Companies Act 2006

The Companies Act 2006 is a comprehensive piece of UK legislation that governs the incorporation, operation, and regulation of companies in the United Kingdom.

Here’s a Companies Act 2006 summary for a guide to its key provisions:

 

Company Formation

The Act simplifies the process of forming a company, allowing for a single person to form a private company. It also introduces the model articles of association, which companies can adopt.

 

Directors’ Duties

One of the most significant parts of the Act defines and clarifies the duties of company directors. Directors’ duties, previously established through case law, are now codified and include the duty to act within powers, promote the success of the company, exercise independent judgement, exercise reasonable care, skill and diligence, avoid conflicts of interest, not accept benefits from third parties, and declare interest in a proposed transaction or arrangement.

 

Shareholder Rights

The Act enhances the rights of shareholders. It provides mechanisms for shareholders to sue directors in the name of the company, requires companies to hold shareholder meetings, and allows shareholders to take part in decisions concerning fundamental changes in the company’s business.

 

Company Administration

The Act requires greater transparency in the operation of companies. This includes detailed requirements for disclosure of information about company operations and finances, including director remuneration. It also mandates electronic communication by default, facilitating more straightforward interaction between a company and its shareholders.

 

Accounts and Audits

The Companies Act 2006 imposes strict regulations on accounting and auditing. Companies must keep accurate records that reflect their financial position. The Act also outlines the responsibilities of auditors and the rights of shareholders to access certain financial documents.

 

Company Resolutions and Meetings

The Act streamlines procedures for passing resolutions and conducting meetings, allowing more decisions to be made by written resolution and reducing the need for formal meetings.

 

Company Names and Registered Office

The Act sets out rules for the naming of companies, including restrictions on certain names and the requirements for changes in company names. It also deals with the requirements for a company to have a registered office address where legal documents can be served.

 

Company Re-registration

There are provisions for changing a company’s status between private and public, and vice versa, with associated requirements and implications detailed.

 

Company Strike-off and Dissolution

The Act simplifies the process for a company to be struck off the register and dissolved, providing clear steps for companies that wish to cease operations.

 

In Summary

The Companies Act 2006 is known for being one of the longest pieces of legislation in UK parliamentary history, reflecting its breadth and complexity in addressing all aspects of company law.

 

We hope this Companies Act 2006 summary serves as a useful starting point for further reading. The information above should not be taken as legal advice, but rather as a starting point for further research.

Find full Companies Act 2006 contents on the UK government legislation website.

Please seek the services of a commercial law firm for expert services and advice on the specific requirements of your business.