes into force.

(6) Deleted

(7) Deleted

(8) The provisions of this Part relating to IAS accounts do not apply to specified companies.

(9) This Part has effect subject to Chapter 3 (consolidated accounts).

Public-interest entity excluded from exemptions.

237A. Unless expressly stated, a company is not entitled to take advantage of any simplifications or exemptions as set out in this Part if it was at any time within the financial year in question a public-interest entity.

Preparation of annual accounts: mainstream companies.

238.(1) A mainstream company’s annual accounts may be prepared−

(a) in accordance with section 243 (“Non-IAS accounts”); or

(b) in accordance with international accounting standards (“IAS accounts”).

(2) After the first financial year in which the directors of a company prepare IAS accounts (the “first IAS year”), all subsequent annual accounts of the company must be prepared in accordance with international accounting standards unless there is a relevant change of circumstance.

(3) There is a relevant change of circumstance if, at any time during or after the first IAS year–

(a) the company becomes a subsidiary undertaking of another undertaking that does not prepare IAS accounts;

(b) the company ceases to be a company with securities admitted to trading on a regulated market;

(c) a parent undertaking of the company ceases to be an undertaking with securities admitted to trading on a regulated market.

(4) If, having changed to preparing Non-IAS accounts following a relevant change of circumstance, the directors again prepare IAS accounts for the company, subsections (2) and (3) apply again as if the first financial year for which such accounts are again prepared were the first IAS year.

CHAPTER 2 Accounts other than consolidated accounts

Keeping of accounts.

239.(1) Subject to section 243, every company shall cause to be kept for a period of 5 years 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 and services by the company; and

(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) Subject to subsection (4), 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, shall be liable, in respect of each offence, on summary conviction to imprisonment for 6 months or to a fine at level 4 on the standard scale.

(4) 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 knowingly.

All accounts Profit and loss account and balance sheet.

240.(1) The directors of the company shall cause to be made out at some date not later than 18 months after the incorporation of the company and subsequently once for each financial year of a company, a profit and loss account or, in the case of a company not trading for profit, an income and expenditure account for the period and the directors of the company shall lay before the company in general meeting such profit and loss account or, in the case of a company not trading for profit, such income and expenditure account made up to a date not earlier than the date of the meeting by more than 9 months, or, in the case of a company carrying on business or having interests abroad, by more than 12 months.

(2) If for any special reason the Minister thinks fit so to do, he may,–

(a) in the case of any company, extend the period of 18 months referred to in subsection (1); and

(b) in the case of any company and with respect to any year, extend the periods of 9 and 12 months referred to in that subsection.

(3) The directors shall cause to be made out for each financial year of a company, 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 in respect of companies other than small companies, there shall be attached to every such balance sheet a report by the directors with respect to–

(a) the state of the company’s affairs;

(b) the amount (if any) which they recommend should be paid by way of dividend; and

(c) 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.

(4) A company’s financial year is determined as follows.

(a) Its first financial year–

(i) begins with the first day of its first accounting reference period, and

(ii) ends with the last day of that period or such other date, not more than 7 days before or after the end of that period, as the directors may determine.

(b) Subsequent financial years–

(i) begin with the day immediately following the end of the company's previous financial year, and

(ii) end with the last day of its next accounting reference period or such other date, not more than 7 days before or after the end of that period, as the directors may determine.

(5) Subject to subsection (6) a person who, being a director of a company to which this section applies, fails to take all reasonable steps to comply with the provisions of this section, shall be guilty of an offence and liable, in respect of each offence, on summary conviction to imprisonment for 6 months or to a fine at level 4 on the standard scale.

(6) 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 knowingly.

(7) This section has effect subject to the provisions of section 268 (change of accounting reference period). Signing of annual accounts.

241.(1) All annual accounts 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 annual accounts, 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 the annual accounts which have not been signed as required by this section is issued, circulated or published (other than in draft form), or if any copy of the annual accounts are issued, circulated or published without having a copy of the auditors’ report attached thereto (other than in draft form), the company and every director, manager 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.

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

242.(1) In the case of a company other than a private company–

(a) not less than 7 days before a general meeting, a copy of every balance sheet, including every document required by law to be annexed to it, which is to be laid before the company in general meeting, together with a copy of the auditors’ report, shall 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 to it, together with a copy of the auditors’ report on the balance sheet.

(2) If default is made in complying with subsection (1)(a), the company and every officer of the company who is in default is guilty of an offence and shall be liable on summary conviction to a fine at level 1 on the standard scale.

(3) If, in a case where any person makes a demand for a document with which he is entitled to be furnished by virtue of subsection (1)(b), default is made in complying with the demand within 7 days after the making thereof, the company and every director, manager or other officer of the company who is knowingly a party to the default is guilty of an offence and shall be liable on summary conviction to a fine of one half of 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.

(4) In the case of a company which is a private company, any member shall be entitled to be furnished, within 7 days after he has made a request to the company under subsection (1)(b), with a copy of the balance sheet and auditors’ report on payment of the prescribed sum for every hundred words.

(5) If default is made in furnishing under subsection (4) a copy to any member who demands it and tenders to the company the amount of the proper charge for such a copy, the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a default fine.

Non-IAS accounts

Non-IAS accounts:

mainstream companies.

243.(1) This section applies only in the case of a mainstream company which prepares Non-IAS accounts.

(1A) Non-IAS accounts must state–

(a) that the company is registered in Gibraltar;

(b) the company’s name and registered number;

(c) the legal form of the company including whether the company is a public or a private company and whether it is limited by shares or by guarantee;

(d) the address of the company’s registered office, and

(e) where appropriate, the fact that the company is being wound up.

(2) Non-IAS accounts must be drawn up clearly and comprise−

(a) a balance sheet as at the last day of the financial year; and

(b) a profit and loss account; and the balance sheet must give a true and fair view of the state of affairs of the company as at the end of the financial year; and the profit and loss account must give a true and fair view of the profit or loss of the company for the financial year.

(3) Non-IAS accounts must comply with the provisions of sections 245 to 246 as to the form and content of the balance sheet and profit and loss account and additional information to be provided by way of notes to the accounts.

(4) Where compliance with subsection (3), and the other provisions of this Part as to the matters to be included in Non-IAS accounts, would not be sufficient to give a true and fair view, the necessary additional information must be given in the accounts or in a note to them.

(5) If in exceptional circumstances compliance with any of those provisions is inconsistent with the requirement to give a true and fair view, the directors must depart from that provision to the extent necessary to give a true and fair view.

(6) Particulars of any such departure, the reasons for it and its effect on the assets, liabilities, financial position and profit or loss of the company must be given in a note to the accounts.

(7) The layout of the balance sheet and of the profit and loss account, and in particular the format adopted for their presentation, must not be changed from one financial year to the next, save in exceptional cases in order to give a true and fair view of the undertaking’s assets, liabilities, financial position and profit or loss unless the departure is disclosed in the notes on the accounts together with an explanation of the reasons for it.

Principles to determine items shown in a company’s accounts:

mainstream companies:

Non-IAS accounts.

244.(1) This section applies only to mainstream companies which prepare Non-IAS accounts.

(2) The amounts to be included in respect of all items shown in Non-IAS accounts shall be determined in accordance with the principles set out in the following paragraphs–

(a) the company shall be presumed to be carrying on business as a going concern;

(b) accounting policies and measurement bases shall be applied consistently within the same accounts and from one financial year to the next;

(i) only profits realised at the balance sheet date may be included in the profit and loss account,

(ii) all liabilities which have arisen in respect of the financial year to which the accounts relate or a previous financial year shall be taken into account, including those which only became apparent between the balance sheet date and the date on which it is signed on behalf of the board of directors, and

(iii) account shall be taken of all negative value adjustments, whether the result of the financial year is a loss or a profit;

(d) amounts recognised in the balance sheet and profit and loss account shall be computed on the accrual basis; (da) the opening balance sheet for each financial year must correspond to the closing balance sheet for the preceding financial year;

(e) in determining the aggregate value of any item the value of each individual asset or liability that falls to be taken into account shall be determined separately;

(f) if, in exceptional circumstances, it appears to the directors of a company to be necessary to depart from these principles in preparing the accounts for a financial year they may do so but particulars of the departure, the reasons for it, and its effect shall be given in a note to the accounts;

(g) in respect of every item shown in a company’s balance sheet or profit and loss account–

(i) for each financial year, the corresponding amount for the previous financial year shall be shown,

(ii) where that corresponding amount is not comparable with the value to be shown for the item in question in the financial year to which the balance sheet or profit and loss account relates, the former amount shall be adjusted and particulars of the adjustment and the reasons for it shall be disclosed in a note to the accounts;

(h) the accounts shall not contain any set-off between asset and liability items or income and expenditure items;

(i) the directors of a company must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice;

(j) the requirements set out in this Part regarding recognition, measurement, presentation, disclosure and consolidation need not be complied with when the effect of complying with them is immaterial.

Mainstream Companies: Non-IAS accounts: layout of balance sheet and profit and loss accounts.

245.(1) This section applies where a mainstream company prepares NonIAS accounts.

(2) Subject to the following provision of this section, the layout of the balance sheet of a company shall show separately and in the order provided, the items listed in either of the formats in Schedule 11; and the layout of the profit and loss account of a company shall show separately and in the order provided, the items listed in either of the profit and loss account formats in Schedule 12.

(2A) The balance sheet or profit and loss account of a company may show a more detailed subdivision of the items listed in the formats in Schedule 11 or 12, provided that the relevant format is adhered to.

(2B) The balance sheet or profit and loss account of a company may include the addition of new items and subtotals, provided that the contents of such new items are not covered by any of the items listed in the formats in Schedule 11 or 12.

(2C) The layout, nomenclature and terminology of items in the balance sheet and profit and loss account that are preceded by Arabic numbers shall be adapted where the special nature of an undertaking so requires.

(3) The layout of the balance sheet of a small company may be modified to follow any of the formats in Schedule 13, but the directors may decide that it may contain some or all of the additional analysis provided for in Schedule 11.

(4) All annual accounts of a company which prepares Non-IAS accounts shall contain a summary of the authorised share capital and of the issued share capital of the company.

(5) The layout of the profit and loss account of a medium sized company and of a small company may be modified to follow any of the formats in Schedule 14.

(6) Items to which Arabic numbers are assigned in any of the formats in Schedule 11, 12, or 13 may be combined in a company’s accounts for any financial year if either–

(a) their individual amounts are not material to assessing the state of affairs or profit or loss of the company for that year; or

(b) the combination facilitates that assessment (in which case the individual amounts of any items so combined must be disclosed in a note to the accounts).

(7) Deleted

(7A) The layout of the balance sheet of a company may be adapted from either of the formats in Schedule 11 so as to distinguish between current and non-current items in a different way, provided that–

(a) the information given is at least equivalent to that which would have been required by the use of such format had it not been adapted, and

(b) the presentation of those items is in accordance with generally accepted accounting principles or practice.

(7B) The layout of the profit and loss account of a company may be adapted from either of the formats in Schedule 12, provided that–

(a) the information given is at least equivalent to that which would have been required by the use of such format had it not been thus adapted, and

(b) the presentation is in accordance with generally accepted accounting principles or practice.

(8) Schedule 15 has effect in relation to the amounts to be included in respect of items shown in the company’s accounts. Content of the notes on the accounts: mainstream companies: Non-IAS accounts.

246.(1) This section applies to the accounts of a mainstream company which prepares Non-IAS accounts.

(2) In the case of Non-IAS accounts, in addition to the information required under other provisions of this Chapter, the notes on the accounts shall, set out the appropriate information in respect of the matters mentioned in Schedule 16.

(3) Information required by this Chapter to be given in notes on the accounts may be contained in the accounts or in a separate document annexed to the accounts and must be presented in the order in which the items to which they relate are presented in the balance sheet and in the profit and loss account.

(4) References in this Chapter to a company’s annual accounts, or to a balance sheet or profit and loss account, include notes to the accounts giving information which is required by any provision of this Chapter or international accounting standards, and required or allowed by any such provision to be given in a note to company accounts. Notes on account: mainstream companies Disclosure required in notes to annual accounts: particulars of staff.

247.(1) Subject to subsection (2), the following information with respect to the employees of a mainstream company must be given in the notes to the company’s annual accounts−

(a) the average number of persons employed by the company in the financial year; and

(b) the average number of persons so employed within each category of persons employed by the company.

(2) Where in respect of a financial year a company qualifies as a small company, the requirements of subsection (1)(b) and subsection (4) do not apply to that company.

(3) The average number required by subsection (1)(a) or (b) is determined by dividing the relevant annual number by the number of months in the financial year; and for this purpose, the relevant annual number is determined by ascertaining for each month in the financial year–

(a) for the purposes of subsection (1)(a), the number of persons employed under contracts of service by the company in that month (whether throughout the month or not);

(b) for the purposes of subsection (1)(b), the number of persons in the category in question of persons so employed, and, in either case, adding together all the monthly numbers.

(4) In respect of all persons employed by the company during the financial year who are taken into account in determining the relevant annual number for the purposes of subsection (1)(a) there must also be stated the aggregate amounts respectively of−

(a) wages and salaries paid or payable in respect of that year to those persons;

(b) social security costs incurred by the company on their behalf; and

(c) other pension costs so incurred, but this requirement does not apply in so far as those amounts, are disclosed separately in the profit and loss account.

(5) For the purposes of subsection (1)(b), the categories of person employed by the company are such as the directors may select, having regard to the manner in which the company’s activities are organised.

(6) In this section “social security costs” means any contributions by the company to any government social security or pension scheme, fund or arrangement.

(7) In this section “pension costs” includes any costs incurred by the company in respect of any pension scheme established for the purpose of providing pensions for persons currently or formerly employed by the company, any sums set aside for the future payment of pensions directly by the company to current or former employees and any pensions paid directly to such persons without having first been set aside.

IAS Accounts IAS annual accounts.

248.(1) IAS accounts must state–

(a) that the company is registered in Gibraltar;

(b) the company’s name and registered number;

(c) the legal form of the company including whether the company is a public or a private company and whether it is limited by shares or by guarantee;

(d) the address of the company’s registered office, and

(e) where appropriate, the fact that the company is being woundup.

(2) The notes to the accounts must state that the accounts have been prepared in accordance with international accounting standards. Directors reports:

mainstream companies

Duty to prepare directors’ reports.

249.(1) The directors of a mainstream company shall for each financial year prepare a report (in this Chapter referred to as a “directors’ report”) complying with the general requirements of section 250 containing the business review specified in section 252 and, when provided separately, the corporate governance statement specified in section 251.

(2) For a financial year in which−

(a) the company is a parent company; and

(b) the directors of the company prepare group accounts, the directors’ report must be a consolidated report (a “group directors report”) relating, to the extent specified in the following provisions of sections 250 and 252, and, when provided separately, section 251.

(3) A group directors’ report may, where appropriate, give greater emphasis to the matters that are significant to the company and its subsidiary undertakings included in the consolidation, taken as a whole.

(4) If a directors’ report does not comply with the provisions of sections 250 and 252, and when provided separately, section 251 relating to the preparation and contents of the report, every director of the company who−

(a) knew that it did not comply or was reckless as to whether it complied; and

(b) failed to take all reasonable steps to secure compliance with the provision in question, is guilty of an offence and shall be liable to a fine.

Directors’ report: general requirements.

250.(1) The directors’ report for a financial year of a mainstream company must state−

(a) the names of the persons who, at any time during the financial year, were directors of the company;

(b) the principal activities of the company in the course of the year; and

(2) In relation to a group directors’ report, subsection (1)(b) has effect as if the reference to the company was a reference to the company and its subsidiary undertakings included in the consolidation.

(3) The directors’ report must give an indication of−

(a) Deleted

(b) the company’s likely future developments;

(d) the existence of any branches of the company.

(4) Where in a financial year any shares in the company−

(a) are acquired by the company by forfeiture or surrender in lieu of forfeiture; or

(b) are made subject to a lien or other charge lawfully taken (whether expressly or otherwise) by the company, the directors’ report for that year shall give the reasons for the acquisition and information required by subsection (5).

(5) Where subsection (4) applies, the report must give−

(a) the number and nominal value of the shares so acquired by the company, acquired by another person in such circumstances and so charged respectively during that year;

(b) the maximum number and nominal value of shares which having been so acquired by the company, acquired by another person in such circumstances or so charged (whether or not during that year), are held at any time by the company or that other person during that year;

(c) the number and nominal value of the shares so acquired by the company, acquired by another person in such circumstances or so charged (whether or not during that year) which are disposed of by the company or that other person or cancelled by the company during that year;

(d) where the number and nominal value of the shares of any particular description are stated in pursuance of any of the preceding paragraphs, the percentage of the called up share capital which shares of that description represent;

(e) where any of the shares have been so charged, the amount of the charge in each case; and

(f) where any of the shares have been disposed of by the company or the persons who acquired them in such circumstances for money or money’s worth, the amount or value of the consideration in each case.

(6) With respect to a financial year in which a company is a small company, a directors’ report is not required, provided that any information required by subsection (4) and (5) is given in a note to the accounts.

Directors’ reports: corporate governance.

251.(1) A mainstream company whose securities are admitted to trading on a regulated market shall include a corporate governance statement in the directors’ report and that statement shall be included as a specific section of the directors’ report and shall contain at least a reference to where applicable−

(a) the corporate governance code to which the company is subject;

(b) the corporate governance code which the company may have voluntarily decided to apply;

(c) all relevant information about the corporate governance practices applied beyond the requirements under Gibraltar law.

(2) Where subsection (1)(a) or (b) apply, the company shall also indicate where the relevant texts are publicly available and where subsection (1)(c) applies, the company shall make its corporate governance practices publicly available.

(3) To the extent to which a company departs from a corporate governance code referred to under subsection (1)(a) or (b), it shall provide an explanation as to which parts of the corporate governance code it departs from and the reasons for doing so.

(4) Where the company has decided not to apply any provisions of a corporate governance code referred to under subsection (1)(a) or (b), it shall explain its reasons for doing so.

(5) The statement referred to in subsection (1) shall, in addition, contain the following matters–

(a) a description of the main features of the company’s internal control and risk management systems in relation to the financial reporting process;

(b) where the company is subject to the Financial Services (Takeover Bids) Act 2006, the information required pursuant to section 18 (1)(c), (d), (f), (h) and (i) of that Act;

(c) unless the information is already fully provided for, the operation of the shareholder meeting and its key powers, and a description of shareholders’ rights and how they can be exercised; and

(d) the composition and operation of the administrative, management and supervisory bodies and their committees.

(6) The information required by this section–

(a) may be set out in a separate report delivered to the Registrar under section 254 together with the directors’ report or by means of a reference in the directors’ report where such document is publicly available on the company’s website;

(b) in the event of a separate report, may contain a reference to the directors’ report in the corporate governance statement where the information required in subsection (5)(b) is made available.

(6A) In relation to a group directors’ report, the information set out in subsection 5(a) shall refer to the main features of the internal controls and risk management systems for the undertakings included in the consolidation taken as a whole.

(7) The statutory auditor or audit firm shall express an opinion in accordance with section 258(2A) regarding the information prepared under subsection (1)(a) and (b), and shall check that the information referred to in subsections (1), (3), (4), (5a) and (d) has been provided.

(8) Companies which have only issued securities other than shares admitted to trading on a regulated market may choose not to apply the provisions of paragraphs (a) to (c) of subsection (1), subsections (2) to (4) and subsection (5)(c) and (d), unless such companies have issued shares which are traded in a multilateral trading facility, within the meaning of the Financial Services (Markets in Financial Instruments) Act 2007.

Directors’ report: business reviews.

252.(1) The directors’ report of a mainstream company for a financial year must contain−

(a) a fair review of the business of the company; and

(b) a description of the principal risks and uncertainties facing the company.

(2) The review required is a balanced and comprehensive analysis of−

(a) the development and performance of the business of the company during the financial year; and

(b) the position of the company at the end of the year, consistent with the size and complexity of the business.

(3) To the extent necessary for an understanding of the development, performance or position of the business of the company, the review must include−

(a) analysis using financial key performance indicators; and

(b) where appropriate, analysis using other key performance indicators, including information relating to environmental matters and employee matters.

(4) Where appropriate, the review must include reference to, and additional explanations of, amounts included in the annual accounts of the company.

(5) In this section, “key performance indicators” means factors by reference to which the development, performance or position of the business of the company can be measured effectively.

(6) In relation to a group directors’ report this section has effect as if the references to the company were references to the company and its subsidiary undertakings included in the consolidation.

(7) With respect to a financial year in which a company is a small or medium sized company, the directors’ report for the year need not comply with the requirements of subsection (3) so far as they relate to non-financial information.

Financial instruments.

253.(1) In relation to the use of financial instruments by a mainstream company, the directors’ report must contain an indication of–

(a) the financial risk management objectives and policies of the company, including the policy for hedging each major type of forecasted transaction for which hedge accounting is used; and

(b) the exposure of the company to price risk, credit risk, liquidity risk and cash flow risk, unless such information is not material for the assessment of the assets, liabilities, financial position and profit or loss of the company.

(1A) In relation to a group directors’ report, subsection (1) has effect as if the references to the company were references to the company and its subsidiary undertakings included in the consolidation.

(2) In subsection (1) the expressions “hedge accounting”, “price risk”, “credit risk”, “liquidity risk” and “cash flow risk” have the same meaning as they have in Directive 2013/34/EU.

Directors’ duties as to preparation and filing of documents.

254.(1) The directors of a mainstream company have collectively the duty to ensure that the annual accounts, the directors’ report and, when provided separately, the corporate governance statement to be provided pursuant to section 251 are drawn up and filed with the Registrar in accordance with the requirements of this Part, and, where applicable, in accordance with the international accounting standards adopted in accordance with the IAS Regulation.

(2) Subject to section 259 the directors of a mainstream company shall, within a reasonable period not exceeding 12 months after the balance sheet date, and in respect of each financial year, deliver to the Registrar a copy of the company’s annual accounts together with a copy of the directors’ report for that year and a copy of the auditors’ report on those accounts.

(3) The copy of the auditors’ report that is delivered to the Registrar shall state the names of the auditors and be signed by them.

(4) In all cases the annual accounts supplied in accordance with subsection (2) shall be signed by two directors, or, if there is only one director, by that director.

(5) The directors of a mainstream company other than a small company may choose as an alternative to make the directors’ report available at the registered address of the company in Gibraltar and in such a case shall ensure in relation to the report that–

(a) it is made available to the public; and

(b) it is possible to obtain a copy of all of it upon request at a price not exceeding its administrative cost.

(6) The directors of a mainstream company which is a small company may choose to deliver to the Registrar only a copy of the company’s balance sheet.

Auditors and auditors’ reports

Appointment of auditors.

255.(1) Subject to subsection (2), every company shall at each annual general meeting appoint an auditor or auditors to hold office until the next annual general meeting.

(2) Subsection (1) does not require a company which is exempt under section 259 of this Act from appointing auditors, to appoint an auditor, unless, at a general meeting, a special resolution is passed requiring the company to conduct an audit for that period.

(3) A person or firm shall not be qualified for appointment as an auditor of a company, other than a company registered under Part XII, unless he is or the firm is approved in accordance with the Financial Services (Auditors) Act 2009 to carry out statutory audits.

(4) A company which appoints as auditor, a person or firm who or which under subsection (3) 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.

(5) 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.

(6) 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; or

(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.

Supplementary provisions as to auditors and their remuneration.

256.(1) Subject to subsection (2), 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 14 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 of it to the members, either by advertisement or in any other mode allowed by the articles, not less than 7 days before the annual general meeting.

(2) If, after notice of the intention to nominate an auditor has been so given, an annual general meeting is called for a date 14 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.

(3) Subject as provided below, 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 except 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 those first 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 7 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.

(4) 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.

(5) The remuneration of the auditors of a company shall be fixed by the company in general meeting, except that–

(a) 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

(b) the remuneration of an auditor appointed by the Registrar may be fixed by the Registrar.

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

257.(1) The auditors shall make a report to the members on the accounts examined by them, and on all annual accounts 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 annual accounts referred to in the report are properly drawn up so as to exhibit a true and fair 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.

Auditors’ reports.

258.(1) Subject to section 259 where the directors of a mainstream company deliver to the Registrar the annual accounts and directors’ report for a financial year, they shall also deliver, with those accounts, a full copy of the report of the person responsible for auditing the accounts.

(1A) The annual accounts and directors’ report delivered under subsection (1) must be delivered in the same layout and with the same text as that used by the person responsible for auditing the accounts when drawing up his opinion.

(2) The auditors must state in their report whether in their opinion the information given in the directors’ report for the financial year for which the annual accounts are prepared is consistent with those accounts and whether the directors’ report has been properly prepared in accordance with this Part.

(2A) The auditors must also state in their report whether, in light of the knowledge and understanding of the company, and its environment obtained in the course of the audit, they have identified material misstatements in the directors’ report and shall give an indication of the nature of any such misstatements.

(3) In addition to the information required by section 257, the auditors’ report must comply with the requirements of section 28 of the Financial Services (Auditors) Act 2009.

Exemption for small companies.

259.(1) Where in respect of a financial year a mainstream company qualifies as a small company, the requirements of this Chapter relating to the appointment of auditors and the audit of account of that year shall not apply to the company if –

(a) the company does not have to submit a return of its income pursuant to section 29 of the Income Tax Act; or

(b) its turnover is such that it complies with the requirements specified in section 30 (1)(c) of the Income Tax Act (exemption from requirement that a return be accompanied by audited accounts).

(2) When, in a financial year, subsection (1) applies to a small company–

(a) sections 241 and 242 have effect in respect of that company with the omission of references to the auditor’s report;

(b) no copy of an auditor’s report need be delivered to the Registrar or laid before the company in general meeting; and

(c) sections 255 and 256, except section 256 (5), do not apply to that company. Auditors’ liability Voidness of provisions protecting auditors from liability.

260.(1) This section applies to any provision–

(a) for exempting an auditor of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company occurring in the course of the audit of accounts; or

(b) by which a company directly or indirectly provides an indemnity (to any extent) for an auditor of the company, or of an associated company, against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he is auditor occurring in the course of the audit of accounts.

(2) Any such provision is void, except as permitted by–

(a) section 261 (indemnity for costs of successfully defending proceedings); or

(b) sections 262 to 264 (liability limitation agreements).

(3) This section applies to any provision, whether contained in a company’s articles or in any contract with the company or otherwise.

(4) For the purposes of this section companies are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate.

Indemnity for costs of successfully defending proceedings.

261. Section 260 (general voidness of provisions protecting auditors from liability) does not prevent a company from indemnifying an auditor against any liability incurred by him in defending proceedings (whether civil or criminal) in which judgment is given in his favour or he is acquitted.

Liability limitation agreements.

262.(1) A “liability limitation agreement” is an agreement that purports to limit the amount of a liability owed to a company by its auditor in respect of any negligence, default, breach of duty or breach of trust, occurring in the course of the audit of accounts, of which the auditor may be guilty in relation to the company.

(2) Section 260 (general voidness of provisions protecting auditors from liability) does not affect the validity of a liability limitation agreement that–

(a) complies with section 263 (terms of liability limitation agreement) and of any regulations under that section; and

(b) is authorised by the members of the company in accordance with section 264.

(3) Such an agreement is effective to the extent provided by section 265.

Terms of liability limitation agreement.

263.(1) A liability limitation agreement–

(a) must not apply in respect of acts or omissions occurring in the course of the audit of accounts for more than one financial year; and

(b) must specify the financial year in relation to which it applies.

(2) The Minister may by regulations–

(a) require liability limitation agreements to contain specified provisions or provisions of a specified description;

(b) prohibit liability limitation agreements from containing specified provisions or provisions of a specified description.

“specified” here means specified in the regulations.

(3) Without prejudice to the generality of the power conferred by subsection (2), that power may be exercised with a view to preventing adverse effects on competition.

(4) Subject to the preceding provisions of this section, it is immaterial how a liability limitation agreement is framed. In particular, the limit on the amount of the auditor’s liability need not be a sum of money, or a formula, specified in the agreement.

Authorisation of agreement by members of the company.

264.(1) A liability limitation agreement is authorised by the members of the company if it has been authorised under this section and that authorisation has not been withdrawn.

(2) A liability limitation agreement between a private company and its auditor may be authorised–

(a) by the company passing a resolution, before it enters into the agreement, waiving the need for approval;

(b) by the company passing a resolution, before it enters into the agreement, approving the agreement’s principal terms; or

(3) A liability limitation agreement between a public company and its auditor may be authorised–

(a) by the company passing a resolution in general meeting, before it enters into the agreement, approving the agreement’s principal terms; or

(b) by the company passing a resolution in general meeting, after it enters into the agreement, approving the agreement.

(4) The “principal terms” of an agreement are terms specifying, or relevant to the determination of–

(a) the kind (or kinds) of acts or omissions covered;

(b) the financial year to which the agreement relates; or

(5) Authorisation under this section may be withdrawn by the company passing an ordinary resolution to that effect–

(a) at any time before the company enters into the agreement; or

(b) if the company has already entered into the agreement, before the beginning of the financial year to which the agreement relates. Paragraph (b) has effect notwithstanding anything in the agreement.

Effect of liability limitation agreement.

265.(1) A liability limitation agreement is not effective to limit the auditor’s liability to less than such amount as is fair and reasonable in all the circumstances of the case having regard (in particular) to–

(a) the auditor’s responsibilities under this Part;

(b) the nature and purpose of the auditor’s contractual obligations to the company; and

(2) A liability limitation agreement that purports to limit the auditor’s liability to less than the amount mentioned in subsection (1) shall have effect as if it limited his liability to that amount.

(3) In determining what is fair and reasonable in all the circumstances of the case no account is to be taken of–

(a) matters arising after the loss or damage in question has been incurred; or

(b) matters (whenever arising) affecting the possibility of recovering compensation from other persons liable in respect of the same loss or damage.

Disclosure of agreement by company.

266.(1) A company which has entered into a liability limitation agreement must make such disclosure in connection with the agreement as the Minister may require by regulations.

(2) The regulations may provide, in particular, that any disclosure required by the regulations shall be made–

(a) in a note to the company’s annual accounts (in the case of its individual accounts) or in such manner as is specified in the regulations (in the case of group accounts); or

(b) in the directors’ report. Other provisions relating to accounts

Voluntary revision of defective accounts and reports.

267.(1) If it appears to the directors of a company that–

(a) the company’s annual accounts; or

(b) the directors’ report, did not comply with the requirements of this Part (or, where applicable, of Article 4 of the IAS Regulation), they may prepare revised accounts or a revised report.

(2) Where copies of the previous accounts or report have been laid before the company in general meeting or delivered to the Registrar, the revisions shall be confined to–

(a) the correction of those respects in which the previous accounts or report did not comply with the requirements of this Part (or, where applicable, of Article 4 of the IAS Regulation); and

(b) the making of any necessary consequential alterations.

(3) The Minister may by regulations make provision as to the application of the provisions of this Chapter in relation to–

(a) revised annual accounts; or

(b) a revised directors’ remuneration report or directors’ report.

(4) The regulations may, in particular–

(a) make different provision according to whether the previous accounts or report are replaced or are supplemented by a document indicating the corrections to be made;

(b) make provision with respect to the functions of the company’s auditor in relation to the revised accounts or report;

(c) require the directors to take such steps as may be specified in the regulations where the previous accounts or report have been–

(i) sent out to members and others under section 242,

(ii) laid before the company in general meeting, or

(iii) delivered to the Registrar.

Change of accounting reference period.

268.(1) A company may, by notice given to the Registrar, specify a new accounting reference date having effect in relation to–

(a) the company’s current accounting reference period and subsequent periods; or

(b) the company’s previous accounting reference period and subsequent periods, and, for this purpose, a company’s previous accounting reference period means the one immediately preceding its current accounting reference period.

(2) The notice must state whether the company’s current or previous accounting reference period–

(a) is to be shortened, so as to come to an end on the first occasion on which the new accounting reference period falls or fell after the beginning of the period;

(b) is to be extended, so as to come to an end on the second occasion on which that date falls or fell after the beginning of the period.

(3) A notice extending a company's current or previous accounting reference period is not effective if given less than 3 years after the end of an earlier reference period of the company that was extended under this section.

(4) Subsection (3) does not apply–

(a) to a notice given by a company that is a subsidiary undertaking or parent undertaking of another EEA undertaking if the new accounting reference date coincides with that of the other EEA undertaking or, where that undertaking is not a company, with the last day of its financial year; or

(b) where the Minister directs that it should not apply, which he may do with respect to a notice that has been given or that may be given.

(5) A notice under this section may not be given in respect of a previous accounting reference period if the period for filing accounts and reports for the financial year by reference to that accounting period has already expired.

(6) An accounting reference period may not be extended so as to exceed 18 months and a notice under this section is ineffective if the current or previous accounting reference period as extended in accordance with the notice would exceed that limit; but this subsection does not apply where the company is under administration.

(7) In this section “EEA undertaking” means an undertaking established under the law of any part of the United Kingdom or Gibraltar or the law of any other EEA state.

Supplementary Offences.

269.(1) If a company’s annual accounts as approved by the board of directors and signed on behalf of the board by a director do not comply with the requirements of this Chapter including, where appropriate, international accounting standards, every director of the company who–

(a) knew that they did not comply, or was reckless as to whether they complied; and

(b) failed to take reasonable steps to secure compliance with those requirements or, as the case may be, to prevent the accounts from being approved, commits an offence and shall be liable, on conviction on indictment, to a fine and, on summary conviction, to a fine not exceeding the statutory maximum.

(2) If a requirement of subsections (2) to (6) of section 254 or section 258 is not complied with before the end of the relevant period ascertained in accordance with section 272, the company and every officer of the company who is in default is guilty of an offence and shall be liable to pay a fixed penalty as described in subsection (4) to the Minister or on summary conviction to a fine up to level 3 on the standard scale.

(3) The Registrar may, within 6 months of the end of the relevant period ascertained in accordance with section 272, inform the Minister that a company or an officer of the company has failed to comply with a requirement of section 254, other than subsection (1), or section 258.

(4) On receipt of the information described in subsection (3), the Minister may issue a notice, in such form as he may decide, requiring the company or an officer of the company to pay a penalty of such sum as he may be prescribed for the purposes of this section.

(5) If, where a notice as described in subsection (4) is served on a company or an officer of a company,–

(a) the amount of the penalty is paid within 1 month of the receipt of the notice; and

(b) the failure to comply to which the notice relates is remedied within 12 months of the date of payment of the penalty, no further proceedings shall be taken against that company or officer in respect of that failure.

(6) If a company or an officer of the company served with a notice as described in subsection (4) fails to pay the amount of the penalty specified within 1 month of its receipt, that company or officer may be proceeded against for the offence of failure to comply with the requirement concerned.

(7) For the purposes of subsections (5) and (6), a company or an officer of the company shall be deemed to have received the notice described in subsection (4) on the day after it was posted to the company’s registered office or, if it was delivered in person, on the day of delivery to the company’s registered office.

(8) A company or person who contravenes any other requirement imposed on it or him under this Act shall be guilty of an offence and liable on summary conviction to a fine up to level 3 on the standard scale.

(9) It is a defence for a company or person charged with an offence under subsection (2) or (8) to prove that all reasonable steps were taken to ensure that the requirements of this Part (or, where applicable, of Article 4 of the IAS Regulation) would be complied with in proper time; but in any proceedings under this section it is not a defence to prove that a document necessary to comply with a requirement of this Part was in fact prepared but not delivered to the Registrar.

Exemptions from preparation, audit and publication of individual accounts.

270. Any requirements made by or under this Chapter concerning the content, auditing and delivering to the Registrar of Non-IAS accounts the directors’ report do not apply to a company which is a subsidiary undertaking if the following conditions are fulfilled–

(a) the parent undertaking must be subject to the laws of Gibraltar or an EEA State;

(b) all shareholders or members of the company must have declared their agreement to the exemption from the obligation and this declaration must be renewed each financial year;

(d) the declarations referred to in paragraphs (b) and (c) must be delivered to the Registrar;

(e) the company must be included in the consolidated accounts drawn up by the parent undertaking in accordance with the provisions of Directive 2013/34/EU;

(f) the exemption referred to in this section must be disclosed in the notes on the consolidated accounts specified in paragraph (e); and

(g) the consolidated accounts referred to in paragraph (e), the consolidated annual report, and auditors’ report are delivered to the Registrar in relation to that company.

271. Deleted Period allowed for delivering accounts and reports.

272.(1) Subject to subsection (2) the period allowed for complying with the requirements of sections 254 (2) to 254(6) and section 258 is–

(a) for a private company, 12 months after the end of the relevant financial year; and

(b) for a public company, 10 months after the end of that year.

(2) If the relevant financial year is the company’s first, the period allowed is 12 months after the end of the financial year.

Delivery and publication of accounts in a primary currency.

273.(1) The annual accounts of a company may be delivered to the Registrar in any one primary currency.

(2) In such cases, other than in the case of a small company, where accounts are not prepared in the currency of the share capital of the company, the amounts of share capital in their original currency and the exchange rate used to translate them must be given in the notes to the accounts.

(3) the Minister may by regulation amend the list of primary currencies.

Requirements where a company wishes to circulate its accounts to the public.

274.(1) If a company circulates to the public any of its statutory accounts, they shall be accompanied by the relevant auditors’ report required to be delivered to the Registrar under section 258(1).

(2) A company which is required to prepare group accounts for a financial year must not circulate to the public its statutory individual accounts for that year without also issuing with them its statutory group accounts.

(3) If a company circulates non-statutory accounts to the public, it shall publish with them a statement indicating–

(a) that they are not the company’s statutory accounts;

(b) whether statutory accounts dealing with any financial year with which the non-statutory accounts purport to deal have been delivered to the Registrar;

(c) whether the company’s auditors have made a report under section 258 on the statutory accounts for any such financial year; and

(d) whether any such auditors’ report−

(i) was qualified or unqualified, or included a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, or

(ii) contained a statement under section 258 (2), and it shall not circulate to the public any auditors’ report under section 258 with the non-statutory accounts.

Regulations.

275. The Minister may by regulations make provision in respect of the operation of this Chapter, in particular with regard to the fees chargeable for the delivery of accounts to the Registrar.

CHAPTER 3 Consolidated accounts

Interpretation and general Parent and subsidiary undertaking.

276.(1) In this Chapter, the expressions “parent undertaking” and “subsidiary undertaking” shall be construed in accordance with the following provisions of this section; and a “parent company” means a parent undertaking which is a public company limited by shares or by guarantee or a private company limited by shares or by guarantee.

(2) An undertaking is a parent undertaking in relation to another undertaking, and the latter is a subsidiary undertaking for the purpose of this Chapter, if–

(a) it holds a majority of the voting rights in the undertaking;

(b) it is a member of the undertaking and has the right to appoint or remove a majority of its board of directors;

(i) by virtue of provisions contained in the undertaking’s memorandum or articles,

(ii) by virtue of a control contract; or

(d) it is a member of the undertaking and controls alone, under an agreement with other shareholders or members, a majority of the voting rights in the undertaking.

(3) For the purposes of subsection (2) an undertaking shall be treated as a member of another undertaking–

(a) if any of its subsidiary undertakings is a member of that undertaking; or

(b) if any shares in that other undertaking are held by a person acting on behalf of the undertaking or any of its subsidiary undertakings.

(4) An undertaking is also a parent undertaking in relation to another undertaking, (and the latter is a subsidiary undertaking), if–

(a) it has the power to exercise, or actually exercises, dominant influence or control over it; or

(b) it and the subsidiary undertaking are managed on a unified basis.

(5) A parent undertaking shall be treated as the parent undertaking of undertakings in relation to which any of its subsidiary undertakings are, or are to be treated as, parent undertakings; and references to its subsidiary undertakings shall be construed accordingly.

(6) Nothing in this section affects the meaning of “subsidiary undertaking” in Chapter 2.

(7) Schedule 20 contains provisions explaining expressions used in this section and otherwise supplementing this section.

Meaning of “undertaking” and related expressions.

277.(1) In this Chapter “undertaking” means–

(a) a corporate body or partnership; or

(b) an unincorporated association carrying on a trade or business, with or without a view to profit.

(2) In this Chapter references to shares–

(a) in relation to an undertaking with a share capital, are to allotted shares;

(b) in relation to an undertaking with capital but no share capital, are to rights to share in the capital of the undertaking; and

(i) conferring any rights to share in the profits or liability to contribute to the losses of the undertaking, or

(ii) giving rise to an obligation to contribute to the debts or expenses of the undertaking in the event of a winding up.

(3) Other expressions appropriate to companies shall be construed, in relation to an undertaking which is not a company, as references to the corresponding persons, officers, documents or organs, as the case may be, appropriate to undertakings of that description; but this is subject to any specific provision providing for the definition of such expressions.

(4) References in this Chapter to “fellow subsidiary undertakings” are to undertakings which are subsidiary undertakings of the same parent undertaking but are not parent undertakings or subsidiary undertakings of each other.

(5) In this Act “group undertaking”, in relation to an undertaking, means an undertaking which is–

(a) a parent undertaking or subsidiary undertaking of that undertaking; or

(b) a subsidiary undertaking of any parent undertaking of that undertaking.

Participating interests.

278.(1) In this Chapter a “participating interest” means an interest held by an undertaking in the shares of another undertaking which it holds on a long term basis for the purpose of securing a contribution to its activities by the exercise of control or influence arising from or related to that interest.

(2) A holding of 20 per cent or more of the shares of an undertaking shall be presumed to be a participating interest unless the contrary is shown.

(3) The reference in subsection (1) to an interest in shares includes–

(a) an interest which is convertible into an interest in shares; and

(b) an option to acquire shares or any such interest, and an interest or option falls within paragraph (a) or (b) even if the shares to which it relates are, until the conversion or the exercise of the option, unissued.

(4) For the purposes of this section an interest held on behalf of an undertaking shall be treated as held by it.

(5) In the balance sheet and profit and loss formats set out in Schedules 11 and 12 “participating interest” does not include an interest in a group undertaking.

(6) For the purposes of this section as it applies in relation to the expression “participating interest”–

(a) in those formats as they apply in relation to group accounts; and

(b) in paragraph 18 of Schedule 21 (form and content of group accounts), the references in subsections (1) to (4) to the interest held by, and the purposes and activities of, the undertaking concerned shall be construed as references to the interest held by, and the purposes and activities of, the group (within the meaning of paragraph 1 of Schedule 21).

Notes to the accounts.

279.(1) Information required by this Chapter to be given in notes to a company’s annual accounts may be contained in the accounts or in a separate document annexed to the accounts and must be presented in the order in which the items to which they relate are presented in the balance sheet and in the profit and loss account.

(2) References in this Chapter to a company’s annual accounts, or to a balance sheet or profit and loss account, include notes to the accounts giving information which is required by any provision made by or under this Act or international accounting standards, and required or allowed by any such provision to be given in a note to the company accounts.

Other definitions.

280.(1) In this Chapter, unless the context otherwise requires– “annual report” in relation to a company means the directors’ report; “balance sheet date” means the date as at which the balance sheet was made up; “capitalisation” in relation to work or costs, means treating that work or those costs as a fixed asset;

“Chapter 3 accounts” has the meaning assigned by section 281(4); “group” means a parent undertaking and its subsidiary undertakings; “included in the consolidation” in relation to group accounts, or “included in consolidated group accounts” means that the undertaking is included in the accounts by the method of full (and not proportional) consolidation, and references to an undertaking excluded from consolidation shall be construed accordingly;

“individual accounts” in relation to each financial year of a company means a balance sheet as at the last day of that year and a profit and loss account; “profit and loss account”, in relation to a company that prepares IAS group accounts, includes an income statement or other equivalent financial statement required to be prepared by international accounting standards.

(2) Any reference to a financial year of a company shall be construed as a reference to a period in respect of which a profit and loss account of the company is made up under section 240.

(3) References in this Act to “realised profits” and “realised losses”, in relation to a company’s accounts, are to such profits or losses of the company as fall to be treated as realised in accordance with principles generally accepted, at the time when the accounts are prepared, with respect to the determination for accounting purposes of realised profits or losses.

(4) Subsection (3) is without prejudice to–

(a) the construction of any other expression (where appropriate) by reference to accepted accounting principles or practice; or

(b) any specific provision for the treatment of profits or losses of any description as realised.

(5) References in this Chapter to accounts giving a “true and fair view” are references–

(a) in the case of Chapter 3 accounts, to the requirement under section 282 that the accounts give a true and fair view; and

(b) in the case of IAS group accounts, to the requirement under international accounting standards that such accounts achieve a fair presentation. Preparation of group accounts

Preparation of group accounts.

281.(1) If at the end of a financial year a company is a parent company, the directors, as well as preparing individual accounts for the year, shall prepare consolidated accounts for the group for the year; and in this Chapter those accounts are referred to as the company’s “group accounts”.

(2) Directors drawing up the consolidated accounts pursuant to subsection (1) have collectively the duty to ensure that the consolidated accounts, the group directors’ report and, when provided separately, the corporate governance statement to be provided pursuant to section 251 are drawn up and published in accordance with the requirements of this Chapter and, where applicable, in accordance with the international accounting standards adopted in accordance with the IAS Regulation.

(3) The group accounts of certain parent companies are required by Article 4 of the IAS Regulation to be prepared in accordance with international accounting standards (“IAS group accounts”).

(4) Subject to the following provisions of this section, the group accounts of other companies may be prepared–

(a) in accordance with section 282 (“Chapter 3 accounts”); or

(b) in accordance with international accounting standards (“IAS group accounts”).

(5) After the first financial year in which the directors of a parent company prepare IAS group accounts (“the first IAS year”), all subsequent group accounts of the company must be prepared in accordance with international accounting standards unless there is a relevant change of circumstance.

(6) There is a relevant change of circumstance if, at any time during or after the first IAS year–

(a) the company becomes a subsidiary undertaking of another undertaking that does not prepare IAS group accounts;

(b) the company ceases to be a company with securities admitted to trading on a regulated market; or

(c) a parent undertaking of the company ceases to be an undertaking with securities admitted to trading on a regulated market.

(7) If, having changed to preparing group accounts in accordance with section 282 following a relevant change of circumstance, the directors again prepare IAS group accounts for the company, subsections (5) and (6) apply again as if the first financial year for which such accounts are again prepared were the first IAS year.

(8) This section is subject to the exemptions provided by sections 285 (exemption for parent companies included in accounts of larger group), 286 (parent companies included in non-EEA group accounts), 287(6) (all subsidiary undertakings excluded from consolidation) and 292 (small and medium sized groups).

(9) In Chapter 3, Sections 240, 241, 242, 249, 253, 254, 257, 258 267, 268, 272, 273 and 274 apply to group accounts prepared under this section.

Chapter 3 Accounts.

282. (A1) Chapter 3 accounts must state, in respect of the parent company–

(a) that the company is registered in Gibraltar;

(b) the company’s name and registered number;

(c) the legal form of the company including whether the company is a public or a private company and whether it is limited by shares or by guarantee;

(d) the address of the company’s registered office, and

(e) where appropriate, the fact that the company is being woundup.

(1) Chapter 3 accounts must be drawn up clearly and comprise–

(a) a consolidated balance sheet dealing with the state of affairs of the parent company and its subsidiary undertakings; and

(b) a consolidated profit and loss account dealing with the profit or loss of the parent company and its subsidiary undertakings.

(2) The accounts must give a true and fair view of the state of affairs as at the end of the financial year, and the profit or loss for the financial year, of the undertakings included in the consolidation as a whole, so far as concerns members of the company.

(3) Chapter 3 accounts must comply with the provisions of Schedule 21 as to the form and content of the consolidated balance sheet and consolidated profit and loss account and with the provisions of Schedule 22 in relation to additional information to be provided in notes to the accounts.

(4) Where compliance with the provisions of Schedules 21 and 22, and the other provisions made by or under this Chapter, as to the matters to be included in a company’s group accounts or in notes to those accounts, would not be sufficient to give a true and fair view, the necessary additional information shall be given in the accounts or a note to them.

(5) If in exceptional circumstances compliance with any of those provisions is inconsistent with the requirement to give a true and fair view, the directors shall depart from that provision to the extent necessary to give a true and fair view; but details of any such departure, the reasons for it and its effect on the assets, liabilities, financial position and profit or loss of the undertakings included in the consolidated shall be given in a note to the accounts.

(6) The directors of a parent company shall secure that, except where in their opinion there are good reasons against it, the financial year of each of its subsidiary undertakings coincides with the company’s own financial year.

(7) In addition to the requirements of section 281(9), the provisions of sections, 243(7), 244, 245(2) to (2C), 245(4), 245(6) to (8), 246 and 247 apply to group accounts prepared under this section.

IAS group accounts.

**283.(1)**IAS group accounts must state, in respect of the parent company–

(a) that the company is registered in Gibraltar;

(b) the company’s name and registered number;

(c) the legal form of the company including whether the company is a public or a private company and whether it is limited by shares or by guarantee;

(d) the address of the company’s registered office, and

(e) where appropriate, the fact that the company is being woundup.

(2) The notes to the accounts must state that the accounts have been prepared in accordance with international accounting standards.

Consistency of accounts.

284.(1) The directors of a parent company must secure that the individual accounts of–

(a) the parent company; and

(b) each of its subsidiary undertakings, are all prepared using the same financial reporting framework, except to the extent that in their opinion there are good reasons for not doing so.

(2) Subsection (1) does not apply if the directors do not prepare group accounts for the parent company. (3) Subsection (1) only applies to accounts of subsidiaries that are required to be prepared as Non-IAS accounts.

(4) Subsection (1)(a) does not apply where the directors of a parent company prepare IAS group accounts and IAS individual accounts under Chapter 2.

Exemption for parent companies included in accounts of larger group.

285.(1) Subject to subsection 2, a company is exempt from the requirement to prepare group accounts if it is itself a subsidiary undertaking and its immediate parent undertaking is established under the law of Gibraltar or an EEA State, where–

(a) the company is a wholly-owned subsidiary of that parent undertaking; or

(aa) that parent undertaking holds 90 per cent or more of the shares in the company and the remaining shareholders of the company have approved the exemption; or

(b) that parent undertaking holds more than 50 per cent (but less than 90 per cent) of the shares in the company and notice requesting the preparation of group accounts has not been served on the company by shareholders holding in total at least –5 per cent of the total shares in the company.

The notice shall be served at least 6 months before the end of the financial year to which it relates.

(2) A company is exempt if–

(a) the company and all of its subsidiary undertakings are included in consolidated accounts for a larger group drawn up to the same date, or to an earlier date in the same financial year, by a parent undertaking established under the law of Gibraltar or an EEA State;

(b) those accounts are drawn up and audited, and that parent undertaking’s annual report is drawn up, according to that law, in accordance with the provisions of Directive 2013/34/EU as amended or in accordance with international accounting standards;

(c) the company discloses in the notes to its individual accounts that it is exempt from the obligation to prepare and deliver group accounts;

(d) the company states in the notes to its individual accounts the name of the parent undertaking which draws up the group accounts referred to above and–

(i) the address of the undertaking’s registered office;

(ii) if it is unincorporated, the address of its principal place of business;

(e) under Chapter 2, the company delivers to the Registrar, within the period allowed for delivering its individual accounts, copies of those group accounts and of the parent undertaking’s annual report, together with the auditors’ report on them; and

(f) any document comprised in accounts and reports delivered in accordance with paragraph (e) is in a language other than English, there is annexed to the copy of that document a translation of it into English, certified in accordance with rule 5 of the Companies Rules to be a correct translation.

(3) The exemption under subsection (1) shall apply to a public-interest entity unless it is a company whose securities are admitted to trading on a regulated market.

(4) Shares held by directors of a company for the purpose of complying with any share qualification requirement shall be disregarded in determining for the purposes of subsection (1)(a) whether the company is a wholly owned subsidiary.

(5) For the purposes of subsection (1)(aa) and (b) shares held by a wholly owned subsidiary of the parent undertaking, or held on behalf of the parent undertaking or a wholly-owned subsidiary, shall be attributed to the parent undertaking.

(6) In subsection (3) “securities” includes–

(a) shares and stock;

(b) debentures, including debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness;

(c) warrants or other instruments entitling the holder to subscribe for securities falling within paragraph (a) or (b); and

(d) certificates or other instruments which confer–

(i) property rights in respect of a security falling within paragraph (a), (b) or (c),

(ii) any rights to acquire, dispose of, underwrite or convert a security, being a right to which the holder would be entitled if he held any such security to which the certificate or other instrument relates, or

(iii) a contractual right (other than an option) to acquire any such security otherwise than by subscription.

Exemption for parent companies included in non-EEA group accounts.

286.(1) A company is exempt from the requirement to prepare group accounts if it is itself a subsidiary undertaking and its parent undertaking is not established under the law of Gibraltar or an EEA State, in the following cases–

(a) where the company is a wholly owned subsidiary undertaking of that parent undertaking;

(aa) where that parent undertaking holds 90 per cent or more of the shares in the company and the remaining shareholders have approved the exemption; or

(b) where that parent undertaking holds more than 50 per cent (but less than 90 per cent) of the shares in the company and notice requesting the preparation of group accounts has not been served on the company by shareholders holding in aggregate at least 5 per cent of the total shares in the company. Such a notice must be served at least 6 months before the end of the financial year to which it relates.

(2) Exemption is conditional upon compliance with all of the following conditions–

(a) that the company and all of its subsidiary undertakings are included in consolidated accounts for a larger group drawn up to the same date, or to an earlier date in the same financial year, by a parent undertaking;

(b) that those accounts and, where appropriate, the group’s annual report, are drawn up–

(i) in accordance with the provisions of Directive 2013/34/EU;

(ii) in accordance with international accounting standards;

(iii) in a manner equivalent to consolidated accounts and consolidated annual reports so drawn up; or

(iv) in a manner equivalent to international accounting standards as determined in accordance with Commission Regulation (EC) No 1569/2007 of 21 December establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council;

(c) that the consolidated accounts are audited by one or more persons authorised to audit accounts under the law under which the parent undertaking which draws them up is established;

(d) that the company discloses in its individual accounts that it is exempt from the obligation to prepare and deliver group accounts;

(e) that the company states in its individual accounts the name of the parent undertaking which draws up the group accounts referred to above and–

(i) the address of the undertaking’s registered office; and

(ii) if it is unincorporated, the address of its principal place of business;

(f) that the company delivers to the Registrar, within the period allowed for delivering its individual accounts, copies of the group accounts and, where appropriate, of the consolidated annual report, together with the auditors’ report on them; and

(g) that if any document comprised in accounts and reports delivered in accordance with paragraph (f) is in a language other than English, there is annexed to the copy of that document a translation of it into English, certified to be a correct translation.

(3) The exemption under subsection (1) shall apply to a public-interest entity unless it is a company whose securities are admitted to trading on a regulated market.

(4) Shares held by directors of a company for the purpose of complying with any share qualification requirement are disregarded in determining for the purposes of subsection (1)(a) whether the company is a wholly owned subsidiary undertaking.

(5) For the purposes of subsection (1)(aa) and (b), shares held by a wholly-owned subsidiary undertaking of the parent undertaking, or held on behalf of the parent undertaking or a wholly-owned subsidiary undertaking, are attributed to the parent undertaking.

(6) In subsection (3), “securities” includes–

(a) shares and stock;

(b) debentures, including debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness;

(c) warrants or other instruments entitling the holder to subscribe for securities falling within paragraph (a) or (b); and

(d) certificates or other instruments which confer–

(i) property rights in respect of a security falling within paragraph (a), (b) or (c),

(ii) any right to acquire, dispose of, underwrite or convert a security, being a right to which the holder would be entitled if he held any such security to which the certificate or other instrument relates, or

(iii) a contractual right (other than an option) to acquire any such security otherwise than by subscription.

Subsidiary undertakings included in the consolidation.

287.(1) In the case of Chapter 3 accounts, subject to the exceptions authorised by this section, all the subsidiary undertakings of the parent company shall be included in the consolidation.

(2) A subsidiary undertaking may be excluded from consolidation in Chapter 3 accounts if its inclusion is not material for the purpose of giving a true and fair view; but two or more undertakings may be excluded only if they are not material taken together.

(3) Any parent undertaking including a public-interest entity, which only has subsidiary undertakings that are not material for the purposes of section 282(1) and (2), both individually and as a whole, shall without prejudice to Articles 4(2), 5 and 6 of Council Directive 83/349 EEC, be exempted from the obligation imposed by section 281(1).

(4) In addition, a subsidiary undertaking, including a public-interest entity, may be excluded from consolidation in Chapter 3 accounts if–

(a) severe long-term restrictions substantially hinder the exercise of the rights of the parent company over the assets or management of that undertaking;

(b) in extremely rare cases the information necessary for the preparation of group accounts cannot be obtained without disproportionate expense or undue delay; or

(5) The reference in paragraph (a) of subsection (4) to the rights of the parent company and the reference in paragraph (c) to the interest of the parent company are, respectively, to rights and interests held by or attributed to the company for the purposes of section 276 (definition of “parent undertakings”) in the absence of which it would not be the parent company.

(6) A parent company, including a public-interest entity, is exempt from the requirement to prepare group accounts if under subsection (2), (3) or (4) all of its subsidiary undertakings could be excluded from consolidation in Chapter 3 accounts.

Treatment of individual profit and loss account where group accounts prepared.

288.(1) The following provisions apply to the individual profit and loss account of a parent company where–

(a) the company is required to prepare group accounts in accordance with this Chapter; and

(b) the notes to the company’s individual balance sheet show the company’s profit or loss for the financial year.

(2) The profit and loss account shall be approved by the board of directors but may be omitted from the company’s annual accounts for the purposes of the other provisions of this Chapter or Chapter 2.

(3) The exemption conferred by this section shall be disclosed in the notes to the company’s annual accounts and the group accounts.

Disclosure required in notes to accounts: related undertakings.

289.(1) The information specified in Schedule 22 shall be given in notes to a company’s annual accounts.

(2) Where the company, other than a small company, is not required to prepare group accounts, the information specified in Part I of Schedule 22 shall be given; and where the company is required to prepare group accounts, the information specified in Parts II and III of Schedule 22 shall be given.

(3) Subject to subsection (4), the information required by Schedule 22 need not be disclosed for an undertaking which–

(a) is established under the law of a country outside the United Kingdom or Gibraltar; or

(b) carries on business outside the United Kingdom or Gibraltar, if in the opinion of the directors of the company the disclosure would be seriously prejudicial to the business of that undertaking, or to the business of the company or any of its subsidiary undertakings.

(4) Subsection (3) does not apply in relation to the information required under paragraphs 5(2), 6, 10, 20 or 29 of Schedule 22.

(5) If advantage is taken of subsection (3), that fact shall be stated in a note to the company’s annual accounts.

Disclosure required in notes to annual accounts: particulars of staff.

290. A company’s group accounts must contain the disclosure required by section 247 as if all the undertakings included in the consolidation were a single company.

291. Deleted

Exemption for small and medium-sized groups.

292.(1) A parent company need not prepare group accounts for a financial year in relation to which the group headed by that company qualifies as a small or medium-sized group and is not an ineligible group.

(2) A group is ineligible if any of its members is–

(a) a company any of whose securities are admitted to trading on a regulated market;

(b) an authorised institution under the Financial Services (Banking) Act;

(d) any other entity designated by the Minister under the Financial Services (Auditors) Act 2009 as a public-interest entity.

(3) If the directors of a company in relation to which the group headed by that company qualifies as a medium-sized group propose to take advantage of the exemption conferred by this section, it is the auditors’ duty to provide them with a report stating whether in their opinion the company is entitled to the exemption.

Qualification of group as small or medium-sized or large.

293.(1) A group is small, medium-sized or large in relation to a financial year if the qualifying conditions are met–

(a) in the case of the parent company’s first financial year, in that year; and

(b) in the case of any subsequent financial year, in that year and the preceding year.

(2) A group shall be treated as qualifying as small, medium-sized or large in relation to a financial year–

(a) if it so qualified in relation to the previous financial year under subsection (1); or was treated as so qualifying under paragraph (b); or

(b) if it was treated as so qualifying in relation to the previous year by virtue of paragraph (a) and the qualifying conditions are met in the year in question.

(3) The qualifying conditions are met by a group in a year in which it satisfies two or more of the following requirements–

Small group.

1. Total turnover Not more than £10.2 million net (£12.2 million gross)

2. Aggregate balance sheet total Not more than £5.1 million net (£6.1 million gross)

3. Total number of employees Not more than 50

Medium-sized group.

1. Total turnover Not more than £36 million net (£43.2 million gross)

2. Aggregate balance sheet total Not more than £18 million net (£21 million gross)

3. Total number of employees Not more than 250

Large group.

1. Total turnover More than £36 million net (£43.2 million gross)

2. Aggregate balance sheet total More than £18 million net (£21 million gross)

3. Total number of employees More than 250

(4) The total figures shall be ascertained by aggregating the relevant figures determined in accordance with Schedule 9 for each member of the group.

(5) In relation to the total figures for turnover and balance sheet, “net” means with the set-offs and other adjustments required by Schedule 21 in the case of group accounts and “gross” means without those set-offs and adjustments; and a company may satisfy the relevant requirements on the basis of either the net or the gross figure.

(6) The figures for each subsidiary undertaking are to be those included in its accounts for the relevant financial year, that is–

(a) if its financial year ends with that of the parent company, that financial year; and

(b) if not, its financial year ending last before the end of the financial year of the parent company.

(7) If those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures must be taken.

Offences.

294. A company, and every officer of the company who is in default, which fails to comply with any requirement of this Chapter (or, where applicable, of Article 4 of the IAS Regulation) is guilty of an offence and liable on summary conviction to a fine up to level 3 on the standard scale.

Transmission of Information.

294A. The Minister shall ensure that the following information is transmitted to the European Commission within a reasonable period–

(a) changes in the types of undertakings in Gibraltar law that may affect the accuracy of Annex I or II of Directive 2013/34/EU; and

(b) any additional information required in accordance with paragraph 6 of Article 4 of Directive 2013/34/EU.

PART VIII ARRANGEMENTS AND RECONSTRUCTIONS

Application of sections 296 to 301.

295.(1) The provisions of sections 296 to 301 apply where a compromise or arrangement is proposed between a company and–

(a) its creditors, or any class of them; or

(b) its members, or any class of them.

(2) In sections 296 to 301−

“arrangement” includes a reorganisation of the company’s share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods; and “company”–

(a) in section 300 means a company within the meaning of this Act; and

(b) elsewhere in this Part means any company liable to be wound up under the Insolvency Act.

(3) The provisions of sections 296 to 301 have effect subject to sections 303 to 351 where the latter sections apply. Meeting of creditors or members Court order for holding of meeting.

296.(1) The court may, on an application under this section, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, to be summoned in such manner as the court directs.

(2) An application under this section may be made by–

(a) the company;

(b) any creditor or member of the company;

(d) if the company is in administration, the administrator.

Statement to be circulated or made available.

297.(1) Where a meeting is summoned under section 296–

(a) every notice summoning the meeting that is sent to a creditor or member must be accompanied by a statement complying with this section; and

(b) every notice summoning the meeting that is given by advertisement must either–

(i) include such a statement, or

(ii) state where and how creditors or members entitled to attend the meeting may obtain copies of such a statement.

(2) The statement must–

(a) explain the effect of the compromise or arrangement; and

(b) in particular, state–

(i) any material interests of the directors of the company, whether as directors or as members or as creditors of the company or otherwise, and

(ii) the effect on those interests of the compromise or arrangement, in so far as it is different from the effect on the like interests of other persons.

(3) Where the compromise or arrangement affects the rights of debenture holders of the company, the statement must give the same explanation as respects the trustees of any deed for securing the issue of the debentures as it is required to give as respects the company’s directors.

(4) Where a notice given by advertisement states that copies of an explanatory statement can be obtained by creditors or members entitled to attend the meeting, every such creditor or member shall be entitled, on making an application in the manner indicated by the notice, to be provided by the company with a copy of the statement free of charge.

(5) Subject to subsection (7), if a company makes default in complying with any requirement of this section, an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(6) For this purpose the following shall be regarded as officers of the company–

(a) a liquidator or administrator of the company; and

(b) a trustee of a deed for securing the issue of debentures of the company.

(7) A person shall not be guilty of an offence under this section if he shows that the default was due to the refusal of a director or trustee for debenture holders to supply the necessary particulars of his interests.

(8) A person guilty of an offence under this section shall be liable–

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Duty of directors and trustees to provide information.

298.(1) It is the duty of–

(a) any director of the company; and

(b) any trustee for its debenture holders, to give notice to the company of such matters relating to himself as may be necessary for the purposes of section 297.

(2) Any person who makes default in complying with this section commits an offence.

(3) A person guilty of an offence under this section shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Court sanction for compromise or arrangement

Court sanction for compromise or arrangement.

299.(1) If a majority in number representing 75% in value of the–

(a) creditors;

(b) class of creditors;

(d) class of members, present and voting either in person or by proxy at the meeting summoned under section 296, agree a compromise or arrangement, the court may, on an application under this section, sanction the compromise or arrangement.

(2) An application under this section may be made by–

(a) the company;

(b) any creditor or member of the company;

(c) if the company is being wound up or an administration order is in force in relation to it, the liquidator or administrator; or

(d) if the company is in administration, the administrator.

(3) A compromise or agreement sanctioned by the court is binding on–

(a) all creditors or the class of creditors or on the members or class of members; and

(b) the company or, in the case of a company in the course of being wound up, the liquidator and contributories of the company.

(4) The court’s order has no effect until a copy of it has been delivered to the Registrar.

(5) A company in relation to which an order is made under this section must cause a copy of the order to be delivered to the Registrar within 7 days after its making.

Reconstructions and amalgamations

Powers of court to facilitate reconstruction or amalgamation.

300.(1) This section applies where application is made to the court under section 299 to sanction a compromise or arrangement and it is shown that–

(a) the compromise or arrangement is 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

(b) under the scheme the whole or any part of the undertaking or the property of any company concerned in the scheme (“a transferor company”) is to be transferred to another company (“the transferee company”).

(2) The court may, either by the order sanctioning the compromise or arrangement or by a 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 is fully and effectively carried out.

(3) If an order under this section provides for the transfer of property or liabilities–

(a) the property is by virtue of the order transferred to, and vests in, the transferee company; and

(b) the liabilities are, by virtue of the order, transferred to and become liabilities of that company.

(4) The property, if the order so directs, vests freed from any charge that is by virtue of the compromise or arrangement to cease to have effect.

(5) Every company in relation to which an order is made under this section must cause a copy of the order to be delivered to the Registrar within 7 days after its making.

(6) If default is made in complying with subsection (5) an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(7) A person guilty of an offence under subsection (6) shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding onetenth of level 3 on the standard scale.

Obligations of company with respect to articles etc.

301.(1) This section applies–

(a) to any order for sanctioning compromise or arrangement under section 299; and

(b) to any order for facilitating reconstruction or amalgamation under section 300 that alters the company’s constitution.

(2) If the order amends–

(a) the company’s articles; or

(b) any resolution under section 25 or 29 or any other resolution or agreement affecting a company’s constitution, the copy of the order delivered to the Registrar by the company under section 299(4) or section 300(6) must be accompanied by a copy of the company’s articles, or the resolution or agreement in question, as amended.

(3) Every copy of the company’s articles issued by the company after the order is made must be accompanied by a copy of the order, unless the effect of the order has been incorporated into the articles by amendment.

(4) In this section–

(a) references to the effect of the order include the effect of the compromise or arrangement to which the order relates; and

(b) in the case of a company not having articles, references to its articles shall be read as references to the instrument constituting the company or defining its constitution.

(5) If a company makes default in complying with this section an offence is committed by–

(a) the company; and

(b) every officer of the company who is in default.

(6) A person guilty of an offence under this section shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Merger and divisions of public companies Application of sections 303 to 351.

302.(1) Sections 303 to 351 apply where–

(a) a compromise or arrangement is proposed between a public company; and–

(i) its creditors or any class of them, or

(ii) its members or any class of them, 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 scheme involves–

(i) a merger within the meaning of section 304, or

(ii) a division within the meaning of section 325; and

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

(2) In sections 303 to 351–

(a) a “new company” means a company formed for the purposes of, or in connection with, the scheme; and

(b) an “existing company” means a company other than one formed for the purposes of, or in connection with, the scheme.

(3) Sections 303 to 351 do not apply where the company in respect of which the compromise or arrangement is proposed is being wound up.

Relationship of sections 303 to 351 to sections 296 to 301.

303.(1) The court may not sanction the compromise or arrangement under sections 296 to 301 unless the relevant requirements of sections 303 to 351 have been complied with.

(2) The requirements applicable to a merger are specified in sections 305 to 317 and some of those requirements, and certain general requirements of sections 296 to 301, are modified or excluded by the provisions of sections 318 to 323.

(3) The requirements applicable to a division are specified in sections 326 to 338 and some of those requirements, and certain general requirements of sections 296 to 301 are modified or excluded by the provisions of sections 339 to 344. Merger

Mergers and merging companies.

304.(1) The scheme involves a merger where under the scheme–

(a) the undertaking, property and liabilities of one or more public companies, including the company in respect of which the compromise or arrangement is proposed, are to be transferred to another existing public company (a “merger by absorption”); or

(b) the undertaking, property and liabilities of two or more public companies, including the company in respect of which the compromise or arrangement is proposed, are to be transferred to a new company, whether or not a public company, (a “merger by formation of a new company”).

(2) References in this Part to “the merging companies” are–

(a) in relation to a merger by absorption, to the transferor and transferee companies;

(b) in relation to a merger by formation of a new company, to the transferor companies.

Requirements applicable to merger Draft terms of scheme (merger).

305.(1) A draft of the proposed terms of the scheme must be drawn up and adopted by the directors of the merging companies.

(2) The draft terms must give particulars of at least the following matters–

(a) in respect of each transferor company and the transferee company–

(i) its name,

(ii) the address of its registered office, and

(iii) whether it is a company limited by shares or a company limited by guarantee and having a share capital;

(b) the number of shares in the transferee company to be allotted to members of a transferor company for a given number of their shares (the “share exchange ratio”) and the amount of any cash payment;

(d) the date from which the holding of shares in the transferee company will entitle the holders to participate in profits, and any special conditions affecting that entitlement;

(e) the date from which the transactions of a transferor company are to be regarded for accounting purposes as being those of the transferee company;

(f) any rights or restrictions attaching to shares or other securities in the transferee company to be allotted under the scheme to the holders of shares or other securities in a transferor company to which any special rights or restrictions attach, or the measures proposed concerning them;

(g) any amount of benefit paid or given or intended to be paid or given–

(i) to any of the experts referred to in section 310, or

(ii) to any director of a merging company, and the consideration for the payment of benefit.

(3) The requirements in subsection (2)(b), (c) and (d) are subject to the circumstances in which certain particulars are not required under section 318.

Publication of draft terms (merger) by Registrar.

306.(1) The directors of each of the merging companies must deliver a copy of the draft terms to the Registrar.

(2) The Registrar must publish in the Gazette notice of receipt by him from that company of a copy of the draft terms.

(3) That notice must be published at least 1 month before the date of any meeting of that company summoned for the purpose of approving the scheme.

(4) The requirements in this section are subject to section 307.

Publication of draft terms on company website (merger).

307.(1) Section 306 does not apply in respect of a company if the conditions in subsections (2) to (6) are met.

(2) The first condition is that the draft terms are made available on a website which–

(a) is maintained by or on behalf of the company; and

(b) identifies the company.

(3) The second condition is that neither access to the draft terms on the website nor the supply of a hard copy of them from the website is conditional on payment of a fee or otherwise restricted.

(4) The third condition is that the directors of the company deliver to the Registrar a notice giving details of the website on payment of such fee as the Registrar shall prescribe.

(5) The fourth condition is that the Registrar publishes the notice giving details of the website in the Gazette at least 1 month before the date of any meeting of the company summoned for the purpose of approving the scheme.

(6) The fifth condition is that the draft terms are made available on the website throughout the period beginning 1 month before the date of any such meeting and remain available until the conclusion of that meeting.

Approval of members of merging companies.

308.(1) The scheme must be approved by a majority in number, representing 75% in value, of each class of members of each of the merging companies, present and voting either in person or by proxy at a meeting.

(2) This requirement is subject to the circumstances in which meetings of members are not required pursuant to sections 320 to 323.

Directors’ explanatory report (merger).

309.(1) The directors of each of the merging companies must draw up and adopt a report.

(2) The report must consist of–

(a) the statement required by section 297; and

(b) insofar as that statement does not deal with the following matters, a further statement–

(i) setting out the legal and economic grounds for the draft terms, and in particular for the share exchange ratio, and

(ii) specifying any special valuation difficulties.

(3) The requirement in this section is subject to the circumstance under sections 318, 319 and 324.

Expert’s report (merger).

310.(1) An expert’s report must be drawn up on behalf of each of the merging companies.

(2) The report required is a written report on the draft terms to the members of the company.

(3) The court may on the joint application of all the merging companies approve the appointment of a joint expert to draw up a single report on behalf of all those companies and if no such appointment is made, there must be a separate expert’s report to the members of each merging company drawn up by a separate expert appointed on behalf of that company.

(4) The expert must be a person who–

(a) is eligible for appointment as an auditor under section 255 (3); and

(b) meets the independence requirement in section 346.

(5) The expert’s report must–

(a) indicate the method or methods used to arrive at the share exchange ratio;

(b) give an opinion as to whether the method or methods used are reasonable in all the circumstances of the case, indicate the values arrived at using each such method and, if there is more than one method, give an opinion on the relative importance attributed to such methods in arriving at the value decided on;

(d) state whether in the expert’s opinion the share exchange ratio is reasonable; and

(e) in the case of a valuation made by a person other than himself, pursuant to section 345, state that it appeared to him reasonable to arrange for it to be so made or to accept a valuation so made.

(6) The expert, or each of them, has-

(a) the right of access to all such documents of all the merging companies; and

(b) the right to require from the companies’ officers all such information, as he thinks necessary for the purposes of making his report.

(7) The requirement in this section is subject to the circumstances under sections 318 and 319.

Supplementary accounting statement (merger).

311.(1) This section applies if the last annual accounts of any of the merging companies relate to a financial year ending before–

(a) the date 7 months before the first meeting of the company summoned for the purposes of approving the scheme; or

(b) if no meeting of the company is required, by virtue of any of sections 320 to 323, the date 6 months before the directors of the company adopt the draft terms of the scheme.

(2) If the company has not made public a half-yearly financial report relating to a period ending on or after the date mentioned in subsection (1), the directors of the company must prepare a supplementary accounting statement.

(3) That statement must consist of–

(a) a balance sheet dealing with the state of affairs of the company as at a date not more than 3 months before the draft terms were adopted by the directors; and

(b) where the company would be required under section 281 to prepare group accounts if that date were the last day of a financial year, a consolidated balance sheet dealing with the state of affairs of the company and the undertakings that would be included in such a consolidation.

(4) The requirements of this Act, and where relevant Article 4 of the IAS Regulation, as to the balance sheet forming part of a company's annual accounts, and the matters to be included in notes to it, apply to the balance sheet required for an accounting statement under this section, with such modifications as are necessary by reason of its being prepared otherwise than as at the last day of a financial year.

(5) The provisions of section 241 shall apply as to the signing of the balance sheet required for an accounting statement under this section.

(6) In this section “half-yearly financial report” means a report of that description required to be made public by rules under section 11 of the Financial Services (Listing of Securities) Act 2006.

(7) The requirements in this section are subject to sections 319 and 324.

(8) In this section, “IAS Regulation” means EC Regulation No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards as amended or replaced by another EC Regulation.

Inspection of documents (merger).

312.(1) The members of each of the merging companies must be able, during the period specified below–

(a) to inspect at the registered office of that company copies of the documents listed below relating to that company and every other merging company; and

(b) to obtain copies of those documents or any part of them on request free of charge.

(2) The period referred to above is the period–

(a) beginning 1 month before; and

(b) ending on the date of, the first meeting of the members, or any class of members, of the company for the purposes of approving the scheme.

(3) The documents referred to above are–

(a) the draft terms;

(b) the directors’ explanatory report;

(d) the company’ s annual accounts and reports for the last 3 financial years ending on or before the first meeting of the members, or any class of members, of the company summoned for the purposes of approving the scheme;

(e) any supplementary accounting statement required by section 311; and

(f) if no statement is required by section 311 because the company has made public a recent half-yearly financial report pursuant to subsection 2 of that section, that report.

(4) The requirement in subsection (1)(a) is subject to section 313(1) in respect of publication of documents on a company website.

(5) Where a member who has consented to information being sent or supplied by the company by electronic means to him and he has not revoked that consent, there is no need to send him a hard copy of such document.

(6) The requirements in this section are subject to sections 319 and 324. Publication of documents on company website (merger).

313.(1) Subject to subsection (6), section 312(1)(a) does not apply to a document if the conditions in subsections (2) to (4) are met in relation to that document.

(2) The first condition is that the document is made available on a website which–

(a) is maintained by or on behalf of the company; and

(b) identifies the company.

(3) The second condition is that access to the document on the website is not conditional on payment of a fee or otherwise restricted.

(4) The third condition is that the document remains available on the website throughout the period beginning 1 month before the date of any meeting of the company summoned for the purpose of approving the scheme and remains available until the conclusion of that meeting.

(5) A person is able to obtain a copy of a document as required by section 312(1)(b) if–

(a) the conditions in subsections (2) and (3) are met in relation to that document; and

(b) the person is able, throughout the period specified in subsection (4)–

(i) to retain a copy of the document as made available on the website, and

(ii) to produce a hard copy of it.

(6) Where members of a company are able to obtain copies of a document only as mentioned in subsection (5), section 312(1)(a) applies to that document even if the conditions in subsections (2) to (4) are met.

Report on material changes of assets of merging companies.

314.(1) The directors of each of the merging companies must report–

(a) to every meeting of the members, or any class of members, of that company summoned for the purpose of agreeing to the scheme; and

(b) to the directors of every other merging company, any material changes in the property and liabilities of that company between the date when the draft terms were adopted and the date of the meeting in question.

(2) The directors of each of the other merging companies must in turn–

(a) report those matters to every meeting of the members, or any class of members, of that company summoned for the purpose of agreeing to the scheme; or

(b) send a report of those matters to every member entitled to receive notice of such a meeting.

(3) The requirement in this section is subject to sections 319 and 324.

Approval of articles of new transferee company (merger).

315. In the case of a merger by formation of a new company, the articles of the transferee company, or a draft of them, must be approved by ordinary resolution of each of the transferor companies.

Protection of holders of securities to which special rights attached (merger).

316.(1) The scheme must provide that where any securities of a transferor company (other than shares) to which special rights are attached are held by a person otherwise than as a member or creditor of the company, that person is to receive rights in the transferee company of equivalent value.

(2) Subsection (1) does not apply if–

(a) the holder has agreed otherwise; or

(b) the holder is, or under the scheme is to be, entitled to have the securities purchased by the transferee company on terms that the court considers reasonable.

No allotment of shares to transferor company or its nominee (merger).

317. The scheme must not provide for any shares in the transferee company to be allotted to a transferor company, or its nominee, in respect of shares in the transferor company held by the transferor company itself, or its nominee. Exceptions where shares of transferor company held by transferee company Circumstances in which certain particulars and reports not required (merger).

318.(1) This section applies in the case of a merger by absorption where all of the relevant securities of the transferor company, or, if there is more than one transferor company, of each of them, are held by or on behalf of the transferee company.

(2) The draft terms of the scheme need not give the particulars relating to allotment of shares to members of the transferor company mentioned in section 305(2)(b), (c) or (d).

(3) Section 297 does not apply.

(4) The requirements of the following sections do not apply–

(a) section 309; and

(b) section 310.

(5) The requirements of section 312 so far as relating to any document required to be drawn up under the provisions mentioned in subsection (4) do not apply.

(6) In this section “relevant securities”, in relation to a company, means shares or other securities carrying the right to vote at general meetings of the company.

Other circumstances in which reports and inspection not required (merger).

319.(1) This section applies in the case of a merger by absorption where 90% or more, but not all, of the relevant securities of the transferor company, or, if there is more than one transferor company, of each of them, are held by or on behalf of the transferee company.

(2) If the conditions in subsections (3) and (4) are met, the requirements of the following sections do not apply–

(a) section 309;

(b) section 310;

(d) section 312; and

(e) section 314.

(3) The first condition is that the scheme provides that every other holder of relevant securities has the right to require the transferee company to acquire those securities.

(4) The second condition is that, if a holder of securities exercises that right, the consideration to be given for those securities is fair and reasonable.

(5) The powers of the court under section 300(2) include the power to determine, or make provision for the determination of, the consideration to be given for securities acquired under this section.

(6) In this section–

“other holder” means a person who holds securities of the transferor company otherwise than on behalf of the transferee company and does not include the transferee company itself; “relevant securities”, in relation to a company, means shares or other securities carrying the right to vote at general meetings of the company.

Circumstances in which meeting of members of transferee company not required (merger).

320.(1) This section applies in the case of a merger by absorption where 90% or more, but not all, of the relevant securities of the transferor company or, if there is more than one transferor company, of each of them, are held by or on behalf of the transferee company.

(2) It is not necessary for the scheme to be approved at a meeting of the members, or any class of members, of the transferee company if the court is satisfied that the conditions in section 321 have been complied with.

(3) In this section and sections 321 and 322, “relevant securities”, in relation to a company, means shares or other securities carrying the right to vote at general meetings of the company.

Conditions relevant to section 320.

321.(1) The first condition relevant to section 320 is that either subsection (2) or subsection (3) is satisfied.

(2) This subsection is satisfied if publication of notice of receipt of the draft terms by the Registrar took place in respect of the transferee company at least 1 month before the date of the first meeting of members, or any class of members, of the transferor company summoned for the purpose of agreeing to the scheme.

(3) This subsection is satisfied if–

(a) the conditions in section 307(2) to (4) are met in respect of the transferee company;

(b) the Registrar published the notice mentioned in section 307(4) in the Gazette at least 1 month before the date of the first meeting of members, or any class of members, of the transferor company summoned for the purpose of agreeing to the scheme; and

(c) the draft terms remained available on the website throughout the period beginning 1 month before that date and remained available until the conclusion of that meeting.

(4) The second condition relevant to section 320 is that subsection (5) or (6) is satisfied for each of the documents listed in the applicable paragraphs of section 312(3)(a) to (f) relating to the transferee company and the transferor company or, if there is more than one transferor company, each of them.

(5) This subsection is satisfied for a document if the members of the transferee company were able during the period beginning 1 month before, and ending on, the date mentioned in subsection (2) to inspect that document at the registered office of that company.

(6) This subsection is satisfied for a document if–

(a) the document is made available on a website which is maintained by or on behalf of the transferee company and identifies the company;

(b) access to the document on the website is not conditional on the payment of a fee or otherwise restricted; and

(c) the document remains available on the website throughout the period beginning 1 month before, and ending on, the date mentioned in subsection (2).

(7) The third condition relevant to section 320 is that the members of the transferee company were able to obtain copies of the documents mentioned in subsection (4), or any part of those documents, on request and free of charge, throughout the period beginning 1 month before the date mentioned in subsection (2) and remains free of charge until the conclusion of the meeting referred to in that subsection; and for the purposes of this subsection, section 313(5) applies as it applies for the purposes of section 312(1)(b).

(8) The fourth condition relevant to section 320 is that–

(a) one or more members of the transferee company, who together held not less than 5% of the paid-up capital of the company which carried the right to vote at general meetings of the company would have been able, during that period, to require a meeting of each class of members to be called for the purpose of deciding whether or not to agree to the scheme; and

(b) no such requirement was made.

Circumstances in which no meetings required (merger).

322.(1) This section applies in the case of a merger by absorption where all of the relevant securities (as defined in section 320(3)) of the transferor company, or, if there is more than one transferor company, of each of them, are held by or on behalf of the transferee company.

(2) It is not necessary for the scheme to be approved at a meeting of the members, or any class of members, of any of the merging companies if the court is satisfied that the following conditions have been complied with.

(3) The first condition is that either subsection (4) or subsection (5) is satisfied.

(4) This subsection is satisfied if publication of notice of receipt of the draft terms by the Registrar took place in respect of all the merging companies at least 1 month before the date of the court’s order.

(5) This subsection is satisfied if–

(a) the conditions in section 307(2) to (4) are met in respect of each of the merging companies;

(b) in each case, the Registrar published the notice mentioned in section 307(4) in the Gazette at least 1 month before the date of the court’s order; and

(c) the draft terms remained available on the website throughout the period beginning 1 month before, and ending on, that date.

(6) The second condition is that either subsection (7) or subsection (8) is satisfied for each of the documents listed in the applicable paragraphs of section 312 (3)(a) to (f) relating to the transferee company and the transferor company, or, if there is more than one transferor company, each of them.

(7) This subsection is satisfied for a document if the members of the transferee company were able during the period beginning 1 month before, and ending on, the date mentioned in subsection (4) to inspect that document at the registered office of that company.

(8) This subsection is satisfied for a document if–

(a) the document is made available on a website which is maintained by or on behalf of the transferee company and identifies the company;

(b) access to the document on the website is not conditional on the payment of a fee or otherwise restricted; and

(c) the document remains available on the website throughout the period beginning 1 month before the date mentioned in subsection (4) and remains available until the conclusion of that meeting.

(9) The third condition is that the members of the transferee company were able to obtain copies of the documents mentioned in subsection (4), or any part of those documents, on request and free of charge, throughout the period beginning 1 month before the date mentioned in subsection (4) and remains free of charge until the conclusion of the meeting referred to in that subsection; and for the purposes of this subsection section 313(5) applies as it applies for the purposes of section 312(1)(b).

(10) The fourth condition is that–

(b) no such requirement was made. Other exceptions

Other circumstances in which meeting of members of transferee company not required (merger).

323.(1) In the case of any merger by absorption, it is not necessary for the scheme to be approved by the members of the transferee company if the court is satisfied that the following conditions have been complied with.

(2) The first condition is that either subsection (3) or subsection (4) is satisfied.

(3) This subsection is satisfied if publication of notice of receipt of the draft terms by the Registrar took place in respect of the transferee company at least 1 month before the date of the first meeting of members, or any class of members, of the transferor company, or, if there is more than one transferor company, any of them, summoned for the purposes of agreeing to the scheme.

(4) This subsection is satisfied if–

(a) the conditions in section 307(2) to (4) are met in respect of the transferee company;

(b) the Registrar published the notice mentioned in section 307(4) in the Gazette at least 1 month before the date of the first meeting of members, or any class of members, of the transferor company, or, if there is more than one transferor company, any of them, summoned for the purposes of agreeing to the scheme; and

(c) the draft terms remained available on the website throughout the period beginning 1 month before, and ending on, that date.

(5) The second condition is that subsection (6) or (7) is satisfied for each of the documents listed in the applicable paragraphs of section 312(3) relating to the transferee company and the transferor company, or, if there is more than one transferor company, each of them.

(6) This subsection is satisfied for a document if the members of the transferee company were able during the period beginning 1 month before, and ending on, the date of any such meeting as is mentioned in subsection (3) to inspect that document at the registered office of that company.

(7) This subsection is satisfied for a document if–

(a) the document is made available on a website which is maintained by or on behalf of the transferee company and identifies the company;

(b) access to the document on the website is not conditional on the payment of a fee or otherwise restricted; and

(c) the document remains available on the website throughout the period beginning 1 month before the date of any such meeting as is mentioned in subsection (3) and remains available until the conclusion of that meeting.

(8) The third condition is that the members of the transferee company were able to obtain copies of the documents mentioned in subsection (5), or any part of those documents, on request and free of charge, throughout the period beginning 1 month before the date of any such meeting as is mentioned in subsection (3) and thereafter until the conclusion of that meeting; and, for the purposes of this section, section 313(5) applies as it applies for the purposes of section 312(1)(b).

(9) The fourth condition is that–

(a) one or more members of that company, who together held not less than 5% of the paid-up capital of the company which carried the right to vote at general meetings of the company would have been able, during that period, to require a meeting of each class of members to be called for the purpose of deciding whether or not to agree to the scheme; and

(b) no such requirement was made.

(10) For the purposes of subsection (9) members holding 5% or more shall be entitled to request the directors to call a meeting irrespective of section 195(1).

Agreement to dispense with report, etc (merger).

324.(1) If all members holding shares in, and all persons holding other securities of, the merging companies, being shares or securities that carry a right to vote in general meetings of the company in question, so agree, the requirements referred to in subsection (2) do not apply.

(2) The requirements that may be dispensed with under this section are–

(a) the requirements of–

(i) section 309,

(ii) section 310,

(iii) section 311, and

(iv) section 314; and

(b) the requirements of section 312 so far as relating to any document required to be drawn up under sections 309, 310 or 311.

(3) For the purposes of this section–

(a) the members, or holders of other securities, of a company; and

(b) whether shares or other securities carry a right to vote in general meetings of the company, are determined as at the date of the application to the court under section 296.

Division Divisions and companies involved in a division.

325.(1) The scheme involves a division where under the scheme the undertaking, property and liabilities of the company in respect of which the compromise or arrangement is proposed are to be divided among and transferred to two or more companies each of which is either–

(a) an existing public company; or

(b) a new company, whether or not a public company.

(2) References in this Part to the companies involved in the division are to the transferor company and any existing transferee companies.

Requirements to be complied with in case of division Draft terms of scheme (division).

326.(1) A draft of the proposed terms of the scheme must be drawn up and adopted by the directors of each of the companies involved in the division.

(2) The draft terms must give particulars of at least the following matters-

(a) in respect of the transferor company and each transferee company–

(i) its name,

(ii) the address of its registered office, and

(iii) whether it is a company limited by shares or a company limited by guarantee and having a share capital;

(b) the number of shares in a transferee company to be allotted to members of the transferor company for a given number of their shares (the “share exchange ratio”) and the amount of any cash payment;

(d) the date from which the holding of shares in a transferee company will entitle the holders to participate in profits, and any special conditions affecting that entitlement;

(e) the date from which the transactions of the transferor company are to be regarded for accounting purposes as being those of a transferee company;

(f) any rights or restrictions attaching to shares or other securities in a transferee company to be allotted under the scheme to the holders of shares or other securities in the transferor company to which any special rights or restrictions attach, or the measures proposed concerning them;

(g) any amount of benefit paid or given or intended to be paid or given–

(i) to any of the experts referred to in section 331, or

(ii) to any director of a company involved in the division, and the consideration for the payment of benefit.

(3) The draft terms must also–

(a) give particulars of the property and liabilities to be transferred, to the extent that these are known to the transferor company, and their allocation among the transferee companies;

(b) make provision for the allocation among and transfer to the transferee companies of any other property and liabilities that the transferor company has acquired or may subsequently acquire; and

(c) specify the allocation to members of the transferor company of shares in the transferee companies and the criteria upon which that allocation is based.

Publication of draft terms by Registrar (division).

327.(1) The directors of each company involved in the division must deliver a copy of the draft terms to the Registrar.

(2) The Registrar must publish in the Gazette notice of receipt by him from that company of a copy of the draft terms.

(3) That notice must be published at least 1 month before the date of any meeting of that company summoned for the purposes of approving the scheme.

(4) The requirements in this section for publication of draft terms on company website are subject to section 328 and the power of court to exclude certain requirements is subject to section 344.

Publication of draft terms on company website (division).

328.(1) Section 327 does not apply in respect of a company if the conditions in subsections (2) to (6) are met.

(2) The first condition is that the draft terms are made available on a website which–

(a) is maintained by or on behalf of the company; and

(b) identifies the company.

(4) The third condition is that the directors of the company deliver to the Registrar a notice giving details of the website.

(5) The fourth condition is that the Registrar publishes the notice in the Gazette at least 1 month before the date of any meeting of the company summoned for the purpose of approving the scheme.

(6) The fifth condition is that the draft terms remain available on the website throughout the period beginning 1 month before the date of any such meeting and remain available until the conclusion of that meeting.

Approval of members of companies involved in the division.

329.(1) The compromise or arrangement must be approved by a majority in number, representing 75% in value, of each class of members of each of the companies involved in the division, present and voting either in person or by proxy at a meeting.

(2) This requirement is subject to sections 339, 340 and 341.

Directors’ explanatory report (division).

330.(1) The directors of the transferor and each existing transferee company must draw up and adopt a report consisting of–

(a) the statement required by section 297; and

(b) insofar as that statement does not deal with the following matters, a further statement–

(i) setting out the legal and economic grounds for the draft terms, and in particular for the share exchange ratio and for the criteria on which the allocation to the members of the transferor company of shares in the transferee companies was based, and

(ii) specifying any special valuation difficulties.

(2) The report must also state–

(a) whether a report on the valuation of non-cash consideration for shares has been made to any transferee company under section 91; and

(b) if so, whether that report has been delivered to the Registrar.

(3) The requirement in this section is subject to section 342 and section 343.

Expert’s report (division).

331.(1) An expert’s report must be drawn up on behalf of each company involved in the division.

(2) The report required is a written report on the draft terms to the members of the company.

(3) The court may on the joint application of the companies involved in the division approve the appointment of a joint expert to draw up a single report on behalf of all those companies and if no such appointment is made, there must be a separate expert's report to the members of each company involved in the division drawn up by a separate expert appointed on behalf of that company.

(4) The expert must be a person who–

(a) is eligible for appointment as an auditor under section 255; and

(b) meets the independence requirement in section 346.

(5) The expert’s report must–

(a) indicate the method or methods used to arrive at the share exchange ratio;

(d) state whether in the expert’s opinion the share exchange ratio is reasonable; and

(e) in the case of a valuation made by a person other than himself pursuant to section 345, state that it appeared to him reasonable to arrange for it to be so made or to accept a valuation so made.

(6) The expert, or each of them, has–

(a) the right of access to all such documents of the companies involved in the division; and

(b) the right to require from the companies’ officers all such information, as he thinks necessary for the purposes of making his report.

(7) The requirement in this section is subject to sections 342 and 343.

Supplementary accounting statement (division).

332.(1) This section applies if the last annual accounts of a company involved in the division relate to a financial year ending before–

(a) the date 7 months before the first meeting of the company summoned for the purposes of approving the scheme; or

(b) if no meeting of the company is required, by virtue of sections 339 and 340 or 341, the date 6 months before the directors of the company adopt the draft terms of the scheme.

(a) a balance sheet dealing with the state of affairs of the company as at a date not more than 3 months before the draft terms were adopted by the directors; and

(3) The requirements of this Act, and where relevant Article 4 of the IAS Regulation, as to the balance sheet forming part of a company's annual accounts, and the matters to be included in notes to it, apply to the balance sheet required for an accounting statement under this section, with such modifications as are necessary by reason of its being prepared otherwise than as at the last day of a financial year.

(4) The provisions of section 241 of this Act shall apply as to the signing of the balance sheet required for an accounting statement under this section.

(5) In this section–

(a) “half-yearly financial report” means a report of that description required to be made public by rules under section 11 of the Financial Services (Listing of Securities) Act 2006; and

(b) “IAS Regulation” means EC Regulation No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards as amended or replaced by another EC Regulation.

(6) The requirement in this section is subject to sections 342 and 343.

Inspection of documents (division).

**333.(1)** The members of each company involved in the division must be able, during the period specified below–

(a) to inspect at the registered office of that company copies of the documents listed below relating to that company and every other company involved in the division; and

(b) to obtain copies of those documents or any part of them on request free of charge.

(2) The period referred to above is the period–

(a) beginning 1 month before; and

(b) ending on the date of, the first meeting of the members, or any class of members, of the company for the purposes of approving the scheme.

(3) The documents referred to above are–

(a) the draft terms;

(b) the directors’ explanatory report;

(d) the company’s annual accounts and reports for the last 3 financial years ending on or before the first meeting of the members, or any class of members, of the company summoned for the purposes of approving the scheme;

(e) any supplementary accounting statement required by section 332; and

(f) if no statement is required by section 332 because the company has made public a recent half-yearly financial report under subsection (2) of that section, that report.

(4) The requirement in subsection (1)(a) is subject to the requirement of publication of documents on the company website pursuant to section 334(1).

(5) The requirements in subsection (3)(b), (c) and (e) are subject to sections 342, 343 and 344.

(6) Where a member who has consented to information being sent to him or supplied by the company by electronic means and he has not revoked that consent, the hard copy of such document need not be sent to him.

Publication of documents on company website (division).

334.(1) Subject to subsection (6), section 333(1)(a) does not apply to a document if the conditions in subsections (2) to (4) are met in relation to that document.

(2) The first condition is that the document is made available on a website which–

(a) is maintained by or on behalf of the company; and

(b) identifies the company.

(3) The second condition is that access to the document on the website is not conditional on payment of a fee or otherwise restricted.

(5) A person is able to obtain a copy of a document as required by section 333(1)(b) if–

(a) the conditions in subsections (2) and (3) are met in relation to that document; and

(b) the person is able, throughout the period specified in subsection (4)–

(i) to retain a copy of the document as made available on the website, and

(ii) to produce a hard copy of it.

(6) Where members of a company are able to obtain copies of a document only as mentioned in subsection (5), section 333(1)(a) applies to that document even if the conditions in subsections (2) to (4) are met.

Report on material changes of assets of transferor company (division).

335.(1) The directors of the transferor company must report–

(a) to every meeting of the members, or any class of members, of that company summoned for the purpose of agreeing to the scheme; and

(b) to the directors of each existing transferee company, any material changes in the property and liabilities of the transferor company between the date when the draft terms were adopted and the date of the meeting in question.

(2) The directors of each existing transferee company must in turn–

(a) report those matters to every meeting of the members, or any class of members, of that company summoned for the purpose of agreeing to the scheme; or

(b) send a report of those matters to every member entitled to receive notice of such a meeting.

(3) The requirement in this section is subject to sections 342 and 343.

Approval of articles of new transferee company (division).

336. The articles of every new transferee company, or a draft of them, must be approved by ordinary resolution of the transferor company.

Protection of holders of securities to which special rights attached (division).

337.(1) The scheme must provide that where any securities of the transferor company, other than shares, to which special rights are attached are held by a person otherwise than as a member or creditor of the company, that person is to receive rights in a transferee company of equivalent value.

(2) Subsection (1) does not apply if–

(a) the holder has agreed otherwise; or

(b) the holder is, or under the scheme is to be, entitled to have the securities purchased by a transferee company on terms that the court considers reasonable.

No allotment of shares to transferor company or its nominee (division).

338. The scheme must not provide for any shares in a transferee company to be allotted to–

(a) the transferor company, or its nominee, in respect of shares in the transferor company held by the transferor company itself or its nominee; or

(b) a transferee company, or its nominee, in respect of shares in the transferor company held by the transferee company, or its nominee Exceptions where shares of transferor company held by transferee company Circumstances in which meeting of members of transferor company not required (division).

339.(1) This section applies in the case of a division where all of the shares or other securities of the transferor company carrying the right to vote at general meetings of the company are held by or on behalf of one or more existing transferee companies.

(2) It is not necessary for the scheme to be approved by a meeting of the members, or any class of members, of the transferor company if the court is satisfied that the conditions in section 340 have been complied with.

Conditions relevant to section 339.

340.(1) The first condition relevant to section 339 is that either subsection (2) or subsection (3) is satisfied.

(2) This subsection is satisfied if publication of notice of receipt of the draft terms by the Registrar took place in respect of all the companies involved in the division at least 1 month before the date of the court’s order.

(3) This subsection is satisfied if–

(a) the conditions in section 328(2) to (4) are met in respect of each of the companies involved in the division;

(b) in each case, the Registrar published the notice mentioned in section 328(4) in the Gazette at least 1 month before the date of the court’s order; and

(c) the draft terms remained available on the website throughout the period beginning 1 month before, and ending on, that date.

(4) The second condition is that subsection (5) or (6) is satisfied for each of the documents listed in the applicable paragraphs of section 333(3) relating to every company involved in the division.

(5) This subsection is satisfied for a document if the members of every company involved in the division were able during the period beginning 1 month before, and ending on, the date of the court’s order to inspect that document at the registered office of their company.

(6) This subsection is satisfied for a document if–

(a) the document is made available on a website which is maintained by or on behalf of the company to which it relates and identifies the company;

(b) access to the document on the website is not conditional on payment of a fee or otherwise restricted; and

(c) the document remains available on the website throughout the period beginning 1 month before, and ending on, the date of the court’s order.

(7) The third condition is that the members of every company involved in the division were able to obtain copies of the documents mentioned in subsection (4), or any part of those documents, on request and free of charge, throughout the period beginning 1 month before, and ending on, the date of the court’s order; and for the purposes of this subsection section 334(5) applies as it applies for the purposes of section 333(1)(b).

(8) The fourth condition is that the directors of the transferor company have sent–

(a) to every member who would have been entitled to receive notice of a meeting to agree to the scheme (had any such meeting been called); and

(b) to the directors of every existing transferee company, a report of any material change in the property and liabilities of the transferor company between the date when the terms were adopted by the directors and the date 1 month before the date of the court’s order.

Other exceptions

Circumstances in which meeting of members of transferee company not required (division).

341.(1) In the case of a division, it is not necessary for the scheme to be approved by the members of a transferee company if the court is satisfied that the following conditions have been complied with in relation to that company; and, of those conditions, the first, second and third are subject to section 344.

(2) The first condition is that either subsection (3) or subsection (4) is satisfied.

(3) This subsection is satisfied if publication of notice of receipt of the draft terms by the Registrar took place in respect of the transferee company at least 1 month before the date of the first meeting of members of the transferor company summoned for the purposes of agreeing to the scheme.

(4) This subsection is satisfied if–

(a) the conditions in section 328(2) to (4) are met in respect of the transferee company;

(b) the Registrar published the notice mentioned in section 328(4) in the Gazette at least 1 month before the date of the first meeting of members of the transferor company summoned for the purposes of agreeing to the scheme; and

(c) the draft terms remained available on the website throughout the period beginning 1 month before the date of such meeting and remains available until the conclusion of that meeting.

(5) The second condition is that subsection (6) or (7) is satisfied for each of the documents listed in the applicable paragraphs of section 333(3) relating to the transferee company and every other company involved in the division.

(6) This subsection is satisfied for a document if the members of the transferee company were able during the period beginning 1 month before, and ending on, the date mentioned in subsection (3) to inspect that document at the registered office of that company.

(7) This subsection is satisfied for a document if–

(a) the document is made available on a website which is maintained by or on behalf of the transferee company and identifies the company;

(b) access to the document on the website is not conditional on payment of a fee or otherwise restricted; and

(c) the document remains available on the website throughout the period beginning 1 month before, and ending on, the date mentioned in subsection (3).

(8) The third condition is that the members of the transferee company were able to obtain copies of the documents mentioned in subsection (5), or any part of those documents, on request and free of charge, throughout the period beginning 1 month before the date mentioned in subsection (3) and remains free of charge until the conclusion of the meeting referred to in that subsection; and for the purposes of this subsection section 334(5) applies as it applies for the purposes of section 333(1)(b).

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