Companies Act Implementation Timetable

The full implementation timetable for the Companies Act 2006 has been announced by Industry and Regions Minister Margaret Hodge. All of the Act will be in place by October 2008 with many elements implemented earlier.

The Companies Act introduces sweeping changes to simplify and improve company law making it easier to understand and more flexible - especially for small businesses. It is expected to save business up to £250 million a year and bring greater shareholder engagement and transparency.

Margaret Hodge said:

"The Companies Act 2006 is a huge achievement, bringing major benefits to business by modernising and simplifying company law.

"Throughout its passage the Government consulted and listened carefully to a range of views. We have maintained this approach for the commencement timetable. We have been guided by a desire to see the benefits for business introduced as quickly as possible and observing common commencement dates.

"We have had further extensive discussions with a wide range of interested parties to make sure we have a timetable that gives business certainty, time to prepare and, wherever possible, early savings and administrative benefits."

The areas coming into effect in October 2007 include the provisions in Part 9 of the Companies Act relating to the rights of indirect investors. These will help investors to be better informed about the performance of companies and allow them to participate more fully in company decision-making.

Most of the provisions relating to directors' general duties will also take effect in October 2007. The provisions for the enhanced business review and derivative claims will be implemented at the same time.

The provisions relating to directors' conflict of interest duties will take effect from October 2008. This will give companies the opportunity to change their articles of association before commencement of these provisions. The Act permits authorisation of conflicts of interest by independent directors, subject to the company's articles of association.

The parts of the Act relating to accounts and reports, audit and statutory auditors will be commenced in April 2008 so that we can implement EU company law requirements alongside our implementation of the Act in a way which minimises the number of changes for business.

Margaret Hodge added:

"One of the most important aspects to implementing the Act is providing the least burdensome and most efficient transition to the new regime for existing companies. We have already consulted stakeholders, but this document provides the basis for further consultation. We also set out how we propose to deal with secondary legislation under the Act."

Draft regulations, following the policy approach outlined in the consultation document, will be placed on the DTI website for comment as they become available. Any changes to the policy decided in the light of the consultation will then be reflected in revised drafting of the regulations.

Checklists for different users are also being prepared. The first of these, for small private companies, is now published and is available on the DTI website.

A schedule listing implementation dates for the Act is attached.

1. The consultation documents can be found on the DTI website.

2. Explanatory notes on the Act's provisions are available from the DTI website.

3. Provisions relating to the Transparency Directive, disclosure of a company's registered name and details on websites from the First Company Law Directive, and e-communications provisions, were all commenced in January 2007.

4. The second Commencement Order that was laid in draft this month will bring into force provisions relating to the Takeovers Directive and Northern Ireland Community Interest Companies on 6 April. Various freestanding repeals will also commence in April, including provisions from the 1985 Act relating to the restrictions on the appointment of directors over 70, and share dealings by directors.

Companies Act Implementation Timetable

The following parts will be introduced from 1 October 2007:

Part 9 (Exercise of members' rights);
Part 10 (A company's directors), other than provisions relating to directors' conflict of interest duties, directors' residential addresses and underage and natural directors;
Part 11 (Derivative claims and proceedings by members);
Part 13 (Resolutions and meetings), and, related to this, sections 485-488 of Part 16 (Audit);
Part 14 (Control of political donations and expenditure); Section 417 of Part 15 (Contents of directors' report: business review);
Part 29 (Fraudulent trading);
Part 30 (Protection of members against unfair prejudice);
Part 32 (Company investigations: amendments).

The commencement provisions in respect of Part 9 will be drafted so as to enable nominee investment operators to send indirect investors' requests to companies from 1 October to entitle indirect investors to enjoy information rights from 31 December 2007.

The following parts will be introduced from 6 April 2008:

Part 12 (Company secretaries);
Part 15 (Accounts and reports), other than section 417;
Part 16 (Audit), other than sections 485-488;
Part 19 (Debentures);
Part 20 (Private and public companies);
Part 21 (Certification and transfer of securities);
Part 23 (Distributions);
Part 26 (Arrangements and reconstructions);
Part 27 (Mergers and divisions of public companies);
Part 42 (Statutory auditors).

The following parts will be introduced from 1 October 2008:

Part 1 (General introductory provisions);
Part 2 (Company formation);
Part 3 (A company's constitution);
Part 4 (A company's capacity and related matters);
Part 5 (A company's name);
Part 6 (A company's registered office);
Part 7 (Re-registration as a means of altering a company's status);
Part 8 (A company's members);
Part 10 (A company's directors) - provisions relating to directors' conflict of interest duties, directors' residential addresses and underage and natural directors
Part 17 (A company's share capital);
Part 18 (Acquisition by limited company of its own shares);
Part 24 (A company's annual return);
Part 25 (Company charges);
Part 31 (Dissolution and restoration to the register);
Part 33 (UK companies not formed under the Companies Acts);
Part 34 (Overseas companies);
Part 35 (The registrar of companies);
Part 41 (Business names).

In the light of further consultation with business, section 358 of the Companies Act 1985 will be repealed, which provides a power for companies to close the register of members, with effect from 1 October 2008.

Posted 01/03/07

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