The Companies Act comprises of approximately 1,300 sections and introduces new legislation which reflects the changing business environment.
The Act provides for a single company law regime applying to the whole of the UK, so that companies will be UK companies rather than GB companies or Northern Ireland companies as at present. In Scotland, there are several areas where the Act deals with matters that are devolved.
Summary of the Act
| PART | SUMMARY |
|---|---|
| 1 to 7 | The fundamentals of what a company is, how it can be formed and what it can be called. |
| 8 to 12 | The members (shareholders) and officers (management) of a company |
| 13 and 14 | How companies may take decisions |
| 15 and 16 | The safeguards for ensuring that the officers of a company are accountable to its members |
| 17 to 25 | Raising share capital, capital maintenance and company charges |
| 26 to 28 | Company reconstructions, mergers and takeovers |
| 29 to 39 | The regulatory framework, application to companies not formed under the Companies Acts and other company law provisions |
| 40 to 42 | Overseas disqualification of directors, business names and statutory auditors |
| 43 | Transparency obligations |
| 44 to 47 | Miscellaneous and general |
A company's members
The Companies Act requires that all companies must keep a register of members
Accounting records
The Companies Act prescribes that every company must keep adequate accounting records
An auditor's rights to information
Auditors are appointed by the members and are accountable to them. As a result it is important that auditors are given the information they consider relevant to the fulfilment of their duty to members.
An historical record of the key changes
The Companies Act changes were introduced over almost three years. For the record, we include a historical account of when the various changes were enacted.
Appointment of auditors
An auditor of a private company must be appointed for each financial year of the company, unless the directors resolve otherwise on the grounds that audited accounts are unlikely to be required.
Appointment of directors
The legislation governing the appointment and removal of directors is contained in the Companies Act in Part 10 and comprises nine chapters and over 100 sections. Inevitably this section of our website cannot cover all the aspects of the Act, but endeavours to highlight a number of key areas.
Changing the company name
The Companies Act permits a company to change its name. The provisions governing name change are found in sections 78 and 79. This may be achieved either by special resolution of the members or by other means provided by the company's articles.
Choosing a name for your company
A company name must not be offensive or suggest any connection with government or public authority, unless permission is granted by the Secretary of State.
Company secretary
A private company is not required to have a secretary, while a public company must have a secretary.
Director's transactions requiring members approval
Where a service contract is, or maybe, longer than two years. This is a complicated area of the Act and we recommend that advice be sought with regard to long term service contracts.
Directors' report
One of the requirements of the Companies Act is that the approved accounts must include a directors' report
Directors' service contracts
The company is required to keep directors' service contracts or any memorandum of terms at the company's registered office, or at any place specified under section 1136, as section 229 confers rights on members to inspect a request copies.
Do you need an audit?
Recent changes mean that small and medium-sized businesses will now be able to obtain an audit exemption if they meet two out of three criteria relating to balance sheet total, turnover and number of employees.
Filing of accounts and late-filing penalties
Companies are automatically fined if accounts are not submitted on time. Accounts should normally be filed for a private company nine months after the company's accounting reference date.
Financial year
A company's financial year is determined by its accounting reference date in each calendar year.
General duties of directors
The general duties required of a director are set out in seven sections of the Companies Act.
Group accounts
The requirements of the Companies Act regarding the preparation of group accounts are based on the company's size.
Loans to directors
The Companies Act permits a company to make a loan to a director. A loan or guarantee must be approved by a resolution of the members of the company.
Records of directors' meetings
The Companies Act requires a company to keep records of its director's meetings. The responsibility for these records rests with the company's Board of Directors.
Registered office
The registered office is the official address to which all communications and notices may be addressed. The company must at all times have a registered office and this must be a physical location and not a PO Box address.
Signing of accounts: directors and auditors
Subject to certain exemptions, a company that meets the small company criteria in respect of a financial year is exempt from the requirement to have an audit of accounts for that year.
Forming a limited company
The provisions relating to company formation are contained in Parts 1 to 7.
