On 1 October 2007 a number of substantive changes were made to company law by the implementation of provisions contained in the Companies Act 2006. The parts of the Act that came into force relate to: the partial codification of directors’ duties; transactions involving directors; the holding and calling of general meetings; a new procedure for written resolutions for private companies; a new procedure for requesting access to the register of members; new information rights for beneficial shareholders and an expanded business review. Some of the changes introduced will affect all companies from now on, others are discretionary or only apply to particular types of companies, but in almost every case there are actions (summarised on pages 8 & 9) that should or could be taken to ensure compliance or to take advantage of the de-regulation introduced by these parts of the Act coming into force.
Delayed implementation – 1 October 2009 At the beginning of November 2007, the Government announced that it had postponed the final implementation stage of the Companies Act 2006 originally scheduled for 1 October 2008 until 1 October 2009. The main reason given for the postponement was to give Companies House more time to complete the changes to its systems and processes necessary for the new legislation, as most of the parts due for implementation at that stage relate to company formation and filing obligations.
The parts of the Act definitely postponed until 1 October 2009 are: company formation, company constitution, company capacity, company name, registered office, re-registration to alter status, company members, business names, register of directors and residential addresses, company share capital and acquisition by limited company of its own shares, annual return, company charges, overseas companies, dissolution and restoration to the register and the registrar of companies.
On 13 December the Government confirmed that there is also to be a limited implementation phase in October 2008. The provisions which it has now been confirmed are to come into force on 1 October 2008 are:
- The remaining provisions relating to directors namely, the ‘conflict of interest duties’ [s 175 to 177], declaration of interest in existing transactions [s 182 to 187], corporate and under age directors [s 155 to 159].
- The repeal of the prohibition on private companies giving financial assistance in connection with the acquisition of their shares and the ‘whitewash procedure’ contained in Companies Act 1985.
- The provisions relating to objecting to company names and trading disclosures [s 69 to 74 and s 82 –85].
In addition, the new procedure for private companies to make capital reductions supported by a solvency statement without the need for a court order [s 642 to 644] is also to come into force on 1 October 2008.
At the same time it was confirmed that the implementation phase scheduled for 6 April 2008 is still to take place. This will bring into force the parts of the Act relating to: company secretaries, accounts, audit, debentures, public and private companies, certification and transfer of securities, distributions, arrangements and reconstruction and mergers and divisions of public companies. Brought forward into the April 2008 implementation are the provisions relating to the removal of entries relating to former members [s 121 and 128] and the new rules relating to requests to inspect the register of interests in shares, which bring in similar requirements for information supporting a request and the right of the company to obtain an order from the court not to make a disclosure as now apply to requests to inspect the register of members [s 811(4), 812 and 814].
One significant other change now proposed for April 2008 is the alteration to the rules relating to the execution of documents by companies to be consistent with the removal of the requirement for private companies to appoint a company secretary. Section 44 of the Act will provide that a company may validly execute a document if it is executed on its behalf by two ‘authorised signatories’ (authorised signatories being every director of the company and any company secretary appointed) or by a director in the presence of a witness who attests the signature.