On 1 October 2009, the final provisions of the Companies Act 2006 come into force. Here, we summarise some of the key changes:
- Memorandum of association
The memorandum of association in its current form will soon be a relic of the past. From 1 October, the memorandum can simply state that the subscribers wish to form a company, that they agree to become members of the company and, if the company has a share capital, that they each agree to take at least one share.
- New model articles of association to replace Table A
New model articles of association will replace the current Table A model articles. The new model articles will apply as a company's default articles to the extent they are not excluded (entirely or partially) or modified.
- Authorised share capital abolished
A company will no longer need to have an authorised share capital. Instead, companies will be able to issue an unlimited number of shares. Existing (pre 1 October 2009) authorised share capital limits will continue to restrict a company’s ability to issue shares until such time as a shareholder resolution is passed to remove it.
- Authority to allot shares
From 1 October 2009, the directors of private companies with a single class of share will automatically be authorised to allot new shares in the company unless the articles of association provide otherwise. Companies incorporated prior to the October implementation date will need shareholder approval before they can take advantage of these new provisions. Public companies and private companies with more than one class of share will continue to require shareholder authorities for the allotment and issue of shares in the usual way.
- Pre-emption rights
The 2006 Act continues to impose statutory pre-emption rights on the allotment of shares but the period in which a pre-emptive offer must remain open has been reduced from 21 days to 14 days.
- Issue of redeemable shares
A private company will no longer need a specific authority in its articles to allow it to issue redeemable shares. However, a public company will continue to require a specific authority in its articles to issue such shares although the mechanism for redemption may be reserved for the directors rather than expressly set out in the articles, as is the current requirement. From 1 October, redemption payments may also be deferred to a date later than the actual redemption date.
- Other changes
Other changes coming into force on 1 October 2009 include:
- - the requirement to file a statement of capital in prescribed circumstances;
- - directors no longer having to disclose their home address on the public record;
- - directors being entitled to change a company’s name without shareholder approval provided its articles allow for it;
- - changes to a company’s statutory registers and inspection rights; and
- - new format Companies House forms to be used for all Companies House filings.