|
|
|
|
|
COMPANIES ACT 2006: IMPLEMENTATION |
|
Already in force The following provisions of the new Companies Act are already in force: » new rules on communications with companies (see below); » shareholders of public companies only have to disclose their interests in the company’s shares when requested; » directors are liable for statements in the directors’ report, remuneration report (in the case of listed companies) or in any summary financial statement derived from either of these reports; and » certain provisions relating to the operation of Companies House. These were dealt with in Issue 8. Guidance on company communications from ICSA See CLM: ¶3698, ¶3699, ¶9915 This month, the Institute of Chartered Secretaries and Administrators, ICSA, published guidance on the communications provisions of the Companies Act 2006. These provisions were the subject of Issue 8’s Focus On… The guidance focuses on electronic communication between companies and their shareholders. It sets out a number of recommended best practice points: » Invitations to agree to electronic communications: - should be sent to all shareholders on equal terms; - should give details, or provide a link to details, of any software or hardware specifications which will be needed. Information about how to download the software for free should also be given; - where shareholders agree, the company should inform them that its obligation to provide the information is satisfied when it transmits the electronic message and that it cannot be held responsible for any failure in transmission beyond its control; and - shareholders’ addresses for electronic communications should not be entered on any part of the register of shareholders which is open to public inspection. » Website communications: - websites should have an online facility enabling shareholders to inform the company that they wish to receive information differently or of a change in their address for electronic communications. If such a facility is not available, the website should make it clear how shareholders can inform the company of these changes; - to make it as easy as possible for shareholders to access information on a website and exercise their rights as shareholders, email notifications of the availability of general meeting material should provide a link to it as well as details of any online voting facility; - email notification of the availability of the annual report on a website should be sent on the date on which the material is made available (which should also be the date on which shareholders who requested hard copies should receive the information); and - where a company’s annual report and accounts are published on a website, they should not contain links to any other part of the website. This will avoid confusion between audited and non-audited material. » Requests for communications in hard copy: - hard copies should still be provided if the shareholder just missed the deadline for response (i.e. deemed consent cannot be inferred. Where the request is received long after the deadline, it should be treated as a revocation of the shareholder’s deemed consent to website communications); and - shareholders who have asked to receive information in hard copy in response to an invitation should only be consulted again every other year, to avoid pestering them for their consent (“deemed” or actual). » Sending notifications/notices: - any notification of a general meeting should make any proxy appointment deadlines clear; - where general meeting material is sent in hard copy, a personalised proxy card should be included; - where telephone voting options for general meetings are available, the details should be made clear in whatever form of communication is used; - if notices are delivered by telephone, the company should prepare and keep a record of those contacted and the date and time of each call; - if notices are delivered by fax, the log or report generated by the fax machine should be certified and kept as proof of sending; - if notices are delivered by email, companies should ensure that their systems can keep a record of each recipient (or, at least, the total number of recipients). A copy of this record, together with records of any failed transmission messages and subsequent re-sending, should be certified and kept as proof of sending; - if a company receives a prompt failed transmission message and attempts to re-send the communication are unsuccessful, it should send a hard copy of the communication to the recipient’s last known postal address within 48 hours. An automatic “out of office” reply does not count as a failed transmission message; and - companies’ articles should state that emails are deemed to have been delivered on the date on which they are sent, to avoid the default 48-hour period applying. » Companies should ensure that communications are virus free, as far as is reasonably practicable. Shareholders who send electronic communications to companies should be warned that any communications containing a virus will not be accepted, but that they will be informed as to why it was rejected. This guidance replaces ICSA’s guidance note number 011103 on electronic communications. This particularly affects companies using Table A articles: reg 115 states that if a notice is given by electronic communication in accordance with ICSA guidance, it is conclusive evidence that it was given. Therefore, these companies will have to follow the new guidance to ensure that they give notice properly. The full guidance note can be freely downloaded from ICSA’s website: http://www.icsa.org.uk/ Coming into force on 6 April 2007 Some provisions of the new Act will come into force on 6 April 2007 as a result of the First Commencement Order (SI 2006/3428). This Order also repeals and amends parts of the Companies Act 1985, to take effect from the same date. These provisions were discussed in Issue 8. On 8 February 2007, the DTI announced that it had laid a draft of the Second Commencement Order before Parliament. The draft can be downloaded from the Office of Public Sector Information: http://www.opsi.gov.uk/si/dsi14-02.htm. If passed, the Order will also come into force on 6 April 2007. The Second Commencement Order deals with the following topics: » Takeovers » Directors’ report » Community Interest Companies » Definition of EEA state
Takeovers See CLM: ¶6675+ The Second Commencement Order brings into force Part 28 of the new Act which deals with takeovers (ss 942-992; Sch 2 CA 2006). The new provisions place the regulation of all public company takeovers onto a statutory footing. As a result, the Order repeals the current Interim Regulations (SI 2006/1183), which only apply to takeovers of listed companies, in relation to offers made on or after 6 April 2007. Part 28 also replaces the current “squeeze-out” and “sell-out” rights which apply following a successful takeover offer. As a result, sections 428-430F of the Companies Act 1985 will be repealed in respect of takeover offers made on or after 6 April 2007. There are also some consequential amendments to the Companies House forms to be used in this process: » Form 429(4) replaced by Form 980(1) » Form 429dec replaced by Form 980dec » Form 430A replaced by Form 984 The Companies Acts (Unregistered Companies) Regulations 2007 (SI 2007/318), were approved by Parliament on 8 February 2007 and will also come into force on 6 April 2007. These extend Part 28 of the new Act to unregistered companies, as well as registered ones. However, the “squeeze-out” and “sell-out” provisions only apply to an unregistered company whose shares are listed on a regulated market. Directors’ report See CLM: ¶4249 The Second Commencement Order repeals paras 2, 2A, 2B Schedule 7 CA 1985. As a result, any directors' report which is approved on or after 6 April 2007 will 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 (as a result of the First Commencement Order). Community Interest Companies See CLM: ¶62 The Second Commencement Order will bring into force section 1284(1) of the new Act. This extends Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 to Northern Ireland. This Part is concerned with community interest companies and will make the CIC corporate vehicle available in Northern Ireland for the first time. Definition of EEA State The Second Commencement Order repeals the definition of EEA state at section 744 CA 1985 and brings into force the definition at section 1170 of the new Act. Under the new definition, an EEA State means 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 Companies Act 2006 received Royal Assent on 8 November 2006. The final text of the Act, explanatory notes and tables of destinations and origins are now freely available to download at http://www.opsi.gov.uk/acts/acts2006a.htm |
