Important Changes

 

Companies Act 2006

 

For those of you who are unfamiliar with the term “The Companies Act 2006 ”, we would like to give a brief explanation of what it is, what’s the objective and what will be the key effects.

The Companies Act 2006 is a piece of primary legislation that largely applies to companies directly. It received Royal Assent in November 2006 (official approval) and all of its provisions must be implemented by October 2009.

 

The reason for this change was to meet four key objectives: -

• To ensure better regulation and a “Think Small First” approach;
• To enhance shareholder engagement and a long term investment culture;
• To make it easier to setup and run a company; and
• To provide flexibility for the future

 

Some of the key effects resulting from the Act include:

 

All companies

• A clear statement of directors’ general duties clarifies the existing case law based rules
• Companies will be able to make greater use of electronic communications for communications with shareholders.
• Directors will automatically have the option of filing a service address on the public record (rather than their private home address).
• Directors must be at least 16 years old, and all companies must have one natural person as a director – i.e. they cannot have all corporate directors.
• There will be improved rules for company names.
• Companies will no longer be required to specify their objects on incorporation.
• The articles will form the basis of the company’s constitution.

 

Private companies

• There will be separate and simpler model Articles of Association for private companies.
• As part of the "think small first" agenda, there will be a separate, comprehensive "code" of accounting and reporting requirements for small companies.
• Private companies will not be required to have a company secretary.
• Private companies will not need to hold an annual general meeting unless they positively opt to do so.
• It will be easier for companies to take decisions by written resolutions.
• There will be simpler rules on share capital, removing provisions that are largely irrelevant to the vast majority of private companies and their creditors.

 

 

 

 

As you may or may not be aware, much of the Act has already been implemented throughout 2007, however the implementation of the final phase was put back from October 2008 until October 2009.

Stephen Timms, Minister of State for Competitiveness, made a Written Statement to Parliament on Thursday 13th December 2007 announcing the final implementation timetable for the Companies Act 2006. To view this table please click on the link provided and select on “Companies Act 2006 table of commencement dates”

http://www.berr.gov.uk/bbf/co-act-2006/whatsnew/page42202.html

For more information on the Companies Act 2006 and detailed explanatory notes, please go to: -
www.berr.gov.uk/bbf/co-act-2006