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The Companies Bill (formerly the Company Law Reform Bill) was introduced into the House of Lords on 1 November 2005 and brought forward to the House of Commons on 24 May 2006. After its Second Reading on 6 June, the Bill was committed to a Standing Committee. Proceedings in the Standing Committee were concluded and the Bill was reported to the House on 20 July. The text of the Bill as amended by the Standing Committee was published on 28 July and can be accessed on the UK Parliament website. The Bill is expected to receive Royal Assent in autumn 2006 and the DTI hopes that most of it will take effect from October 2007. Memo points: 1. Provisions dealing with accounts, reports and audit will apply to financial years beginning on or after the commencement date. 2. The following provisions will require earlier commencement: a. those extending the Financial Reporting Council’s immunity in respect of its oversight of the actuarial profession, which it assumed on 1 April 2006, will come into force immediately upon Royal Assent (currently clauses 1238 and 1240 of the Bill); b. those implementing the Takeovers Directive are expected to come into force soon after Royal Assent (currently Part 28 of the Bill); and c. those implementing the Transparency Directive, which affects listed companies, will come into force on Royal Assent (ss 1230-1232, 1234-1236 and Schedule 15, except paragraph 11(2)). These will grant the FSA powers to make the necessary alterations to its rulebook on or before 20 January 2007, when the Directive must be implemented into national law. Consultations Transitional Arrangements The DTI published a consultation paper setting out its general approach to how the Bill will apply to existing companies. The deadline for comments was 22 September. Firstly, it wants the new law to apply to existing companies and new companies in the same way. Secondly, it intends to ensure that, so far as possible, existing bargains are not overridden. Finally, it wishes to make it as easy as possible for existing companies to comply with the new requirements of the Bill and to take advantage of the new freedoms that the Bill offers. The consultation paper sets out specific proposals for transitional arrangements in the following areas: - company constitutions; - share capital; - annual general meetings; - company secretaries; and - directors’ conflicts of interest. The DTI expects to conduct a formal consultation on the order to make transitional arrangements after Royal Assent. Restatement clauses Following its decision to consolidate the unchanged sections of the Companies Act 1985 into the Bill, the government published the appropriate “restatement clauses” along with a table of derivations and destinations. The deadline for comments on the drafting of these clauses, which in some cases has changed slightly to bring them into line with the Bill’s approach, was 8 September 2006. Draft model articles for plcs The consultation on the DTI’s draft model articles for public companies limited by shares ended on 30 August 2006. Further consultations on the model articles for private companies limited by shares and by guarantee will be opened in due course. |
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COMPANIES BILL PROGRESS UPDATE |