On 1 October 2008, further provisions in the Companies Act 2006 came into force. The key provisions in force from that date include the duties of directors relating to conflicts of interest, the relaxation of the capital maintenance rules for private companies in the form of removal of the prohibition on financial assistance and a new route for reduction of capital.
Prior to 2006 Act, no statute set out what the duties of a director of a UK company were and the nature of those duties was left to the common law. The new provisions, together with the four statutory duties which came into force from 1 October 2007, codify directors' duties. The conflicts duties require both private and public companies to adopt new procedures and practices in order to comply with the new provisions from 1 October. The new provisions are:
- The duty to avoid conflicts of interest (section 175);
- The duty not to accept benefits from third parties (section 176);
- The duty to declare their interests in proposed transactions with the company (section 177);
- The obligation to declare an interest in an existing transaction with the company (section 182).
There is only one further commencement date for the 2006 Act: 1 October 2009. This will complete the repeal of the company law provisions in the Companies Act 1985 and their replacement by the Companies Act 2006 provisions. In relation to the October 2009 commencements, we are still waiting for the publication of the Eighth Commencement Order which should be the final commencement order for the 2006 Act.