Unitat i criteris d’amidament

These sections set out in detail the requirements for the valuation of non-cash consideration for shares of a public company on allotment. They implement Article 10 of the Second Directive.

Article 108

Subsections (1)-(3). Implement the requirement in Article 10.1 that the valuation report should be made by an independent expert “appointed or approved by an administrative or judicial authority”. This is achieved by requiring the report to be made by a qualified company auditor or by a valuer approved by such an auditor. This, by specifying a class of approved valuers, avoids the need for a procedure for case by case approval of the valuer. (This section amplifies section 103 – the case where shares are allotted for non-cash consideration.)

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Subsection (4). Implements Article 10.2 which provides that the valuation report should include details of the nominal value (or accountable par) of the shares being paid up, including any premium; a description of the non-cash assets used, the valuation method and the date of valuation, and confirmation that the value of the assets corresponds to that of the shares.

Subsections (5) and (6). Deal in detail with the case where all or part of the valuation is delegated to another expert.

Subsection (7). Covers the case where the non-cash consideration is given both as full payment up for shares and for something else as well.

The use of company auditors, who are covered by a statutory registration scheme, remains the most convenient way of meeting the requirement that the independent expert must be approved by an administrative authority. It is therefore proposed to retain the substance of subsection (1). It is also proposed to retain the substance of subsection (2), confirming the right of the auditor to delegate work to a valuation expert independent of the company. It will also be necessary to retain the substance of subsection (4) in order to ensure compliance with Article 10.2 of the Directive. But subsections (5), (6) and (7) contain detail about the conduct of the valuation which appears to be unnecessary, since a competent expert would take these matters into account anyway. It is therefore proposed to drop these provisions in the interest of simplification.

Section 109

This section adapts the detailed provisions of section 108 for the case where a company, within two years of incorporation or commencement of business, acquires from a founder shareholder an asset for a consideration of at least one tenth of the subscribed capital (section 104).

Subsection (1). Applies subsections (1)-(3) and (5) of section 108 for the purposes of section 104.

Subsection (2). Adapts section 108(4) – on the content of the valuation report – for the purposes of section 104.

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Subsection (3). Covers the case where consideration is given to the company in part for the transfer of an asset in the circumstances covered in section 104, and in part for something else.

It will be necessary to apply the new provisions corresponding to section 108(1),(2) and (4) to the case dealt with in section 104. But it is proposed to drop section 109(3), which appears to be unnecessary for the same reasons as section 108(7).

Section 110

This section gives the valuer the right to require information from officers of the company (subsection (1)) and provides criminal sanctions for the knowing or reckless giving of false or misleading information (subsection (2)). Subsection (3) defines the class of statement which, if false or misleading, will attract these sanctions.

It is proposed to retain provisions on the lines of subsections (2) and (3); these seem necessary to reduce the risk that valuations will be made on the basis of false information, and criminal penalties seem appropriate where dishonesty or recklessness in involved. But it is for consideration whether the valuer needs a statutory right to require information provided in subsection (1). If he is not given voluntarily all the information he needs, he can simply refuse to issue the valuation report.

Section 111

This section implements the requirement in Article 10.3 of the Second Directive for publicity for the valuation report where shares are allotted for non-cash consideration, and, as required by Article 11.1, extends the requirement to the valuation report under section 104.

Subsection (1). Requires a copy of the valuation report made under section 108 to be delivered to the registrar along with the return of allotments required under section 88.

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Subsection (2). Requires a resolution passed under section 104 to be delivered to the registrar, together with the valuation report required under that section. Subsections (3) and (4) provide the normal penalties for default in respect of registration requirements (a “one off” fine followed by daily default fines on the officers responsible for a breach of subsection (1) and on both the company and the officers responsible for a breach of subsection (2)).

The registration requirements are clearly necessary and it is proposed to retain them. It is also proposed to retain penalties for default against the officers of the company; the nature of the penalties on individuals here and elsewhere will be considered separately. But it is proposed to drop the provision for penalties on the company here and in a number of other cases; it seems inappropriate to penalise the company, and thus reduce the value of the investment of the innocent shareholders, for the default of individual officers.