MacRoberts Corporate Law e-update 01/10/07

COMPANIES ACT 2006 - PARTIAL COMMENCEMENT

A substantial number of the provisions of the Companies Act 2006 (“the Act”) come into force today including provisions:

• relating to company directors - in particular the statutory codification of directors’ duties. The provisions relating to directors’ conflict of interest duties, confidentiality of directors’ residential addresses and underage and natural directors are expected to come into force on 1 October 2008;
• dealing with the passing of resolutions (including the new written resolution procedure) and conduct of company meetings (including abolition of the requirement for private companies to hold AGMs);
• introducing the new statutory derivative proceedings which entitle a company member to litigate on the company’s behalf against directors for breach of duty;
• controlling political donations and expenditure; and
• dealing with unfair prejudice against members.

The provisions of the Act covering fair dealing by directors also come into force
today. These broadly require member approval of:

• long-term service contracts (those with a guaranteed term exceeding two years);
• substantial property transactions between a company and its directors or their connected persons (an asset is substantial if its value exceeds 10% of the company’s asset value and is more than £5,000 or exceeds £100,000);
• any loan, guarantee or security given by a company to or for any of its directors; and
• any payment for loss of office made to a director.

Transitional provisions also apply in each case making it clear that the new provisions apply to payments etc arising on or after 1 October 2007 and the preexisting rules apply up to that date in most instances.

In addition, Table A (the model articles applicable to private companies limited by shares) has been amended as of today’s date to reflect the alterations made in the Act. Any company wishing to take advantage of the new Table A will need, however, to change their articles of association appropriately.

If you require any further information please contact Robert Burns on 0141 332 9988 or Alan Kelly on 0131 229 5046

© MacRoberts 2007