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COMPANIES ACT 2006: IMPLEMENTATION |
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The final text of the Companies Act 2006, explanatory notes and tables of destinations and origins are now freely available to download at: http://www.opsi.gov.uk/acts/acts2006a.htm The Act received Royal Assent on 8 November 2006. To see when specific sections of the Act will or have come into force, check the implementation timetable on the FL Memo Ltd newsletter homepage (follow the link to “Companies Act 2006 implementation timetable”). This document will be updated as new secondary legislation is passed. The Government is currently consulting on some secondary legislation and transitional arrangements: see Issue 1 for details. Also see Company Law Memo 2006 Newsletter Issue 9 for a summary of ICSA’s guidance on the new company communication provisions. |
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Brought into force this month On 6 April 2007, various provisions of the new Act came into force as a result of the First and Second Commencement Orders (SI 2006/3428 and SI 2007/1093). Community Interest Companies See CLM: ¶62 The Second Commencement Order brought section 1284(1) of the new Act into force. This extended Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 to Northern Ireland, making the CIC corporate vehicle available in Northern Ireland for the first time. Directors See CLM: ¶2247+, ¶2735, ¶2931, ¶3536 The First Commencement Order repealed the following provisions relating to directors: » the rules regarding appointing or reappointing a director of a public company or its private subsidiary who is aged 70 or more (i.e. ss 293, 294 CA 1985); and » the prohibition on companies making payments to directors under their service contracts which are tax free, or calculated by reference to income tax rates (i.e. s 311 CA 1985). Company management and decision making See CLM: ¶3379+, ¶3494, ¶3958+ The obligation on directors to disclose their interests in the shares in or debentures of their companies and associated companies, and companies’ related obligations to keep a register of the interests disclosed, have been repealed by the First Commencement Order (i.e. ss 324-326, 328, 329, Pts II-IV Sch 13 CA 1985). The provision stating that a document can be authenticated, or certified, by a director, the company secretary or another officer with authority to sign documents has also been repealed by the same Order (i.e. s 41 CA 1985). However, the board will still be able to authorise any person to do this, using its general power to delegate. Section 1063 CA 2006 allowing the secretary of state to make regulations relating to the fees payable to Companies House for services such as receiving, copying and allowing inspection of documents has also been brought into force by the First Commencement Order. This provision does not extend to Northern Ireland for the time being. The general provisions describing the Registrar and his functions are also in force as far as necessary to bring section 1063 into force (ss 1060, 1061 CA 2006). Company accounts See CLM: ¶4249 The Second Commencement Order repealed paras 2, 2A, 2B of Schedule 7 CA 1985. As a result, any directors' report which is approved on or after 6 April 2007 does not have to disclose the directors' interests in shares or debentures of the company and its group companies. This is consistent with the fact that, from the same date, directors will not have to disclose these interests to the company either (above). Takeovers See CLM: ¶6675+ Broadly speaking, the new provisions place the regulation of public company takeovers on a statutory footing, and set out new squeeze-out and sell-out rights. These changes are discussed in detail in this month’s Focus on… Certain other provisions of the new Act have been brought into force by the Second Commencement Order as far as necessary for the new takeover provisions to take effect: » the definitions of allotted and issued share capital in section 546; » the definition of when shares are allotted in section 558; » provisions relating to offences (ss 1121-1123, 1125-1133); » provisions relating to company records (ss 1134, 1135, 1138); » provisions relating to the service of documents by or on a company, and the meaning of “hard copy”, “electronic form” etc (ss 1138, 1140, 1168); and » the definitions of “body corporate”, “the Gazette” and “regulated market” in section 1173. These provisions have also been brought into force as far as necessary for the definitions of “Companies Acts” and “EEA State” and the provision relating to unregistered companies to come into force (see “Other changes”, below). DTI investigations See CLM: ¶7231+ The secretary of state’s power to bring proceedings in a company’s name following an investigation has been repealed by the First Commencement Order (i.e. s 438 and the relevant parts of ss 439, 452 CA 1985). Other changes The Second Commencement Order has brought the definition of the “Companies Acts” for the purposes of CA 2006 fully into force, with changes to include those sections of the 1985 Act still in force within the definition for the time being (s 2 CA 2006). The same Order has brought into force the provision relating to unregistered companies (s 1043 CA 2006), which allows the secretary of state to make regulations applying certain provisions of the Companies Acts to these companies. Regulations under this section also came into force on 6 April 2007, applying the new takeovers provisions and related consequential changes to unregistered companies (SI 2007/318). The Second Commencement Order also repeals the definition of “EEA state” at section 744 CA 1985 and brings into force the definition at section 1170 of the new Act. Accordingly, the term now refers to a state which is a Contracting Party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (as it has effect from time to time). The First Commencement Order has brought section 1281 CA 2006 into force, adding a new section 241A to the Enterprise Act 2002 that allows public authorities to disclose information they have obtained about individuals and companies in exercising their powers and functions under that Act in connection with civil court proceedings. The First commencement Order has repealed the following miscellaneous provisions of CA 1985: » sections 343 and 344, which relate to disclosures of transactions in the accounts of banks and the holding companies of credit institutions (s 1177 CA 2006); » section 720 and Schedule 23, which require insurance companies and deposit, provident and benefit societies to make a periodical statement of certain matters (s 1178 CA 2006); and » section 729, which requires the secretary of state to lay an annual report of matters within the Companies Acts before parliament (s 1179 CA 2006). |
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Political donations and expenditure See CLM: ¶3204 The Government has published draft regulations exempting companies which publish or disseminate news material to the public in their ordinary course of business from the obligation to obtain shareholder approval for this “political expenditure”. Without this exception, media companies would have to obtain authorisation to spend money on publishing material which could be regarded as affecting public support for a political party, for example, which would clearly be impractical. A copy of the draft regulations can be found on the DTI website (http://www.dti.gov.uk/bbf/co-act-2006/index.html). They will replace the existing regulations, which grant the same exemption (SI 2001/445). The regulations are due to come into force on 1 October 2007, along with the relevant provisions of the Companies Act 2006 (ss 362-379). |