Companies Act 2006 – what’s now in force and how may it affect your Business?

Company Constitution

• Memorandum and Articles – the role of a Memorandum for companies formed under the 2006 Act is now diminished to a statement that subscribers wish to form a company and agree to become its members (and agree to take at least one share, in the case of companies limited by shares).
  
  Matters relating, for instance, to company location, which previously formed part of a Memorandum, are now featured in the Articles of Association. For existing companies, the provisions of their Memorandum will now be treated as if they were part of the company Articles and therefore any changes will have to be affected by amending Articles.

• Company objects - for newly formed companies, company objects are now unrestricted, unless specifically limited by the Articles. For existing companies, the earlier chosen objects now become part of the Articles of Association. However, they may be removed by a resolution and a notification sent to this effect to the Registrar.

Authorised Share Capital

• The requirement for companies to have an authorised share capital has been removed.

• Existing companies wishing to retain restricted authorised share capital should note that the restriction on allotment continues to operate as part of the company Articles of Association. Should a company wish to abolish the existing authorised share capital, changes to the Articles are necessary.

• New companies are deemed to be incorporated without an authorised share capital which may be restricted at a later stage.

Company name and registered office

• Any person may object to a company’s registered name if it is established that the applicant has goodwill in another company name which is sufficiently similar or identical to the name in question.

• Companies can now change their name by way of special procedures set out in their Articles and notifying the Registrar accordingly. Under the old regime, such change was only permitted by way of special resolution. Existing companies may therefore change their Articles to allow similar changes in the future.

Directors’ Addresses

• Although company directors will be required to provide the Registrar with both their residential addresses (for each directorship held) and correspondence addresses, directors now have the option to request that their private address is kept on a separate and secure register not available to the public. Directors’ information currently held on the public register will remain unchanged, unless a specific request is made to protect it from disclosure.

Access to the Register of Members

• Any person wishing to inspect a company register of members is now under an obligation to provide their full name, address and the purpose for which the information is sought. In turn, the company must ensure that the inspector knows whether the register is accurate, and if not, stipulate the date to which the information has been made up. Failure to comply with this requirement means that the company or its officer is liable to a fine.

Share Capital

• Any changes to the company’s share capital must be notified to the Registrar in a new detailed statement of capital.

• All shares must have a fixed nominal value in any currency.

• Companies may no longer convert shares into stock.

Acquisition of owns shares by a limited company

• Financial assistance for the purchase of own shares by private companies is now permitted.

If you think that your company is inadequately prepared to face the legal developments introduced on 1st October 2009 by the Companies Act 2006, and wish to discuss further the points raised in this note, please contact Christopher Sherliker (cjs@silvermansherliker.co.uk), Shane Morris (scm@silvermansherliker.co.uk) or Izabela Mountford (ibm@silvermansherliker.co.uk) or call us on +44 (0)20 7749 2700.