Companies Act 2006
The Companies Act 2006 received Royal Assent on 8 November 2006 and is the longest Act ever passed by Parliament. The vast majority of the Act comes into force by 1 October 2008 with some of the law effective from January and April 2007. Other key dates for the introduction of the Act are 1 October 2007 and 6 April 2008.
The new Companies Act comprises approximately 1,300 sections and introduces new legislation, which reflects the changing business environment.
The Companies Act starts by approaching the legislative needs and obligations of private companies, while there are additional requirements for public, quoted and traded companies. Previously, legislation applied to all companies while providing for exemptions in certain circumstances for smaller companies or if shareholders agreed.
In order to make the UK a country where it is easier to do business the Act aims to simplify procedures and requirements for starting and running a company. The Act also seeks to make directors more accountable to shareholders.
Some of the changes introduced by the Act have already come into force. However, many changes take effect from 1 October 2007, 6 April 2008 and 1 October 2008.
The key changes are:
1 October 2007
- The Companies Act sets out directors' responsibilities to their companies.
- Annual General Meeting requirements change: private companies can conduct most business without holding a general meeting.
6 April 2008
- The period for filing accounts is reduced from ten months and nine months.
- The position of Company Secretary becomes an optional appointment.
- Shareholders may agree a limitation of auditors' liability.
1 October 2008
- An easier approach to the formation and the administration of new companies is introduced.
- Concept of authorised share capital is abolished.
- Directors may file 'service' rather than home address.
- The right to challenge company names is introduced.
- Companies are permitted to give financial assistance for purchase of their shares.
The Companies Act 2006 is a very important piece of legislation.
You can click here for a comprehensive look at the legislation.
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Date:31 August 2007
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