The final implementation phase of the Companies Act 2006 (the "Act") takes place on 1st October this year.

The provisions being introduced in October make substantial changes to the presentation and contents of a company's Memorandum and Articles of Association as well as further deregulation of certain areas of company law. Now is the logical time for clients to review their existing memorandum and articles to take advantage of the relaxations brought in by the Act. Brief details of the key changes which will come into effect on 1st October this year are set out below:

Objects Clause

From 1st October 2009 existing companies' objects clause will become part of the articles of association, rather than the memorandum. No filing needs to take place for this to happen. As a result companies may now choose to remove the objects clause in its entirety in order to have unlimited objects. The memorandum of association of companies incorporated on or after 1st October 2009 will simply be a short statement of the desire of the initial subscriber(s) to incorporate the company, the company name and type and its initial share capital.

Authorised Share Capital

Companies incorporated on or after 1st October 2009 will also no longer have an authorised share capital and directors will be able to issue shares without limitation. Existing companies' statement of authorised share capital, as set out in its memorandum of association, will become part of the articles in the same way as the objects clause. Companies incorporated prior to 1st October 2009 are therefore able to remove the limit on authorised share capital by passing an ordinary shareholders resolution to remove reference to authorised share capital from the constitutional documents.

Authority to Allot Shares

Provided that both before and after the allotment, a private company has only one class of shares, the directors may exercise their power to allot shares without prior shareholder approval. Private companies may therefore remove any reference to authority to allot shares from their articles of association in order to take advantage of this new provision.

Changing the Company Name

Directors may now change a company's name without approval from shareholders provided they are allowed to do so by the articles of association. This is a particularly useful new facility.

Redemption and Purchase of Own Shares

Private companies will no longer require articles of association to give directors authority to issue redeemable shares (public companies still require provision in their articles). Limited companies can also purchase their own shares unless there is a prohibition or restriction in the articles preventing them from doing so.

Consolidation and sub-division of share capital

Unless it is prohibited by a the articles, a company will no longer be required to obtain permission from shareholders to consolidate or subdivide its share capital.

It is therefore recommended that existing companies consider the amendments required to their articles of association now so that following 1st October 2009 they are able to take advantage of the new provisions and correctly reflect the current law where provisions of the new Act may already be in force (e.g. enhanced rights of proxies).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.