What is changing and when?
The Companies Act 2006 (the Act) is a major overhaul of company law. It is intended to simplify and modernise the existing law, including by removing a number of administrative requirements for private companies.
We will be producing a series of briefings to keep you up to date on the Act. This first briefing gives a short overview of what is changing and when. Further briefings will explore some of the changes in more detail, what they mean for your business and the steps you need to take.
Will the Act replace the existing Companies Acts?
The Act is intended to provide a comprehensive code of company law and will replace almost all of the provisions in the Companies Act 1985 (the 1985 Act), the Companies Act 1989 and the Companies (Audit, Investigations and Community Enterprise) Act 2004.
When will the Act come into force?
The Act received royal assent on 8 November 2006. Some parts of the Act are already in force (having come into force on royal assent or in January) with other parts coming into force in April 2007.
On 28 February 2007 the Government announced the commencement timetable for the remaining provisions of the Act, which will come into force on 1 October 2007, 6 April 2008 and 1 October 2008.
The Government also published proposals on secondary legislation (including draft model articles) on 28 February 2007. The consultation on these proposals will remain open until 31 May 2007. The Government intends to make all secondary legislation (or lay it in draft if parliamentary approval is required) by the end of 2007.
See the implementation timetable below for further details.
What is already in force?
The provisions that have already come into force include:
Disclosure of company details Companies are required to disclose company details (e.g. company name, place of registration, registered number and registered office) on all business correspondence (including e-mails) and websites. See our last corporate clip for further details.
Company Communications - The Act contains provisions facilitating electronic communications with shareholders, designed to deliver significant cost savings to businesses. Key changes include:
the electronic communications provisions now apply to all communications by or to a company pursuant to the Act (subject to contrary provisions in other legislation); previously such provisions only applied to communications by a company in certain circumstances;
shareholders can communicate with the company by electronic means where the company gives an electronic address in a meeting notice or proxy documents;
subject to shareholder approval (either by resolution or a provision in the articles) companies may supply documents to shareholders by posting them on a website. Companies still need to ask shareholders individually for consent, but shareholders will be deemed to have consented if they do not object within 28 days of the company's request (i.e. shareholders will have to deliberately 'opt out').
Further detail on these provisions, and their practical implications...