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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. The Bill received its third reading in the Commons on 17 - 19 October 2006 and will now be sent back to the Lords for them to consider the Commons’ amendments. The text of the Bill as amended by the Commons’ Standing Committee was published on 28 July. A consolidated list of the Commons’ amendments for the Lords’ consideration was published on 23 October. Both can be accessed on the UK Parliament website. The Bill is expected to receive Royal Assent in November 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. Recent amendments Further draft restatement clauses The current provisions relating to restriction in shares (Pt 15 CA 1985) will be restated in Part 23 of the Companies Bill, but will also remain in the 1985 Act since it relates to other provisions which will remain in force. The provisions relating to mergers and divisions of public companies (s 427A, Sch 15B CA 1985) will be restated in Part 27 A of the Bill. These provisions were originally intended to be dealt with in secondary legislation. Proposed amendments regarding company secretaries Among the amendments being tabled to the Companies Bill, changes are to be proposed regarding company secretaries to ensure that, where a private company chooses to retain its secretary, they will retain their powers and status. The proposed amendments will: » enable secretaries to execute and certify documents; » ensure that secretaries which are appointed still have to be registered at Companies House; and » retain secretaries’ power to file returns and deal with Companies House on their companies’ behalf. Proposed amendments regarding the “business review” The proposals to require medium-sized and large companies to include a business review in the directors’ report to the company’s accounts continue to be a controversial aspect of the Bill. Amendments made in the Commons will require quoted companies to disclose details of relationships with their suppliers, as well as an analysis of the company’s development and performance for the financial year and a description of the main risks and uncertainties it faces. Consultations There are no current open consultations on the Companies Bill. For details of recent past consultations, see CLM 2006 Newsletter Issue 4. |
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COMPANIES BILL PROGRESS UPDATE |