The Companies Act 2006 (2006 Act) has come into effect in tranches spanning approximately three years (as reported in past issues of Corporate and Financial Weekly Digest from November 10, 2006; December 21, 2006; and September 28, 2007). The final implementation date is October 1, 2009.
Below are certain of the key changes the 2006 Act has already implemented:
- a codification of directors’ duties (October 1, 2007);
- new provisions for shareholder approval of directors’ substantial property transactions, loans, long-term service contracts and payments for loss of office (October 1, 2007);
- changes to formalities for shareholders’ meetings and resolutions (October 1, 2007);
- the repeal of the prohibition on financial assistance for private companies (October 1, 2008);
- new rules dealing with directors’ conflicts of interests (October 1, 2008); and
- a simplified share capital reduction procedure for private companies (October 1, 2008).
From October 1, 2009, the following changes will be implemented:
- simplified and ‘model’ constitutional documentation is provided for new companies;
- the concept of authorized share capital is abolished and directors of private companies with only one class of share will be free to allot shares unless prohibited from doing so by their articles;
- directors may file a “service” rather than home address; and
- a simplified procedure has been adopted to change company names.
All UK companies should be taking the opportunity to consider whether or not they comply with the 2006 Act regime and how they can take advantage of certain simplified and modernized procedures. For example, in relation to the recent changes existing UK private limited companies might:
- consider whether to pass resolutions to remove restrictions that are no longer required (e.g., to allow directors to allot shares without prior authority);
- review the company’s articles and consider whether to:
- adopt new articles to reflect the new model articles available; or
- introduce amendments to existing articles (e.g., to remove or update provisions that are altered or relaxed by the 2006 Act); or o entrench any provisions of the company’s articles; and
- update internal processes to ensure that registers of directors and secretaries are correctly and confidentially maintained.