Member Article

Company law gets clean-up

Company law has been substantially rewritten to make it easier for businesses to understand. The draft law – the Companies Bill – received Royal Assent this week and it is expected that all parts of the Companies Act 2006 will be in force by October 2008.

The new law aims to make it easier to set up and run a company as part of the Government’s drive towards a more competitive economy. Other measures are also aimed at reducing the regulatory burden that company law places on small businesses. These include abolishing the requirement for private companies to have private secretaries; simplifying the way private companies make decisions, including removing the requirement to hold AGMs unless the company wants one; and giving greater clarity on directors’ duties, including making clear that they have to act in the interests of shareholders, but at the same time being more accountable for how their operations impact on people and the environment.

The Act also includes a new offence for recklessly or knowingly including misleading, false or deceptive matters in an audit report. The first measures to be introduced will include provisions on company communications to shareholders. These will be introduced in January 2007. The Act also extends to the whole of the UK, so that there will no longer be a separate regime for Northern Ireland.

Secretary of State, Alistair Darling said: “This Act will help ensure Britain remains one of the best places in the world to set up and run a business. It makes sure the regulatory burden on business is ‘light-touch’, promotes shareholder engagement and will help encourage a long-term investment culture in the UK. “We will continue to work closely with interested parties in implementing the Act. In particular, we will work with the business community to ensure widespread and effective communication of the Act’s provisions so that all parties fully understand the measures and are in a position to take advantage of the benefits.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .