Company Law April 2008
Companies Act 2006 - Up to April 2008 Implementation
Customisable UK Legal Documents available immediately to subscribers
The Companies Act 2006 was enacted following a review of company law in the UK. The new Act largely restates the provisions of the 1985 Act, with a few changes made to help simplify how companies are governed and managed. Private companies in particular will benefit from these changes.
Section 270 of the Companies Act 2006 came into force on 6th April 2008, removing the obligation on private companies to appoint a company secretary. In those companies who take advantage of the new exemption, the duties that would normally be carried out by a secretary will instead be carried out by a director, or such other person as is authorised in that behalf by the board. Private companies will however continue to have the option to appoint a secretary, subject to the registration requirements under sections 274 to 280 of the Act. More detail can be found on the Company Secretaries in Private Companies information page.
One of the major changes under the Companies Act 2006 is that directors' duties are codified for the first time. Whilst the statutory duties are heavily based on the existing common law duties, there are some additions and alterations. The seven statutory duties are;
1. To act within the directors' powers in accordance with the company's constitution;
2. To promote the success of the company;
3. To exercise independent judgement;
4. To exercise reasonable skill, care and diligence;
5. To avoid conflicts of interest;
6. Not to accept benefits from third parties;
7. To declare interests in a proposed or existing transaction or arrangement with the company.
As of 1st October 2007 the first four director's duties apply. The remaining three, regarding conflicts of interest, are due to come into force from October 2008.
Shareholder Written Resolutions
Whilst private companies have been able to make use of written resolutions for some time, such resolutions could only be passed if there was unanimity. Under the 2006 Act written resolutions are now able to be passed in a manner more commensurate with "normal" shareholder resolutions. Instead of unanimity, it is now only necessary to secure the agreement of members representing 50% (for ordinary resolutions) or 75% (for special resolutions) of the total voting rights of eligible members.
The new Act has also standardised the minimum notice periods for ordinary and special resolutions, with each now requiring 14 days notice.
The written resolutions provided by Simply-docs have been updated in light of the relaxation of requirements.
With effect from 1st October 2007, private companies are no longer required by law to hold an AGM. Previously private companies were able to pass an elective resolution to dispense with an AGM, but in the absence of such resolution an AGM had to be held. The default position under the 2006 Act is effectively mirrored, as there is no statutory requirement to hold AGMs although a company may, through its articles, decide that AGMs will be held.
Template notices, minutes and resolutions for general meetings all available within the Simply-docs Corporate Document Folder.
Statutory Company Registers
The Companies Act 2006 removed the obligation to maintain a Register of Directors Interests as of 1st April 2007.
On 1st October 2007 the provisions of the 2006 Act concerning the Register of Directors came into effect. The register must now show a service address rather than a residential address. Companies must now also keep a Register of Directors' Residential Addresses.
Simply-docs has updated the template Register of Directors and now also provides a Register of Directors' Residential Addresses, available in the Corporate Document Folder.
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The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.