Ian Stubbs demystifies the Companies Act changes
THE SIMPLE FACTS ABOUT THE COMPANIES ACT 2006
Decisions taken by shareholders
Written resolutions no longer need to be signed by all the shareholders instead a simple majority of the eligible shares for ordinary resolutions or 75% for special resolutions.
Companies can choose to make more use of electronic methods and resolutions can be circulated by email or other electronic methods such as websites, with shareholders agreement.
Shareholders Meetings Streamlined
Private companies will no longer hold an annual general meeting although shareholders can demand a meeting if at least 10% (5% in certain circumstances) wish to. Shareholders still have the right to receive accounts.
Shareholder meetings for private companies can now all be on a 14 day notice period, unless different arrangements are specified in a company’s Articles.
Private companies will not have to appoint a company secretary unless they choose to do so.
If they choose to do so they will have the same authority and responsibilities as now and will continue to be registered at Companies House.
Filing Directors Addresses
Directors will be required to file a service address on the public record at Companies House. This may for example be their company’s address, rather than their private home address.
A director’ private address will be held as protected information at Companies House.
Reduction of Share Capital
Private companies can now choose to reduce their capital by special resolution supported by a solvency statement by each of the directors.
Financial Assistance to purchase Private Company’s own shares
The statutory rule that companies cannot give financial assistance for the purchase of their own shares has been abolished for private companies.
Directors Conflicts of Interest
Directors have always had a duty to avoid a situation in which they have an interest which conflicts or may conflict with the company’s interests unless the matter has been duly authorised. At the moment only shareholders can authorise such a conflict of interest.
In future in the case of existing companies, it will be possible for those directors who do not have an interest in the matter to authorise it if this is specifically permitted by the company’s Articles.
Forming a Company from October 2009
The Memorandum of Association will become a historic document which will simply record the facts at the time of incorporation.
The Articles will set out the principles covering the way the company conducts business.
New companies registering under the 2006 Act will be able, if they wish, to take advantage of a new default model Articles of Association for private companies. These are set out in a clear language and reflect the way many small companies operate.
Existing companies can also choose to adopt these new Articles.
In future neither the Memorandum or the Articles do not have to state the objects of the company. This means that companies need not be restricted in what they do, but they can choose to be restricted if they wish.
Electronic communications, including emails and websites will in future need to include the company’s name, number, registered office and other particulars.
Accounting Arrangements form April 2008
The deadline for private companies to file annual accounts and reports will reduce from ten months to nine.
The exemption from preparing consolidated accounts by medium sized groups has been changed so as to apply now only to small groups.
All companies must have at least one actual person as a director and cannot just have companies acting as directors.
A new minimum age of 16 is set for directors. Existing underage directors will cease to be directors when the age criteria comes into force.
The Companies Act 2006 confirms current law in respect of the duties of directors.
A summary of these 10 things you need to know will be published tomorrow.