KPSK NEWS

The Companies Act 2006 has now become law from 1st October 2007.

This new legislation, as well as introducing a number of changes, allows companies greater flexibility in choosing how they operate. Its provisions will be brought into force in stages, with all of it in effect by October 2008.

Here is an overview on those parts of the new legislation which will be of interest to most small private companies.

Company Secretaries from April 2008

There is no need to appoint a company secretary unless you want to. If you do have one, he/she will have the same rights and responsibilities as now and will continue to be registered with Companies House.

Directors from October 2008

All companies must have at least one actual person as a director (ie not acting as a director). All directors must be at least 16. Existing underage directors will cease to be directors from October 2008.

Directors can file service addresses on the public record, with residential addresses held as protected information at Companies House.

The act also defines the duties of a director…

• must respect the terms of the company constitution and act within their powers

• must act in such a way as to promote the 'success' of the company, take account of specified consequences of an decision, the interest of the company's employees and the impact of the company's operations on the environment

• must exercise independent judgement

• must exercise reasonable skill, care and diligence

• must avoid conflicts of interest

• should not accept benefits from third parties

• must declare an interest in any proposed transaction or arrangement

Shareholder meetings – from October 2007

Private companies will no longer need to hold an AGM. 10% of shareholders can demand a meeting (5% in certain circumstances).

If private company meetings take place they will require a 14 day notice period.

Decision making

Written resolutions will become easier to use, requiring a simple majority (for ordinary
resolutions) or 75% (for special resolution) of eligible votes.

Arrangements can be made so that communications can be sent and received in certain ways, especially electronically.

If there is agreement from shareholders, emails and websites can be used much more than at present. Individual members can still ask for hard copies.

Electronic Documents from January 2007

A company’s name, number, registered office and other particulars, currently required to be displayed on business letters and other documents, must now also be provided on electronic documents, as well as on any company website.

Articles

Companies formed under the new Act can choose to have new streamlined default model Articles. Existing companies can also choose to take advantage of these new model articles in whole or in part.

Financial assistance

The statutory rule that private companies can’t give financial assistance to buy their own shares has been abolished and should make these types of transactions easier.

Accounts from April 2008

Private companies must file their annual report within nine (previously ten) months of the year end. The medium-sized group exemption from preparing consolidated accounts has now been removed so it only applys to small groups.

Capital reductions

There is now a simpler solvency-based procedure to enable private companies to reduce capital without court approval.

General Compliance

There is very little companies have to do now, but they can take steps to take advantage of the deregulatory benefits of the Act. Transitional arrangements will make it as easy as possible for companies to take up these benefits.

Should you have any queries regarding these point or if you would like to discuss them with someone from KPSK, plese contact us directly.

Telephone: 01359 259999 Email: jasonford@kpsk.co.uk
More information is available from www.companieshouse.gov.uk/companiesAct/companiesAct