ContractStore Legal Business Blog

The Government confirmed yesterday, 7th November, that implementation of parts of the new Companies Act will be delayed for a year - until October 2009. It was feared that companies might incur “unnecessary risks or costs”, so they decided to delay implementation. Reaction from the business community has centred on the higher administrative costs consequent upon the delay.

Next October should be seeing the introduction of new, simplified constitutions for limited companies but this will now only take effect in 2009, 3 years after the Act was passed.

Also postponed is the new rule that the home address of directors of a company will no longer have to be on the public record. This was included in the 2006 Companies Act largely to protect directors of those companies who have had their homes targeted by animal rights activists. On a more mundane level, home addresses can be used by those who want to return unsolicited junk mail: it can be more effective than sending it back to the company’s head office!

The new law is the biggest single act ever passed by Parliament and has wide-ranging implications for companies, shareholders and investors. See our earlier posting for more information.

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The longest statute ever passed by the UK parliament is the Companies Act 2006. There is some irony in this because one of the reasons for the new law, according to the government, was that they wanted to simplify company law, in particular for smaller companies.

Because of its length and complexity, the Act is being introduced in stages, commencing in January 2007, and going through to October 2008. We will provide updates on the blog as the stages unfold.

Among the sections which came into effect on 1 October, are the following changes:

• New duties for Directors. As well as having to act in good faith to promote the company, directors now have to exercise care, skill and diligence; independent judgement; and have regard to not only the interests of the company but also the interests of its employees and the impact of the company’s operations on the community and the environment. There is more detail in the Act itself.
• Shareholders approval is now required for any service contract for a director which lasts more than two years.
• Shareholder approval is also required for any payoff to a director which exceeds the amount to which he or she is entitled under their employment contract. (Presumably Mr O’Neal, until recently the Chairman of Merrill Lynch, may not have seen so much of his £80 million had his contract fallen under the new jurisdiction)
• Shareholders also have to approve a loan to a director of more than £10,000.
• There is no need for a company to hold an Annual General Meeting any more.
• Notice periods for meetings of shareholders are reduced to 14 days. Until now the notice period has generally been 21 days.

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If you own a trademark, beware! Since the 1st October, the rules have changed and the UK’s Intellectual Property Office (IPO) will no longer automatically refuse a new trademark application simply because a similar or identical mark is already registered.

Now, when their search identifies the existence of a registered trademark, the IPO will inform the applicant for the new mark, who then has to decide whether to go ahead with the application.

If the applicant does go ahead, then the owner of the existing registered mark will be notified. They then have three months in which to make a block on the application.

For more information take a look at the IPO website.

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From July 1st England goes smoke free.

Here Giles talks about the changes businesses need to make in preparation for the smoking ban in England.

This is the first video published by ContractStore, so we would appreciate any feedback.

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Since 1st January 2007, every company in the UK must provide corporate details on its websites and in all emails that it sends.

The details you must display on both your website and on emails are:

• the company name (if this is different from the trading name then the difference should be made clear)
• the registered office address of the company
• the registration number and country of registration

The details you must make available on your website are:

• an email address where the company can be contacted (this is not needed on emails from the company)
• membership of any trade or professional association including the registration number
• the VAT number if VAT registered.

Make sure your website and email signatures are up to date right away.

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