The next implementation date for the Companies Act 2006 is fast approaching. Some significant changes are made to UK company law with effect from 1st October 2007. The new statutory statement of directors’ duties partially comes into force (those provisions relating to conflict of interest do not come in until 1st October 2008) and the provisions relating to decision making by members also come into force.
The new Act provides that, as is currently the case, members of private companies can make decisions either by written resolution or by passing a resolution at a meeting. Members’ meetings to date have been either Annual General Meetings or Extraordinary General Meetings.
However, the new Act also presupposes that most private companies will wish to use the written resolution procedure rather than convening a more administratively cumbersome meeting. Private companies will no longer need to hold an Annual General Meeting (although any provision in their articles requiring them to do so will still have effect). In addition, the written resolution procedure has been simplified.
Rather than requiring unanimity (as is the current position) as of 1st October a written resolution will only require the support of the number of members which would have been required to pass the resolution at a general meeting. There are some additional requirements relating to the information that has to be provided to members when a resolution is circulated for approval. Members will need to be advised of the way in which they can signify approval of a resolution and the timescale within which this should be communicated to the company. A company’s auditors remain entitled to receive a copy of any written resolution.
In consequence of the removal of the requirement for holding an AGM each year, references to "Extraordinary General Meetings" are replaced with references to "General Meetings".
What does this mean in practice? Private companies may wish to review their current articles of association with a view to removing references to AGMs if it is not their intention to continue holding these after October. Otherwise they will be obliged to do so even standing the changes contained in the Act.
Disclaimer
The material contained in this e-update is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
