6 April 2008

Provisions of the Companies Act 2006 coming into Force on 6 April 2008

Another phase of the provisions contained in the Companies Act 2006 (the “Act”) will come into force on 6 April 2008 and we have set out below some of the provisions coming into force that may be of interest:

Company Secretaries (Sections 270-274 and 280)

From 6 April 2008, private limited companies will no longer be required to appoint a company secretary.  However, many private companies may continue to appoint a company secretary to carry out the duties traditionally carried out by company secretaries.

Before the post of company secretary is vacated, the articles of association of the company should be checked to ensure that they do not require a company secretary to be appointed.  If this is the case, the articles of association should be amended before the post of company secretary is vacated.

This relaxation of the old rules means that the smaller owner managed or non-trading companies can have a simplified structure, with only one director as an officer of the company.  Public companies are still required to have a company secretary.

Execution of Documents (Section 44)

A company is now able to execute a deed by two authorised signatories (being two directors or a director and secretary) or by the signature of a single director who must execute the deed in the presence of a witness who attests his signature.   This is another simplification aimed at small companies who after 6 April may only have one director and no company secretary.   However, where the company has more than one director, the Articles may as a matter of corporate governance, provide that two directors or a director and secretary are required to execute documents as deeds in order to protect the company.

Accounts and Reports (Sections 380-474)

The deadlines for the submission of accounts to Companies House have been reduced to six months for public companies and nine months for private companies.  In addition, late filing penalties have been increased making it important that these new deadlines are observed.

While private companies are no longer required to hold an AGM, they are still required to send out their accounts to members on or before the date that they are submitted to Companies House.  Even if a private company does decide to hold an AGM, the accounts are no longer required to be laid before the members at that meeting.

Public companies are required to send their annual accounts and reports out no later than 21 days before the general meeting at which the accounts are to be laid before the members.

Audits (Sections 507 and 519 - 525)

The provisions of part 16 of the Act coming into force on 6 April, include new offences in relation to inaccurate audit reports; revised rules concerning statements that auditors have to make when leaving office with a company; and new provisions in relation to “major audits” (i.e. audits conducted on a listed company, or in a company whose financial condition may be in the public interest).

In addition, auditors and companies may agree to limit the liability of the auditor subject to certain conditions.

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.

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