The Final Implementation of the Companies Act 2006
On 1 October 2009 the remaining provisions of the Companies Act 2006 (CA 2006) came into force bringing with it a new more flexible regime for small companies. A company may continue to operate after 1 October 2009 under its existing constitution. However, to take full advantage of this new regime a close inspection of the articles will be required and some amendments of the existing articles to update the company’s constitution may be necessary.
An overview of the key provisions which came into effect on 1 October 2006 is set out below:
- Authorised Share Capital - CA 2006 has removed the concept of an authorised share capital. However, pre-existing authorised share capital details will continue to operate as a restriction after 1 October 2009. If companies wish to remove this restriction they need to amend accordingly by passing an ordinary resolution.
- Allotment of Shares - From 1 October 2009, directors of private companies with one class of shares have unconditional authority to allot shares; existing (pre 1 October 2009) authorised share capital limits will continue to apply until such time as a shareholder resolution is passed to remove it. S.551 requires directors of a company with more than one class of share to obtain authority from the members before allotting shares.
- Pre-emption rights - The existing statutory pre-emption rights remain under the CA 2006 and existing disapplication rights continue to be valid post 1 October 2009. They can be disapplied by special resolution or by the articles.
- Reduction of capital - Private companies will be able to reduce their capital by way of a special resolution supported by a solvency statement from the directors.
- Purchase of own shares - A company’s articles will no longer need to contain specific authorisation to purchase shares out of capital because a shareholder resolution at the appropriate time will be sufficient.
- Memorandum and articles of association - The memorandum will no longer set out the objects of the company. The provisions set out in the memoranda will automatically become part of the articles of association. The articles rather than the memoranda will set out the principles covering the way the company conducts its business. However from 1 October 2009 a company is free to delete these objects or adopt new articles without the objects.
- Notice of Meetings - A private company now only needs to give 14 clear days’ notice for a general meeting irrespective of the type of resolution. However a company’s articles may still require a longer period of notice if a special resolution is to be considered. Failure to give the correct period of notice could invalidate any decision taken at the meeting.
- Shareholder meetings - Private companies are no longer required to hold an AGM, however 10% of the shareholders can demand a meeting (5% in certain circumstances).
- Written resolutions - Since October 2007, under the CA 2006, private companies are able to pass written resolutions without needing the consent of all shareholders. It is now possible for any resolution to be approved by shareholders in writing with a simple majority for an ordinary resolution and a 75% majority for a special resolution. This should avoid the need to convene a general meeting to pass shareholders’ resolution in most cases.
- Chairman’s Casting Vote at General Meetings - If a company was incorporated before 1 October 2008 it is permissible to keep this clause in the articles but if the incorporation was after 30 September 2008 this clause is invalid.
- Change of name - A company will be able to include provisions in its articles to authorise directors to change its name without requiring a special resolution.
Directors’ residential addresses
- New and existing directors will be able to use a service address (e.g. the registered office) instead of their home address for disclosure on the public records at Companies House (although their home must still be supplied which will be kept on a separate, protected register both by the company and Companies House). Details of existing directors’ home addresses on the register at Companies House will not be expunged automatically.
- The service address of a director or secretary who holds a Confidentiality Order granted under the Companies Act 1985 which is valid on 30 September 2009, will continue to be the address on the public records at Companies House for that person post 1 October 2009. Furthermore, under the CA 2006, Companies House is prevented from disclosing the residential address of that director or secretary to a credit reference agency.
PROtected Online Filing (PROOF) Service
- Companies House have introduced a scheme called PROOF. Under this scheme a company can only file certain forms electronically. The forms covered under the PROOF scheme are:
- Change of particulars (company officers)
- Change of registered office
- Annual return
The purpose of the scheme is to assist companies to protect themselves from fraudulent filings as it prevents individuals from filing the above forms.
Once a company has registered for the PROOF scheme, Companies House will only accept these forms if they filed electronically, papers forms will be rejected and sent back to the registered office.
15 October 2009
< previous next >
To download a pdf version of this publication please click HERE
About Throgmorton: Throgmorton is one of the leading companies specialising in the provision of financial and administrative outsourcing in the UK SME financial services sector.
The information in this notice is intended for general guidance only. Throgmorton does not accept any responsibility for losses incurred to any person acting or refraining to act as a result of the information in this notice. Advice should be taken in the context of specific circumstances.