Companies Act 2006 Download
| Companies Act 2006 |
| The Companies Act 2006 signifies a major re-write of company law. The implementation of this Act commenced in January this year and all remaining reforms will come into force over the next 18 months. The main objectives of the Act are to make the law clearer and easier to understand making it more flexible; keeping the regulatory burden to a minimum; and promoting shareholder engagement and long term investment. |
| Some of the major changes are highlighted below: |
| Shareholders |
- Extended rights to sue directors for a broader range of misconduct.
- Enhanced rights for indirect investors: indirect investors will be able to exercise the registered shareholder's right to attend and vote at meetings.
- Enhanced proxy rights will make it easier for shareholders to appoint others to attend and vote at general meetings.
- Shareholders will receive more timely information, reflecting improvements in technology and the increased rate at which information becomes out of date.
- More timely accountability to shareholders by requiring public companies to hold their AGM within 6 months of the financial year-end.
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| Private Companies |
- No longer required to appoint a company secretary.
- No requirement to hold an annual general meeting.
- Easier to make decisions by written resolutions.
- Abolition of prohibition from giving financial assistance for the purchase of own shares.
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| All Companies |
- Companies can make greater use of electronic communications to contact shareholders.
- Memorandum will become a formal registration document and the articles of association will be the continuing constitutional document.
- No maximum age limit for directors.
- Although corporate directors will still be permitted, at least one director must be a natural person.
- Companies can have unlimited objects.
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Under the new Act directors duties are to be 'codified' and the Government proposes to introduce a statutory statement of directors general duties, which are:
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- To act within the company's powers.
- To promote the success of the company.
- To exercise independent judgement.
- To exercise reasonable care and skill.
- To avoid conflicts of interest.
- Not to accept benefits from third parties.
- To declare an interest in any proposed transaction or arrangement with the company.
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