Amended Articles of Associati

RNS Number : 7697M

Home Retail Group Plc

01 June 2010

 



Amendment to Articles of Association

Home Retail Group plc (the "Company")

The Company has, in accordance with DTR 6.1.2, submitted a draft of the Company's proposed revised Articles of Association (the "New Articles") to the FSA for publication through its document viewing facility. The New Articles will be considered at the Annual General Meeting ("AGM") of the Company to be held on 30 June 2010.

The New Articles will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS. They are also available on the Company's website http://www.homeretailgroup.com/ and at the Company's registered office, and will be available at the AGM venue on the day of the AGM shortly before the meeting.

It is proposed that the Company adopt the New Articles, primarily to reflect the implementation of the Shareholder Rights Directive in the UK in August 2009 and the remaining provisions of the Companies Act 2006 in October 2009. The New Articles contain certain differences from the current Articles of Association (the "Current Articles") of the Company. The paragraphs below explain certain of the key changes:

1          Memorandum of Association

The Current Articles will be amended by deleting all the provisions of the Company's Memorandum of Association which, by virtue of section 28 of the 2006 Act, have been treated as provisions of the Company's Articles of Association from 1 October 2009.

The provisions regulating the operations of the Company are currently set out in the Company's Memorandum and Articles of Association.  The Company's Memorandum contains, among other things, the objects clause which sets out the scope of the activities the Company is authorised to undertake.  This is drafted to give a wide scope.

The 2006 Act significantly reduces the constitutional significance of a company's memorandum by providing that a memorandum will record only the names of subscribers and the number of shares each subscriber has agreed to take in a company.  Under the 2006 Act the objects clause and all other provisions which are contained in a company's memorandum, for existing companies at 1 October 2009, are deemed to be contained in the company's articles of association but the company is allowed to remove these provisions by special resolution. 

Further the 2006 Act states that unless a company's articles provide otherwise, a company's objects are unrestricted.  This abolishes the need for companies to have objects clauses.  For this reason the Company is proposing to remove its objects clause together with all other provisions of its Memorandum which, by virtue of the 2006 Act, are treated as forming part of the Company's Current Articles.  A resolution is proposed to remove these provisions for the Company.  As the effect of this resolution will be to remove the statement currently in the Company's Memorandum of Association regarding limited liability, the New Articles also contain an express statement preserving the limited liability of shareholders.

2          Authorised share capital and unissued shares

The 2006 Act has abolished the requirement for a company to have an authorised share capital. The proposed changes in the New Articles reflect this. A resolution is proposed to also remove all provisions of the Company's Memorandum relating to authorised share capital, which were deemed to have formed part of the Current Articles from 1 October 2009. Directors will still be limited as to the number of shares they can at any time allot because allotment authority continues to be required under the 2006 Act, save in respect of employee share schemes.

3          Redeemable shares

Under the Companies Act 1985, if a company wished to issue redeemable shares, it had to include in its articles the terms and manner of redemption.  Since 1 October 2009, under the 2006 Act directors have been able to determine such matters instead provided they are so authorised by the articles.  The New Articles contain such an authorisation. 

4          Authority to purchase own shares, consolidate and sub-divide shares, and reduce share capital

Under the Companies Act 1985, a company required specific enabling provisions in its articles to purchase its own shares, to consolidate or sub-divide its shares and to reduce its share capital or other undistributable reserves as well as shareholder authority to undertake the relevant action.  The Current Articles include these enabling provisions.  Since 1 October 2009, under the 2006 Act, a company has only required shareholder authority to do any of these things and it is no longer necessary for articles to contain enabling provisions.  Accordingly, it is proposed that the relevant enabling provisions in relation to the power to increase capital and consolidate and sub-divide and purchase its own shares be removed from the New Articles. However, the provisions on reducing share capital will remain in the New Articles.

5          Fractional entitlements

If, following a consolidation or sub-division, a member is entitled to a fraction of a share the Directors have the power to sell those fractions and distribute the proceeds to the entitled members. A new provision is proposed so that if the entitlement is less than £5 the Directors may give that amount to charity rather than giving it to the entitled member or retaining it for the company's benefit.  This is in line with the model articles for public companies produced by the Department for Business, Innovation and Skills (the "Model Articles") and ensures that the Directors are not obliged to distribute nominal sums to members where the cost of doing so might be greater than the amount to be distributed.

6          Authority to allot shares

The Current Articles contain authority to allot shares and a disapplication of pre-emption rights, which the Company would renew at each Annual General Meeting. These provisions have been removed from the New Articles as the Company intends to seek this authority by proposing resolutions at each Annual General Meeting instead of having the authority set out in the articles.

7          Uncertificated shares

This provision sets out the powers the Directors have in relation to uncertificated shares, consolidating various provisions from the Current Articles, and how they should be dealt with in accordance with the Articles.  The proposed provision in the New Articles follows the language used in the Model Articles.

8          Notice of general meetings

The Shareholders' Rights Regulations amend the 2006 Act to require the company to give 21 clear days' notice of general meetings unless the company offers members an electronic voting facility and a special resolution reducing the period of notice to not less than 14 days has been passed.  Annual General Meetings must be held on 21 clear days' notice.  The New Articles remove the provisions in the Current Articles dealing with notice of general meetings on the basis that this is dealt with in the 2006 Act.

9          Adjournment

It is proposed to amend the Articles to clarify the circumstances in which the chairman has power to adjourn a general meeting without the consent of the general meeting. The proposed changes will bring the New Articles in line with the common law and with market practice as well as making them more consistent with the Model Articles.  In particular they will confirm the power of the chairman to adjourn a general meeting in order to restore order or protect the safety of the attendees.

10        Adjournments for lack of quorum

Under the 2006 Act as amended by the Shareholders' Rights Regulations, general meetings adjourned for lack of quorum must be held at least 10 clear days after the original meeting.  The New Articles have been amended to reflect this requirement.

11        Voting by Guardian

This provision, as contained in the Current Articles, gave the Directors discretion to allow a person appointed by the court to manage the affairs of someone suffering from a mental disorder to vote in place of that member.  This provision used to appear in the Table A articles but is not contained in the Model Articles. It has been removed to bring the New Articles in line with the Model Articles. In these circumstances the Guardian or other appointed person may use their authority to appoint a proxy on behalf of the member (they could appoint themselves as proxy if they wish) and that proxy can vote.

12        Voting by proxies on a show of hands

The Shareholders' Rights Regulations have amended the 2006 Act so that it now provides that each proxy appointed by a member has one vote on a show of hands unless the proxy is appointed by more than one member in which case the proxy has one vote for and one vote against if the proxy has been instructed by one or more members to vote for the resolution and by one or more members to vote against the resolution.  The New Articles have been amended to reflect these changes.

13        Nomination of Directors

It is proposed to remove the requirement in the Current Articles that a Director cannot be elected at a general meeting unless a specified amount of notice is given before the meeting.  This requirement used to appear in the Table A articles but is not contained in the Model Articles and there is no requirement for such a notice to be given.

14        Provision for employees on cessation of business

With effect from 1 October 2009, the 2006 Act has provided that the powers of the directors of a company to make provision for a person employed or formerly employed by the Company or any of its subsidiaries in connection with the cessation or transfer to any person of the whole or part of the undertaking of the company or that subsidiary, may only be exercised by the directors if they are so authorised by the company's articles or by the company in general meeting.  The New Articles provide that the Directors may exercise this power.

15        Closure of Share Register

Since 1 October 2009, companies are no longer able to close their registers of members for up to 30 days each year. The Company proposes to delete this provision from the Current Articles so that the New Articles reflect the fact that this is no longer permitted under the 2006 Act.

16        Reserves/ Business bought from a past date/Liquidators' powers

Articles dealing with the creation of reserves, business bought from a past date and liquidators' powers have been deleted from the New Articles as they are obsolete and unnecessary in light of provisions of statute and applicable accounting standards.

17        General

Generally the opportunity has been taken to bring clearer language into the New Articles and in some areas to conform the language of the New Articles with that used in the Model Articles.

18        Articles which duplicate statutory provisions

Provisions in the Current Articles which replicate provisions contained in the 2006 Act are in the main to be removed in the New Articles.  This is in line with the approach advocated by the Government that statutory provisions should not be duplicated in a company's constitution.

Gordon Bentley

Secretary

1 June 2010

 

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