The Companies Act 2006 took over from the Companies Act 1985. This is a United Kingdom Parliamentary Act, which is the main source for UK Company Law. It has 1300 sections, 700 pages with 15 or more schedules & 59 pages of contents.

The Companies Act 2006 brought great change to the law in relation to companies. Its provisions are as follows.

Certain common law principles are codified, such as the directors duties

It implements Transparency Obligation Directives and also the European Union Takeover.

Under this Act, private and public companies have new provisions.

Earlier there were two separate systems for Northern Island and Great Brittan but with the Companies Act 2006 a single Law ruling throughout the UK was established.

Varying to a certain degree it amends and restates the Companies Act 1985.

The implementation of the Act was carried out in a small portion starting November 2006 and was completed by October 2009. The lengthy duration was due to the fact that it was not possible for Corporate UK to implement this Act all at once and also that many sections of the subsidiary legislation took some time to draft.

The Companies Act 2006 codified and replaced the law and duties that governed the working of the directors. Mentioned below are the following 7 duties.

S171: acting within their power.

S172: To promote the company’s success.

S173: Exercising independent judgment.

S174: Exercising reasonable diligence, care and skill.

S175: Avoiding conflicts of interest.

S176: Not to accept third party benefits.

S177: Declaring interest in proposed transactions of the company.

The General provision of the Companies Act 2006 is as follows

Company formations: Companies will now be able to be incorporated over the internet, thus making it possible for even a public company to be formed by a single person.

Constitutional documents: The company’ main constitutional document will be its articles of associations, and part of the articles will also be the companies memorandum.

Corporate Capacity: Under this Act the company’s capacity is unlimited unless its articles specify otherwise.

Executions of document: Here a single director may execute a document as a deed representing the company by just a signature in front of a witness.

Share Capital: Authorized share capital will no longer be required and companies can change their share capital by interchanging currencies without a court order.

Distribution in kind: It deals with the current uncertainty in the law concerning distribution of non cash asset to an individual shareholder by the company.

Shareholders meetings: shareholders meeting can now be held more frequently and special resolutions can now be passed in 14 day unless otherwise proposed at the Annual General-body Meeting.

Share holder communications: Shareholder communication was made easier via electronic communications like e-mail or website, in order to come to an agreement.

Auditors now are allowed to limit their liability on claims based on negligence, breach of duty or trust, under the condition that the share holders approve of these limitations in advance and the court considers these limitations of liability to be reasonable.

Some of the changes brought to small private companies were the simplification of the corporate ruling. Some of the significant changes are:

Company Secretaries: Small privately held companies are under no compulsion to keep company secretaries, they may keep them only if they choose to do so.

AGM: Abolition: Private companies are not required to hold AGM although they may state the same in their articles and do so if they wish.

Financial Assistance: The prohibition of private companies lending financial assistance to purchase their own shares and white wash exemption was abolished

With Public companies the act seeks to boost shareholder involvement and a number of new requirements too with some provisions applying only to companies which are on the London Stock Exchange. Some of the significant changes are:

Voting by Institution: The Act gives the government power, to bring in regulations, where in, institutions may need to divulge information on the voting. The government however indicates that it will only use this power after a full investigation or if voluntary disclosure does not work.

Paperless trade: The government is empowered to introduce regulations towards paperless share holding and transfer in main listed companies.

Directive towards Transparency Obligation: The European directive is brought into force putting obligations on main listed companies relating to financial reporting, disclosing major acquisitions, disposal of own shares and the propagation of company information to its shareholders and the general public.