Company Law Bill [HL]

Perhaps I may deal with Amendment No. A90 first. Clause 578 enables a company to easily redenominate its share capital or any class of its share capital from one currency to another. This requires an ordinary resolution of the company’s members. The clause makes it clear that a redenomination of a company’s share capital or any class of it does not affect any rights or obligations that the members may have under the company’s constitution or any restrictions affecting members under the company’s constitution. 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. Similarly, if a company has issued partly paid shares, the liability on those shares remains in the currency in which the shares were issued. Amendment No. A90 would mean that where a company has redenominated its share capital from one currency to another, the shareholders will receive future dividends in the currency in which their shares are now held unless they have made other arrangements with the company. The Government consider that the question of which currency a company’s assets and liabilities are held in is a matter for the company and its shareholders. There may be good reasons for paying dividends in a particular currency, and the Government would not want to interfere with those. If the company and its shareholders wish to make provision for dividends to be paid in a particular currency post redenomination of the company’s share capital, they are free to do so. I accept that this may require a change in the company’s constitution; that is, a special resolution of the company’s shareholders, but this is a small price to pay for protecting the rights and obligations that attach to a company’s shares. One would expect that this would take place at the same time as the proposals to redenominate. Amendment No. A89C seeks to add ““receive”” to subsection (1) of Clause 580. I am not convinced that the amendment is necessary. This is purely a question of drafting style and, in our view, the proposed amendment does not make the provision any clearer.