(1) This section defines what is meant by references in this Part to a director “controlling” a body corporate.
(2) A director of a company is taken to control a body corporate if, but only if—
(a) he or any person connected with him—
(i) is interested in any part of the equity share capital of that body, or
(ii) is entitled to exercise or control the exercise of any part of the voting power at any general meeting of that body, and
(b) he, the persons connected with him and the other directors of that company, together—
(i) are interested in more than 50% of that share capital, or
(ii) are entitled to exercise or control the exercise of more than 50% of that voting power.
(3) The rules set out in Schedule 1 (references to interest in shares or debentures) apply for the purposes of this section.
(4) References in this section to voting power the exercise of which is controlled by a director include voting power whose exercise is controlled by a body corporate controlled by him.
(5) Shares in a company held as treasury shares, and any voting rights attached to such shares, are disregarded for the purposes of this section.
(6) For the avoidance of circularity in the application of section 252 (meaning of “connected person”)—
(a) a body corporate with which a director is connected is not treated for the purposes of this section as connected with him unless it is also connected with him by virtue of subsection (2)(c) or (d) of that section (connection as trustee or partner); and
(b) a trustee of a trust the beneficiaries of which include (or may include) a body corporate with which a director is connected is not treated for the purposes of this section as connected with a director by reason only of that fact.
For the purposes of this Part—
(a) bodies corporate are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate, and
(b) companies are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate.
(1) References in this Part to a company's constitution include—
(a) any resolution or other decision come to in accordance with the constitution, and
(b) any decision by the members of the company, or a class of members, that is treated by virtue of any enactment or rule of law as equivalent to a decision by the company.
(2) This is in addition to the matters mentioned in section 17 (general provision as to matters contained in company's constitution).
(1) The Secretary of State may by order substitute for any sum of money specified in this Part a larger sum specified in the order.
(2) An order under this section is subject to negative resolution procedure.
(3) An order does not have effect in relation to anything done or not done before it comes into force.
Accordingly, proceedings in respect of any liability incurred before that time may be continued or instituted as if the order had not been made.
For the purposes of this Part it is immaterial whether the law that (apart from this Act) governs an arrangement or transaction is the law of the United Kingdom, or a part of it, or not.
(1) This Chapter applies to proceedings in England and Wales or Northern Ireland 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 this Chapter 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 994 (proceedings for protection of members against unfair prejudice).
(3) A derivative claim under this Chapter 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) a shadow director is treated as a director; 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.
261 Application for permission to continue derivative claim
(1) A member of a company who brings a derivative claim under this Chapter must apply to the court for permission (in Northern Ireland, leave) 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 (or leave) to continue the claim on such terms as it thinks fit,
(b) refuse permission (or leave) and dismiss the claim, or
(c) adjourn the proceedings on the application and give such directions as it thinks fit.
262 Application for permission to continue claim as a derivative claim
(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 this Chapter.
(2) A member of the company may apply to the court for permission (in Northern Ireland, leave) 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
(c) it is appropriate for the member to continue the claim as a derivative claim.
(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 as a derivative claim on such terms as it thinks fit,
(b) refuse permission (or leave) and dismiss the application, or
(c) adjourn the proceedings on the application and give such directions as it thinks fit.
(1) The following provisions have effect where a member of a company applies for permission (in Northern Ireland, leave) under section 261 or 262.
(2) Permission (or leave) must be refused if the court is satisfied—
(a) that a person acting in accordance with section 172 (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
(c) where the cause of action arises from an act or omission that has already occurred, that the act or omission—
(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 (or leave) the court must take into account, in particular—
(a) whether the member is acting in good faith in seeking to continue the claim;
(b) the importance that a person acting in accordance with section 172 (duty to promote the success of the company) would attach to continuing it;
(c) 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;
(d) 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;
(e) whether the company has decided not to pursue the claim;
(f) 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 (or leave) 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 Secretary of State may by regulations—
(a) amend subsection (2) so as to alter or add to the circumstances in which permission (or leave) 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 (or leave).
(6) Before making any such regulations the Secretary of State shall consult such persons as he considers appropriate.
(7) Regulations under this section are subject to affirmative resolution procedure.
264 Application for permission to continue derivative claim brought by another member
(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
(c) has continued a derivative claim under this section.
(2) Another member of the company (“the applicant”) may apply to the court for permission (in Northern Ireland, leave) 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
(c) it is appropriate for the applicant to continue the claim as a derivative claim.
(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
(c) adjourn the proceedings on the application and give such directions as it thinks fit.
(1) In Scotland, a member of a company may raise proceedings in respect of an act or omission specified in subsection (3) in order to protect the interests of the company and obtain a remedy on its behalf.
(2) A member of a company may raise such proceedings only under subsection (1).
(3) The act or omission referred to in subsection (1) is any actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company.
(4) Proceedings may be raised under subsection (1) against (either or both)—
(a) the director referred to in subsection (3), or
(b) another person.
(5) It is immaterial whether the act or omission in respect of which the proceedings are to be raised or, in the case of continuing proceedings under section 267 or 269, are raised, arose before or after the person seeking to raise or continue them became a member of the company.
(6) This section does not affect—
(a) any right of a member of a company to raise proceedings in respect of an act or omission specified in subsection (3) in order to protect his own interests and obtain a remedy on his own behalf, or
(b) the court's power to make an order under section 996(2)(c) or anything done under such an order.
(7) In this Chapter—
(a) proceedings raised under subsection (1) are referred to as “derivative proceedings”,
(b) the act or omission in respect of which they are raised is referred to as the “cause of action”,
(c) “director” includes a former director,
(d) references to a director include a shadow director, and
(e) 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.
(1) Derivative proceedings may be raised by a member of a company only with the leave of the court.
(2) An application for leave must—
(a) specify the cause of action, and
(b) summarise the facts on which the derivative proceedings are to be based.
(3) If it appears to the court that the application and the evidence produced by the applicant in support of it do not disclose a prima facie case for granting it, the court—
(a) must refuse the application, and
(b) may make any consequential order it considers appropriate.
(4) If the application is not refused under subsection (3)—
(a) the applicant must serve the application on the company,
(b) the court—
(i) may make an order requiring evidence to be produced by the company, and
(ii) may adjourn the proceedings on the application to enable the evidence to be obtained, and
(c) the company is entitled to take part in the further proceedings on the application.
(5) On hearing the application, the court may—
(a) grant the application on such terms as it thinks fit,
(b) refuse the application, or
(c) adjourn the proceedings on the application and make such order as to further procedure as it thinks fit.
267 Application to continue proceedings as derivative proceedings
(1) This section applies where—
(a) a company has raised proceedings, and
(b) the proceedings are in respect of an act or omission which could be the basis for derivative proceedings.
(2) A member of the company may apply to the court to be substituted for the company in the proceedings, and for the proceedings to continue in consequence as derivative proceedings, on the ground that—
(a) the manner in which the company commenced or continued the proceedings amounts to an abuse of the process of the court,
(b) the company has failed to prosecute the proceedings diligently, and
(c) it is appropriate for the member to be substituted for the company in the proceedings.
(3) If it appears to the court that the application and the evidence produced by the applicant in support of it do not disclose a prima facie case for granting it, the court—
(a) must refuse the application, and
(b) may make any consequential order it considers appropriate.
(4) If the application is not refused under subsection (3)—
(a) the applicant must serve the application on the company,
(b) the court—
(i) may make an order requiring evidence to be produced by the company, and
(ii) may adjourn the proceedings on the application to enable the evidence to be obtained, and
(c) the company is entitled to take part in the further proceedings on the application.
(5) On hearing the application, the court may—
(a) grant the application on such terms as it thinks fit,
(b) refuse the application, or
(c) adjourn the proceedings on the application and make such order as to further procedure as it thinks fit.
(1) The court must refuse leave to raise derivative proceedings or an application under section 267 if satisfied—
(a) that a person acting in accordance with section 172 (duty to promote the success of the company) would not seek to raise or continue the proceedings (as the case may be), or
(b) where the cause of action is an act or omission that is yet to occur, that the act or omission has been authorised by the company, or
(c) where the cause of action is an act or omission that has already occurred, that the act or omission—
(i) was authorised by the company before it occurred, or
(ii) has been ratified by the company since it occurred.
(2) In considering whether to grant leave to raise derivative proceedings or an application under section 267, the court must take into account, in particular—
(a) whether the member is acting in good faith in seeking to raise or continue the proceedings (as the case may be),
(b) the importance that a person acting in accordance with section 172 (duty to promote the success of the company) would attach to raising or continuing them (as the case may be),
(c) where the cause of action is 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,
(d) where the cause of action is 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,
(e) whether the company has decided not to raise proceedings in respect of the same cause of action or to persist in the proceedings (as the case may be),
(f) whether the cause of action is one which the member could pursue in his own right rather than on behalf of the company.
(3) In considering whether to grant leave to raise derivative proceedings or an application under section 267, 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.
(4) The Secretary of State may by regulations—
(a) amend subsection (1) so as to alter or add to the circumstances in which leave or an application is to be refused,
(b) amend subsection (2) so as to alter or add to the matters that the court is required to take into account in considering whether to grant leave or an application.
(5) Before making any such regulations the Secretary of State shall consult such persons as he considers appropriate.
(6) Regulations under this section are subject to affirmative resolution procedure.
269 Application by member to be substituted for member pursuing derivative proceedings
(1) This section applies where a member of a company (“the claimant”)—
(a) has raised derivative proceedings,
(b) has continued as derivative proceedings raised by the company, or
(c) has continued derivative proceedings under this section.
(2) Another member of the company (“the applicant”) may apply to the court to be substituted for the claimant in the action 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 proceedings diligently, and
(c) it is appropriate for the applicant to be substituted for the claimant in the proceedings.
(3) If it appears to the court that the application and the evidence produced by the applicant in support of it do not disclose a prima facie case for granting it, the court—
(a) must refuse the application, and
(b) may make any consequential order it considers appropriate.
(4) If the application is not refused under subsection (3)—
(a) the applicant must serve the application on the company,
(b) the court—
(i) may make an order requiring evidence to be produced by the company, and
(ii) may adjourn the proceedings on the application to enable the evidence to be obtained, and
(c) the company is entitled to take part in the further proceedings on the application.
(5) On hearing the application, the court may—
(a) grant the application on such terms as it thinks fit,
(b) refuse the application, or
(c) adjourn the proceedings on the application and make such order as to further procedure as it thinks fit.
270 Private company not required to have secretary
(1) A private company is not required to have a secretary.
(2) References in the Companies Acts to a private company “without a secretary” are to a private company that for the time being is taking advantage of the exemption in subsection (1); and references to a private company “with a secretary” shall be construed accordingly.
(3) In the case of a private company without a secretary—
(a) anything authorised or required to be given or sent to, or served on, the company by being sent to its secretary—
(i) may be given or sent to, or served on, the company itself, and
(ii) if addressed to the secretary shall be treated as addressed to the company; and
(b) anything else required or authorised to be done by or to the secretary of the company may be done by or to—
(i) a director, or
(ii) a person authorised generally or specifically in that behalf by the directors.
272 Direction requiring public company to appoint secretary
(1) If it appears to the Secretary of State that a public company is in breach of section 271 (requirement to have secretary), the Secretary of State may give the company a direction under this section.
(2) The direction must state that the company appears to be in breach of that section and specify—
(a) what the company must do in order to comply with the direction, and
(b) the period within which it must do so.
That period must be not less than one month or more than three months after the date on which the direction is given.
(3) The direction must also inform the company of the consequences of failing to comply.
(4) Where the company is in breach of section 271 it must comply with the direction by—
(a) making the necessary appointment, and
(b) giving notice of it under section 276,
before the end of the period specified in the direction.
(5) If the company has already made the necessary appointment, it must comply with the direction by giving notice of it under section 276 before the end of the period specified in the direction.
(6) If a company fails to comply with a direction under this section, an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
For this purpose a shadow director is treated as an officer of the company.
(7) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 5 on the standard scaleone-tenth of the greater of £5,000 or level 4 on the standard scale.
273 Qualifications of secretaries of public companies
(1) It is the duty of the directors of a public company to take all reasonable steps to secure that the secretary (or each joint secretary) of the company—
(a) is a person who appears to them to have the requisite knowledge and experience to discharge the functions of secretary of the company, and
(b) has one or more of the following qualifications.
(2) The qualifications are—
(a) that he has held the office of secretary of a public company for at least three of the five years immediately preceding his appointment as secretary;
(b) that he is a member of any of the bodies specified in subsection (3);
(c) that he is a barrister, advocate or solicitor called or admitted in any part of the United Kingdom;
(d) that he is a person who, by virtue of his holding or having held any other position or his being a member of any other body, appears to the directors to be capable of discharging the functions of secretary of the company.
(3) The bodies referred to in subsection (2)(b) are—
(a) the Institute of Chartered Accountants in England and Wales;
(b) the Institute of Chartered Accountants of Scotland;
(c) the Association of Chartered Certified Accountants;
(d) the Institute of Chartered Accountants in Ireland;
(e) the Institute of Chartered Secretaries and Administrators;
(f) the Chartered Institute of Management Accountants;
(g) the Chartered Institute of Public Finance and Accountancy.
274 Discharge of functions where office vacant or secretary unable to act
Where in the case of any company the office of secretary is vacant, or there is for any other reason no secretary capable of acting, anything required or authorised to be done by or to the secretary may be done—
(a) by or to an assistant or deputy secretary (if any), or
(b) if there is no assistant or deputy secretary or none capable of acting, by or to any person authorised generally or specifically in that behalf by the directors.
279G Duty to notify registrar of change in secretary or joint secretary
(1) A company must give notice to the registrar if a person—
(a) becomes the secretary or one of the joint secretaries of the company, or
(b) ceases to be the secretary or one of the joint secretaries of the company.
(2) The notice must specify the date on which the person became or ceased to be the secretary or one of the joint secretaries of the company.
(3) A notice under subsection (1)(a) must contain—
(a) a statement of the required information about the secretary or joint secretary (see sections 279J and 279K), and
(b) a statement by the company that the person has consented to act in that capacity.
(4) Subsection (1)(a) does not require a company, on its incorporation, to give notice in relation to a person named as the proposed secretary or one of the proposed joint secretaries of the company in the statement under section 12.
(5) A notice under this section must be given within the period of 14 days beginning with the day on which the person becomes or ceases to be the secretary or a joint secretary.
279H Duty to notify registrar of changes of information
(1) A company must give notice to the registrar of any change in the required information about the secretary or one of the joint secretaries of the company (see sections 279J and 279K).
(2) The notice must specify the date on which the change occurred.
(3) A notice under this section must be given within the period of 14 days beginning with the day on which the change occurs.
279I Notification of changes occurring before company’s incorporation
(1) A company must give notice to the registrar if—
(a) a person named in the statement under section 12 as the proposed secretary of the company did not become the secretary on its incorporation, or
(b) a person named in the statement under section 12 as one of the proposed joint secretaries of the company become did not become one of the joint secretaries on its incorporation.
(2) A company must give notice to the registrar of any change in the required information about a proposed secretary, or one of the proposed joint secretaries, that occurred—
(a) after the application for the company’s registration under section 9 was delivered to the registrar, but
(b) before the company was incorporated.
(3) But a company is not required to give notice under subsection (2) in respect of a person if it gives notice under subsection (1) in respect of the person.
(4) A notice under subsection (2) must specify the date on which the change occurred.
(5) A notice under this section must be given within the period of 14 days beginning with the day on which the company was incorporated.
279J Required information about a secretary etc: individuals
(1) The required information about a secretary or joint secretary (or proposed secretary or joint secretary) who is an individual is—
(a) name;
(b) any relevant former names;
(c) a service address (which may be stated as “The company’s registered office”).
(2) In subsection (1)(b) “relevant former name” means any former name other than—
(a) in the case of a peer, or an individual normally known by a British title, the name by which the individual was known previous to the adoption of or succession to the title, or
(b) in the case of any person—
(i) a former name which was changed or disused before the person attained the age of 16 years,
(ii) a former name which has been changed or disused for 20 years or more, or
(iii) a former name which the registrar is required to refrain from making available for public inspection or from disclosing (or both) by virtue of regulations under section 1088(1)(a) or (b).
(3) In this section—
“former name” means a name by which the individual was formerly known for business purposes;
“name” means the individual’s forename and surname.
(4) Where a secretary or joint secretary (or proposed secretary or joint secretary) is a peer or an individual usually known by a title, any requirement of this Act to provide the individual’s name because it forms part of the required information may be satisfied by providing that title instead of the individual’s forename and surname.
(5) The Secretary of State may by regulations—
(a) amend this section so as to change the required information about a secretary or joint secretary (or proposed secretary or joint secretary) who is an individual;
(b) repeal subsection (4).
(6) Regulations under this section are subject to affirmative resolution procedure.
279K Required information about a secretary etc: corporate secretaries and firms
(1) The required information about a secretary or joint secretary (or proposed secretary or joint secretary) that is a body corporate, or a firm that is a legal person under the law by which it is governed, is—
(a) corporate or firm name;
(b) principal office;
(c) a service address (which may be stated as “The company’s registered office”);
(d) in the case of a limited company that is a UK-registered company, the registered number;
(e) in any other case, particulars of—
(i) the legal form of the body corporate or firm and the law by which it is governed, and
(ii) if applicable, the register in which it is entered (including details of the state) and its registration number in that register.
(2) The Secretary of State may by regulations amend this section so as to change the required information about a secretary or joint secretary (or proposed secretary or joint secretary) of a description mentioned in subsection (1).
(3) Regulations under this section are subject to affirmative resolution procedure.
279L Firms all of whose partners are joint secretaries
(1) This section applies where—
(a) all the members in a firm are joint secretaries (or proposed joint secretaries) of a company, and
(b) the firm is not a legal person under the law by which it is governed.
(2) Any requirement imposed by this Act to provide the required information about the members as joint secretaries (or proposed joint secretaries) may instead be satisfied by providing the information that would be required if the firm were a legal person and the firm had been appointed as secretary.
279M Secretary or joint secretary: offence of failure to notify of changes
(1) If a company fails, without reasonable excuse, to comply with section 279G, 279H or 279I, an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(2) For this purpose a shadow director is treated as an officer of the company.
(3) A person guilty of an offence under this section is liable on summary conviction—
(a) in England and Wales, to a fine;
(b) in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 5 on the standard scale.
A provision requiring or authorising a thing to be done by or to a director and the secretary of a company is not satisfied by its being done by or to the same person acting both as director and as, or in place of, the secretary.