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companies_act [2017/04/27 16:35]
phil created
companies_act [2017/04/27 16:52] (current)
phil
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 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest Act in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules (the list of contents is 59 pages long) but it has since been surpassed, in that respect, by the Corporation Tax Act 2009. The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest Act in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules (the list of contents is 59 pages long) but it has since been surpassed, in that respect, by the Corporation Tax Act 2009.
  
-Implementation[edit]+Implementation
 A small portion of the Act came into effect on Royal Assent in November 2006. The first and second Commencement Orders then brought further provisions into force in January 2007 and April 2007. The implementation timetable for the remainder of the Act was announced in February 2007, by Margaret Hodge, Minister for Industry and the Regions. The third and fourth Commencement Orders brought a further tranche of provisions into force in October 2007, and the fifth, sixth and seventh in April and October 2008. The eighth commencement order, made in November 2008, brought the remainder of the Act into force with effect from October 2009. A small portion of the Act came into effect on Royal Assent in November 2006. The first and second Commencement Orders then brought further provisions into force in January 2007 and April 2007. The implementation timetable for the remainder of the Act was announced in February 2007, by Margaret Hodge, Minister for Industry and the Regions. The third and fourth Commencement Orders brought a further tranche of provisions into force in October 2007, and the fifth, sixth and seventh in April and October 2008. The eighth commencement order, made in November 2008, brought the remainder of the Act into force with effect from October 2009.
  
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 Implementation of the Act is the responsibility of the Department for Business, Innovation and Skills. Implementation of the Act is the responsibility of the Department for Business, Innovation and Skills.
  
-Directors[edit]+Directors
 Main article: Board of directors Main article: Board of directors
 The Act replaced and codified the principal common law and equitable duties of directors, but it does not purport to provide an exhaustive statement of their duties, and so it is likely that the common law duties survive in a reduced form. Traditional common law notions of corporate benefit have been swept away, and the new emphasis is on corporate social responsibility. The seven codified duties are as follows: The Act replaced and codified the principal common law and equitable duties of directors, but it does not purport to provide an exhaustive statement of their duties, and so it is likely that the common law duties survive in a reduced form. Traditional common law notions of corporate benefit have been swept away, and the new emphasis is on corporate social responsibility. The seven codified duties are as follows:
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 The current age restriction of 70 for directors of public companies has been abolished. A new minimum age of 16 has been introduced for all directors who are natural persons (S157). The current age restriction of 70 for directors of public companies has been abolished. A new minimum age of 16 has been introduced for all directors who are natural persons (S157).
 Directors will have the option of providing Companies House with a service address, which will in future enable their home addresses to be kept on a separate register to which access will be restricted. Directors will have the option of providing Companies House with a service address, which will in future enable their home addresses to be kept on a separate register to which access will be restricted.
-General provisions[edit]+General provisions
 The Act contains various provisions which affect all companies irrespective of their status: The Act contains various provisions which affect all companies irrespective of their status:
  
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 Execution of documents - Formalities for execution as a deed are to be further revised, so that a single director can execute a document as a deed on behalf of the company by a simple signature in the presence of a witness. Execution of documents - Formalities for execution as a deed are to be further revised, so that a single director can execute a document as a deed on behalf of the company by a simple signature in the presence of a witness.
 Share capital - the requirement for an authorised share capital will be abolished. Companies will be able to redenominate their share capital from one currency to another without an order of the court. Share capital - the requirement for an authorised share capital will be abolished. Companies will be able to redenominate their share capital from one currency to another without an order of the court.
-Distributions in kind - The Act addresses the current uncertainty in the law in relation to the transfer of non-cash assets by a company to a shareholder,​ and whether this should be treated as a distribution.[4]+Distributions in kind - The Act addresses the current uncertainty in the law in relation to the transfer of non-cash assets by a company to a shareholder,​ and whether this should be treated as a distribution.
 Shareholder meetings - The Act enables shareholder meetings to be held more quickly. Special resolutions now require only 14 days' notice unless proposed at an AGM. Shareholder meetings - The Act enables shareholder meetings to be held more quickly. Special resolutions now require only 14 days' notice unless proposed at an AGM.
 Shareholder communications - The Act made it easier for companies to communicate electronically (e.g. by email or by website) with their shareholders by express agreement (which agreement can be obtained under the articles, or by the shareholder failing to indicate that they do not wish to communicate via the website, as well as by more conventional methods). Shareholder communications - The Act made it easier for companies to communicate electronically (e.g. by email or by website) with their shareholders by express agreement (which agreement can be obtained under the articles, or by the shareholder failing to indicate that they do not wish to communicate via the website, as well as by more conventional methods).
 Auditor'​s liability - auditors are now permitted to limit their liability for claims in negligence, breach of trust or breach of duty so long as: Auditor'​s liability - auditors are now permitted to limit their liability for claims in negligence, breach of trust or breach of duty so long as:
 the shareholders have approved the limitation in advance. the shareholders have approved the limitation in advance.
-the court considers the limitation of liability to be 'fair and reasonable' ​[5]+the court considers the limitation of liability to be 'fair and reasonable' ​
 This change was made after intensive lobbying by the accounting profession in the United Kingdom. This change was made after intensive lobbying by the accounting profession in the United Kingdom.
  
 Company Names Adjudicator - Section 69 of the Act provides for the appointment of a Company Names Adjudicator. A Company Names Tribunal was established on 1 October 2008 through which the Company Names Adjudicator will administer his powers via the UK Intellectual Property Office under the tribunal. Section 69 has expanded the grounds under which any person can object to a conflicting company name registration under the Act. Company Names Adjudicator - Section 69 of the Act provides for the appointment of a Company Names Adjudicator. A Company Names Tribunal was established on 1 October 2008 through which the Company Names Adjudicator will administer his powers via the UK Intellectual Property Office under the tribunal. Section 69 has expanded the grounds under which any person can object to a conflicting company name registration under the Act.
-Private companies[edit]+Private companies
 Main article: Private company limited by shares Main article: Private company limited by shares
 One of the more touted aspects of the new legislation was the simplification of the corporate regime for small privately held companies. A number of the changes brought about by the Act apply only to private companies. Significant changes include: One of the more touted aspects of the new legislation was the simplification of the corporate regime for small privately held companies. A number of the changes brought about by the Act apply only to private companies. Significant changes include:
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 Reduction of share capital - private companies will be able to reduce their share capital without the need to obtain a court order. Reduction of share capital - private companies will be able to reduce their share capital without the need to obtain a court order.
 Filing of accounts - the period in which accounts must be filed has been reduced from 10 months to 9 months from the financial year end. Filing of accounts - the period in which accounts must be filed has been reduced from 10 months to 9 months from the financial year end.
-Public and listed companies[edit]+Public and listed companies
 Main article: Public limited company Main article: Public limited company
 The Act also seeks to promote greater shareholder involvement,​ and a number of new requirements are introduced for public companies, some of the provisions of which only apply to companies whose shares are listed on the main board of the London Stock Exchange (but, importantly,​ not to companies whose shares are listed on AIM). The Act also seeks to promote greater shareholder involvement,​ and a number of new requirements are introduced for public companies, some of the provisions of which only apply to companies whose shares are listed on the main board of the London Stock Exchange (but, importantly,​ not to companies whose shares are listed on AIM).
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 Enfranchising indirect investors - nominee shareholders of main list companies will be able to nominate persons on behalf of whom they hold shares to receive copies of company communications and annual reports and accounts. All companies will also be able to include provisions in their articles to identify some other party to exercise additional rights of the shareholder. This is to address the concern that shares in publicly listed companies are frequently held in an intermediary'​s name, which makes it more difficult for the beneficial owners of the shares to exercise their rights as shareholder. Enfranchising indirect investors - nominee shareholders of main list companies will be able to nominate persons on behalf of whom they hold shares to receive copies of company communications and annual reports and accounts. All companies will also be able to include provisions in their articles to identify some other party to exercise additional rights of the shareholder. This is to address the concern that shares in publicly listed companies are frequently held in an intermediary'​s name, which makes it more difficult for the beneficial owners of the shares to exercise their rights as shareholder.
 Voting by institutions - the Act empowers the government to introduce regulations in the future that would require institutions to disclose how they have voted. The government has indicated it will only introduce such regulations after full consultation and if a voluntary disclosure scheme does not work. Voting by institutions - the Act empowers the government to introduce regulations in the future that would require institutions to disclose how they have voted. The government has indicated it will only introduce such regulations after full consultation and if a voluntary disclosure scheme does not work.
-Paperless share transfers - the Act gives the government power to make regulations requiring (as well as permitting) paper-free holding and transferring of shares in main list companies. Some law firms[who?​] ​have expressed reservations as to how paper-free holding and transfers would work in practice.+Paperless share transfers - the Act gives the government power to make regulations requiring (as well as permitting) paper-free holding and transferring of shares in main list companies. Some law firms have expressed reservations as to how paper-free holding and transfers would work in practice.
 Transparency Obligations Directive - the Act brings into force the European Directive imposing obligations on main list companies in relation to financial reporting, disclosure of major acquisitions or disposals of its shares and the dissemination of information about the company to its shareholders and the public generally. The Act gives the Financial Services Authority power to make rules to implement the requirements of the Directive, which would be implemented by way of changes to the existing Listing Rules and Disclosure Rules. The Act also introduces a statutory compensation scheme for misleading or inaccurate statements in reports. Transparency Obligations Directive - the Act brings into force the European Directive imposing obligations on main list companies in relation to financial reporting, disclosure of major acquisitions or disposals of its shares and the dissemination of information about the company to its shareholders and the public generally. The Act gives the Financial Services Authority power to make rules to implement the requirements of the Directive, which would be implemented by way of changes to the existing Listing Rules and Disclosure Rules. The Act also introduces a statutory compensation scheme for misleading or inaccurate statements in reports.
 Takeovers - the EU Takeover Directive was implemented by interim regulations in the United Kingdom in May 2006. The Act extends the statutory basis for the regulations in relation to certain matters, such as the statutory footing of the Takeover Panel, and the City Code on Takeovers and Mergers. It also extended the "​minority sweep up" provisions which were introduced by an amendment to the Companies Act 1985, and addresses certain practical problems which had arisen in relation to their operation. Takeovers - the EU Takeover Directive was implemented by interim regulations in the United Kingdom in May 2006. The Act extends the statutory basis for the regulations in relation to certain matters, such as the statutory footing of the Takeover Panel, and the City Code on Takeovers and Mergers. It also extended the "​minority sweep up" provisions which were introduced by an amendment to the Companies Act 1985, and addresses certain practical problems which had arisen in relation to their operation.
companies_act.txt ยท Last modified: 2017/04/27 16:52 by phil