The Companies Act 2006 is a piece of primary legislation that largely applies to companies directly. A number of provisions are currently being set out in secondary legislation, mainly through regulations or orders made by statutory instrument. The Companies Act 1985 has been amended in order to meet four key objectives:

• To enhance shareholder engagement and a long term investment culture;
• To ensure better regulation and a ‘Think Small First’ approach;
• To make it easier to set up and run a company; and
• To provide flexibility for the future.

A copy of the Companies Act 2006 is available from the Office of Public Sector Information http://www.opsi.gov.uk/acts/acts2006a.htm, or from the Companies Act Publications page of the Companies House website.

The Companies Act 2006 is by no means complete and will be supplemented by a series of Regulations using powers given to the Secretary of State in certain parts of the Act. It will be supplemented by Commencements Orders which bring the Act into force. As they are published, details can be at:

http://www.berr.gov.uk/bbf/co-act-2006/made-or-before-parliament/page35232.html.

The Act will not be fully implemented until October 2009,

A clear statement of directors’ general duties clarifies the existing case law based rules

Companies will be able to make greater use of electronic communications for communications with shareholders.

Directors will automatically have the option of filing a service address on the public record (rather than their private home address).

Directors must be at least 16 years old, and all companies must have one natural person as a director – i.e. they cannot have all corporate directors.

There will be improved rules for company names.

Companies will no longer be required to specify their objects on incorporation.

The articles will form the basis of the company’s constitution.

Private companies

There will be separate and simpler model Articles of Association for private companies.

As part of the "think small first" agenda, there will be a separate, comprehensive "code" of accounting and reporting requirements for small companies.

Private companies will not be required to have a company secretary.

Private companies will not need to hold an annual general meeting unless they positively opt to do so.

It will be easier for companies to take decisions by written resolutions.

There will be simpler rules on share capital, removing provisions that are largely irrelevant to the vast majority of private companies and their creditors.

Shareholders

There will be greater rights for nominee shareholders. These will include the right to receive information electronically or in hard copy if they so wish.

There will be more timely accountability to shareholders by requiring public companies to hold their AGM within 6 months of the financial year-end

Directors

Every director must provide both their usual residential address and, for each directorship, a service address. The service address will be on the public record; the residential address will be protected information. A director may choose to use his residential address as his service address; in which case the fact that the two addresses are the same will be protected information.

Directors will still need to file their residential address with Companies House but they will also have the choice of filing a service address. The service address can be the same as the residential address, or the registered office address, or it can be somewhere different. The residential address will be held on a private register only available to predetermined organisations. This will be introduced from October 2009.

The following will be able to access information on directors residential addresses:

• Specified public bodies for carrying out their public functions.
• Credit reference agencies for vetting applications for credit and associated work and to meet the obligations in the Money Laundering Regulations.

Vulnerable directors will be able to apply to the Registrar for their addresses not to be provided to credit reference agencies where for example a director is the beneficiary of a valid Confidentiality Order on 30 September 2009 or who has made a successful application to the Registrar on the grounds that he is:

• at serious risk of violence or intimidation as a result of the activities of a company of which he is a director;
• or has been, employed by the police or security services;

Minimum and maximum age for directors

The Act introduces a minimum age for a director of 16. Any directors under 16, when the Act is implemented in October 2008, will automatically cease to be a director.

From 6th April 2007 the maximum age for directors of PLC’s, which was 70, has been removed.

Secretaries

From 6th April 2008 private companies will have the option whether or not they have a company secretary. If the company decide to no longer have a secretary after that date they will need to inform Companies House on the usual 288b form.

A company can have a sole director and no secretary as long as it is a private company and from 1st October 2008 that the director is a natural person.

The new provisions relating to natural directors do not apply to secretaries. Secretaries can still be corporate.

On 1st October 2009 secretaries who are an individual person will be able to file a service address for the public record and corporate secretaries will be required to give details of where they are registered and the registered company number, if applicable.

Accounts

The filing dates for accounts will be reduced from 10 months to 9 months for private companies and from 7 months to 6 months for PLCs. The reduction in the accounts filing deadlines will be introduced for companies with accounting periods beginning on or after 6th April 2008.

Minutes

After 1st October 2007 a company will only have to hold an EGM to pass an extraordinary resolution if it is stated in the company’s articles. Any resolution that was passed as an extraordinary resolution under the Companies Act 1985 can now be passed as a special resolution

Under the Companies Act 2006 private companies will no longer be required to hold annual general meetings, however the shareholders will still be involved in the decision making process of the company. Public companies must still hold AGM’s.

The required majority needed for written resolutions will be similar to that for shareholders’ meetings – a simple majority of eligible shares for ordinary resolutions, or 75% for special resolutions. Written resolutions passed on or after 1 October 2007 (under the Companies Act 2006) require only one signature (but may have more).

Section 390 of the Companies Act 85 will be amended so that auditors are still entitled to receive all communications that go to members in connection written resolutions.

Shareholder meetings for private companies can now all be on a 14 notice period, unless different arrangements are specified in a company’s articles.

Under the Companies Act 2006 elective resolutions excluding section 80a (now section 549-55 of the 2006 Act) have been repealed.

As of 1 October 2007, four of the five elective resolution types are no longer necessary to be filed for private limited companies - these being:

• Dispensing with the laying of accounts and reports before a general meeting (s252)
• Dispensing with the holding of annual general meetings (s366a)
• Reduction of majority required to authorise a meeting at short notice (s369(4) or 378(3))
• Dispensing with the annual appointment of auditors (s386)

But if they are filed they will be placed on the public record.

Company Names

In situations where, on similarity of names, the company is part of a group the proposal is that where there is a suggested link between two companies such as by the use of GB or UK (where either of these words is the only difference in the company name) the incorporation application is rejected unless it is accompanied by written consent from the company already on the index confirming that the applicant company is, or will be, in the same group of companies and that they give their agreement to the proposed name being taken.

Companies that are exempt from using the word limited in their company name under section 30 of the Companies Act 1985, are still exempt from the requirements relating to the publication of its company name under the new Act.

From 1st October 2008 the public can complain to an independent names adjudicator about a company name. Complaints can still be received at Companies House but where the company name needs to be changed the complainant will be directed to the independent adjudicator. The adjudicator will consider the name and if it fails to comply with the naming rules the company can be forced to change the name to one the adjudicator states.A company can appeal to the Court about a company name and if the Court determines that the new name is appropriate then the order will be filed at Companies House

Capital

Public companies will need to establish whether they are maintaining the minimum share capital in sterling or euros (previously only sterling was permitted).The minimum authorised share capital is either 50,000 in sterling or 65,600 in euros.

An application by a public company for a certificate to commence business and borrow (trading certificate) will no longer be required to be in the form of a statutory declaration. A public company applying for a trading certificate or a private company re-registering to a public company will need to determine on the application whether they are meeting the authorised minimum requirement in sterling or euros.

Note: Information sourced from the Companies House Web Site. This has been summarised here but to view the provisions in full please visit http://www.companieshouse.gov.uk