The Companies Act 2006 replaced almost all of the Companies Act 1985 and 1989. The Act came into force in stages, with full implementation by October 2008. Most of the new Act has the same or very similar affects as the old Acts and existing case law.
One important change now implemented is that directors must have regard to the impact of their company’s operations on the community and the environment. It is still unclear how, and to what extent, this will be enforced. It is our view that a company operating without an environmental policy should be in breach of this regulation.
Whilst we are not lawyers and cannot give legal advice, we are often able to remind company directors of some of their basic duties. The most common points that we find useful for directors include:
- There is a requirement for all forms, letters, emails and websites to show the company name and place of registration, registered number and registered office.
- Company directors are responsible for setting dividend policy. Shareholders can either approve or reject dividend proposals.
- Dividends can only be voted if there are profits in the company. It is crucial to review management accounts each time a dividend is voted. Minutes of a meeting and a dividend voucher must be drawn up for each dividend.
- Accounts must be filed within 9 months of the end of the accounting period (or 9 months after incorporation for first period if period is more than twelve months).
- A company secretary is no longer required for most companies.
- Company registered office cannot be a PO Box. We recommend that registered office is also the company’s trading address, avoiding the need for two addresses on each form, letter, email and website.
- Full accounts must be sent to all shareholders each year.