Companies Act 2006 - latest provisions.

On 1 October 2008 another tranche of provisions under the Companies Act 2006 came into force, several of which will have a profound effect.

The main changes can be summarised as follows:

1. New trading disclosure regulations: these are largely concerned with where and how the company name and details should be displayed. Click here for more details.
2. Financial assistance: private companies are no longer prohibited from giving ‘financial assistance’ to a person for the purpose of acquiring the company’s shares. However the removal of this prohibition may not make life much easier for those wanting to buy and sell companies: lenders will still require evidence that the new directors have considered the effect of any financial assistance on the target company and complied with their duties.
3. Changes to Company Director requirements: all companies must have at least one director who is an individual, as opposed to a legal entity e.g. a company or firm. The Act has also introduced a minimum age for directors of sixteen.
4. Directors Duties. The following: statutory duties are in force:
• Not to accept benefits from third parties
• To declare an interest in proposed transactions or arrangements
• To avoid conflicts of interest
  The latter duty is significant, possibly requiring a review of the articles of association and a resolution of the members of the company, particularly where a director is also a director of a pension trustee company.
5. Relaxation in the rules governing reduction in share capital for private companies
6. Changes to the rules regarding objection to company names: a new system of adjudication has been introduced where there is an objection to a company’s registered name.
7. Changes to annual returns: for private companies, or a ‘non-traded’ company, only the names of shareholders appearing in the Register of Members are required and not their addresses.