Section 1040: Companies authorised to register under this Act
1319. This section replaces section 680 of the 1985 Act. It applies to companies incorporated within the UK but not formed under the Companies Acts (or certain earlier companies legislation). It enables such companies to register under the Act. The types of company that can take advantage of this provision are listed in subsection (1). They include companies formed before 2 November 1862; companies formed by private Act of Parliament and companies incorporated by royal charter.
1320. The company may apply to register as a company limited by shares, a company limited by guarantee or as an unlimited company. Subsections (4) and (5) impose restrictions on this choice. So, a company with limited liability may not register as an unlimited company, and only a company with share capital may register as a company limited by shares.
1321. A company may wish to apply to register under the Act in order to take advantage of legislation applying to companies registered under the Companies Acts. Subsection (6) makes clear that a company may register even if it is in order to take advantage of certain provisions of the Insolvency Act 1986 not available to unregistered companies. For example, under section 221(4) of the Insolvency Act 1986, unregistered companies may not be wound up under that Act voluntarily (except in accordance with the EC regulation on insolvency proceedings).
Section 1041: Definition of “joint stock company”
1322. This section restates section 683 of the 1985 Act. It defines the joint stock companies that may register under section 1040.
Section 1042: Power to make provision by regulations
1323. This section is a new provision. It confers power on the Secretary of State to make regulations in connection with the registration of a company following an application under section 1040 (application by UK company not formed under the Companies Acts to register under the Companies Acts). Regulations made under this section will replace the provisions made by sections 681 to 682, 684 to 690 and Schedule 21 of the 1985 Act. The regulations will cover the procedural requirements for registration, the conditions to be satisfied before registration and the documents to be supplied on an application for registration. The regulations will also set out the consequences of registration, including the status of the company following registration and the application of the Companies Acts to such companies following registration. The regulations are subject to the negative resolution procedure.
Section 1043: Unregistered companies
1324. This section replaces section 718 of the 1985 Act. The section confers a power on the Secretary of State to apply provisions of the Companies Acts to certain unregistered companies. These are companies incorporated in the UK, and having their principal place of business in the UK, but not formed or registered under the Companies Acts or any other public general Act of Parliament. Examples include companies formed by letters patent or by private Act of Parliament. Subsection (1) exempts certain other companies from regulations under this section, including those exempted by direction of the Secretary of State.
1325. Regulations under this section will replace the provision made by Schedule 22 to the 1985 Act. The regulations may apply specified provisions of the Companies Acts to specified descriptions of unregistered company, and may make limitations, adaptations and modifications to the application of the Companies Acts to unregistered companies. The regulations are subject to the negative resolution procedure.
1326. This Part applies to companies incorporated outside the UK (“overseas companies”). It enables various registration, reporting and disclosure requirements to be imposed on overseas companies.
1327. This Part, together with the regulations to be made under it, will replace the provisions made by Part 23 (including Schedules 21A to D) of the 1985 Act. Regulations made under this Part will continue to implement the requirements of the Eleventh Company Law Directive (89/666/EEC), which imposes disclosure requirements on overseas companies that set up branches in the UK.
1328. As originally enacted, Part 23 of the 1985 Act applied to companies incorporated outside Great Britain that established a place of business in Great Britain. Subsequently, the Eleventh Company Law Directive imposed a different set of disclosure requirements on those overseas companies with branches in the UK. The branch disclosure requirements also differ depending on whether or not the overseas company is incorporated within another EEA State. The result is that there are at present effectively two parallel regimes that apply to overseas companies.
1329. The CLR set out their initial analysis of the rules for regulating companies formed abroad in Chapter 5.6 of the Strategic Framework and then put forward their provisional detailed conclusions in their consultation document of October 1999 entitled "Reforming the law concerning overseas companies." The CLR presented their conclusions in paragraphs 11.21 to 11.33 of the Final Report.
Section 1044: Overseas companies
1330. This section explains that for the purposes of the Companies Acts an “overseas company” means a company incorporated outside the UK. This is wider than the definition of “oversea company” in section 744 of the 1985 Act which it replaces. The definition in section 744 refers to companies incorporated outside Great Britain that establish a place of business in Great Britain. Under the Act the regulations will be able to specify the connection with the UK that gives rise to the various disclosure obligations imposed under this Part.
Section 1045: Company contracts and execution of documents by companies
1331. This section restates section 130(6) of the Companies Act 1989 (company contracts and execution of documents by companies).
Section 1046: Duty to register particulars
1332. This section confers on the Secretary of State a new power to make regulations to require overseas companies to register with the registrar of companies. The regulations may require particular information to be included in the registration. For example, an address for the company and details of its directors. The regulations may also require particular documents to be sent to the registrar, such as a copy of the company’s constitution. Subsection (2) ensures that the regulations implement the requirements of the Eleventh Company Law Directive (89/666/EEC), under which an overseas company must register if the company opens a branch in the UK.
1333. Regulations may require the overseas company to inform the registrar of companies of any changes in the details or documents it has registered (subsection (4)). The regulations may set deadlines for sending the information to the registrar of companies. They may also determine whether the overseas company should register with the registrar for England and Wales, the registrar for Scotland or the registrar for Northern Ireland. For example, an overseas company that opens a branch in Scotland may be required to register with the registrar of companies for Scotland.
1334. The Eleventh Company Law Directive imposes different disclosure requirements depending on where the overseas company setting up the branch is incorporated. Different reporting requirements are imposed on credit and financial institutions. Therefore regulations under this section may make different provision according to the place where the company is incorporated and the activities carried on by it.
1335. Regulations made under this section will be subject to the affirmative resolution procedure.