MacRoberts Corporate Law e-update 08/03/07

COMPANIES ACT 2006 - IMPLEMENTATION PROPOSALS

On 28 February 2007 the government announced the commencement timetable for the remaining provisions of the Companies Act 2006 (“the Act”) with three implementation dates identified.

With effect from 1 October 2007, a number of provisions are scheduled to come into force including some of the provisions relating to company directors, resolutions and meetings, exercise of members’ rights, derivative claims and proceedings by members, control of political donations and expenditure, contents of directors’ report, fraudulent trading, unfair prejudice and company investigations.

With effect from 6 April 2008 the provisions relating to company secretaries, accounts and reports, audit, private and public companies, certification and transfer of securities, distributions, arrangements and reconstructions, mergers and divisions of public companies and statutory auditors will come into force.

With effect from 1 October 2008 the balance of provisions will be brought into force.

The Department of Trade and Industry has also published a consultation paper setting out amongst others, further transitional issues arising for existing companies once the Act comes into force.
The consultation paper covers a number of such issues including:

• The requirement for every company to have at least one director who is a natural (as opposed to a legal) person - it will no longer be possible for a company to have a sole corporate director
• Political donations to independent election candidates
• Provisions that might have effects on existing bargains or rights
• Acts done by a company secretary after a private company has decided not to have a secretary
• Financial assistance
• Derivative claims (an action brought by a member of a company to protect the interests of the company and obtain a remedy for it in connection with an act or omission involving negligence, default, breach of duty or breach of trust by a director)
• Provisions in articles of association or private contracts (for example, shareholders agreements) which rely on concepts which are abolished or different under the Act (which might include issues relating to authorised share capital or pre-emption, for example)

Views are also sought on the general approach to applying the changes made to company law to limited liability partnerships (“LLPs”) and extension of specific changes to the provisions for companies under the Act to LLPs. A further consultation later this year is expected on the application of the Act to LLPs.

In addition, views are sought on secondary legislation under the Act on a range of areas including company formation and re-registration, company and business names, control of political donations and expenditure, addresses on the public record at Companies House and share capital.

Revised draft model articles of association for private companies limited by shares and guarantee and for public companies have also been published.

Comments on political donations and expenditure should be made by 1 May 2007 and by 31 May 2007 in relation to all other matters. A copy of the consultation paper is available on the DTI website at www.dti.gov.uk/consultations/page37980.html

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

© MacRoberts 2007