Companies Act 2006 – certainty at last …

Over the past two and a half years we have been updating our clients on the (rather slow) progress of the implementation of the Companies Act 2006 (the “2006 Act”). The 2006 Act received Royal Assent back in November 2006 and we are glad to report that the final tranche of provisions were implemented on 1^st October 2009.

Provisions which came into force on 1^st October 2009 and which are relevant to private limited companies include:

• The reduction in the content of the memorandum of association so that it is essentially an historical document and the migration of certain elements previously contained in the memorandum of association to the articles of association;
• The introduction of a new set of model articles of association;
• The ability to entrench provisions in the articles of association, subject to certain safeguards;
• The ability for certain companies to have an unrestricted objects clause;
• The ability for Directors of companies to register a service address at Companies House (which can be the registered office address) rather than be required to disclose their residential address;
• The abolition of the requirement for Directors to have authority to allot new shares in a company; and
• The abolition of the requirement for companies to have an authorised share capital.

Several of these changes are significant and all corporate clients are advised to review their constitutional documents to ensure that: (1) they are compliant with the 2006 Act; and (2) they take maximum advantage of the changes introduced under the 2006 Act.  

The final implementation of the 2006 Act will no doubt be welcomed by all persons involved in administering, advising and dealing with companies. For the past two and a half years we have been working under two regimes – that of the 2006 Act in so far as that is in force and of the Companies Act 1985 for everything else. Both Acts are somewhat lengthy, indeed the 2006 Act is the largest piece of legislation ever written.

However, the final implementation will also cause considerable change to the general day-to-day running of companies. Among other things, AGMs are no longer a formal requirement and neither is a company secretary. In each case this is subject to the provisions of the articles. Directors now have codified duties and at least one director of each company must be a “natural person”. Notices may now be given electronically (although this is difficult in practice to introduce) and the use of written resolutions has been overhauled. And of course the forms and documents that were known to many a director and company secretary up and down the country will all be changing to reflect the new sections of the 2006 Act to which they relate.

Further details of the changes implemented by the 2006 Act on 1^st October 2009 and the changes implemented between January 2007 and October 2008 are contained in two publications that we have produced in partnership with the UK200 Group. The publications can be found here, please click on the images to view them. This will open up a new webpage.