More of the Companies Act 2006 comes into effect next week
April 1st, 2008 by GilesOn 6th April some more sections of The Companies Act 2006 come into effect. This is the longest statute ever passed by Parliament and its implementation by stages merely adds to the difficulties created for those who have to advise on the subject.
Among the new rules that may be of interest to readers of this blog are:
- A document can be validly executed by a company if it is signed by only one director provided his signature is witnessed by someone else. This is in addition to the existing rule that the signature of two directors or a director and company secretary are required for execution as an alternative to using the company seal. (Section 44)
- A private company will no longer have to have a company secretary - but if the Articles of Association require a secretary, then the company will need to change the Articles before ditching the company secretary. (Section 270)
Also, the 56 pages of Part 15 of the Act dealing with the accounts of a company come into effect (with one exception concerning the requirement for companies to include a ‘business review’ in the directors’ report).
Among the new items:
- Directors must not sign accounts unless they are satisfied they give a true and fair view of the financial position of the company.
- The time for filing annual accounts at Companies House for private companies is reduced from 10 months to 9 months after the end of the financial year in the case of private companies and to 6 months instead of 7 months for public companies.
In addition, auditors will be able to have their liability for negligence limited if a company signs a ‘liability limitation agreement’ - but this must not last for more than one financial year, its terms must be ‘fair and reasonable’ and shareholders have to approve the agreement.(Sections 527-538)