Companies Act 2006 – Key points for small businesses

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 ever 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.

Companies Act 2006 – Key points

  • 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).

Last updated: 2nd May, 2021

Superscript no-ties business insurance - pay monthly

Tailored just for you + pay monthly. You could be covered in just 10 minutes.

Set up a limited company - packages from £12.99

Online company formation - everything you need to get started, via 1st Formations

Tide Business Bank Account - £40 welcome bonus!

Exclusive for Bytestart readers + 12 months' free transfers. Find out more.

FreeAgent Online Accounting - 55% off - ByteStart exclusive!

Brilliant software. Get 55% of your first 6 months, then 10% for life.

Related articles

  • choose business structure

    Which is best? – sole trader, limited company, partnership or LLP?

    The type of structure you use will depend on a number of factors unique to the business you want to start. In this article, we look at the main structures – sole trader, limited company,…

  • set up a limited company

    How to set up a limited company – the basics

    Aside from the sole trader route, the limited liability company is the most popular business structure to trade under in the UK. Related guides: The Annual Return – Form AR01, what it is and how…

  • person significant control

    Persons with Significant Control – what are they and how do you create a PSC register?

    Since 6th April 2016, nearly all UK companies have been required to maintain a register of Persons with Significant Control (also known as a “PSC register”). Related guides: What is a dormant limited company, and…