Companies Act 2006

The new Companies Act comprises approximately 1,300 sections and introduces new legislation which reflects the changing business environment. The Act contains new and updated legislation.

The Act provides for a single company law regime applying to the whole of the UK, so that companies will be UK companies rather than GB companies or Northern Ireland companies as at present. In Scotland, there are several areas where the Act deals with matters that are devolved.

Summary of the Act

A three step approach

1. Start small

The Companies Act starts by approaching the legislative needs and obligations of private companies while there are additional requirements for public, quoted and traded companies. Previously legislation applied to all companies while providing for exemptions in certain circumstances for smaller companies or if shareholders agreed. It is important to note that private companies remain subject to much of the detail contained in this Act.

2. Simplifying legislative arrangements

In order to make the UK a country where it is easier to do business the Act seeks to simplify procedures and requirements for starting and running a company.

Notwithstanding that objective, there is still a weighty tome of legislation to be complied with.

3. Shareholder accountability

These provisions mainly apply to listed companies. The Act seeks to make directors more accountable to shareholders.