The latest round of changes resulting from the Companies Act 2006 came into effect on 1 October 2008. The most important of these are as follows:
- Every company must have at least one director who is a ‘natural person’. This means that companies where the directors are exclusively other companies (as is not uncommon for subsidiaries) will have to appoint at least one individual as a director. There is, however, a concession which allows companies that did not have a natural person as a director on the date on which the Act received Royal Assent (8 November 2006) to delay compliance until 1 October 2010;
- The restrictions on providing financial assistance for the acquisition of a company’s own shares are repealed (Part 18). This will make it easier for smaller companies to widen the base of their shareholdings. There are other changes in the rules governing reductions in share capital (Part 17);
- Substantial changes are made relating to a director’s duties with regard to avoidance of conflicts of interest. These are contained in Chapter 2 of Part 10 of the Act and are sufficiently important to be recommended reading for all company directors (you'll need to scroll down the page);
- An objection to a company name may be made if it is sufficiently similar to another name that is owned by the objector and compromises their goodwill (Part 5); and
- New regulations requiring companies to display specified information at their trading premises and on documents or communications.
Failure to comply with any of the new requirements may leave the company and/or its directors liable to a fine. The final round of changes is due to come into effect in October 2009. View implementation timetable.
We can help you make sure your company complies with the Companies Act and other applicable legislation and can advise directors on their rights and responsibilities.