The Companies Act 2006

New rules applicable from October 1st 2009

There are a raft of changes to the responsibilities of company officers that are being brought into force from October 1st 2009.

•    Minimum age for directors.
•    Greater use of electronic communication.
•    Directors duties clarified.
•    The reduced role of the Memorandum of Association.
•    New ‘model Articles’ replacing Table A.
•    Company Secretary role made voluntary.
•    Directors private addresses protected.
•    Requirement for other directorships removed.

Director’s minimum age

The new Act brings into force a minimum age for a director of 16 and any persons under that age currently appointed to the post of director will automatically cease to be directors by virtue of the new regulation. This applies retrospectively to all existing under-age directors. No notification of any under-age directors will need to be made to Companies House, the change however will need to be noted in the company’s register of directors.

Chalfen provides a professional director service which can be use to provide you with a solution to directorship matters. Director’s maximum age (public limited companies) The new Act has already removed the maximum age for directors of PLC’s and the previous maximum age of 70 no longer applies.

Greater use of electronic communication

The new Act allows companies to send documents and information to members and others (who agree in advance to this) by electronic means, for example email or fax. Documents can also be sent on electronic disk rather than in paper form. In some cases members are deemed to have agreed to this.

Communication can also be made via a website and this would require the passing of an ordinary resolution.

If members or debenture holders are sent a request to agreement to website communication and no response is received within a period of 28 days then permission is deemed to have been given. Any refusal of agreement received will prevent a further request from the company to the same person for a period of 12 months. This default agreement regulation applies only to website communication and not electronic communication generally.

Notification must be made to persons who have previously agreed, when documents or information are posted to the website and in this respect there are detailed rules concerning how long documents or information must remain accessible on the site.

Directors duties clarified

Directors are guided by the following general rules:

  • To act in accordance with the company’s constitution and to only use the powers for the purposes for which they were given.
  • To promote the company for the benefit of the members.
  • To exercise independent judgment in all matters.
  • To act with due care, skill and diligence.
  • To avoid conflicts of interest (except those arising out of arrangements with the company), and to declare to other directors any interest in such arrangements.
  • To not accept benefits from 3rd parties.

The reduced role of the Memorandum of Association

The memorandum of association becomes a statement by the subscribers of their/his/her intention to form a company and to become a member thereof and where there is share capital to agree to take a minimum of 1 share.

New ‘model Articles’ replacing Table A

The Act includes a new set of model Articles replacing the previous Table A which has become so familiar. The new model Articles are created with the same goal in mind, that is, to be a set of standard rules based on the Act for the management and ownership of the company. Chalfen can provide the model articles and also a set of standard Articles of Association prepared for use in association therewith.

Company Secretary role made voluntary

The Act has made the role of the company secretary a voluntary one and as such companies may opt to be registered without a secretary or at any time to remove the role from use within the company. Our opinion is that this can be of assistance in many cases; however some time should be given to the advantages that having a company secretary might provide (see below).

The advantages of a company secretary: In the world of global business the advantage of having an in-house “signatory”, who whilst being capable of signing legal documents, acts solely on the instructions of the directors can be invaluable for businesses with mobile directors. Despite the changes in the Act, many institutions will be looking to see documents counter-signed by a second signatory, for instance, something as simple as managing your bank account can be made much simpler when a bank can instantly verify the position of a signatory – in this case the secretary. As with all changes, the process of acceptance into the wider marketplace, particularly where the trading is outside the country of origin and 2nd verifiable signatory can prove significant in breaking through the internal or local regulations applied to companies generally. Chalfen is able to provide a professional company secretary to meet the needs of the growing mobile business and allow the director to have some flexibility when dealing with matters of red tape, banking being a particularly annoying field when the focus needs to be promoting business.

Directors private addresses protected

The Act provides for the appointment of directors to disclose 2 separate addresses (which of course can be the same address), the first being a service address and this is the address that will be published for public inspection at Companies House and the second being the usual residential address, which will be held by Companies House but not published on the public register. Certain bodies may gain access to the personal residential addresses; these are credit reference agencies for vetting applications for credit and associated work and to meet the obligations in the Money Laundering Regulations. Vulnerable directors will be able to apply to the Registrar for their addresses not to be provided to credit reference agencies.

Requirement for other directorships removed

The requirement for a director to provide a list of other directorships has been removed as of 1st October 2009.

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