Companies Act 2006 – New Year...New Requirements! – Is your business ready?

Most companies will now be aware that certain provisions of the Companies Act 2006 (the “Act”) came into force last year. Further provisions are due to come in force in April this year and so it seems an opportune moment for businesses to check that they are currently complying with the Act and to prepare for the changes to come.

A summary of a selection of key provisions of the Act currently affecting private companies and shortly to be in force, are as follows:

What companies should already be doing.

• Companies should ensure that their name, registered office and number appear on their website and in addition on all electronic business letters and order forms.

• Directors should be managing their company’s affairs with regard to their new statutory duties. Although many of the new duties reflect the previous common law duties, Directors should take note of the requirement to note the interests of the employees and the impact of their actions on the environment and community when promoting the success of the company.

• Directors should be aware of new statutory procedures for shareholders to bring legal action against them (e.g. for negligence or breach of trust).

• Directors should note that they are statutorily liable for statements made in the Directors’ and Business Review which accompany the annual accounts.

• Directors should also be aware of new provisions relating to substantial property transactions, loans to directors, payments for loss of office and service contracts.

• Companies should consider taking advantage of provisions allowing communications between companies and shareholders to be carried out electronically and the simplified procedure for written resolutions.

• Care should be taken when dealing with requests by third parties to access a company’s register of members. It is now a criminal offence to fail to respond to such requests in the appropriate manner.

• Companies are currently required to keep copies of all written resolutions and minutes of shareholder and directors’ meetings for 10 years. The good news for trees is that this information can now be stored electronically.

What companies should prepare for in April

From 6 April 2008

• The requirement for a private company to appoint a company secretary is removed. Companies will now be able to execute deeds by the signature of a single director before a witness.

• The requirement for private companies to hold AGMs was removed in October last year. Private companies will now also not be required to lay their accounts before a general meeting of shareholders.

• The filing period for the accounts of private companies has been reduced by one month and penalties for late filing have been increased.

• Revision and clarification of the rules on distributions to shareholders.

• Auditors will be able to limit their liability by agreements providing they meet certain requirements.

The Company Commercial Department of Spratt Endicott Solicitors are able to provide further assistance and information about these changes, telephone 01295 204000.