Companies Act 2006 - The Finale

The final piece of the jigsaw relating to the Companies Act 2006 ("the Act"), said to be the largest ever Act passed by Parliament, came into force on 1 October 2009.  The changes affecting companies under the Act are wide ranging but the key features all directors and shareholders need to know include:-

• Directors have never been so heavily legislated against and should be fully aware of their duties, particularly in respect of their duty to promote the success of the company for the benefit of shareholders.
• Key decisions by directors should be properly documented in board minutes to help protect themselves against a possible 'derivative claim' (i.e. a claim pursuant to which shareholders can ensure a company  pursues a director for breach of their duties) which as a result of the Act are now becoming more common.
• Directors must ensure that any transaction or arrangements they have with the company which may give rise to a conflict are properly disclosed and recorded in their register of directors' interests.  Failure to do so could lead to criminal sanctions. Key examples would include where directors lease property they own to the company and technically even the use of directors' loan accounts could get caught by the legislation.
• Companies should seriously consider updating their Articles of Association to take advantage of new procedures brought in by the Act (e.g. removing the need for AGMs, a company secretary, authorised share capital or an objects clause).  They should also include new provisions to deal with directors' conflicts of interests, electronic communications and the allotment of shares.

Due to the volume of changes under the Act, Higgs & Sons is offering advice over the phone to anyone with general queries together with a free consultation to those wishing to update their procedures and documents. For further information please call Geoff Kettle on 01384 342100.

 All Change at Companies House

From 1 October 2009 the way in which companies are formed and administered by Companies House has also completely changed.  The key points to note are:

Companies House have now issued on their website new forms that replace their old ones.

• The new forms must be used for any changes that effect from after 1 October 2009. 
• Forms to be 'properly delivered' must only be in black ink (including signatures).
• Annual returns can only confirm information already at Companies House otherwise an inconsistency notice will be submitted.
• Directors will need to file a residential address (which will not be on public record) and a service address (which will be on public record).  The service address can be the registered office of the company.
• Company secretaries only need to file a service address.
• For directors and secretaries as at 1 October their service address will be their residential address until changed to another service address.  Companies House will also (for a fee) remove their residential address from historic forms filed with them.
• Audited accounts must include the company's name and address and registered office on one of the balance sheet, director's report or audit report and cannot be solely on the cover sheet.
• Companies House concession to allow 14 days to re-file rejected accounts has been removed.
• There are materially increased fines for late filing of documents.

For more information about Higgs & Sons' Corporate department please contact Susheel Gupta on 01384 342100.

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