Introduction to The Companies Act 2006 - entrepreneurs thinking of incorporating a Limited company, need to be aware of changes in UK law in regards to The Companies Act 2006. The following summary is not comprehensive, and does not purport to legal advice relating to any particular circumstances. The Companies Act is the main piece of legislation impacting small businesses. It was designed to keep pace with current changes in the business world, by updating existing company laws that date back decades.
History of The Companies Act - there has been legislation relating to UK companies and the principles of limited liability for over 150 years. The Companies Act 2006 is designed to update The Companies Act 1985 in order to make it simpler and easier to run a small company. It has also helped to involve shareholders in the investment culture. In 1998, The Company Law Reform Group was established to determine the best way in which company law could be updated. A White Paper followed in 2005. Following consultation, the Bill gained approval in 2006 and came into force in 2009.#
By having a general understanding of company law, new Company Directors are better placed to conduct themselves appropriately in the course of setting up and running a new business. Customers will have confidence in companies that adhere to the rules regarding company registration, submission of company accounts and annual submission of other statutory forms.
Key Provisions of The Companies Act 2006 - the main changes relating to this recent addition of the Act include:-
How The Act Helps Start-Ups - the new Act will have the impact of reducing the amount of paperwork for entrepreneurs setting up a new business. It will also provide a greater degree of personal privacy, as Directors will no longer need to disclose their identity details on the public Companies House Register. Instead, the option of filing a service address on the public record can be used to prevent fraudsters from obtaining signatures and personal details of individuals from the register. The simplification of the rules, for specifying company objects as well as Directors duties, will help new Directors better understand their obligations and responsibilities. Many existing small businesses complain about the level of red tape in taxation law and company law, (in terms of annual submissions and declarations). The Act should help reduce the volume of paperwork required on a regular basis.