Companies Act 2006 - Implementation timetable

The full implementation timetable for the Companies Act 2006 - which introduces sweeping changes to company law especially for small businesses - has been announced by Industry and Regions Minister Margaret Hodge.

The Companies Act 2006 is the single largest piece of legislation ever made and replaces most of the Company Law provisions of the 1985, 1989 and 2004 Acts. It brings in a wide range of changes to areas of company law such as formation of company, directors’ duties and liabilities. The Act will be implemented in phases with the entire Act in place by October 2008.

The areas coming into effect in October 2007 include the provisions in Part 9 of the Companies Act relating to the rights of indirect investors. Most of the provisions relating to directors' general duties will also take effect in October 2007.

The parts of the Act relating to accounts and reports, audit and statutory auditors will be commenced in April 2008.

The provisions relating to directors' conflict of interest duties will take effect from October 2008. This will give companies the opportunity to change their articles of association before commencement of these provisions.

Companies Act Implementation Timetable

The following parts will be introduced from 1 October 2007:

Part 9 (Exercise of members' rights);
Part 10 (A company's directors), other than provisions relating to directors' conflict of interest duties, directors' residential addresses and underage and natural directors;
Part 11 (Derivative claims and proceedings by members);
Part 13 (Resolutions and meetings), and, related to this, sections 485-488 of Part 16 (Audit);
Part 14 (Control of political donations and expenditure);
Section 417 of Part 15 (Contents of directors' report: business review);
Part 29 (Fraudulent trading);
Part 30 (Protection of members against unfair prejudice);
Part 32 (Company investigations: amendments).

The commencement provisions in respect of Part 9 will be drafted so as to enable nominee investment operators to send indirect investors' requests to companies from 1 October to entitle indirect investors to enjoy information rights from 31 December 2007.

The following parts will be introduced from 6 April 2008:

Part 12 (Company secretaries);
Part 15 (Accounts and reports), other than section 417;
Part 16 (Audit), other than sections 485-488;
Part 19 (Debentures);
Part 20 (Private and public companies);
Part 21 (Certification and transfer of securities);
Part 23 (Distributions);
Part 26 (Arrangements and reconstructions);
Part 27 (Mergers and divisions of public companies);
Part 42 (Statutory auditors).

The following parts will be introduced from 1 October 2008:

Part 1 (General introductory provisions);
Part 2 (Company formation);
Part 3 (A company's constitution);
Part 4 (A company's capacity and related matters);
Part 5 (A company's name);
Part 6 (A company's registered office);
Part 7 (Re-registration as a means of altering a company's status);
Part 8 (A company's members);
Part 10 (A company's directors) - provisions relating to directors' conflict of interest duties, directors' residential addresses and underage and natural directors
Part 17 (A company's share capital);
Part 18 (Acquisition by limited company of its own shares);
Part 24 (A company's annual return);
Part 25 (Company charges);
Part 31 (Dissolution and restoration to the register);
Part 33 (UK companies not formed under the Companies Acts);
Part 34 (Overseas companies);
Part 35 (The registrar of companies);
Part 41 (Business names).

Companies Act 2006 - Key benefits for Private companies

The Government claims that the Companies Act will bring the following benefits for private companies;

• There will be separate and simpler model Articles of Association for private companies, reflecting the way small companies operate.

• As part of our “think small first” agenda, we will set out a separate, comprehensive “code” of accounting and reporting requirements for small companies.

• Private companies will not be required to have a company secretary.

• Private companies will not need to hold an annual general meeting unless they positively opt to do so.

• It will be easier for companies to take decisions by written resolutions.

• Private companies will no longer be prohibited from providing financial assistance for the purchase of their own shares.

• There will be simpler rules on share capital, removing provisions that are largely irrelevant to the vast majority of private companies and their creditors.