The Bank Recovery and Resolution ( No. 2) Order 2014

PART 3 U.K. Provisions concerning the maintenance and alteration of a company's share capital

25.  In relation to a company under resolution, this Part modifies the application of provisions of the Companies Act 2006 made— U.K.

(a) for the co-ordination of safeguards in respect of the formation of public limited liability companies and the maintenance and alteration of their capital; or

(b) for equivalent purposes in relation to companies to which the Safeguards Directive does not apply.

26.  Section 550 (power of directors to allot shares etc: private company with only one class of shares) has effect as if— U.K.

(a) the existing provision were subsection (1); and

(b) after that provision there were inserted—

“(2) In relation to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution (No. 2) Order 2014, any provision in the company's articles which prohibits the directors from exercising the power referred to in subsection (1) is to be disregarded.”.

27.  Section 551 (power of directors to allot shares etc: authorisation by company) has effect as if after subsection (9) there were inserted— U.K.

“(10) In relation to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution (No. 2) Order 2014—

(a) the maximum amount of shares that may be allotted under the authorisation may be exceeded where necessary for the use of resolution tools, powers and mechanisms (within the meaning given in article 216 of that Order) in relation to the company;

(b) if the maximum amount is exceeded, the statement of that amount made in the authorisation is deemed to have been increased under subsection (4) by the amount of the excess;

(c) the authorisation does not expire until it is renewed or revoked after the company has ceased to be a company under resolution; and

(d) the authorisation may not be revoked or varied while the company is a company under resolution.”.

28.  Part 17 (a company's share capital) has effect as if the following sections were omitted— U.K.

(a) section 561 (existing shareholders' right of pre-emption); and

(b) section 568 (exclusion of pre-emption right: articles conferring corresponding right).

29.  Section 569 (disapplication of pre-emption rights: private company with only one class of shares) has effect as if it provided that a determination made under subsection (1)(b) does not have effect. U.K.

30.  Section 570 (disapplication of pre-emption rights: directors acting under general authorisation) has effect as if it provided that a determination made under subsection (1)(b) does not have effect. U.K.

31.  Section 571 (disapplication of pre-emption rights by special resolution) has effect as if, in subsection (1)— U.K.

(a) after paragraph (a) “, or” were omitted; and

(b) paragraph (b) were omitted.

32.  Section 586 (public companies: shares must be at least one-quarter paid-up) has effect as if for subsection (2) there were substituted— U.K.

“(2) This does not apply to shares allotted—

(a) in pursuance of an employers' share scheme; or

(b) by the use of resolution tools, powers and mechanisms (within the meaning given in article 216 of the Bank Recovery and Resolution (No. 2) Order 2014) in relation to a company which is a company under resolution for the purposes of Part 17 of that Order.”.

33.  Section 593 (public company: valuation of non-cash consideration for shares) has effect as if after subsection (2) there were inserted— U.K.

“(2A) In relation to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution (No. 2) Order 2014, subsection (1) does not prevent the allotment of shares by the use of resolution tools, powers and mechanisms (within the meaning given in article 216 of that Order), and for the purposes of the Companies Acts such a share is deemed to be fully paid up.”.

34.  Section 617 (alteration of share capital of limited company) has effect as if, in subsection (5), at the end there were inserted— U.K.

“(f) the alteration of the share capital of a company, which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution (No. 2) Order 2014, by the use of resolution tools, powers and mechanisms (within the meaning given in article 216 of that Order)”.

35.  Section 618 (sub-division or consolidation of shares) has effect— U.K.

(a) as if subsection (3) were omitted; and

(b) where the articles of a company under resolution would otherwise exclude or restrict the exercise of any power conferred by that section, as if that section provided that the exclusion or restriction does not have effect.

36.  Section 656 (public companies: duty of directors to call meeting on serious loss of capital) has effect as if at the end there were inserted— U.K.

“(7) This section does not apply to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution (No. 2) Order 2014 (“the Order”).

(8) Where the net assets of such a company became half or less of its called-up share capital before the date on which the company became a company under resolution—

(a) the duty of the directors to call a general meeting of the company under subsection (1) ceases to have effect on that date;

(b) a general meeting which has been called under subsection (1) but has not yet taken place is deemed to have been cancelled on that date; and

(c) any resolution passed at such a meeting which has taken place is subject to the use of resolution tools, powers and mechanisms (within the meaning given in article 216 of the Order) in relation to the company.”.