The current parliament has been reviewing the existing company law provisions of the Companies Act 1985, the Companies Act 1989 and the Companies (Audit, Investigations and Community Enterprise) Act 2004 and established a new companies bill to reform the existing act. As of the 08 November 2006 the Companies Act 2006 received royal ascent and is scheduled to be implemented in parts over the next two years.
The goal is to have the Companies Act 2006 fully implemented by October 2009 but some parts of the act will arrive earlier. The first measures to be introduced relate to communications with shareholders. In January 2007 it will be permitted to communicate with shareholders by electronic means instead of paper. It is thought this measure alone will create savings for businesses of £50 million per year.
The clauses on takeovers which give the Takeover Panel power to make rules within a statutory framework will also be one of the first areas introduced. Measures relating to disclosure to the market and clarification of the liability attaching to such disclosures will also come in at an early stage.
The intention of the act is to simplify the legislation making it easier to understand and more flexible, especially for small businesses. The act will also save UK businesses millions of pounds each year. It is thought total savings to UK businesses overall will be in the region of £250 million per year with £100 million of this figure being saved by smaller businesses.
The companies Act 2006 is the largest ever act with some 1300 sections. Some of these sections simply restate existing legislation in simpler easy to understand terms.
Some of the key areas of interest for small businesses –
- It will no longer be a legal requirement for a private company to have a company secretary if they do not want one. Work traditionally undertaken by the company secretary can be undertaken by a sole director.
- New Model Articles have been created
- No longer required to hold an AGM is the company does not wish to.
The new act also encompasses Northern Ireland which has in the past had its own regime separate from England, Wales and Scotland which are covered by the old Companies Act 1985.
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