Part 34: Overseas Companies
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1328.As originally enacted, Part 23 of the 1985 Act applied to companies incorporated outside Great Britain that established a place of business in Great Britain.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.
Section 1047: Registered name of overseas company
1336.This section applies to overseas companies required to register with the registrar of companies by regulations made under section 1046 (duty to register particulars). Overseas companies registered under that section must be required to provide a name for registration. The name will be entered on the index of company names (see section 1099).
1337.The company may register its corporate name (by which is meant its registered or legal name in its place of incorporation) or another name. All companies are free to choose whether to register their corporate name or another name, subject to the restrictions imposed by subsections (4) and (5). A name other than the corporate name can be registered only if it complies with the requirements imposed on the names of companies formed and registered under the Act. Likewise, unless the overseas company is incorporated in an EEA State, its corporate name can only be registered if it complies with these requirements. The only requirements of Chapters 1 to 4 of Part 5 (a company’s name) that do not apply are the requirements for the names of certain types of company to end with certain words (sections 58 and 59). These rules are not appropriate for overseas companies as they are specific to the types of company formed under the Companies Acts.
1338.Where the overseas company is incorporated in an EEA State (defined in section 1170), it may always register its corporate name, even if it does not comply with the requirements imposed on the names of companies formed under the Act provided that it complies with the requirement relating to permitted characters (contained in section 57). This section, together with section 1048 (registration under alternative name) replaces section 694 of the 1985 Act.
Section 1048: Registration under alternative name
1339.This section enables an overseas company to be registered under a name other than its corporate name. It also enables an overseas company to change the name by which it is registered. To do so it must deliver a statement to the registrar of companies with its proposed new name for registration. As long as the proposed name complies with the requirements for registration (see section 1047) the registrar of companies will enter it on the index of company names in place of the name previously registered.
1340.The section also provides that whatever name an overseas company is registered under, whether its corporate name or another, it is treated as being its corporate name for the purposes of the law in the UK. The change of name will not affect any legal proceedings that are continued or commenced by or against the company.
Section 1049: Accounts and reports: general
1341.This section confers on the Secretary of State a power to make regulations requiring overseas companies to prepare accounts and directors’ reports, and to obtain an auditor’s report. The requirements must be like those imposed on companies formed and registered under the Act. The accounts, directors’ report and auditor’s report requirements applying to companies formed and registered under the Act appear in Part 15 (accounts and reports) and Part 16 (audit).
1342.Regulations under this section may require the overseas company to deliver to the registrar of companies copies of the accounts and reports prepared in accordance with the regulations; alternatively the overseas company may be required to deliver to the registrar a copy of the accounts and reports that it prepared and had audited in accordance with the law of the country in which it is incorporated. The registrar will place the accounts and reports on the public register.
1343.Regulations under this section will replace sections 699AA to 703 of, and Schedule 21D to, the 1985 Act. The regulations will be subject to the negative resolution procedure.
Section 1050: Accounts and reports: credit or financial institutions
1344.This section applies only to credit or financial institutions incorporated or formed outside the UK and Gibraltar, with their head office outside the UK and Gibraltar but having a branch in the UK (subsection (1)). This section confers on the Secretary of State a power to make regulations specifically in respect of accounts and directors’ reports by these credit or financial institutions.
1345.Credit institution and financial institution are both defined in section 1173.
1346.Regulations under this section will implement requirements of the Bank Branches Directive 89/117/EEC of the Council of 13 February 1989. The definition of “branch” for the purposes of this section (subsection (2)) is based on Article 1.3 of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions. The power to make regulations under this section is similar to that in under section 1049 (accounts and reports: general).
1347.The regulations will replace section 699A of, and Schedule 21C to, the 1985 Act. The regulations will be subject to the negative resolution procedure.
Section 1051: Trading disclosures
1348.This section confers on the Secretary of State a power to make regulations as to the information that overseas companies must display in specified locations, include in specified documents or communications, or provide to those who make a request in the course of business. Regulations made under this section will replace the provision made by section 693 of the 1985 Act. This section complements the similar power under section 82 to make regulations imposing trading disclosure obligations on companies formed and registered under the Companies Acts. Regulations under this section may require an overseas company carrying on business in the UK:
to display particular information in particular places. For example, a sign with its name outside every branch;
to include particular information in certain documents. For example, its name and country of incorporation on every invoice;
to provide certain information, such as its name, to those who request it when doing business with the overseas company.
1349.They may also make provision, corresponding to that made in sections 83 and 84, in respect of a failure by a company formed and registered under the Companies Acts to comply with the trading disclosure requirements imposed on them by regulations under section 82.
1350.Regulations under this section, like those under section 82, are subject to the affirmative resolution procedure.
Section 1052: Company charges
1351.This section applies to overseas companies that are required to register particulars under section 1046. It confers on the Secretary of State a power to make regulations about the registration by those companies of charges they grant over property in the United Kingdom. Subsection (2) lists some of the matters that may be dealt with in such regulations, and subsections (3) and (4) enable the regime for overseas companies to mirror specified provisions in Part 25, with modifications. This section replaces sections 409 (charges on property in England and Wales created by an overseas company) and 424 (extension of Chapter 2) of the 1985 Act.
Section 1053: Other returns etc
1352.This section applies to overseas companies that are required to register particulars under section 1046. It confers on the Secretary of State a power to make regulations requiring those companies to deliver returns to the registrar if they are being wound up or subjected to insolvency proceedings. The regulations may also require the liquidator of such a company to deliver returns to the registrar. They may specify the circumstances in which a return is to be made to the registrar. For example, on termination of the winding-up. The regulations may specify the information to be included in the return and set deadlines for sending it to the registrar (subsection (3)). They may require notice to be given to the registrar of certain appointments (subsections (4) and (5)).
1353.The regulations will replace sections 703P and 703Q of the 1985 Act. The regulations will be subject to the affirmative resolution procedure.
Section 1054: Offences
1354.This section ensures that the regulations will be able to specify the person or persons who would be responsible for complying with any specified requirement of the regulations. It allows regulations to provide for offences, including who would be liable in the event of any contravention and what might be considered a defence should a charge be brought. The maximum level of penalty permissible under the regulations on indictment is an unlimited fine and on summary conviction a fine not exceeding level 5 on the standard scale, or for continued contravention, a daily default fine not exceeding one-tenth of that.
Section 1055: Disclosure of individual’s residential address: protection from disclosure
1355.If the regulations under section 1046 require an overseas company to register an individual’s usual residential address, then the regulations must also provide for its protection on the same basis as is provided for directors’ residential addresses in Chapter 8 of Part 10.
Section 1056: Requirement to identify persons authorised to accept service of documents
1356.Every overseas company required by regulations under section 1046 to register with the registrar of companies must register particulars identifying every person resident in the UK who is authorised to accept service of documents on the company’s behalf or make a statement that there is no such person.
1357.As to how a document may be served on a registered overseas company, see section 1139(2) and the company communications provisions (sections 1144 to 1148 and Schedules 4 and 5).
1358.This section replaces the provision made by section 691(1)(b)(ii) and paragraph 3(e) of Schedule 21A to the 1985 Act.
Section 1057: Registrar to whom returns, notices etc to be delivered
1359.This section makes provision for regulations in respect of overseas companies that are required to register, or have registered, particulars under section 1046 in more than one part of the United Kingdom. The regulations may set out what should happen, for example, if the overseas company has registered branches in Scotland and in Northern Ireland; the regulations may require the returns or notices to be delivered to each registrar with whom the company is registered, or to the registrar for such part or parts of the United Kingdom as the regulations may specify.
1360.Regulations made under this section will be subject to the negative resolution procedure.
Section 1058: Duty to give notice of ceasing to have registrable presence
1361.Where an overseas company has registered particulars with the registrar following the opening of a branch in the United Kingdom, this section will enable regulations to require the overseas company to give notice to the registrar if it subsequently closes that branch. In addition, an overseas company that has registered particulars in other circumstances specified by regulations under section 1046 may be required by regulations to give notice to the registrar if those circumstances cease to obtain.
1362.The regulations will require the notice to be delivered to the registrar for the part of the United Kingdom in which the overseas company was registered and may set deadlines for sending the information to the registrar.
1363.Regulations made under this section will be subject to negative resolution procedure.
Section 1059: Application of provisions in case of relocation of branch
1364.This section provides that the relocation of a branch from one part of the UK to another is to be treated as the closing of the branch in one part and the opening in another. For example, if an overseas company moves a branch from Scotland to Wales, it must tell the registrar for Scotland that it is closing the branch. It must also tell the registrar for England and Wales that it is opening a branch in Wales. This section replaces the provision made by section 695A(4) of the 1985 Act.