Company Law Reform Bill [HL]

moved Amendment No. 90:"Page 37, line 28, at end insert—" ““(   )   from a company limited by guarantee to a private company limited by shares; (   )   from a company limited by shares to a company limited by guarantee.”” The noble Lord said: Here we are dealing with Part 7 and re-registration as a means of altering a company’s status. The amendment has been raised with us by the Law Society. It would enable a company limited by guarantee to re-register as a company limited by shares and vice versa. The clause deals with the company changing its status by re-registration. Because of the restrictions in Clauses 102(2) and 105(2), it is not possible for a company limited by guarantee to re-register as a company limited by shares or vice versa, via registration as an unlimited company. The only routes available, both under the existing Companies Acts and as proposed under the Bill, are either a scheme or arrangement under Section 425 of the Companies Act 1985, which involves a court hearing and is cumbersome and expensive, or, alternatively, a transfer of the assets and, as appropriate, the liabilities of the existing company to a new company of the other type. This is complicated and can have disadvantageous tax implications. There appear no public policy reasons why re-registration along the lines proposed in our amendment would not be possible. There will need to be consequential amendments to provide for the procedure to be adopted in each case along similar lines to those in Clauses 105 to 107. A special resolution of the company should be sufficient to approve the registration in each case. All we wish to do today is test the principle with the Minister so we have not tried to draft consequential amendments. In summary, the amendment is intended to remove an historical obstacle, which has caused difficulties to both businesses and practitioners. I beg to move.