Companies (Amendment) Act, 1983

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Experts' reports on non-cash consideration before allotment of shares.

30.—(1) Subject to subsection (2), a public limited company shall not allot shares as fully or partly paid up (as to their nominal value or any premium payable on them) otherwise than in cash unless—

(a) the consideration for the allotment has been valued in accordance with the following provisions of this section;

(b) a report with respect to its value has been made to the company by a person appointed by the company in accordance with those provisions during the six months immediately preceding the allotment of the shares; and

(c) a copy of the report has been sent to the proposed allottee of the shares.

(2) Subject to subsection (3), subsection (1) shall not apply to the allotment of shares by a company in connection with—

(a) an arrangement providing for the allotment of shares in that company on terms that the whole or part of the consideration for the shares allotted is to be provided by the transfer to that company or the cancellation of all or some of the shares, or of all or some of the shares of a particular class, in another company (with or without the issue to that company of shares, or of shares of any particular class, in that other company); or

(b) a proposed merger of that company with another company.

(3) Subsection (2) (a) does not exclude the application of subsection (1) to the allotment of shares by a company in connection with any such arrangement as is there mentioned unless it is open to all the holders of the shares in the other company in question or, where the arrangement applies only to shares of a particular class, to all the holders of shares in that other company of that class, to take part in the arrangement. In determining whether that is the case, shares heldby or by a nominee of the company proposing to allot the shares in connection with the arrangement, or by or by a nominee of a company which is that company's holding company or subsidiary or a company which is a subsidiary of its holding company, shall be disregarded.

(4) For the purposes of subsection (2) (b) there is a proposed merger of two companies when one of them proposes to acquire all the assets and liabilities of the other in exchange for the issue of shares or other securities in that one to shareholders of the other, with or without any cash payment to those shareholders.

(5) The valuation and report required by subsection (1) shall be made by an independent person, that is to say, a person qualified at the time of the report to be appointed or to continue to be auditor of the company, except that where it appears to him to be reasonable for the valuation of the consideration, or a valuation of part of the consideration, to be made, or to accept such a valuation made, by any person who—

(a) appears to him to have the requisite knowledge and experience to value the consideration or that part of the consideration; and

(b) is not an officer or servant of the company or any other body corporate which is that company's subsidiary or holding company or a subsidiary of that company's holding company or a partner or employee of such an officer or servant,

that independent person may arrange for or accept such a valuation, together with a report which will enable him to make his own report under that subsection and provide a note in accordance with subsection (8).

(6) The independent person's report under subsection (1) shall state—

(a) the nominal value of the shares to be wholly or partly paid for by the consideration in question;

(b) the amount of any premium payable on those shares;

(c) the description of the consideration and, as respects so much of the consideration as he himself has valued, a description of that part of the consideration, the method used to value it and the date of the valuation; and

(d) the extent to which the nominal value of the shares and any premium are to be treated as paid up—

(i) by the consideration;

(ii) in cash.

(7) Where any consideration is valued under this section by a person other than the independent person, the latter's report under subsection (1) shall state that fact and shall also—

(a) state the former's name and what knowledge and experience he has to carry out the valuation; and

(b) describe so much of the consideration as was valued by that other person, the method used to value it and state the date of valuation.

(8) The report of the independent person made under subsection (1) shall contain or be accompanied by a note by him—

(a) in the case of a valuation made by another person, that it appeared to the independent person reasonable to arrange for it to be so made, or to accept a valuation so made;

(b) whoever made the valuation, that the method of valuation was reasonable in all the circumstances;

(c) that it appears to the independent person that there has been no material change in the value of the consideration in question since the valuation; and

(d) that on the basis of the valuation the value of the consideration, together with any cash by which the nominal value of the shares or any premium payable on them is to be paid up, is not less than so much of the aggregate of the nominal value and the whole of any such premium as is treated as paid up by the consideration and any such cash.

(9) Subsection (10) applies where a public limited company allots any share in contravention of subsection (1) and either—

(a) the allottee has not received a report under this section; or

(b) there has been some other contravention of this section and the allottee knew or ought to have known that it amounted to a contravention.

(10) Where this subsection applies, the allottee shall be liable to pay the company an amount equal to the nominal value of the shares, together with the whole of any premium or, if the case so requires, such proportion of that amount as is treated as paid up by the consideration, and shall be liable to pay interest at the appropriate rate on the amount payable under this subsection.

(11) Section 26 (4) shall apply for the purposes of this section as it applies for the purposes of that section.

(12) Where the consideration is accepted partly in payment up of the nominal value of the shares and any premium and partly for some other consideration given by the company, the provisions of this section shall apply as if references to the consideration accepted by the company included references to the proportion of that consideration which is properly attributable to the payment up of that value and any premium; and

(a) the independent person shall carry out or arrange for such other valuations as will enable him to determine that proportion; and

(b) his report under subsection (1) shall state what valuations have been made by virtue of this subsection and also the reason for and method and date of any such valuation and any other matters which may be relevant to that determination.

(13) It is hereby declared for the avoidance of doubt that subsection (1) does not apply by reference to the application of an amount for the time being standing to the credit of any of the company's reserve accounts or to the credit of its profit and loss account in paying up (to any extent) any shares allotted to members of the company or any premiums on any shares so allotted; and in relation to any such allotment references in this section to the consideration for the allotment do not include any such amount so applied.

(14) In this section—

(a) “arrangement” means any agreement, scheme or arrangement (including an arrangement sanctioned in accordance with section 201 or 260 of the Principal Act);

(b) any reference to a company, except where it is or is to be construed as a reference to a public limited company, includes a reference to any body corporate and any body to which letters patent have been issued under the Chartered Companies Act, 1837 ; and

(c) any reference to an officer or servant shall not include a reference to an auditor.