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FOCUS ON… CA 2006 FINAL IMPLEMENTATION |
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At long last, the remainder of the new Companies Act will be implemented tomorrow, 1 October 2009. All of the provisions coming into force are noted in CLM 2009, along with explanations of changes in the law where appropriate. The highlights of this implementation phase are summarised here. Names See CLM ¶248, ¶275 The rules on when a company’s name is regarded as the “same” as another on the register are more strictly defined (SI 2009/1085). See CLM 2009 Newsletter Issue 3 for details of the relevant regulations. There are two new ways in which companies can change their names: by conditional special resolution and by an alternative procedure set out in the articles. The conditional special resolution will be useful in situations where a significant change in the business is planned, for example where a company merges with another business. Passing a conditional resolution will allow the shareholders to consider the change of name in advance (along with various other matters that are likely to arise before the merger), and the actual change can be triggered once the merger has gone ahead by making the appropriate filing at Companies House. Allowing companies to change their names by an alternative procedure set out in the articles gives companies far more flexibility. There is no restriction on this power. For example, companies could decide to enable the directors to change the company’s name by board resolution, or allow a particular class of shareholders to do it. Companies can still change their names by special resolution. There are specific Companies House forms that need to be used in each of these situations. Incorporation and constitution See CLM ¶394+, ¶517+ One of the most significant changes brought in by the new Act is the change to a company’s constitution. Although the memorandum still exists, it is a very basic document only relevant to incorporation, setting out the company’s name, subscribers and how many shares they agree to take on incorporation. Companies incorporated on or after 1 October 2009 will only use this new-style memorandum. However, the changes apply to all companies. For those incorporated before 1 October 2009, all of the extra information in their old-style memoranda is deemed to be included in their articles (s 28 CA 2006). This has three main consequences: » companies will not be able to take advantage of some of the new more flexible provisions introduced by the new Companies Act unless they change these articles. For example, under the new Act, companies’ objects are unlimited unless their articles limit them. An objects clause imported from the memorandum has the effect of limiting the company’s objects to those stated; » the clauses imported from the memorandum can now, for the most part, be changed in the same way as other provisions in the articles. This means that, for example, shareholders lose their right to object to an alteration of the objects. It also means that provisions entrenched in the memorandum can be changed. The new Companies Act does allow companies to include entrenchment provisions in their articles instead (although they will only be able to make a provision more difficult, not impossible, to change). However, the implementation of this provision has been postponed while the Government consults on its effects on class rights (reg 2(2) SI 2009/2476); and » companies must ensure that when they provide copies of their articles to shareholders and others, they include the imported provisions or attach a copy of the memorandum marked up to show which provisions are now included in the articles. A company’s articles are still a matter for its own discretion. However, Table A 1985 has been replaced by Model Articles as the default articles for newly incorporated companies that do not choose to draft their own articles. There are three sets of Model Articles, tailored to the most common types of company: private companies limited by shares, public companies and private companies limited by guarantee. Companies can still choose to file their own articles. Companies incorporated before 1 October 2009, whether under Table A 1985, an older version of Table A or their own tailored articles, will continue to be governed by those articles. However, they should consider amending their articles in order to benefit fully from the new Act (see CA 2006). The new Act introduces a new incorporation procedure. Instead of the old set of documents, Form IN01 will have to be filed, along with a new-style memorandum and the company’s articles (unless the company indicates that it will rely entirely on the appropriate form of Model Articles). Applications for registration received by Companies House on or after 1 October 2009 need to be in this new form. Shares and share capital See CLM ¶707, ¶760+, ¶921, ¶1317, ¶1374 Companies no longer have to have an authorised share capital. Instead, a statement of capital will be filed on incorporation and when changes are made to a company’s share capital (these statements are included in the relevant new Companies House forms). Companies can, however, choose to have an authorised share capital set out in their articles if they wish. Therefore, companies incorporated before 1 October 2009, whose authorised share capital provision has been imported from the memorandum into their articles, are in the same position as before (i.e. there is still a limit on how many shares can be issued). This provision can now be changed (whether to increase or remove it altogether) more easily than before, by ordinary resolution. As well as removing the need for an authorised share capital, the new Companies Act gives companies more flexibility in dealing with their share capital in other ways. The principal changes introduced on 1 October 2009: » allow directors of companies with only one class of share to allot without prior authority. This is automatic for such companies incorporated under the new Act; those already incorporated can give their directors this power by ordinary resolution; » remove the need for private companies to be authorised in their articles to issue redeemable shares. All companies can authorise their directors to determine the terms and manner of redemption (either in their articles or by ordinary resolution), rather than having to set out these details in the articles. Companies can restrict or prohibit the use of the power to issue redeemable shares and/or set out the terms and manner of redemption in their articles if they wish; and » remove the need for all companies to be authorised in their articles to consolidate or sub-divide their share capital, or to purchase their own shares (including where a private company wants to carry out an own share purchase out of capital). Companies can restrict or prohibit the use of these powers in their articles if they wish. Companies House filing See CLM ¶3869, ¶3896, ¶3907, ¶4080, ¶9900 The main change in this area is that Companies House forms have been redrafted and retitled to suit the new Companies Act. The new forms are specifically tailored to suit each situation, for example there are different forms for appointing individual directors and corporate directors. Therefore, companies must take care to check the Companies House website to ensure that they use the correct form before filing. Any information filed using CA 1985 forms will be rejected. The filing fees remain the same, see CA 2006. Another major change allows directors to file service addresses, instead of their residential addresses, on the public register. Only certain authorities, such as the police and Revenue and Customs, have access to them. Credit reference agencies also have access to the residential addresses, but a director can apply to Companies House for an exemption from this. Directors whose residential addresses are already on the register at Companies House can file Form CH01 to register a service address instead, although it is more difficult to get a residential address that appears on historic documents on the register removed (this will only be allowed in similar circumstances to the old confidentiality orders, such as in cases of intimidation or violence). Companies are obliged to keep a register of directors’ residential addresses so that directors can be traced by the authorities if necessary. The new Act enables companies to keep their registers and other documents open to inspection at their registered office or a single alternative inspection location (SAIL), rather than making different arrangements for different registers or documents as under CA 1985. Companies must notify Companies House when they start using a SAIL, if the address of the SAIL changes or if the records are returned to the registered office. Companies House has wider powers to correct mistakes on the register, for example it can correct incomplete documents and remove information that should not have been included. Any changes will be annotated on the register. Charges See CLM ¶4641+ Most of the provisions of the new Companies Act relating to charges mirror those in CA 1985. The biggest change companies will notice will be in the filing requirements at Companies House, as new forms must now be used. Companies are still required to submit the instrument creating the charge or series of debentures. The new Act has clarified the question over whether overseas companies must register charges over their assets in the UK even if they have not registered a UK establishment. There is no need for these so-called Slavenburg companies to register their charges, as the new Act specifies that only overseas companies with a registered UK establishment need to register charges. Companies House will therefore not now accept registration of Slavenburg charges. Dissolution and restoration See CLM ¶7502, 7545+ The new Act extends the ability to apply for voluntary striking off to public companies, on the same conditions (for example, that the company has not traded within the last 3 months). It also simplifies the restoration process, by providing for a new administrative restoration procedure for cases where the company should not have been struck off. In all other cases, there is now one restoration procedure to follow, whether the company was struck off under CA 1985 or the new Act (although there are different deadlines). Other types of company See CLM ¶77, ¶140+ The basis of the registration and general filing requirements for overseas companies operating in the UK is simplified by the new Act. Instead of different rules for branches and places of business, there is now only one regime for overseas companies with a UK establishment (the definition of UK establishment encompasses both branches and places of business). As with other matters, the Companies House forms relevant to overseas companies have changed. The new Act applies, with appropriate modifications, to LLPs and unregistered companies. |
