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Companies Act 2006 – the latest instalment…

Published: 1st October 2008

Further provisions of the Companies Act 2006 come into force today (1 October 2008), including:

Financial Assistance
The long heralded repeal of the prohibition on private companies from giving financial assistance for the acquisition of its own shares.

Share capital reduction
Private companies are now able to reduce the amount of their share capital by special resolution supported by a statement of solvency made by the directors, rather than having to obtain court approval.

Annual Returns
Changes to the requirements of annual returns so that private and non-traded public companies are only required to provide names of shareholders and no longer their addresses.

Limited Liability Partnerships
New regulations introduced to bring the accounts content in line with company regulations.

Directors - conflicts of interests
The statutory codification of the law relating to directors' conflicts of interest including the duty to avoid conflicts of interest, the duty not to accept benefits from third parties and the duty to declare interests in proposed transactions or arrangements.

Directors - capacity and age
Companies must have at least one director who is a natural person although those companies which only had corporate directors at 8 November 2006 will have a "grace" period until October 2010 before they must make changes.

Directors must be at least 16 years old and those existing under-age directorships (at 1 October 2008) will cease automatically.

Company names and the Company Names Tribunal
The introduction of the Company Names Tribunal and associated rules allow complaints to be made to the CNT by people and organisations who have goodwill in a name which they believe has been registered at Companies House by another as an "opportunistic registration". The rules allow the CNT to make orders to direct such companies to change their names.

Disclosures in trading literature
Companies are now required to display the registered name at its registered office, any "inspection place" and at any location which it carries on business (with the exception of locations primarily used for living accommodation).

Companies must also include certain details such as the registered name, number, address and the part of the United Kingdom in which the company is registered in various documents such as business letters, orders and websites.

Control of political donations and expenditure Companies must be authorised by their members before incurring expenditure in respect of political activities or before making political donations in excess of £5,000 in any year.

If you would like to discuss any of the issues raised in this update please contact either Paul Raftery in our Manchester Corporate Department on 0161 214 0500, Ian Hodgkinson in our Liverpool Corporate Department on 0151 236 8989 or your usual contact in the Corporate Department.