The Company Law Reform Bill, first introduced by the DTI in November 2005, is an attempt by the Government to reform and streamline the law relating to companies in the UK, particularly as regards small private companies, who are often swamped by a raft of administrative rules and regulations not entirely appropriate to their size.
The extent to which the Bill achieves this however is questionable. Once passed the Bill will sit alongside the existing 1985 Companies Act (which will continue in force) creating a two tier system of regulation. In addition a number of the more significant provisions initially proposed in the Bill e.g. codification of directors' duties, have been subsequently amended following pressure from various bodies such as the CBI who were concerned that the codification of directors' duties in this way (and the inclusion of various interests that were to be taken into account by directors such as environmental issues) would open the floodgates to litigation and expose directors to claims.
Given that this Bill has been in gestation since the first White Paper was published on 17 March 2005, and has been literally sent back to the drawing board on numerous occasions, where do we currently stand as regards its progress and implementation?
The Bill was first read in the House of Lords on 1 November 2005 and was published on 3 November 2005. On 27 April 2006 the text of the Bill was amended by the Commons and republished and then on 16 May 2006 the text of the Bill as amended in the House of Lords was published. Finally, on 26 May 2006 the definitive version of the Bill was republished with explanatory notes. The Second Reading of the Bill took place in the Commons on 6 June 2006 and is expected to be passed finally on 13 July 2006 with most of its provisions coming into force in Spring 2007.
We have, for the most part, been tracking the up-to-date changes as they occur in relation to particular areas of the Bill and shall continue to do so, in our regular feature "A Company Law for the 21st Century" (see for example our June E-Bulletin outlining the latest changes proposed regarding audits and accounts).
However as will be clear from the chequered progress of the Bill thus far, there have been, and will no doubt continue to be, changes right up to the wire.
Given the Bill is now due to be passed on 13 July 2006, in our next edition we will be providing a definitive round up of our various E-bulletin summaries on all the Bill's provisions and setting out comments on how this could affect your business going forward – watch this space!