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| Companies Act 1989 |
| 1989 c. 40 - continued
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SCHEDULE 9 |
| Section 21(2). |
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[Schedule 10A to the Companies Act 1985] Parent and
Subsidiary Undertakings: Supplementary Provisions |
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Introduction |
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1. The
provisions of this Schedule explain expressions used in section 258
(parent and subsidiary undertakings) and otherwise supplement that
section. |
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Voting rights in an undertaking |
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2.(1) In
section 258(2)(a) and (d) the references to the voting rights in an
undertaking are to the rights conferred on shareholders in respect of
their shares or, in the case of an undertaking not having a share capital,
on members, to vote at general meetings of the undertaking on all, or
substantially all, matters. (2) In
relation to an undertaking which does not have general meetings at which
matters are decided by the exercise of voting rights, the references to
holding a majority of the voting rights in the undertaking shall be
construed as references to having the right under the constitution of the
undertaking to direct the overall policy of the undertaking or to alter
the terms of its constitution. |
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Right to appoint or remove a majority of the
directors |
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3.(1) In
section 258(2)(b) the reference to the right to appoint or remove a
majority of the board of directors is to the right to appoint or remove
directors holding a majority of the voting rights at meetings of the board
on all, or substantially all,
matters. (2) An undertaking shall be
treated as having the right to appoint to a directorship if
(a) a person's appointment to it follows necessarily from
his appointment as director of the undertaking, or
(b) the directorship is held by the undertaking
itself. (3) A right to appoint or remove
which is exercisable only with the consent or concurrence of another
person shall be left out of account unless no other person has a right to
appoint or, as the case may be, remove in relation to that
directorship. |
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Right to exercise dominant influence |
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4.(1) For
the purposes of section 258(2)(c) an undertaking shall not be regarded as
having the right to exercise a dominant influence over another undertaking
unless it has a right to give directions with respect to the operating and
financial policies of that other undertaking which its directors are
obliged to comply with whether or not they are for the benefit of that
other undertaking. (2) A "control
contract" means a contract in writing conferring such a right which
(a) is of a kind authorised by the memorandum or articles
of the undertaking in relation to which the right is exercisable, and
(b) is permitted by the law under which that undertaking
is established. (3) This paragraph shall
not be read as affecting the construction of the expression "actually
exercises a dominant influence" in section 258(4)(a). |
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Rights exercisable only in certain circumstances or temporarily
incapable of exercise |
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5.(1) Rights
which are exercisable only in certain circumstances shall be taken into
account only
(a) when the circumstances have arisen, and for so long
as they continue to obtain, or
(b) when the circumstances are within the control of the
person having the rights. (2) Rights
which are normally exercisable but are temporarily incapable of exercise
shall continue to be taken into account. |
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Rights held by one person on behalf of another |
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6. Rights
held by a person in a fiduciary capacity shall be treated as not held by
him. |
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7.(1) Rights
held by a person as nominee for another shall be treated as held by the
other. (2) Rights shall be regarded as
held as nominee for another if they are exercisable only on his
instructions or with his consent or concurrence. |
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Rights attached to shares held by way of
security |
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8. Rights
attached to shares held by way of security shall be treated as held by the
person providing the security
(a) where apart from the right to exercise them for the
purpose of preserving the value of the security, or of realising it, the
rights are exercisable only in accordance with his instructions, and
(b) where the shares are held in connection with the
granting of loans as part of normal business activities and apart from
the right to exercise them for the purpose of preserving the value of
the security, or of realising it, the rights are exercisable only in his
interests. |
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Rights attributed to parent undertaking |
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9. (1) Rights
shall be treated as held by a parent undertaking if they are held by any
of its subsidiary undertakings. (2) Nothing in paragraph
7 or 8 shall be construed as requiring rights held by a parent undertaking
to be treated as held by any of its subsidiary
undertakings. (3) For the purposes of
paragraph 8 rights shall be treated as being exercisable in accordance
with the instructions or in the interests of an undertaking if they are
exercisable in accordance with the instructions of or, as the case may be,
in the interests of any group undertaking. |
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Disregard of certain rights |
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10. The
voting rights in an undertaking shall be reduced by any rights held by the
undertaking itself. |
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Supplementary |
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11. References
in any provision of paragraphs 6 to 10 to rights held by a person include
rights falling to be treated as held by him by virtue of any other
provision of those paragraphs but not rights which by virtue of any such
provision are to be treated as not held by him. |
| © Crown copyright 1989 |
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