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The Companies Act 2006: In the home straight

24 September 2009

1 October 2009 saw the Companies Act 2006 finally put into effect - a process begun in 2007. Key changes brought about by the Act concern the status of the memorandum of association, Table A articles, and shareholder authorities.

So even though the implementation process may now be over, the challenges of post-Companies Act 2006 company law need to be addressed, and companies should ensure they are not be caught out by the reshaped legal landscape.

Vigilant directors and businesses will have updated their procedures and constitutional documents for the previous provisions of the Act that have already come into force. Amongst other things, these previous amendments include changes to:

Unfortunately, whilst it is certainly prudent to have kept up with the implementation process, it is essential that unless forward looking practices and provisions have already been implemented by a company, this last tranche of new law is not ignored.

In general, it sees a de-regularisation, so that, for example:

Changes are also made to the old Table A articles, which will be superseded as the standard articles of association, with new model articles becoming the standard set that most newly incorporated private companies will – and existing companies may – choose to adopt.

After October, directors will find it easier to vary class rights, allot shares, purchase their own shares, and undertake reductions of capital given proper provisions are inserted or removed from a company’s articles of association as necessary.

There are also several other changes being implemented in October, including practical ones like directors’ addresses recorded on the Companies House public register no longer needing to be  residential addresses.

So for directors to guide companies through the changes introduced since 2007, they must ensure they have the right tools for the job: fighting fit constitutional documents and a sound understanding of what company law now demands of them.

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