The Companies Act | Keeping it simple

01 November 2006



According to the Government, the purpose of company law and corporate governance is to promote enterprise and stimulate investment. On this basis, it is in the process of a 'thorough overhaul' of legislation to make it easier for smaller businesses to get established and to grow.

The Companies Bill is likely to come into force in October 2007 and is expected to replace the 1985 Companies Act, which was written mainly with the large company in mind. In the new Bill, challenges to small companies are addressed in simpler and clearer language.

So what are the key changes?

• Separate, shorter and clearer model articles of association.
• The abolition of the requirement for a company secretary.
• The inclusion of a statutory (rather than case law based) statement of directors' responsibilities, along with clear guidance.
• The removal of the need to hold an AGM; it will also be easier to take decisions by written resolution (majority, rather than unanimous, decisions being allowed).
• The provisions on accounts and reports will be easier to understand and smaller companies will still be able to file abbreviated accounts.
• The highly complex rules on private companies providing financial assistance for the acquisition or purchase of their own shares will be abolished.

The Government estimates that total net savings to companies as a result of company law reform could be around £250m annually. So keep an eye on developments to see what this could mean for your business.

B P Collins' team of experienced corporate and commercial solicitors understand that clients expect responsive, pragmatic and commercial solutions, and we are committed to building long term relationships that help our clients businesses to grow.

For more information on the impact of the Companies Bill on your business, contact Simon Deans on 01753 279022 or at simon.deans@bpcollins.co.uk.