The Next Wave of the Companies Act 2006

It is now over a year since the Companies Act 2006 received royal assent. It has, since November 2006, been coming into force in tranches, the next due in April 2008. So what are the incoming changes for private limited companies to watch, and are they likely to save businesses time and money? Here is an illustrative list of the key provisions effective from 6 April 2008:

There will no longer be a legal requirement for private companies to appoint a company secretary. Companies may choose to retain their existing company secretary, and newly-incorporated companies may still appoint one. If a private company chooses not to have one, it will still be necessary to perform the company secretary’s tasks, which include keeping the company's internal books up-to-date and its records and filings at Companies House. A director will be able to do anything which would normally be done by the company secretary. If your company was incorporated before 6 April 2008 and you wish to dispense with your company secretary, you must check your constitutional documentation. If, for instance, your Articles of Association expressly require you to have a company secretary, you will not be able to dispense with him/her without amending your Articles of Association first.

In relation to changes to a company’s register of members, entries relating to past members will now only need to remain on the register for ten years. When a request for inspection of a company’s register of interests in shares is made, companies should refuse such a request unless satisfied that it was made for a proper purpose. An application may then be made to the court to reverse such a refusal. The company should notify anyone whose details would be disclosed if the company has to comply with the request.

It will be an offence to make a false or misleading statement in a request to inspect a company’s register of disclosed interests. Once inspected, it will also be an offence to disclose that information to someone who may use it for an improper purpose. Similar provisions will also come into force in respect of a company’s register of debenture holders.

Currently, a company can execute a deed by a director and company secretary or two directors each signing the deed. From April 2008, a deed will be validly executed if it is signed on behalf of the company by either two authorised signatories, or by a single director of the company in the presence of a witness.

The period for filing accounts and reports will be reduced from ten to nine months after the end of the relevant accounting period. One change to note relating to audit is the ability for auditors to limit their liability with the company. Agreements limiting liability will only be effective if they are fair and reasonable. Members will have rights to prevent the automatic re-appointment of auditors and the Secretary of State may require companies to disclose its terms of appointment of auditors. Finally, a new criminal offence, punishable by a fine, will be introduced in relation to inaccurate auditor's reports.

For assistance in navigating any of the above issues, provisions expected in October 2008 or any related issues, please contact the corporate commercial team at Raworths Solicitors LLP.