The Companies Act 2006 is being brought into force in stages, and is not expected to be fully in force until 1 October 2009. This article looks at the changes that came into force on 6 April 2008.
From 6 April 2008 it is optional for a private company whether it has a Company Secretary. Public companies are still obliged to have a Company Secretary (who must be suitably qualified).
If a private company wishes to dispense with having a Company Secretary, it will need to check its Articles of Association. If these make specific reference to it having a Company Secretary (as opposed to just referring to the Secretary’s duties), the Company will need to amend its Articles. Subject to this, the Secretary can just resign (or be removed by a resolution of the Directors) and Form 288b filed at Companies House to confirm the termination of the appointment.
If a private company wishes to continue to have a Company Secretary, it can just continue as before, notifying Companies House of any new appointment.
It will now at last be possible for there to be a “one man” private company, where the same person is sole shareholder and sole director, with no requirement for somebody else to be Company Secretary. Because of this the formalities for the execution of deeds by companies have been amended. Previously two officers had to sign the deed (with or without the Company Seal). As from 6 April one Director can sign a deed in the presence of an independent witness, in the same way as an individual would execute a deed in their own name.
Filing of Accounts
There are a number of changes relating to accounts. Perhaps the most significant is the reduction of the time limit for filing accounts by one month. For accounting periods that begin on or after 6 April 2008, the time period for a private company to file its accounts is reduced from 10 months after the year end to 9 months, and for a public company it is reduced from 7 months after the year end to 6 months.
For example a private company with a year end of 30 April will be able to file its accounts for the year ending 30 April 2008 as late as 28 February 2009. For the year ending 30 April 2009 the deadline will be 31 January 2010.
Note also that the “corresponding date” rule for calculating the deadline date has been abolished. Under this rule, for example, a private company with a year end of 28/29 February will have to file its accounts for the year ending 28 February 2009 by 30 November 2009 (not 28 November).
It is important to get these deadlines right, as late filing penalties apply if the accounts are filed late, even by one day. The penalties will therefore now apply as from one month earlier. The amounts have also been increased, and are now doubled for a second offence. In most cases there is of course no real excuse for leaving the filing of accounts so late, but human nature being what it is, many Directors do leave the filing to the deadline.
Other changes relating to accounts include increases in the exemption thresholds which allow the filing of abbreviated accounts, the statutory statements in the accounts now have to refer to the 2006 Act, and the audit report must now be signed by the senior statutory auditor at the audit firm in his own name.
Minimum share capital of public companies
Previously a public company had to have a minimum issued share capital of £50,000, of which at least one quarter (i.e. £12,500) was paid up. A public company is not permitted to borrow or carry on business until it has this minimum paid up capital, and must apply to Companies House for a Certificate of Entitlement to Carry on Business once the capital has been paid up.
As from 6 April 2008, the minimum share capital can be paid up in euros, the equivalent figure to the £50,000 being €65,600. The company would need to have its share capital denominated in euros to take advantage of this.
This is not the adoption of the euro by the UK via the back door, nor (at current exchange rates) is it a cheaper way to pay up the minimum capital. It is simply a way of giving some extra flexibility to public companies, whilst still complying with the relevant EU Directive on capital adequacy of public companies.