Companies Act 2006 – Section 851

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Section 851: Application of rules of law restricting distributions

1158. This section is a new provision which preserves the existing common law rules on
unlawful distributions (see subsection (1)) – which continue to be an essential component in
determining what amounts to an unlawful distribution.

1159. Subsection (2) makes an exception to this: in particular, it provides that the lawfulness
and amount of distributions in kind are established by the statutory rules in sections 845 and
846 and not by any applicable common law rules.

PART 24: A COMPANY’S ANNUAL RETURN

1160. This Part restates Chapter 3 of Part 11 of the 1985 Act. It requires every company to
deliver to Companies House an Annual Return with the specified information. The only
significant difference from the 1985 provisions is that section 857 confers power on the
Secretary of State not only to amend or repeal sections 855 and 856 but also, in subsection
(2)(b), to make exceptions from the requirements of those sections. (The comparable power
in the 1985 Act is only to amend or repeal.)

PART 25: COMPANY CHARGES

CHAPTERS 1 AND 2: COMPANIES REGISTERED IN ENGLAND AND WALES OR
IN NORTHERN IRELAND; AND COMPANIES REGISTERED IN SCOTLAND

1161. This Part of the Act provides a scheme for the registration of charges created by a
company. Part 12 of the 1985 Act was prospectively repealed and replaced by the 1989 Act,
but these amendments and repeals were never brought into force, and they are now
themselves being repealed (see Schedule 16).

1162. Chapters 1 and 2 of Part 25 restate Part 12 of the 1985 Act, with a few changes. The
principal differences between the restated provisions and those of the 1985 Act are described
below.

• Changes have been made to provisions in this Part as a result of other provisions in
the Act. So, for example, references to a statutory declaration in sections 403 and 419
of the 1985 Act are replaced by references to a statement in sections 872 and 887.
Additionally changes have been made to sections 408 and 423 of the 1985 Act (now
sections 877 and 892 respectively) to enable a company to keep its instruments
creating charges and its register of charges in a place other than its registered office,
bringing these provisions into line with provisions elsewhere in the Act relating to
availability of documents for inspection.

• The provisions relating to charges created by an overseas company in sections 409
and 424 of the 1985 Act have not been restated. Instead section 1052 provides a new
regulation-making power for the Secretary of State to make provision about the
registration of charges over property in the United Kingdom of an overseas company
that has registered its particulars with the registrar under section 1046.

• There are no longer to be daily default fines for the offences under this Part of failure
to register a new charge under section 860 or 878 (compare sections 399 and 415 of
the 1985 Act) and failure to register an existing charge over acquired property under
section 862 or 880 (compare sections 400 and 416).

CHAPTER 3: POWERS OF THE SECRETARY OF STATE

Section 893: Power to make provision for effect of registration in special register

1163. This is a new provision, which provides power for the Secretary of State to make an
order providing that, if a charge is registered in another register (for example, the register of
floating charges to be established under the Bankruptcy and Diligence etc (Scotland) Bill),
then the registrar may not register it, but it will be treated as if it had been registered in
accordance with the requirements of Part 25. The power may only be exercised if appropriate
information-sharing arrangements have been made between the registrar and the person
responsible for the other register. This is to ensure that a person searching of the register will
have access to information about charges registered in that other register.

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