Companies Act 2006 - Implementation Timetable
Introduction
Many people are aware of the existence of the new Companies Act 2006 which became law last November, but it is less well known that most of the provisions are not yet in force and will only come into force in a piecemeal fashion between now and October 2008.
The government has now announced the implementation timetable. Dates for implementation of some of the main provisions relating to private companies are set out below and a more detailed summary is provided at the end of this article:
January 2007
- Requirement to state the company's name, registered number, place of registration and registered office address on the company's website and its order forms
- Provisions aimed at facilitating electronic communications with shareholders
October 2007
- Written resolutions will no longer need to be signed by all shareholders
- Abolition of annual general meetings for private companies
- 14 days' notice for a shareholder meeting (unless otherwise set out in the Articles of Association)
- Codification of directors' duties
April 2008
- Private companies will no longer have to appoint a company secretary, but can if they choose to do so
- Deadline for private companies to file annual accounts and reports reduced from ten months to nine months
October 2008
- Directors no longer required to file home addresses at Companies House, they may instead file a service address
- Financial assistance no longer prohibited
- Directors' conflicts of interest may now be authorised by those directors not having an interest
- Memorandum of Association will no longer be required
- New default model Articles of Association may be adopted
- Companies no longer required to state their Objects
- All companies will be required to have at least one actual person as a director
- Minimum age of 16 for directors. Any directors under 16 will cease to be directors from October 2008
Despite much of the Act not coming into force until late 2008 companies should familiarise themselves with the new Act and begin preparing for it now. Some forward planning will be required, and in due course companies will need to conduct a review of both their company documentation and methods of operation. In particular, they should consider whether any action to deal with the new Act should be taken at their AGM before autumn 2008, by which time the entire Act should be in force.
The long timetable begs the question: why can the new Act not be implemented on a specific date in its entirety? The answer may in part be due to the fact that the Act is the longest piece of legislation ever to be passed in the UK, containing over 1,500 clauses. It replaces all the previous Companies Acts. There are many practical difficulties in implementation and the transitional process between the old and the new system. The Government claims that the timetable is aimed to give businesses certainty, time to prepare and the least burdensome and most efficient transition to the new regime.
In more detail, the sections of the new Act will be brought in as follows:
From 1 October 2007:
- Part 9 (Exercise of members' rights);
- Part 10 (Company's directors), other than provisions relating to directors' conflict of interest duties, directors' residential addresses and underage and natural directors;
- Part 11 (Derivative claims and proceedings by members);
- Part 13 (Resolutions and meetings), and, related to this, sections 485-488 of Part 16 (Audit);
- Part 14 (Control of political donations and expenditure);
- Section 417 of Part 15 (Contents of directors' report: business review);
- Part 29 (Fraudulent trading);
- Part 30 (Protection of members against unfair prejudice);
- Part 32 (Company investigations: amendments).
From 6 April 2008:
- Part 12 (Company secretaries);
- Part 15 (Accounts and reports), other than section 417;
- Part 16 (Audit), other than sections 485-488;
- Part 19 (Debentures);
- Part 20 (Private and public companies)
- Part 21 (Certification and transfer of securities);
- Part 23 (Distributions);
- Part 26 (Arrangements and reconstructions);
- Part 27 (Mergers and divisions of public companies);
- Part 42 (Statutory auditors).
From 1 October 2008:
- Part 1 (General introductory provisions);
- Part 2 (Company formation);
- Part 3 (A company's constitution);
- Part 4 (A company's capacity and related matters);
- Part 5 (A company's name);
- Part 6 (A company's registered office);
- Part 7 (Re-registration as a means of altering a company's status);
- Part 8 (A company's members);
- Part 10 (A company's directors) - provisions relating to directors' conflict of interest duties, directors' residential addresses and underage and natural directors;
- Part 17 (A company's share capital);
- Part 18 (Acquisition by limited company of its own shares);
- Part 24 (A company's annual return);
- Part 25 (Company charges);
- Part 31 (Dissolution and restoration to the register);
- Part 33 (UK companies not formed under the Companies Acts);
- Part 34 (Overseas companies);
- Part 35 (The registrar of companies);
- Part 41 (Business names).
Further guidance on the implementation timetable can be found at http://www.dti.gov.uk/
Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.
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