The provisions of the Companies Act 2006 have been brought into force in stages and the remaining changes will come into force on 1 October 2009. The new provisions are as follows:
Memorandum & Articles of Association (M&A)
A simplified version of the M&A (the document that sets out how a company is managed by the shareholders and directors) is being introduced. For companies formed after 1 October 2009, the Memorandum of Association will be abolished. For an existing company, the current provisions of its Memorandum will become part of the Articles of Association. Under the new articles, it will be possible to form a trading company with unlimited capacity, which means that the company can undertake any lawful business unless the company’s articles restrict its business activities.
Companies already operating under a general commercial company object should not be adversely affected by the new rule. However, companies engaged in non-commercial activities, such as managing residential property or acting as a trade association, should ensure that the articles contain specific objects tailored to the particular activities that the company undertakes.
The directors of a company might wish to consider updating the company’s articles to take advantage of the new simplified provisions and to include references to provisions on managing directors’ conflicts of interest. These include a power given to the directors to pre-authorise a conflict to which a director is subject, thus enabling that director to continue to take part in the board’s discussions on the issue leading to the potential conflict. The directors can also take advantage of provisions to extend the indemnity available to directors and officers.
Register of directors and secretaries
From 1 October companies will be required to maintain two separate registers of directors’ addresses. The newly introduced ‘register of directors’ need not show a director’s usual residential address but will instead show a service address, eg. the company’s registered office, the director’s home address or any other address at which legal documents and official notices may be served on the director. This register will be available for public inspection.
The ‘register of directors’ home addresses’ will be kept separately from the register of service addresses and will only be disclosed to some public authorities and credit reference agencies. Directors who feel they are at risk of intimidation or violence are able to apply to the Registrar to prevent their home addresses from being disclosed to credit reference agencies.
Authorised share capital
Companies incorporated after 1 October 2009 will no longer have authorised share capital, but must complete a ‘statement of capital and initial shareholdings’ as part of the incorporation process. The statement of capital gives details of a limited company’s issued share capital at a particular time. A different statement is required for companies limited by guarantee, which do not have a share capital.
Company’s capacity and related matters
From 1 October 2009 it will not be possible to call into question the validity of an act done by a company on grounds of lack of capacity in the company’s articles, and a person dealing with the company will not be bound to check on the powers of the directors to bind the company.
Public inspection of register of members
A person wanting to inspect the company’s register of members will have to give reasons, and access can be refused if the company can persuade a court that the request is not being made for a ‘proper purpose’.
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