United Kingdom Encyclopedia of Law     Wiki Legal Encyclopedia (BETA)
What do you need to know about law? Search in more than 1.500.000 entries

Company Reconstructions in United Kingdom

History

When a company reconstructs, as it often does in these days, the rights of debenture-holders have to be provided for. Reconstructions are mainly of two kinds—(1) by arrangement, under the Joint Stock Companies Arrangement Act 1870, amended in 1900 and 1907, incorporated in act of 1908 (§ 120), and (2) by sale and transfer of assets, either under § 192 of the act of 1908, or under a power in the company’s memorandum of association.

By the procedure provided under (1) a petition for the sanction of the court to a scheme is presented, and the court thereupon directs meetings of creditors, including debenture-holders, to be held. A three-fourths majority in value of debenture-holders present at the meeting in person or by proxy binds the rest. Debenture-holders claiming to vote must produce their debentures at or before the meeting. Under the other mode of reconstruction—sale and transfer of assets—there is usually a novation, and the debenture-holders accept the security of the new company in the shape of debentures of equivalent value or—occasionally—of fully paid preference shares.

A point in this connexion, which involves some hardship to debenture-holders, may here be adverted to. It is a not uncommon practice for a solvent company to pass a resolution to wind up voluntarily for the purpose of reconstructing. The effect of this is to accelerate payment of the security, and the debenture-holders have to accept their principal and interest only, parting with a good security and perhaps a premium which would have accrued to them in a year or two.

The company is thus enabled by its own act to redeem the reluctant debenture-holder on terms most advantageous to itself. To obviate this hardship, it is now a usual thing in a debenture-holders’ trust deed to provide—the committee of the London Stock Exchange indeed require it—that a premium shall be paid to the debenture-holders in the event of the security becoming enforceable by a voluntary winding up with a view to reconstruction. (1)

Small company moratorium

Refine your research by picking one of the following subsections:

  • Eligible companies
  • The effect of the moratorium
  • Procedure for securing a moratorium
  • Approval of a voluntary arrangement
  • Responsibility of the nominee
  • Directors’ responsibilities

 

Administration of Company Financial Restructuring

Refine your research by picking one of the following subsections:

  • Initiation of administration
  • Effect of administration
  • Process of administration
  • Functions of the administrator
  • Ending administration
  • Ending administration

 

Financial restructuring

Refine your research by picking one of the following subsections:

  • Voluntary arrangements under the Insolvency Act
  • Administration of Company Financial Restructuring

 

Takeovers

Refine your research by picking one of the following subsections:

  • The City Code on Takeovers and Mergers
  • Compulsory acquisition

 

Process of administration

 

Arrangement

 

Nominee

 

Director Responsibilities

 

Company Reconstruction under the Insolvency Act

 

Company Reconstructions: The Insolvency Act and the Companies Act procedures compared and contrasted

Resources

Notes and References

  1. Encyclopedia Britannica (1911)

See Also

Further Reading



Law is our Passion


This entry about Company Reconstructions has been published under the terms of the Creative Commons Attribution 3.0 (CC BY 3.0) licence, which permits unrestricted use and reproduction, provided the author or authors of the Company Reconstructions entry and the Encyclopedia of Law are in each case credited as the source of the Company Reconstructions entry. Please note this CC BY licence applies to some textual content of Company Reconstructions, and that some images and other textual or non-textual elements may be covered by special copyright arrangements. For guidance on citing Company Reconstructions (giving attribution as required by the CC BY licence), please see below our recommendation of "Cite this Entry".

Cite this entry

Legal Citations Generator

(2016, 08). Company Reconstructions lawi.org.uk Retrieved 06, 2021, from https://lawi.org.uk/company-reconstructions/

08 2016. 06 2021 <https://lawi.org.uk/company-reconstructions/>

"Company Reconstructions" lawi.org.uk. lawi.org.uk, 08 2016. Web. 06 2021. <https://lawi.org.uk/company-reconstructions/>

"Company Reconstructions" lawi.org.uk. 08, 2016. Accesed 06 2021. https://lawi.org.uk/company-reconstructions/

Emily Rowling, 'Company Reconstructions' (lawi.org.uk 2016) <https://lawi.org.uk/company-reconstructions/> accesed 2021 June 16

Usage Metrics

641 Views. 493 Visitors.

Google Scholar: Search for Company Reconstructions Related Content

 

Schema Summary

  • Article Name: Company Reconstructions
  • Author: Emily Rowling
  • Description: History When a company reconstructs, as it often does in these days, the rights of debenture-holders have to be provided [...]

This entry was last updated: November 4, 2020

Banking Law


CO


Companies

Recent Comments