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Companies Act 2006  Implications for companies limited by guarantee
Companies Act 2006 New UK wide legislation  Implemented from Jan 07 – Oct 09 Companies (Northern Ireland) Order 1986 and its associated rules and regulations will no longer apply.
Changes already in effect in 2007…
Disclosure of company details Companies are now required to show the following company details on all order forms, emails, faxes and websites (as they have done on business letters), in a legible form:
Company details cont’d - Its full registered name  - A statement that it is a limited company - The country of registration  - The company's registration number  - The address of its registered office
Company details cont’d A company is now also required to write its full registered name on all notices, official publications, cheques, endorsements, invoices, receipts, promissory notes, bills of exchange, letters of credit and conveyance whether in hard copy, electronic or other form.
Electronic communications Allows for the wider use of e-communications.  Any information or documents can be communicated by email or any other electronic form including websites.  Could result in savings for those companies which have large numbers of members.
Electronic communications - Consent The company must acquire the consent of the intended recipient to receive the information Consent can relate to all general information or in specific circumstances and it can be withdrawn at any time.
Community Interest Company (CIC) A new corporate structure for non-charitable social economy enterprises  Use their profits and assets for the public good.  Can be a plc limited by shares, a private company limited by shares or a private company limited by guarantee
CIC cont’d Register with Companies Registry in Belfast Include a community interest statement to confirm that the company will provide benefit to the community Regulated by CIC Regulator (UK wide)  www.cicregulator.gov.uk
Codified Statement of Directors duties There is for the first time a statutory statement of the duties of company directors.  Directors duties developed until now in case law
Directors Duties cont’d Those in effect from October 2007 are:  to act within company’s powers;  to promote the success of the company;  to exercise independent judgment;  to exercise reasonable care, skill and diligence.
Promoting the success of a company For Charities and CICs this means success in achieving the company's purposes.  Directors have to consider the long-term implications of their decisions, and have to take into account the interests of employees, suppliers, customers and the environment
Connected Persons The definition of connected person has now been extended to include the parents, children, step-children, civil partner (enduring family relationship) of a director and the children of a civil partner.
Written resolutions No longer necessary for companies to have unanimous approval - even if the Articles say otherwise.  Written resolutions may now be passed on the same basis as if the resolution was put to a general meeting 75% of members signing a written resolution to pass as a  special  resolution  50% of members signing a written resolution to pass as  an  ordinary  resolution
Written resolutions cont’d Cannot be used to remove directors or auditors.  Can allow longer than the stated 28 days by altering the Articles of Association.  Companies can also use electronic communications to seek and receive agreement for a written resolution.
Written resolution provisions Identify which members are entitled to vote A proposed written resolution will lapse if its not passed within a certain time period Provides certainty as to whether a written resolution has been passed.
Proxy voting All company members now have a statutory right to appoint a proxy to attend, speak and vote (either on a show of hands or on a poll) on their behalf at general meetings of the company - even if the Articles say otherwise.
Proxy voting cont’d Must communicate this information to its members on the notice of the meeting from the 1 October O7  Directors risk being fined if they fail to comply.  If the notice for your AGM or EGM has already been sent out to members before 1 October then the general meeting is not subject to these new rules.
Proxy voting administrative arrangements All companies need to : Update/create proxy forms to include the right of the proxy to speak as well as to attend and vote or create a proxy  Update/create the notice of the general meeting to tell members of their statutory right to appoint a proxy State on the proxy form that it must not have to be returned more than 48 hours before the general  Consider updating the Articles of Association if proxies haven't been permitted in the past
Notices Notice period for all members meetings will be reduced from 21 days to 14 days However, if the Articles state 21 days then you must give this notice or change the Articles  Now 90%, rather than 95%, of members can agree to hold a general meeting on short notice (whichever is written in the articles).
Annual General Meetings Companies no longer required to hold an AGM unless it states this requirement in the articles However charitable companies will continue to hold AGMs for accountability and transparency reasons.  May be useful for trading subsidiaries to use
Minutes of directors meetings  A new requirement for minutes of directors' meetings to be kept for at least 10 years
Directors annual report A Director is liable to the company for loss it suffers as a result of an untrue or misleading statement in the directors’ reports.  if he /she knew the statement to be untrue or misleading or was reckless about this, or if he/she knew the omission was dishonest concealment of a material fact.
Access to register of company members The public now has a right to inspect and be provided with a copy of register entries only if they provide: their names and addresses  the purpose for which the information will be used and  if access is sought on behalf of others or the information will be disclosed to anyone else, similar details for them  The company can apply to the court if it thinks the information is not going to be used for a proper purpose
Access to register of members cont’d The register of company members must be open for inspection every working day.  The previous right to close it to the public for up to 30 days per year was repealed from 6 April 2007.
Minutes and records of written resolutions Records of written resolutions and general meetings will have to be kept for at least 10 years, rather than throughout the life of the company and beyond as at present  Good practice for voluntary sector organisations is almost certainly to keep them longer than 10 years.
Further changes in 2008
Company Secretary  - April 08 It will no longer be a requirement to have a Company Secretary although companies can continue to have one. Will continue to have the same rights and responsibilities as now
New Accounting arrangements – April 08 Deadline for filing annual accounts and reports will reduce from 10 months to 9 months  No longer required to send out their annual accounts prior to an AGM Must be sent to members by the time they are due to be filed with Companies Registry.
Further changes originally intended for  Oct 08 some now delayed until Oct 09
Company formation Oct 09 The memorandum of association will become an historic document - it will simply record the facts at the time of incorporation The articles rather than the memorandum will set out  the principles covering the way the company conducts its business.
Company constitution Oct 09 There will be no requirement in future for companies (non-charitable) to state their objects However charitable companies will have to state these in line with charity law New streamlined default model articles of association will be made available.
Company name A company can now set its own procedure in its articles for changing its name Anyone may now object to a company’s name if it either interferes with a name which they have goodwill or is so similar to such a name that it would suggest a link between them and the company which is misleading.
Further Directors Duties  to avoid conflicts of interest;  not to accept benefits from third parties;  to declare interest in a proposed transaction or arrangement (in addition to the current requirement to declare an interest in an existing transaction)
Directors New minimum age of 16.  However min age for directors of charitable companies is normally 18. Must have at least one actual person (as opposed to a company) acting as a Director
Directors addresses  Oct 09 Register of Directors: can use service addresses rather than residential addresses  However must keep a separate register of the residential addresses Both addresses will need to be given to Companies Registry but the residential addresses will be withheld from the public
Companies Registry Integrate Companies Registry for NI with Companies House
For further information  www.nicva.org   dedicated company law reform page www.berr.gov.uk/files/file42262.pdf A summary of what it means for private companies

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New Company Regulations 16 Nov07

  • 1. Companies Act 2006 Implications for companies limited by guarantee
  • 2. Companies Act 2006 New UK wide legislation Implemented from Jan 07 – Oct 09 Companies (Northern Ireland) Order 1986 and its associated rules and regulations will no longer apply.
  • 3. Changes already in effect in 2007…
  • 4. Disclosure of company details Companies are now required to show the following company details on all order forms, emails, faxes and websites (as they have done on business letters), in a legible form:
  • 5. Company details cont’d - Its full registered name - A statement that it is a limited company - The country of registration - The company's registration number - The address of its registered office
  • 6. Company details cont’d A company is now also required to write its full registered name on all notices, official publications, cheques, endorsements, invoices, receipts, promissory notes, bills of exchange, letters of credit and conveyance whether in hard copy, electronic or other form.
  • 7. Electronic communications Allows for the wider use of e-communications. Any information or documents can be communicated by email or any other electronic form including websites. Could result in savings for those companies which have large numbers of members.
  • 8. Electronic communications - Consent The company must acquire the consent of the intended recipient to receive the information Consent can relate to all general information or in specific circumstances and it can be withdrawn at any time.
  • 9. Community Interest Company (CIC) A new corporate structure for non-charitable social economy enterprises Use their profits and assets for the public good. Can be a plc limited by shares, a private company limited by shares or a private company limited by guarantee
  • 10. CIC cont’d Register with Companies Registry in Belfast Include a community interest statement to confirm that the company will provide benefit to the community Regulated by CIC Regulator (UK wide) www.cicregulator.gov.uk
  • 11. Codified Statement of Directors duties There is for the first time a statutory statement of the duties of company directors. Directors duties developed until now in case law
  • 12. Directors Duties cont’d Those in effect from October 2007 are: to act within company’s powers; to promote the success of the company; to exercise independent judgment; to exercise reasonable care, skill and diligence.
  • 13. Promoting the success of a company For Charities and CICs this means success in achieving the company's purposes. Directors have to consider the long-term implications of their decisions, and have to take into account the interests of employees, suppliers, customers and the environment
  • 14. Connected Persons The definition of connected person has now been extended to include the parents, children, step-children, civil partner (enduring family relationship) of a director and the children of a civil partner.
  • 15. Written resolutions No longer necessary for companies to have unanimous approval - even if the Articles say otherwise. Written resolutions may now be passed on the same basis as if the resolution was put to a general meeting 75% of members signing a written resolution to pass as a special resolution 50% of members signing a written resolution to pass as an ordinary resolution
  • 16. Written resolutions cont’d Cannot be used to remove directors or auditors. Can allow longer than the stated 28 days by altering the Articles of Association. Companies can also use electronic communications to seek and receive agreement for a written resolution.
  • 17. Written resolution provisions Identify which members are entitled to vote A proposed written resolution will lapse if its not passed within a certain time period Provides certainty as to whether a written resolution has been passed.
  • 18. Proxy voting All company members now have a statutory right to appoint a proxy to attend, speak and vote (either on a show of hands or on a poll) on their behalf at general meetings of the company - even if the Articles say otherwise.
  • 19. Proxy voting cont’d Must communicate this information to its members on the notice of the meeting from the 1 October O7 Directors risk being fined if they fail to comply. If the notice for your AGM or EGM has already been sent out to members before 1 October then the general meeting is not subject to these new rules.
  • 20. Proxy voting administrative arrangements All companies need to : Update/create proxy forms to include the right of the proxy to speak as well as to attend and vote or create a proxy Update/create the notice of the general meeting to tell members of their statutory right to appoint a proxy State on the proxy form that it must not have to be returned more than 48 hours before the general Consider updating the Articles of Association if proxies haven't been permitted in the past
  • 21. Notices Notice period for all members meetings will be reduced from 21 days to 14 days However, if the Articles state 21 days then you must give this notice or change the Articles Now 90%, rather than 95%, of members can agree to hold a general meeting on short notice (whichever is written in the articles).
  • 22. Annual General Meetings Companies no longer required to hold an AGM unless it states this requirement in the articles However charitable companies will continue to hold AGMs for accountability and transparency reasons. May be useful for trading subsidiaries to use
  • 23. Minutes of directors meetings A new requirement for minutes of directors' meetings to be kept for at least 10 years
  • 24. Directors annual report A Director is liable to the company for loss it suffers as a result of an untrue or misleading statement in the directors’ reports. if he /she knew the statement to be untrue or misleading or was reckless about this, or if he/she knew the omission was dishonest concealment of a material fact.
  • 25. Access to register of company members The public now has a right to inspect and be provided with a copy of register entries only if they provide: their names and addresses the purpose for which the information will be used and if access is sought on behalf of others or the information will be disclosed to anyone else, similar details for them The company can apply to the court if it thinks the information is not going to be used for a proper purpose
  • 26. Access to register of members cont’d The register of company members must be open for inspection every working day. The previous right to close it to the public for up to 30 days per year was repealed from 6 April 2007.
  • 27. Minutes and records of written resolutions Records of written resolutions and general meetings will have to be kept for at least 10 years, rather than throughout the life of the company and beyond as at present Good practice for voluntary sector organisations is almost certainly to keep them longer than 10 years.
  • 29. Company Secretary - April 08 It will no longer be a requirement to have a Company Secretary although companies can continue to have one. Will continue to have the same rights and responsibilities as now
  • 30. New Accounting arrangements – April 08 Deadline for filing annual accounts and reports will reduce from 10 months to 9 months No longer required to send out their annual accounts prior to an AGM Must be sent to members by the time they are due to be filed with Companies Registry.
  • 31. Further changes originally intended for Oct 08 some now delayed until Oct 09
  • 32. Company formation Oct 09 The memorandum of association will become an historic document - it will simply record the facts at the time of incorporation The articles rather than the memorandum will set out the principles covering the way the company conducts its business.
  • 33. Company constitution Oct 09 There will be no requirement in future for companies (non-charitable) to state their objects However charitable companies will have to state these in line with charity law New streamlined default model articles of association will be made available.
  • 34. Company name A company can now set its own procedure in its articles for changing its name Anyone may now object to a company’s name if it either interferes with a name which they have goodwill or is so similar to such a name that it would suggest a link between them and the company which is misleading.
  • 35. Further Directors Duties to avoid conflicts of interest; not to accept benefits from third parties; to declare interest in a proposed transaction or arrangement (in addition to the current requirement to declare an interest in an existing transaction)
  • 36. Directors New minimum age of 16. However min age for directors of charitable companies is normally 18. Must have at least one actual person (as opposed to a company) acting as a Director
  • 37. Directors addresses Oct 09 Register of Directors: can use service addresses rather than residential addresses However must keep a separate register of the residential addresses Both addresses will need to be given to Companies Registry but the residential addresses will be withheld from the public
  • 38. Companies Registry Integrate Companies Registry for NI with Companies House
  • 39. For further information www.nicva.org dedicated company law reform page www.berr.gov.uk/files/file42262.pdf A summary of what it means for private companies