The Companies Act 2006 (the “Act”) received Royal Assent on 8 November 2006. It replaces the existing Companies Acts of 1985 and 1989 by consolidating existing and new law in one document. It is the lengthiest piece of legislation ever to have been considered by Parliament, being over 700 pages long, with approximately 1300 clauses. The legislation is drafted on a "Think Small Company First" principle and removes various procedures and regulations which previously applied to the private company. The Act is being introduced in stages and will not be fully in force until October 2009.

This article is intended to highlight some of the key changes that have already been implemented, together with those which will be introduced over the next two years.

Changes Introduced on 1 October 2007
Annual General Meetings (AGMs) – A private company is no longer required to hold AGMs unless the shareholders wish to do so. Companies must still hold AGMs if their articles of association or existing investment agreements require them to do so.

General Meetings (previously known as Extraordinary General Meetings) – General meetings of shareholders now require only 14 days’ notice to be given.

Written Resolutions no longer require unanimous approval – Shareholder resolutions may now be passed using a new amended written resolution procedure obtaining the consent of the requisite majority of the shareholding (over 50% for an ordinary resolution, and 75% for a special resolution).

Directors Duties – Directors’ duties have been codified to help directors to understand the duties they are required to comply with. In summary, these duties require each Director to:-

• Act within his powers;
• Promote the success of the Company;
• Exercise independent judgement;
• Exercise reasonable skill, care and diligence;
• Avoid conflicts of interest;
• Not accept benefits from third parties; and
• Declare his interest in any proposed transaction or arrangement.
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