Office of Public Sector Information
PART 2 continued
(1) The Regulator may by order remove a director of a community interest company.
(2) If a person has been removed under subsection (1)—
(a) the company may not subsequently appoint him a director of the company, and
(b) any assignment to the person of the office of director of the company is of no effect (even if approved by special resolution of the company).
(3) The Regulator may by order suspend a director of the company pending a decision whether to remove him.
(4) The maximum period for which a director may be suspended under subsection (3) is one year.
(5) If the Regulator suspends a director under subsection (3) the Regulator may give directions in relation to the performance of the director’s functions.
(6) The Regulator may discharge an order made under subsection (1).
(7) The discharge of an order made under subsection (1) does not reinstate the person removed by the order as a director of the company, but on the discharge of the order subsection (2) ceases to apply to the person.
(8) The Regulator must from time to time review any order made under subsection (3) and, if it is appropriate to do so, discharge the order.
(9) Before making an order under subsection (1) or (3) in relation to a director, the Regulator must give at least 14 days' notice to—
(a) the director, and
(b) the company.
(10) Where an order is made in relation to a director under subsection (1) or (3) the director may appeal against the order—
(a) in England and Wales, to the High Court, or
(b) in Scotland, to the Court of Session.
(11) The Regulator must, before the end of the period of 14 days beginning with the date on which—
(a) an order under subsection (1) is made or discharged,
(b) an order under subsection (3) is made or discharged or expires, or
(c) an order under subsection (1) or (3) is quashed on appeal,
give notification of that event to the registrar of companies in a form approved by the registrar of companies.
(12) Where subsection (11) imposes an obligation to notify the registrar of companies of an event, section 288(2) of the Companies Act 1985 (c. 6) (requirement that company notify change among directors to registrar) does not apply in respect of the event.
(1) The Regulator may by order appoint a manager in respect of the property and affairs of a community interest company.
(2) The person appointed may be anyone whom the Regulator thinks appropriate, other than a member of the Regulator’s staff.
(3) An order under subsection (1) may make provision as to the functions to be exercised by, and the powers of, the manager.
(4) The order may in particular provide—
(a) for the manager to have such of the functions of the company’s directors as are specified in the order, and
(b) for the company’s directors to be prevented from exercising any of those functions.
(5) In carrying out his functions the manager acts as the company’s agent; and a person dealing with the manager in good faith and for value need not inquire whether the manager is acting within his powers.
(6) The appointment of the manager does not affect—
(a) any right of any person to appoint a receiver or manager of the company’s property (including any right under section 51 of the Insolvency Act 1986 (c. 45)), or
(b) the rights of a receiver or manager appointed by a person other than the Regulator.
(7) The manager’s functions are to be discharged by him under the supervision of the Regulator; and the Regulator must from time to time review the order by which the manager is appointed and, if it is appropriate to do so, discharge it in whole or in part.
(8) In particular, the Regulator must discharge the order on the appointment of a person to act as administrative receiver, administrator, provisional liquidator or liquidator of the company.
(9) The Regulator may apply to the court for directions in relation to any matter arising in connection with the manager’s functions or powers.
(10) On an application under subsection (9) the court may give such directions or make such orders as it thinks fit.
(11) The costs of any application under subsection (9) are to be paid by the company.
(12) Regulations may authorise the Regulator—
(a) to require a manager to make reports,
(b) to require a manager to give security (or, in Scotland, to find caution) for the due exercise of the manager’s functions, and
(c) to remove a manager in circumstances prescribed by the regulations.
(13) Regulations may—
(a) provide for a manager’s remuneration to be payable from the property of the company, and
(b) authorise the Regulator to determine the amount of a manager’s remuneration and to disallow any amount of remuneration in circumstances prescribed by the regulations.
(14) The company may appeal to the Appeal Officer against an order under this section.
(1) The Regulator may by order—
(a) vest in the Official Property Holder any property held by or in trust for a community interest company, or
(b) require persons in whom such property is vested to transfer it to the Official Property Holder.
(2) The Regulator—
(a) may order a person who holds property on behalf of a community interest company, or on behalf of a trustee of a community interest company, not to part with the property without the Regulator’s consent, and
(b) may order any debtor of a community interest company not to make any payment in respect of the debtor’s liability to the company without the Regulator’s consent.
(3) The Regulator may by order restrict—
(a) the transactions which may be entered into by a community interest company, or
(b) the nature or amount of the payments that a community interest company may make,
and the order may in particular provide that transactions may not be entered into or payments made without the Regulator’s consent.
(4) The vesting or transfer of property under subsection (1) does not constitute a breach of a covenant or condition against alienation, and no right listed in subsection (5) operates or becomes exercisable as a result of the vesting or transfer.
(5) The rights are—
(a) a right of reverter (or, in Scotland, the right of the fiar on the termination of a liferent),
(b) a right of pre-emption,
(c) a right of forfeiture,
(d) a right of re-entry,
(e) a right of irritancy,
(f) an option, and
(g) any right similar to those listed in paragraphs (a) to (f).
(6) The Regulator must from time to time review any order under this section and, if it is appropriate to do so, discharge the order in whole or in part.
(7) On discharging an order under subsection (1) the Regulator may make any order as to the vesting or transfer of the property, and give any directions, which he considers appropriate.
(8) If a person fails to comply with an order under subsection (1)(b), the Regulator may certify that fact in writing to the court.
(9) If, after hearing—
(a) any witnesses who may be produced against or on behalf of the alleged offender, and
(b) any statement which may be offered in defence,
the court is satisfied that the offender failed without reasonable excuse to comply with the order, it may deal with him as if he had been guilty of contempt of the court.
(10) A person who contravenes an order under subsection (2) or (3) commits an offence, but a prosecution may be instituted in England and Wales only with the consent of the Regulator or the Director of Public Prosecutions.
(11) A person guilty of an offence under subsection (10) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(12) Subsections (8) to (10) do not prevent the bringing of civil proceedings in respect of a contravention of an order under subsection (1)(b), (2) or (3).
(13) The company and any person to whom the order is directed may appeal to the Appeal Officer against an order under subsection (1) or (2).
(14) The company may appeal to the Appeal Officer against an order under subsection (3).
(1) If a community interest company has a share capital, the Regulator may by order transfer specified shares in the company to specified persons.
(2) If a community interest company is a company limited by guarantee, the Regulator may by order—
(a) extinguish the interests in the company of specified members of the company (otherwise than as shareholders), and
(b) appoint a new member in place of each member whose interest has been extinguished.
(3) An order under subsection (1) may not transfer any shares in respect of which—
(a) a dividend may be paid, or
(b) a distribution of the company’s assets may be made if the company is wound up.
(4) An order under this section in relation to a company—
(a) may only transfer shares to, and appoint as new members, persons who have consented to the transfer or appointment, and
(b) may be made irrespective of any provision made by the memorandum or articles of the company or a resolution of the company in general meeting.
(5) The company and any person from whom shares are transferred by the order may appeal to the Appeal Officer against an order under subsection (1).
(6) The company and any person whose interest is extinguished by the order may appeal to the Appeal Officer against an order under subsection (2).
(7) “Specified”, in relation to an order, means specified in the order.
(1) The Regulator may present a petition for a community interest company to be wound up if the court is of the opinion that it is just and equitable that the company should be wound up.
(2) Subsection (1) does not apply if the company is already being wound up by the court.
(3) In section 124 of the Insolvency Act 1986 (c. 45) (application for winding up), after subsection (4) insert—
“(4A) A winding-up petition may be presented by the Regulator of Community Interest Companies in a case falling within section 50 of the Companies (Audit, Investigations and Community Enterprise) Act 2004.”
(1) If a community interest company has been dissolved, the Regulator may apply under section 651 of the Companies Act 1985 (c. 6) for an order declaring the dissolution to have been void.
(2) If a community interest company has been struck off the register under section 652 of the Companies Act 1985 (defunct companies), the Regulator may apply under section 653(2) of that Act for an order that the company’s name be restored.
(3) If an application under section 652A of the Companies Act 1985 (application to strike name of private company off register) is made on behalf of a community interest company, section 652B(6) of that Act (persons to be notified of application) is to be treated as also requiring a copy of the application to be given to the Regulator.
(1) A community interest company is excluded from re-registering under section 49 of the Companies Act 1985 (c. 6) (re-registration of limited company as unlimited).
(2) If a community interest company which is not a public company re-registers as a public company under section 43 of the Companies Act 1985, or a community interest company which is a public company re-registers as a private company under section 53 of that Act, the certificate of incorporation issued under section 47(1)(b) or 55(1)(b) of that Act is to contain a statement that the company is a community interest company.
(3) The fact that the certificate of incorporation contains such a statement is conclusive evidence that the company is a community interest company.
A community interest company may not cease to be a community interest company except by dissolution or as provided—
(a) by sections 54 and 55 (becoming a charity or a Scottish charity), or
(b) if regulations are made under section 56 (becoming an industrial and provident society), by the regulations.
(1) If a community interest company is to cease being a community interest company and become a charity or a Scottish charity, the company must—
(a) by special resolution alter its memorandum so that it does not state that it is to be a community interest company,
(b) by special resolutions under the Companies Act 1985 make such alterations of its memorandum and articles as it considers appropriate, and
(c) by special resolution change its name so that it does not comply with section 33.
(2) Section 380(1) of the Companies Act 1985 (forwarding of copies of special resolutions to registrar of companies) must be complied with in relation to each of the special resolutions at the same time.
(3) If the special resolutions include one under section 4 or 17 of the Companies Act 1985 (alterations of memorandum)—
(a) copies of the special resolutions must not be forwarded to the registrar of companies before the relevant date, and
(b) section 380(1) has effect in relation to them as if it referred to 15 days after the relevant date.
(4) If an application is made under section 5 of the Companies Act 1985 (objection to alteration of memorandum under section 4 or 17), the relevant date is—
(a) the date on which the court determines the application (or, if there is more than one application, the date on which the last to be determined by the court is determined), or
(b) such later date as the court may order.
(5) If there is no application under section 5 of that Act, the relevant date is the end of the period for making such an application.
(6) The copies of the special resolutions forwarded to the registrar of companies must be accompanied by—
(a) a copy of the memorandum and articles of the company as altered by the special resolutions, and
(b) a statement under subsection (7) or, if the company’s registered office is situated in Scotland and the company is to become a Scottish charity, a statement under subsection (8).
(7) A statement under this subsection is a statement by the Charity Commissioners that in their opinion, if the special resolutions take effect and the company ceases to be a community interest company the company will be a charity and will not be an exempt charity.
(8) A statement under this subsection is a statement by the Commissioners of Inland Revenue that—
(a) the company has claimed exemption under section 505(1) of the Income and Corporation Taxes Act 1988 (c. 1), and
(b) if the special resolutions take effect and the company ceases to be a community interest company the company will be given such intimation as is mentioned in section 1(7) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40).
(9) “Exempt charity” has the same meaning as in the Charities Act 1993 (c. 10) (see section 96 of that Act).
(1) On receiving under section 54 the copies of the special resolutions, the memorandum and articles as altered by the special resolutions and the statement, the registrar must (instead of recording the special resolutions and entering a new name on the register)—
(a) forward a copy of each of the documents to the Regulator, and
(b) retain them pending the Regulator’s decision.
(2) The alterations of the memorandum and articles made by the special resolutions are to take effect only as provided by this section.
(3) The Regulator must decide whether the company is eligible to cease being a community interest company.
(4) The company is eligible to cease being a community interest company if it has complied with section 54 and none of the following applies—
(a) the Regulator has under section 43 appointed an auditor to audit the company’s annual accounts and the audit has not been completed,
(b) civil proceedings instituted by the Regulator in the name of the company under section 44 have not been determined or discontinued,
(c) a director of the company holds office by virtue of an order under section 45,
(d) a director of the company is suspended under section 46(3),
(e) there is a manager in respect of the property and affairs of the company appointed under section 47,
(f) the Official Property Holder holds property as trustee for the company,
(g) an order under section 48(2) or (3) is in force in relation to the company,
(h) a petition has been presented for the company to be wound up.
(5) The Regulator must give notice of the decision to the registrar of companies (but the registrar is not required to record it).
(6) If the Regulator gives notice of a decision that the company is eligible to cease being a community interest company, section 28(6) of the Companies Act 1985 (c. 6) (registration of new name) applies; and if the registrar of companies enters the new name of the company on the register he must also retain and record the special resolutions and the statement.
(7) On the date on which the certificate of incorporation is issued the alterations to the company’s articles and memorandum made by the special resolutions take effect and the company ceases to be a community interest company.
(8) If the Regulator decides that the company is not eligible to cease being a community interest company, the company may appeal to the Appeal Officer against the decision.
(1) Unless regulations make provision to the contrary, a community interest company may not convert itself into a registered society under section 53 of the Industrial and Provident Societies Act 1965 (c. 12).
(2) If regulations make provision allowing the conversion of community interest companies under that section they may include provision modifying that section in its application by virtue of the regulations.
(1) Regulations may require the payment of such fees in connection with the Regulator’s functions as may be specified in the regulations.
(2) The regulations may provide for fees to be paid to the registrar of companies (rather than to the Regulator).
(3) The Regulator may charge a fee for any service which is provided otherwise than in pursuance of an obligation imposed by law, other than the provision of guidance which the Regulator considers to be of general interest.
(4) Fees paid by virtue of this section are to be paid into the Consolidated Fund.
Regulations may make amendments or modifications of any provision contained in—
(a) Part 24 of the Companies Act 1985 (registrar), or
(b) Part 25 of that Act (miscellaneous and supplementary),
in consequence of any provision contained in, or made under, this Part (in particular, so as to provide that references to the Companies Acts are to include provisions contained in, or made under, this Part).
(1) Regulations may require the registrar of companies—
(a) to notify the Regulator of matters specified in the regulations, and
(b) to provide the Regulator with copies of documents specified in the regulations.
(2) After section 71 of the Bankruptcy (Scotland) Act 1985 (c. 66) insert—
The Accountant in Bankruptcy shall, on receiving any notice under section 109(1) of the Insolvency Act 1986 in relation to a community interest company, forward a copy of that notice to the Regulator of Community Interest Companies.”
(3) In section 31(2) of the Data Protection Act 1998 (c. 29) (restricted access to data processed for specified purposes)—
(a) in paragraphs (b), (c) and (d), after “charities” insert “or community interest companies”, and
(b) in paragraph (b), after “trustees” insert “, directors”.
(4) A public authority may disclose to the Regulator, for any purpose connected with the exercise of the Regulator’s functions, information received by the authority in connection with its functions.
(5) The Regulator may disclose to a public authority any information received by the Regulator in connection with the functions of the Regulator—
(a) for a purpose connected with the exercise of those functions, or
(b) for a purpose connected with the exercise by the authority of its functions.
(6) In deciding whether to disclose information to a public authority in a country or territory outside the United Kingdom the Regulator must have regard to the considerations listed in section 243(6) of the Enterprise Act 2002 (c. 40) (overseas disclosures), but as if the reference to information of a kind to which section 237 of that Act applies were to information of the kind the Regulator is considering disclosing.
(7) The powers to disclose information in subsections (4) and (5) are subject to—
(a) any restriction on disclosure imposed by or by virtue of an enactment, and
(b) any express restriction on disclosure subject to which information was supplied.
(8) Information may be disclosed under subsection (4) or (5) subject to a restriction on its further disclosure.
(9) A person who discloses information in contravention of a restriction imposed under subsection (8) is guilty of an offence, but a prosecution may be instituted in England or Wales only with the consent of the Regulator or the Director of Public Prosecutions.
(10) A person guilty of an offence under subsection (9) is liable on summary conviction to a fine not exceeding level 3 on the standard scale.
(11) “Public authority” means a person or body having functions of a public nature.
(1) If an offence under this Part committed by a body corporate is proved—
(a) to have been committed with the consent or connivance of an officer, or
(b) to be attributable to any neglect on the part of an officer,
the officer as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.
(2) “Officer” means a director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in any such capacity.
(3) “Director”—
(a) includes a shadow director, and
(b) if the affairs of a body corporate are managed by its members, means a member of the body.
(1) An order made by the Regulator under this Part must be given to the community interest company in relation to which it is made and—
(a) if the order is under section 46(1) or (3), to the director removed or suspended,
(b) if the order is under section 48(1)(b) or (2), to the person to whom the order is directed,
(c) if the order is under section 49(1), to the persons from and to whom shares are transferred,
(d) if the order is under section 49(2), to the person whose interest is extinguished and any person appointed in his place.
(2) Orders made by the Regulator under or by virtue of this Part may contain any incidental or supplementary provisions the Regulator considers expedient.
(3) When discharging an order made under or by virtue of this Part, the Regulator may make savings and transitional provisions.
(4) A document certified by the Regulator to be a true copy of an order made by the Regulator is evidence of the order without further proof; and a document purporting to be so certified shall, unless the contrary is proved, be taken to be so certified.
(5) Where the Regulator makes an order or decision against which an appeal lies under or by virtue of this Part, the Regulator must give reasons for the order or decision to the persons entitled to appeal against it.
(1) Any power to make regulations under this Part is exercisable by the Secretary of State by statutory instrument.
(2) Regulations under this Part may make different provision for different cases.
(3) Regulations under this Part may confer or impose functions on the Regulator or any other person specified in the regulations (and, unless made under paragraph 4 of Schedule 4, may provide for appeals to the Appeal Officer from a person on whom functions are conferred by the regulations).
(4) No regulations to which this subsection applies are to be made unless a draft of the statutory instrument containing the regulations (whether or not together with other provisions) has been laid before, and approved by a resolution of, each House of Parliament.
(5) Subsection (4) applies to regulations under—
(a) section 30,
(b) section 31,
(c) section 32,
(d) section 34,
(e) section 35,
(f) section 36,
(g) section 37,
(h) section 47, and
(i) section 56.
(6) A statutory instrument containing regulations under this Part is (unless a draft of it has been approved by each House of Parliament under subsection (4)) subject to annulment in pursuance of a resolution of either House of Parliament.
(1) In this Part—
“administrative receiver” has the meaning given by section 251 of the Insolvency Act 1986 (c. 45),
“the Appeal Officer” has the meaning given by section 28(1),
“charity” (except in the phrase “Scottish charity”) has the same meaning as in the Charities Act 1993 (c. 10) (see section 96 of that Act),
“community interest object” is to be construed in accordance with section 35(3),
“the community interest test” is to be construed in accordance with section 35(2),
“enactment” includes an Act of the Scottish Parliament,
“excluded company” is to be construed in accordance with section 35(6),
“the Official Property Holder” has the meaning given by section 29(1),
“the Regulator” has the meaning given by section 27(1), and
“Scottish charity” has the meaning given by section 1(7) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40).
(2) Any expression used in this Part and in the Companies Act 1985 (c. 6) has the same meaning in this Part as in that Act.
Companies (Audit, Investigations and Community Enterprise) Act 2004