Companies Act 2006

The Companies Act 2006 Finally Comes Into Force

Since the Companies Act 2006 (the “Act”) became law on 8th November 2006 its provisions have been brought into force in stages. This is not surprising for an Act which represents a complete overhaul of UK company law and holds the record for being the longest Act ever passed by Parliament (at over 1200 sections!).

The Act was implemented, in full, on 1st October 2009 and has brought about changes to all areas of company law and practice, including a number of welcome deregulatory measures for private companies.

The list below highlights just some of the changes that are likely to be of most significance to private companies.

Memorandum of Association & Articles of Association – it is no longer necessary for the Memorandum to set out the company’s objects. The Memorandum will simply be a document signed by the subscribers confirming that they wish to form a company.

New model Articles of Association will apply to companies incorporated on or after 1st October 2009.

Directors - all companies must have at least one natural person as a director and a new minimum age of 16 has been set for all directors.

Directors Duties – the Act codifies directors’ duties. It sets out a statutory statement of seven duties being:-

to act within powers
to promote the success of the company for the benefit of its members as a whole
to exercise independent judgment
to exercise reasonable care, skill and diligence
to avoid conflicts of interest
not to accept benefits from third parties
to declare interests in proposed transactions with the company

Electronic Communications – designed as a cost-saving measure for businesses. Companies are now able to communicate electronically with their members using email and via the company website.

Meetings and Resolutions – private companies are no longer required to hold an annual general meeting and new procedures are introduced for written, ordinary and special resolutions.

These are only a small number of the changes made by the Act. For further information on how the changes can affect your company, please contact Andrew Arnott on 01463 239393 or by email.

Disclaimer: The information in this publication is based on our current understanding of the law. It has been produced for information purposes only. Professional advice should always be sought before taking any action.

Macleod & MacCallum cannot take any responsibility for loss incurred through acting or failing to act on the basis of anything contained in this publication.