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Some Key Changes |
Companies Act 2006 provisions in force from 1 October 2007
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| Part 9 |
Members’ rights |
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Companies may have a provision in their articles allowing members to nominate another person to exercise their rights as a member
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| Part 10 |
Directors – including directors’ duties and transactions with directors (excluding ss. 155-159, 162-167, 175-177, 182-187 and 240-246) |
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Introduces a statutory statement of the duties owed by directors to their company (ss. 170)
Shareholder approval is now required for directors’ service contracts in excess of 2, as opposed to 5, years (s. 188)
Loans to directors are no longer prohibited if shareholder approval is obtained (s. 197) Provisions enabling a company to indemnify a director have been re-stated and, additionally, companies which are trustees of occupational pensions schemes can now indemnify their directors against liability in connection with the company’s activities as trustee of the scheme (s. 232 – 238)
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| Part 11 |
Derivative claims |
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Establishes a statutory derivative claims procedure for claims brought by shareholders in the name of the company against directors
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| Part 13 |
Shareholder resolutions and meetings |
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Introduces various deregulation measures for private companies including provisions enabling them to dispense with holding AGMs and a simplified written resolution procedure The percentage consent to hold meetings on short notice goes down from 95% to 90% (s. 307)
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| Part 14 |
Control of political donations and expenditure |
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Clarifies the rules on making political donations – broadly that making political donations or incurring political expenditure needs shareholder approval (ordinary resolution is the default requirement subject to a company’s articles of association)
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| Part 15 |
Directors’ report and business review |
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Changes the requirements for quoted companies (but not AIM) relating to the “business review” which must be included in the directors’ report to accounts and includes a forward looking element
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| Part 29 |
Fraudulent trading |
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The term of imprisonment is extended (s. 993)
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| Part 30 |
Protection of members against unfair prejudice |
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The existing provisions of the Companies Act 1985 are essentially restated
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| Part 32 |
Company investigations |
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The Secretary of State is given enhanced powers to appoint inspectors to investigate companies or a company’s ownership
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Companies Act 2006 provisions in force from 6 April 2008
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| Part 12 |
Company secretaries |
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Abolishes the requirement for private limited companies to have a company secretary (s. 270) (although companies can still have a secretary or secretaries)
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| Part 15 |
Accounts and reports |
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Directors have a new general obligation not to approve accounts unless they give a true and fair view of the financial position of the company (s. 393) and the deadline for private companies to file accounts reduces from 10 months after year end to 9 months
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Part 16 |
Company’s audit and liability of auditors |
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Shareholders can agree to limit the extent of liability of company auditors under “limitation liability agreements” (ss. 534 - 538)
There is a new criminal offence for auditors of knowingly or recklessly causing an audit report to include a matter which is materially misleading, false or deceptive (s. 507)
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Part 19 |
Debentures |
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Re-enacts provisions in the Companies Act 1985 relating to debentures with some minor changes
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Part 20 |
Minimum share capital requirements |
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The authorised minimum nominal value of a public company’s allotted share capital remains £50,000 (or the euro equivalent) (s. 763)
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Part 21 |
Certification and transfer of securities |
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Re-enacts provisions in the Companies Act 1985 with some technical changes including an ability for the Secretary of State to make regulations to enable securities to be evidenced or transferred without a written instrument (s. 785)
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Part 23 |
Distributions |
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The rules on distributions in kind are clarified including the amount of distributable profits a company needs when transferring assets intra-group (ss. 845 - 847) (removing the uncertainty created by the Aveling & Barford case)
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Part 26 |
Arrangements and reconstructions |
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Re-enacts the provisions of the Companies Act 1985 with some technical changes
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Part 27 |
Mergers and division of public companies |
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Introduces some technical changes for the mergers and divisions of public companies
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Part 42 |
Statutory auditors |
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No substantive changes for private or public companies
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Companies Act 2006 provisions in force from 1 October 2008
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| Part 1 |
General introductory provisions |
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| Part 2 |
Company formation |
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Makes changes to reflect the web incorporation facility introduced with effect from 1 January 2007 and enables any type of company (not just a private company) to be formed by a single person (s. 7) (although the requirement for public companies to have 2 directors remains)
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Part 3 |
A company’s constitution |
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A company’s objects are now unlimited unless its articles specifically restrict them (s. 31) and a company’s constitution will now be contained in its articles of association (with the memorandum of association only being required to state that the company’s subscribers wish to form a company, become its members and take at least one share) (s. 8)
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Part 4 |
Company capacity |
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A document will be validly executed if it is signed on behalf of a company by either two authorised signatories, or by a director of the company in the presence of a witness who attests the signature. Authorised signatories are each of the company's directors and the company secretary but note that a company need not have a secretary from 6 April 2008 (s. 44)
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Part 5 |
Company names |
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Introduces new provisions to allow objections to a company’s name if it is the same or confusingly similar to a name in which the objector has goodwill
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Part 6 |
Registered offices |
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No substantive changes from previous law (other than for Welsh companies)
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Part 7 |
Re-registration as a means of altering a company’s status |
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No substantive changes from previous law save that a public company can re-register as a private unlimited company with a share capital without first having to re-register as a private limited company (s. 109)
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Part 8 |
A company’s members |
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New obligations are introduced in relation to requests to inspect or obtain a copy of a company’s register of members. If a company suspects a request is not being made for a proper purpose then it may apply to Court for relief (s. 117)
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Part 10 |
Directors (the remainder of Part 10 - including conflicts of interest, residential addresses and underage and natural directors) |
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A private company only needs to have one director but, if it does only have one director, that director must be a natural person (as all companies must have one director who is a natural person) (ss. 154 and 155)
There is a minimum age of 16 for directors. Individuals over 70 are able to continue as directors of public companies without specific shareholder approval
Directors’ home addresses can be kept off the public record with a service address being stated instead (although the company must keep a separate register of directors’ home addresses) (s. 162 – 167)
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Part 17 |
Share capital |
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Companies are given greater flexibility with their share capital. The requirement to have authorised share capital is abolished and, although shares must still have a nominal value, it can be in sterling or in euros and there is a new procedure for redenominating share capital from one currency to another
Private companies can reduce their share capital, supported by a directors’ solvency statement, rather than having to go to Court (s. 642)
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Part 18 |
Acquisition of a company’s own shares |
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The prohibition on financial assistance for private companies is abolished (ss. 672-682) but the restriction on financial assistance for public companies is retained
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Part 24 |
Annual returns |
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The substantive provisions on annual returns under the 1985 Act are restated
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Part 25 |
Company charges |
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The substantive provisions on company charges under the 1985 Act are restated
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Part 31 |
Dissolution and restoration to the Register |
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Introduces a new administrative procedure for restoring companies to the Register as an alternative to restoration by Court order (s. 1024)
Public and private companies can now apply to be voluntarily struck off the register (s. 1003)
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Part 33 |
UK companies not formed under the Companies Acts |
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Enables UK companies not formed under the Companies Acts to apply to register under the 2006 Act
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Part 35 |
Registrar of Companies and filing requirements |
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There is a new offence of knowingly or recklessly delivering information to the Registrar which is misleading, false or deceptive in a material way punishable by imprisonment and/or fine (c. 1112)
The Registrar now has limited powers to accept informal corrections or replacements of documents that have been filed (whereas a Court order is currently required) (s. 1075)
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Part 41 |
Business names |
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Largely re-enacts existing provisions but creates an offence of using a business name that gives “so misleading an indication of the nature of the activities of the business as to be likely to cause harm to the public” (s. 1198)
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