New company law provisions came into force under the Companies Act 2008 on 1st October 2008.
The changes include:
- the general duties of directors in respect of conflicts of interest;
- the new procedure for private companies to make capital reductions supported by a solvency statement instead of by a court order;
- companies now have to have at least one natural person (not a company) as a director – a company cannot be a sole director of another company (some existing companies will have more time before the rules change);
- there is a new minimum age of 16 for directors; and
- the restrictions under the Companies Act 1985 on financial assistance by private companies for the acquisition of their own shares have also now been repealed.
Many companies are also updating their Articles of Association to reflect changes in the Companies Act 2006 such as the removal of the requirement to have a company secretary and the abolition of the rule that companies must have an Annual General Meeting each year. Some directors are tempted to cut corners in recessionary times. However, directors’ duties are now clearly set out in the Companies Act 2006 and compliance with the law is essential. If you want more information on how the new company law provisions affect your business Cathy Cook at our Wakefield Office in West Yorkshire.