Companies Act

The Companies Act 2006 received Royal Assent on 8 November 2006. It is expected to be fully implemented by October 2009. The Act includes measures to enhance the relationship between companies and their shareholders.

More information on how the changes to company law will affect your business can be found on BIS's website, please click here.

Some of the more important factors for SQCs include:

• Directors general duties are to be incorporated into statute, widening their responsibility beyond shareholders to include other stakeholders and the environment, and codifying their responsibility to avoid conflicts of interest situations;
• The provisions on accounts and audits have been restated to make them easier to understand;
• The controversial Operating and Financial Review ('OFR') has been replaced by the (very similar) Business Review. Together with a "safe harbour" provision for directors, this is to encourage companies to communicate more useful information to shareholders. The QCA Corporate Governance committee has produced a guide on preparing a Business Review, available by clicking here.

In addition, the Act:

• Has a separate model of articles for private companies stipulating minimum rules.
• Abolishes the requirement for private companies to have a company secretary.
• No longer requires private companies to hold AGM's, making it easier for companies to take decisions by written resolution.
• Makes it easier for private companies to make capital reductions and abolishes the financial assistance rules.