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Authority of company required for allotment of certain securities by directors.
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20.—(1) The directors of a company shall not exercise any power of the company to allot relevant securities, unless the directors are, in accordance with this section, authorised to do so by—
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(a) the company in general meeting; or
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(b) the articles of the company.
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(2) Authority for the purposes of this section may be given for a particular exercise of that power or for the exercise of that power generally, and may be unconditional or subject to conditions.
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(3) Any such authority shall state the maximum amount of relevant securities that may be allotted thereunder and the date on which the authority will expire, which shall be not more than five years from whichever is relevant of the following dates—
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(a) in the case of an authority contained at the time of the original incorporation of the company in the articles of the company, the date of that incorporation; and
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(b) in any other case, the date on which the resolution is passed by virtue of which that authority is given;but any such authority (including an authority contained in the articles of the company) may be previously revoked or varied by the company in general meeting.
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(4) Any such authority (whether or not it has been previously renewed under this subsection) may be renewed by the company in general meeting for a further period not exceeding five years; but the resolution must state (or restate) the amount of relevant securities which may be allotted under the authority or, as the case may be, the amount remaining to be allotted thereunder, and must specify the date on which the renewed authority will expire.
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(5) The directors may allot relevant securities, notwithstanding that any authority for the purposes of this section has expired, if the relevant securities are allotted in pursuance of an offer or agreement made by the company before the authority expired and the authority allowed it to make an offer or agreement which would or might require relevant securities to be allotted after the authority expired.
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(6) A resolution of a company to give, vary, revoke or renew such an authority may, notwithstanding that it alters the articles of the company, be an ordinary resolution but section 143 of the Principal Act shall apply to it.
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(7) Any director who knowingly and wilfully contravenes, or permits or authorises a contravention of, this section shall be guilty of an offence.
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(8) Nothing in this section shall affect the validity of any allotment of relevant securities.
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(9) This section does not apply to any allotment of relevant securities by a company, other than a public limited company registered as such on its original incorporation, if it is made in pursuance of an offer or agreement made before the date on which the earlier of the following events occurs, that is to say, the holding of the first general meeting of the company after its re-registration or registration as a public limited company and the end of the general transitional period; but any resolution to give, vary or revoke an authority for the purposes of this section shall have effect for those purposes if it is passed at any time after the passing of this Act.
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(10) In this section “relevant securities” means, in relation to a company,—
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(a) shares in the company other than shares shown in the memorandum to have been taken by the subscribers thereto or shares allotted in pursuance of an employees' share scheme; and
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(b) any right to subscribe for, or to convert any security into, shares in the company other than shares so allotted;
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and any reference to the allotment of relevant securities shall include a reference to the grant of such a right but shall not include any reference to the allotment of shares pursuant to such a right.
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