Group companies - Companies Act 2006

Group companies - Companies Act 2006

Posted by Alan_Riley on Thu, 22/10/2009 - 23:48

Much use is made, both in statute and in the drafting of group sharing and assignment provisions in leases, of section 42 LTA 1954. This deals with cases where a lease of premises is granted to one company in a group, but occupation is taken up by another company in the same group. To work out whether the companies are within the same group, use is made of the definition of “subsidiary” in section 46(2) LTA 1954, which refers in turn to section 736 Companies Act 1985. Of course, the latter provision has been repealed by the Companies Act 2006, but the former provisions do not appear to have changed.

In fact, section 42 LTA 1954 has changed. It (or, rather, section 46(2)) has been automatically amended by virtue of section 1297(5) CA 2006. This reads as follows:

"Any reference (express or implied) in any enactment [i.e. the 1954 Act], instrument or document to a repealed provision shall be construed (so far as the context permits), as respects times, circumstances and purposes in relation to which the corresponding provision of this Act has effect, as being or (according to the context) including a reference to the corresponding provision of this Act."

Hence, section 42 LTA 1954 now effectively makes use of the new definition of a subsidiary company to be found in section 1159 CA 2006.