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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. Various provisions of the new Act came into force on 6 April 2007. These were discussed in Issue 2. 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 which came into force in January 2007. |
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The Government has published three new sets of draft regulations this month, which are discussed below. These are in addition to the draft regulations exempting certain types of company from having to obtain shareholder approval for “political” expenditure (see Issue 2). The Government expects to be able to publish a draft of the next Commencement Order in June (which will bring into force the next tranche of provisions of the Act in October), and hopes to have drafted all of the secondary legislation to the new Act by the end of this year.
Company formation See CLM: ¶394+, ¶519, ¶526, ¶527, ¶660, ¶682 The draft Companies (Registration) Regulations 2007 set out the new form of memorandum that will be required of companies incorporating under the Companies Act 2006 (reg 2, Sch 1, Sch 2). This is a very simple statement that the subscribers wish to form a company, that they agree to become members and, in the case of companies with a share capital, that they agree to take at least one share each. There are separate memoranda for companies with share capital and those without. As part of the incorporation process under the new Act, companies with share capital will have to include a statement of capital and initial shareholdings in their application for registration. The same draft regulations require this statement to include the names and addresses of the subscribers (reg 3). Likewise, for companies limited by guarantee, the statement of guarantee will have to include the names and addresses of the subscribers (reg 4). These draft regulations also set out the form of assent required from the shareholders to re-register a public or a private limited company as an unlimited company (regs 5, 6, Sch 3, Sch 4). The draft Companies (Registration) Regulations 2007 will come into force in their final form on 1 October 2008, along with the incorporation provisions of the new Act.
Shares and share capital See CLM: ¶374, ¶526, ¶685, ¶715, ¶915, ¶1087, ¶1318, ¶1325, ¶1326, ¶1378, ¶1394, ¶1404+, ¶1428, ¶1469, ¶1489, ¶1493, ¶1612, ¶1828, ¶4062 The draft Companies (Shares, Share Capital and Authorised Minimum) Regulations 2007 deal with various details to do with shares and share capital which were not addressed in the new Act. » The draft regulations set the euro equivalent of the minimum allotted share capital for public companies at €75,000 (reg 2). This is an alternative to the sterling figure of £50,000. » If a public company’s minimum allotted share capital is in a currency other than sterling or euros, the draft regulations set out how the authorised minimum figure is to be calculated where the company’s share capital has been reduced to determine whether or not the company still meets the minimum requirement (reg 3). » If a public company has used the new redenomination procedure with the effect that its share capital is reduced below the minimum allotted share capital level, the draft regulations require it to re-register as a private company within a year and set out a procedure for doing so (regs 4-8). » The new Act prohibits the distribution of reserves resulting from a reduction of share capital. However, the draft regulations create an exemption for the following types of reduction (reg 9): - reductions confirmed by the court; - reductions made out of court supported by a solvency statement, to the extent that the reserve is treated as realised profit; and - any reduction carried out by an unlimited company. » The draft regulations enable reserves resulting from a reduction of share capital to be treated as realised profit except in certain situations (reg 9): - where the company is unlimited and its articles provide that such a reserve cannot be treated as realised profit; - where the reduction of capital is approved by the court and the court orders that the reserve cannot be treated as realised profit; or - where the reduction is made out of court supported by a solvency statement, but only to the extent that the reserve is not treated as realised profit. » The draft regulations require a solvency statement in support of an out of court reduction of capital to be in writing, state that it is a solvency statement and be signed by each director (reg 13). » They also require a directors’ statement regarding the payment out of capital by a company for the redemption or purchase of its own shares to be in writing, state that it is a directors’ statement, state whether the company’s business includes that of a banking or insurance company and be signed by each director (reg 14). » A number of filing obligations under the new Act require a company to provide a “statement of capital” to Companies House. The draft regulations set out the contents of such a statement as follows (reg 10): - rights to vote at general meetings, including those which are limited to certain circumstances; - rights to dividends; - rights to participate in a distribution of capital, including on a winding up; and - whether the shares will be redeemed, or can be redeemed at the option of the company or the shareholder, and any terms of that redemption. » The draft regulations also set out the information that will be needed to complete a return of allotment:(reg 11): - the number of shares allotted; - how much is paid up and how much is not (including of any premium as well as the nominal value of the shares); and - if the shares have not been paid up (fully or partly) in cash, what the consideration was. » The draft regulations also allow payment for shares using CREST to be regarded as cash consideration (reg 12). The draft Companies (Shares, Share Capital and Authorised Minimum) Regulations 2007 will come into force in their final form on 1 October 2008.
Company management - access to company records See CLM: ¶2044, ¶2513, ¶2669, ¶3869, ¶3930, ¶3994 The draft Companies (Fees for Inspection and Copying of Company Records) Regulations 2007 will replace the current fees companies can charge to comply with requests to inspect and copy certain registers and other records kept by the company (these are currently set out in SI 1991/1998): » register of shareholders: - fee to inspect: £3.50 per hour - fee to provide copies: £3.50 for the first 50 entries, £31.50 for the next 950 entries, £20 for the next 4,000 entries, and £25 for every subsequent 5,000 entries; » fee to inspect the Index of shareholders’ names: £3.50 per hour; » fee to provide copies of the register of interests in shares: £3.50 for the first 50 entries, £31.50 for the next 950 entries, £20 for the next 4,000 entries, and £25 for every subsequent 5,000 entries; » fee to provide copies of a director’s service contract or memorandum of terms: 20p for every 1,000 words; » fee to provide copies of a director’s qualifying indemnity provision: 20p for every 1,000 words; » fee to provide copies of records of resolutions and meetings: 20p for every 1,000 words; and » fee to provide copies of reports on interests in shares: 20p for every 1,000 words. These fees are intended to allow companies to recover their costs of meeting their statutory obligations without discouraging shareholders and others from exercising their rights to access these records. The draft Companies (Fees for Inspection and Copying of Company Records) Regulations 2007 will come into force in their final form on 1 October 2007. The regulatory impact assessment published with these draft regulations includes a useful table summarising how statutory rights of access will change under the new Act.
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