19 December, 2006
The Companies Act 2006 is one of the UK's largest pieces of legislation and modernises legislation which stretches back decades. Perhaps it is not the most exciting subject, but nonetheless it is important because of the number of companies and people it will affect.
The first parts of the Act to come into effect are:
Information to be provided on company stationary including websites
At present a company is required to have its name mentioned in legible characters on all business letters and order forms. Under the new provisions companies will have to ensure that all letters and order forms whether in paper form or any other medium, including e-mails and websites, contain the required information.
Communications with shareholders
There will be a new regime to allow companies to make greater use of electronic communication with its shareholders and debenture holders. If a person or company agrees (generally or specifically) then information may be provided to them in an electronic form, either by e-mail or by use of a website.
Companies listed on the London Stock Exchange (LSE), AIM and PLUS markets must announce their total number of issued shares and voting rights.
There are other changes being brought into effect by the FSA's Transparency and Disclosure Rules. The Rules deal with financial reporting requirements, disclosure of interests in securities, and information to be provided to holders of shares and debt securities in connection with general meetings.
The new provisions on changes to business correspondence should be in force by 31 December 2006.
The provisions relating to electronic communications are expected by January 2007.
The disclosure of major shareholding must have been made by 31 December 2006 and any subsequent alterations which occur prior to 20 January 2007 must also be disclosed.
The FSA's Disclosure and Transparency Rules are scheduled to take effect on 20 January 2007.
Other major changes to UK company law including director's duties and formation of companies will take effect during 2007 and 2008.
The provisions relating to business correspondence will affect all companies. All companies should therefore urgently review business letters, order forms and company websites to ensure that they contain the required information.
The provisions relating to electronic communication, disclosure of major shareholdings and those brought about by the Disclosure and Transparency Rules will not have an impact on privately owned limited companies.
In order to keep companies up to date Forbes will be producing a series of updates and seminars outlining all the major changes.
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