Explanatory note

Paragraph 71(2) of Schedule 25 to the Water Act 1989 provides that Part XIII of the Companies Act 1985 (arrangements and reconstructions) shall have effect in relation to statutory water companies that are not limited companies with prescribed modifications. These Regulations specify the modifications which have the effect of applying only sections 425 and 426 of Part XIII.

The modifications apply where a statutory water company applies to the court under section 425 with a view to securing an order in respect of a compromise or arrangement with its creditors or members in anticipation of a change in the provisions for its constitution and regulation. The modification to section 425(3) has the effect of postponing the effect of the court’s order under section 425(2) sanctioning the compromise or arrangement until the new memorandum and articles come into force by virtue of an order made by the Secretary of State under section 101(2)(c) of the Water Act 1989 and a copy of the court’s order has been delivered to the registrar of companies.