Clause 107
Company Law Reform Bill [Lords]
3:15 pm
Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)
An issue arises here that we said we would return to following Report in the Lords, when we amended the Bill to remove the requirement for a statement of capital to be provided where an unlimited company that has not previously had a share capital re-registers as a company limited by shares. The requirement for a statement of capital was considered unnecessary in those circumstances, as the company will be required to make a return of allotments to the registrar under clause 545 when it makes an allotment of shares after its registration. That return must be accompanied by a statement of capital. In short, we removed the potential duplication of an information requirement.
We indicated then that we might need to return to the question of whether there were any circumstances in which an unlimited company should be required to provide a statement of capital on its re-registration as a limited company. The amendment is the outcome of our deliberations on that point.
The new clause requires unlimited companies that already have a share capital at the date of application for re-registration as limited to deliver a statement of capital to the registrar within 15 days of their re-registration as a limited company unless that information has already been provided in some other way.
The amendment is required to ensure consistency of treatment between companies that are already limited by shares on the one hand and unlimited companies having a share capital that re-registers companies limited by shares on the other hand. Companies limited by shares are required to file a statement of capital whenever they make an alteration to their share capital which affects their total subscribed capital and whenever they make a new allotment of shares. In other words, they are effectively required to keep the publicly accessible statement of capital up to date.
By contrast, unlimited companies that have a share capital are not subject to the same requirements for real-time reporting, so to speak, of their capital base. Instead, they must provide a statement of capital once a year with their annual return. That means that there is often a time lag. For example, the share capital information on an unlimited company with a share capital that provides an annual statement in January, allots new shares in July and re-registers as a company limited by shares in December, will be many months out of date when the company re-registers.
One option for addressing that difference would be to require all unlimited companies with a share capital to make statements of capital on the same basis as companies limited by shares. That seems an unnecessary burden.