Member Article

New Companies Act ? Some Provisions in Force

With Watson Burton LLP Law Firm

The Companies Act 2006 (“the Act”) received the Royal Assent on 8th November 2006 with many of the provisions due to come into force in October 2008. However, the Companies Act 2006 (Commencement No.1, Transitional Provisions and Savings) Order 2006 has already brought into force some provisions of the Act with others due to take effect on 6th April 2007.

As of 20th January 2007 a company will be able to send its shareholders a hard copy notice of a meeting or notice via electronic means such as email or via its website. Website notification must state the time and place of the meeting and must remain on the website from date of notification until the meeting occurs. If a company chooses to send notices of its meetings in electronic format it is deemed to agree to accept any information regarding the proceedings of the meeting in the same format.

Companies are now permitted to send and receive information via electronic means. Companies should, however, be aware that a shareholder (or debenture holder) can request a hard copy of this information at the company’s expense. Failure to provide this within 21 days of the request is an offence and every company officer (which now includes directors, managers and company secretaries) will be liable by default. On summary conviction a person guilty of this offence is liable to a fine not exceeding £1000 and a daily fine not exceeding £100 for continued contravention.

If a company wishes to send information to shareholders via its website it must ensure the shareholders have resolved that this is acceptable or there must be appropriate provision in the articles of association. The company must send an individual request to each shareholder for consent to provide information via its website making clear that if no response is received within 28 days the shareholder will be deemed to have agreed to notification of information in this way.

In the case of joint shareholders the company can send information or documentation to each joint holder or to the person whose name appears first in the register of members.

Section 463 relates to directors’ reports, directors’ remuneration reports and financial summaries prepared using either of those reports. If a director knowingly makes an untrue or misleading statement, is reckless as to its truth or fails to include something required in the report the omission of which he knew was dishonestly hiding a material fact, he will be liable only to the company for any losses it suffers as a result.

The provisions which have been brought into force largely reflect the changes in technology since the Companies Act 1985 and should allow companies to correspond with their shareholders using more modern methods of communication.

Readers should note that certain provisions relating to electronic communications with the Companies Registrar were brought into force on 1st January 2007.

If you have any questions on the above article please contact Marie-Louise Bozonet at Watson Burton LLP (marie-louise.bozonet@watsonburton.com).

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