The Companies Act 2006 enacted a wide range of reforms to the way company law is governed. It set out the duties of company directors for the first time, and has simplified some elements of company incorporation process. In this summary, we look at the key elements of the Act from a company director’s point of view.
Famously the longest piece of legislation every made at the time, the Companies Act 2006 was implemented in four stages, with the final phase going live on 1st October 2009.
The Companies Act 1985 was updated to make it easier to form and run a company, to enhance ‘shareholder engagement’ and provide a better environment for investors, to ensure better regulation, and to provide flexibility for the future.
- The duties of company directors were clarified for the first time. This included the responsibilities directors have towards their shareholders, employees, and the environment.
- Companies will be able to communicate with shareholders by electronic means if desired.
- The office of company secretary is now an optional one, although you can continue to use a secretary if needed.
- You can now form a limited company with just one director in place.
- Directors can provide a service address, which keeps their residential address private, if required. You can elect to provide a service address upon incorporation, or update existing director’s details with a service address.
- New model Articles of Association can now be used to incorporate a company. All companies must adopt Articles and a Memorandum of Association when forming a company.
- Company naming rules have been updated. In certain circumstances, a business can register a name which is the ‘same’ as an existing one, as long both companies are owned by the same group.
- The filing dates for the delivery of company accounts have been reduced from 10 to 9 months for all limited companies.
- Limited companies no longer have to hold an Annual General Meeting (AGM) unless they decide to do so, however the Act ensures that shareholders will still be involved in making decisions.
- Share capital rules have been simplified to make them more relevant to the way the majority of companies are run.
- Nominee shareholders will have greater rights (including the right to receive company information electronically).