Companies Act 2006 - partial commencement 6 April 2008

The Companies Act 2006 is being implemented in stages.  Click here to see our short briefing on the effect of the Act. On 6 April 2008, a number of changes to the existing company regulation regime will come into force.  These includes changes to:-

-  The accounts regime;
-  Liability of auditors; and
-  The appointment of company secretaries. 

Accounts
The existing regime is replaced by Part 15 of the Companies Act 2006 for financial periods beginning on or after 6 April 2008.   The principal differences include:-

*(the thresholds in the Act as published will be increased on 6 April by the Companies Act 2006 (Amendment) (Accounts and Reports) Regulations 2008)

2. A specific obligation on directors not to approve accounts unless satisfied the accounts give a true and fair view.

3. The time allowed following the end of the financial year for delivering annual reports and accounts to Companies  House reduces from ten to nine months for private companies.

Action Points

• Directors should ensure they re-familiarise themselves with their responsibilities in relation to signing of accounts.
• Those responsible for preparing annual returns/accounts should be aware of the reduced periods for lodging.

This firm can assist in relation to the preparation of annual returns through our company secretarial services.  

Audit 

From 6 April 2008, the Companies Act 2006 allows auditors to limit their liability by agreement with a company.  It is important to note that this does not extend to exempting or indemnifying auditors.  To be valid, such agreements must be:-

• Fair and reasonable
• Approved by shareholders
• In respect of the audit for only one financial year (although they are renewable for further year long periods)

Action Point

• Directors and finance directors in companies requiring audited accounts to be prepared should be aware of the new rules.  It is likely that auditors will introduce such agreements and companies in receipt of such limitation letters ought to be prepared.

This firm's corporate department can advise on the terms of limitation of liability letters and prepare shareholder documentation to approve such documents if necessary.

Secretaries

From 6 April 2008, private companies will be able to choose whether or not they have a company secretary.  If the company’s Articles of Association do not have any contrary provisions, a company secretary can simply be asked to resign. 

However, if the company’s Articles of Associations specifically require a company secretary to be appointed, this will take precedence over the Act and a secretary must remain in office until this provision is removed from the Articles. 

Before deciding to remove their secretary from office, private companies must be aware that the tasks which were the responsibility of the company secretary have not been abolished under the Companies Act 2006.  The company must still comply with the requirements imposed on it under companies legislation. 

Similar considerations apply to the creation of new companies with no company secretary being appointed on formation.

There must still be some individual delegated to take on the functions of a company secretary.  Many private companies will still find that the burden of filing returns, keeping registers and attending to administrative paperwork is better out-sourced.  CLP Secretaries Limited can take on all of the functions of company secretarial support, freeing up company time from administrative tasks. 

Action Points

• Companies should review their Articles to check whether the company is required to have a company secretary.
• If the company wishes to remove the company secretary, the correct paperwork ought to be filed with Companies House.
• Consider whether the functions of the company secretary should be out-sourced (whether or not a company secretary is actually appointed).

This firm can assist with all of the above.  Contact us to discuss your requirements further.