Morgan Russell Solicitors

Companies Act 2006

Companies Act 2006

Companies Act 2006- Financial Assistance

The legislation regarding financial assistances changed on 1st October 2008.

Please note this Briefing Note only deals with the changes that affect private limited companies.

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Companies Act 2006 - Trading Disclosures

Provisions of the Companies Act 2006 came into force on 1st October 2008, dealing with trading disclosures.  The aim of the provisions is to ensure that anyone who has dealings with the company knows its legal identity, its limited liability status and where they can inspect the company records.

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The Companies Act 2006 - Shareholders Resolutions and Meetings

The Companies Act 2006 provides for private companies to pass resolutions:-

  1. at a meeting; or
  2. by written resolution.

Please see the separate Briefing Note “Companies Act 2006: Written Resolutions” for further information on written resolutions.

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Companies Act 2006 - Auditors Liability Limitation Agreements

Provisions of the Companies Act 2006 came into force on 6th April 2008 regarding the ability for auditors to limit their liability.

Companies and auditors can now enter into ‘liability limitation agreements’.   These agreements are designed to limit an auditor’s liability to a company for negligence, default, or breach of duty or trust in relation to the audit of the accounts.  Such an agreement is not effective to limit the auditor’s liability to less than such an amount as is fair and reasonable in all the circumstances, having regard to the auditor’s responsibilities, the nature and purpose of the auditor’s contractual obligations to the company and the professional standards expected of the auditor.

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Companies Act 2006 - Shares: Issues and Transfers

Provisions of the Companies Act 2006 came into force on 6th April 2008 regarding the issue and transfer of shares.

As previously, a private company must not offer shares to the public.

A share certificate under the common seal of the company, specifying shares held by a member, is prima facie evidence of that member’s title to the shares.

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Companies Act 2006 - Execution of Documents

Provisions of the Companies Act 2006 came into force on 6th April 2008 regarding the execution of documents by companies.

Prior to 6th April 2008, private companies were required to have a company secretary.  Since 6th April 2008, private companies are no longer required to have a company secretary.  (For further information please see Briefing Note “Companies Act 2006: Company Secretaries”).

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Companies Act 2006 - Accounts

Provisions of the Companies Act 2006 came into force on 6th April 2008 relating to Accounts.  This Briefing Note only deals with requirements for private companies.

This Briefing Note gives a general update and does not cover any specific requirements for a company’s accounts.  Companies should take advice from their accountants regarding specific requirements for a company’s accounts.

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Companies Act 2006 - Appointment of Auditors

Provisions of the Companies Act 2006 came into force on 1st October 2007 regarding the appointment of auditors for private companies whose financial statements need auditing.

The appointment of auditors for a private company is to be made by the shareholders by an ordinary resolution, although the directors can appoint an auditor in a limited number of circumstances.

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Companies Act 2006 - Fraudulent Trading

If any business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose every person who is knowingly a party to the carrying on of the business in that manner commits an offence.

Fraudulent trading can be committed whether or not the company has been or is in the course of being wound up.

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Companies Act 2006 - Written Resolutions

The provisions in the Companies Act 2006 relating to written resolutions came into effect on 1 October 2007. Private companies are currently able and will still be able to pass shareholders resolutions by way of written resolutions rather than holding a general meeting. However from 1 October 2020 written resolutions no longer require all the shareholders to consent to the resolution.

An ordinary resolution requires a simple majority and a special resolution requires a majority of not less than 75%. Under the current law irrespective of whether the written resolution is an ordinary or special resolution all the members need to sign the written resolution.

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