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30-August-2007

 

The Companies Act: a practical guide for implementation

 

Much has been said about the new Companies Act, it being the longest ever act of Parliament. Some parts of the Act are already in force. The next major implementation date is 1 October 2007.

 

On that day, the way companies run will change dramatically. Companies need to start acting now to ensure that they are compliant.

 

  • We now have a code of legal duties for Company Directors. Directors will need to be briefed on the new duties and to ensure that their decisions are made and recorded in accordance with those duties. Board meeting minutes will need to be more detailed to ensure that Directors have taken into account the list of factors contained in the Act.

 

  • All Directors and Company Secretaries can choose to supply their residential address for Companies House. They can also apply for a non-disclosure certificate so that this address will be kept confidential. A service address must be supplied, which will be available to the public but, this need not be the residential address. Thought will need to be given by Directors and Company Secretaries who do not wish to disclose their residential address to the public.

 

  • There is a new code for shareholders to bring proceedings in the name of a Company. The Act sets out how proceedings should be brought. Concern has been raised that this new code would be a charter to disgruntled shareholders to bring proceedings, which had little merit. If the Act is interpreted correctly, this should not happen. Thought should again be given to how the Company transacts its business both internally and externally so that the proceedings are avoided. Where there are risks, Directors should consider liability insurance.

 

It is safe to assume that the Act will need bedding in. Companies will need to seriously re-think how they function and a great deal more paperwork will be involved in terms of Directors duties, minuting consideration of factors and introduction or review of document retention policies.

 

ENDS

 

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