"As a director of a private company, I was concerned to hear that many of the advantageous changes contained in the new Companies Act have been delayed and will not come into effect as planned in 2008. Could you explain what is likely to happen now and the reasons for the delay?"
Recently, a further setback to the implementation of the Companies Act has added to the already drawn-out process. The delay, announced by Stephen Timms, the Minister for Competitiveness that many of the provisions due to come into force in October 2008 have been delayed until October 2009, relates to potential difficulties in completing changes to Companies House systems, on time, and the delay and disruption this could cause.
However, within the act there are also provisions that require no amendment to Companies House procedures. As a result, and following consultation with key stakeholders, a decision was made regarding clear changes to the implementation schedule, announced on 13 December 2007.
The following provisions of the new Act will come into force on 1 October 2008 as originally planned.
- objection to company names
- trading disclosures
- directors and under-aged directors
- duties of directors in respect of conflict of interest
- declarations of a director of an interest in an existing transaction
- the repeal of restrictions on financial assistance for the acquisition of shares in private companies and
- the new procedure for private companies to make capital reductions supported by a solvency statement rather than a court order
However, the remaining provisions due to come into force on this date will be delayed until October 2009.
This statement indicates that Government is responding to the desires of the business lobby and has attempted to maximise the potential benefit to business of early implementation of those provisions not effected by the delays in modifying Companies House systems. However, the provisions that have been postponed are substantial and the delay in their implementation may have an impact on companies seeking to amend their constitutional documents to reflect the Companies Act 2006.
Ailsa Mapplebeck is an associate specialising in corporate finance with law firm Shepherd and Wedderburn LLP