Commonhold and Leasehold Reform Bill - continued        House of Lords
PART II, LEASEHOLD REFORM - continued
Exercise of right - continued

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RTE companies.     118. After section 4 of the 1993 Act insert-
 
 
"RTE companies.     4A. - (1) A company is a RTE company in relation to premises if-
 
    (a) it is a private company limited by guarantee, and
 
    (b) its memorandum of association states that its object, or one of its objects, is the exercise of the right to collective enfranchisement with respect to the premises.
      (2) But a company is not a RTE company in relation to premises if another company which is a RTE company in relation to-
 
 
    (a) the premises, or
 
    (b) any premises containing or contained in the premises,
  has given a notice under section 13 with respect to the premises, or any premises containing or contained in the premises, and the notice continues in force in accordance with subsection (11) of that section.
 
RTE companies: membership.     4B. - (1) Subject as follows, the persons who are entitled to be members of a company which is a RTE company in relation to premises are qualifying tenants of flats contained in the premises.
 
      (2) But if a company which is a RTE company in relation to any premises is also a RTM company in relation to the premises, landlords under leases of the whole or any part of the premises are also entitled to be members of the company.
 
      (3) In this Part "RTM company" has the same meaning as in Chapter I of Part II of the Commonhold and Leasehold Reform Act 2001.
 
      (4) When a conveyance of premises to a RTE company is executed for the purposes of this Chapter, any member of the company who is not a participating member ceases to be a member.
 
      (5) In this Chapter "participating member", in relation to a RTE company which has given a notice under section 13 with respect to any premises, means a person who is a member by virtue of subsection (1) of this section and who-
 
 
    (a) has given a participation notice before the date when the notice was given or during the participation period, or
 
    (b) is a participating member by virtue of either of the following two subsections.
      (6) A member who is the assignee of a lease by virtue of which a participating member was a qualifying tenant of his flat is a participating member if, within the period of 14 days beginning with the date of the assignment, he gives a participation notice to the company.
 
      (7) And if the personal representatives of a participating member are a member, they are a participating member if, at any time, they give a participation notice to the company.
 
      (8) In this section "participation notice", in relation to a member of a company, means a notice stating that he wishes to be a participating member.
 
      (9) For the purposes of this section "the participation period" is the period beginning with the date when the notice under section 13 was given and ending-
 
 
    (a) six months, or such other time as the Secretary of State may by order specify, after that date, or
 
    (b) immediately before a binding contract is entered into in pursuance of the notice under section 13,
  whichever is the earlier.
 
      (10) In this section references to assignment include an assent by personal representatives, and assignment by operation of law where the assignment is to a trustee in bankruptcy or to a mortgagee under section 89(2) of the Law of Property Act 1925 (foreclosure of leasehold mortgage); and references to an assignee shall be construed accordingly.
 
RTE companies: regulations.     4C. - (1) The Secretary of State shall by regulations make provision about the content and form of the memorandum of association and articles of association of RTE companies.
 
      (2) A RTE company may adopt provisions of the regulations for its memorandum or articles.
 
      (3) The regulations may include provision which is to have effect for a RTE company whether or not it is adopted by the company.
 
      (4) A provision of the memorandum or articles of a RTE company has no effect to the extent that it is inconsistent with the regulations.
 
      (5) The regulations have effect in relation to a memorandum or articles-
 
 
    (a) irrespective of the date of the memorandum or articles, but
 
    (b) subject to any transitional provisions of the regulations.
      (6) The following provisions of the Companies Act 1985 do not apply to a RTE company-
 
 
    (a) sections 2(7) and 3 (memorandum), and
 
    (b) section 8 (articles)."
Invitation to participate.     119. - (1) After section 12 of the 1993 Act insert-
 
 

"The notice of invitation to participate
Notice by RTE company inviting participation.     12A. - (1) Before making a claim to exercise the right to collective enfranchisement with respect to any premises, a RTE company must give notice to each person who at the time when the notice is given-
 
 
    (a) is the qualifying tenant of a flat contained in the premises, but
 
    (b) neither is nor has agreed to become a participating member of the RTE company.
      (2) A notice given under this section (a "notice of invitation to participate") must-
 
 
    (a) state that the RTE company intends to exercise the right to collective enfranchisement with respect to the premises,
 
    (b) explain the rights and obligations of the members of the RTE company with respect to the exercise of the right (including their rights and obligations in relation to meeting the price payable in respect of the freehold, and any other interests to be acquired in pursuance of this Chapter, and associated costs),
 
    (c) include an estimate of that price and those costs, and
 
    (d) invite the recipients of the notice to become participating members of the RTE company."
      (2) In section 13 of the 1993 Act, after subsection (2ZA) (inserted by section 117(3)) insert-
 
 
    "(2ZB) The initial notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before."
 
Consequential amendments.     120. Schedule 8 (amendments consequential on sections 117 to 119) has effect.
 
Right of access.     121. - (1) In subsection (1) of section 17 of the 1993 Act (access by reversioner or other relevant landlord for purposes of valuation), insert at the end "or if it is reasonable in connection with any other matter arising out of the claim to exercise the right to collective enfranchisement".
 
      (2) For the sidenote of that section substitute "Rights of access."
 
 
Purchase price
Valuation date.     122. In Schedule 6 to the 1993 Act (purchase price payable), for "the valuation date" (in each place) substitute "the relevant date".
 
Freeholder's share of marriage value.     123. In paragraph 4(1) of Schedule 6 to the 1993 Act (freeholder's share of marriage value), for the words after "freeholder's share of the marriage value is" substitute "50 per cent. of that amount".
 
Disregard of marriage value in case of very long leases.     124. - (1) Paragraph 4 of Schedule 6 to the 1993 Act is amended as follows.
 
      (2) In sub-paragraph (2) (meaning of marriage value), insert at the beginning "Subject to sub-paragraph (2A),".
 
      (3) After that sub-paragraph insert-
 
 
    "(2A) Where at the relevant date the unexpired term of each of the leases held by participating members of the RTE company exceeds eighty years, the marriage value shall be taken to be nil."
 
 
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