• Transfer of non-cash asset in an initial period

    • 555. Public company: agreement for transfer of non-cash asset in initial period

      (1) A public company formed as such must not enter into an agreement—
      (a) with a person who is one of its initial members,
      (b) for the transfer by him to the company, or another, before the end of the company's initial period of one or more non-cash assets, and
      (c) under which the consideration for the transfer to be given by the company is at the time of the agreement equal in value to one-tenth or more of the company's issued share capital,
      unless the conditions referred to below have been complied with.
      (2) The company's "initial period" means the period of two years beginning with the date of the company being issued with a certificate under section 699(2) (trading certificate).
      (3) The conditions are those specified in—
      (a) section 556 (requirement of independent valuation), and
      (b) section 558 (requirement of approval by members).
      (4) This section does not apply where—
      (a) it is part of the company's ordinary business to acquire, or arrange for other persons to acquire, assets of a particular description, and
      (b) the agreement is entered into by the company in the ordinary course of that business.
      (5) This section does not apply to an agreement entered into by the company under the supervision of the Court or of an officer authorised by the Court for the purpose.

    • 556. Agreement for transfer of non-cash asset: requirement of independent valuation

      (1) The following conditions must have been complied with—
      (a) the consideration to be received by the company, and any consideration other than cash to be given by the company, must have been independently valued in accordance with the provisions of this Chapter,
      (b) the valuer's report must have been made to the company during the six months immediately preceding the date of the agreement, and
      (c) a copy of the report must have been sent to the other party to the proposed agreement not later than the date on which copies have to be circulated to members under section 558(1)(b).
      (2) The reference in subsection 556(1)(a) to the consideration to be received by the company is to the asset to be transferred to it or, as the case may be, to the advantage to the company of the asset's transfer to another person.
      (3) The reference in subsection 556(1)(c) to the other party to the proposed agreement is to the person referred to in section 555(1)(a).

      If he has received a copy of the report under section 558 in his capacity as a member of the company, it is not necessary to send another copy under this section.
      (4) This section does not affect any requirement to value any consideration for purposes of section 550 (valuation of non-cash consideration for shares).

    • 557. Agreement for transfer of non-cash asset: requirements as to valuation and report

      (1) The provisions of sections 1010 to 1013 (general provisions as to independent valuation and report) apply to the valuation and report required by section 556 (requirement of independent valuation).
      (2) The valuer's report must state—
      (a) the consideration to be received by the company, describing the asset in question (specifying the amount to be received in cash) and the consideration to be given by the company (specifying the amount to be given in cash), and
      (b) the method and date of valuation.
      (3) The valuer's report must contain or be accompanied by a note by him—
      (a) in the case of a valuation made by a person other than himself, that it appeared to himself reasonable to arrange for it to be so made or to accept a valuation so made,
      (b) whoever made the valuation, that the method of valuation was reasonable in all the circumstances,
      (c) that it appears to the valuer that there has been no material change in the value of the consideration in question since the valuation, and
      (d) that, on the basis of the valuation, the value of the consideration to be received by the company is not less than the value of the consideration to be given by it.
      (4) Any reference in section 556 or this section to consideration given for the transfer of an asset includes consideration given partly for its transfer.
      (5) In such a case—
      (a) the value of any consideration partly so given is to be taken as the proportion of the consideration properly attributable to its transfer,
      (b) the valuer must carry out or arrange for such valuations of anything else as will enable him to determine that proportion, and
      (c) his report must state what valuations have been made for that purpose and also the reason for and method and date of any such valuation and any other matters which may be relevant to that determination.

    • 558. Agreement for transfer of non-cash asset: requirement of approval by members

      (1) The following conditions must have been complied with—
      (a) the terms of the agreement must have been approved by an ordinary resolution of the company,
      (b) copies of the valuer's report must have been circulated to the members entitled to notice of the meeting at which the resolution is proposed, not later than the date on which notice of the meeting is given, and
      (c) a copy of the proposed resolution must have been sent to the other party to the proposed agreement.
      (2) The reference in subsection 558(1)(c) to the other party to the proposed agreement is to the person referred to in section 555(1)(a).

    • 559. Copy of resolution to be delivered to Registrar

      (1) A company that has passed a resolution under section 558 with respect to the transfer of an asset must, within 14 days of doing so, deliver to the Registrar a copy of the resolution together with the valuer's report required by that section.
      (2) If a company fails to comply with subsection (1), a contravention of these Regulations is committed by—
      (a) the company, and
      (b) every officer of the company who is in default.
      (3) A person who commits a contravention of this section is liable to a level 2 fine.

    • 560. Adaptation of provisions in relation to company re-registering as public

      The provisions of sections 555 to 559 (public companies: transfer of non-cash assets) apply with the following adaptations in relation to a company re-registered as a public company—

      (a) the reference in section 555(1)(a) to a person who is one of the company's initial members shall be read as a reference to a person who is a member of the company on the date of re-registration,
      (b) the reference in section 555(2) to the date of the company being issued with a certificate under subsection 699(2) (trading certificate) shall be read as a reference to the date of re-registration.

    • 561. Agreement for transfer of non-cash asset: effect of contravention

      (1) This section applies where a public company enters into an agreement in contravention of section 555 and either—
      (a) the other party to the agreement has not received the valuer's report required to be sent to him, or
      (b) there has been some other contravention of the requirements of this Chapter that the other party to the agreement knew or ought to have known amounted to a contravention.
      (2) In those circumstances—
      (a) the company is entitled to recover from that person any consideration given by it under the agreement, or an amount equal to the value of the consideration at the time of the agreement, and
      (b) the agreement, so far as not carried out, is void.
      (3) If the agreement is or includes an agreement for the allotment of shares in the company, then—
      (a) whether or not the agreement also contravenes section 550 (valuation of non-cash consideration for shares), this section does not apply to it in so far as it is for the allotment of shares, and
      (b) the allottee is liable to pay the company an amount equal to the aggregate issue price for the shares (or, if the case so requires, so much of that aggregate as is treated as paid up by the consideration), with interest at the appropriate rate.