The final provisions of the Companies Act 2006 came into force in October 2009. The Act heralded by biggest shake up of British company law in over a generation. Some of these changes related directly to the preparation of financial information and the position of auditors and were well documented in the accountancy journals and professional updates. However, many of the more general changes to company law that were less well publicised to the accountancy profession also impact directly upon the work undertaken by accountants in small and medium practices. In this presentation (which was originally delivered to accountancy firms and their professional bodies during 2010) company law specialist Martin Frost of Denison Till solicitors highlights some of the key changes the 2006 Act introduced. Martin points out where accountants and their director and company clients can take advantage of the new provisions to reduce bureaucracy and costs. He also flags up where the bear-traps lie for the unwary!

1. 2006 and All That –
A few things all accountants need to know about the
Companies Act
Martin Frost – Partner (Corporate)

2. The Companies Act 2006
• Longest Act is British history
• To “reform and restate” company law
• Replaces and repeals the Companies Act 1985
• Final provisions came into force on 1st
October 2009

3. Key points
• Modernises company law (e.g. Facilitate the use of
electronic communication)
• New code of directors duties
• Simplifies and deregulates (particularly for private
companies)
• No need for AGMs
• No need for Company Secretaries
• Abolishes “financial assistance” restrictions

4. What does this mean for accountants?
• A number of very specific changes to the law relating to
financial information and auditors including:
• Rules governing preparation of accounts
• Auditors liability agreements
• Signing audit reports
• Filing deadlines
• But many general changes will also impact on accountants
• New rules and procedures
• New terminology and concepts
• New opportunities and new dangers

5. Offences, Fines and Penalties
• In 2008 Companies House took over £73m in penalties
• About 2,000 directors prosecuted each year
• 220 offences under CA 2006 (49 new offences)
• Companies House compliance team substantially
increased
• Companies House to become more aggressive?

6. Offences, Fines and Penalties
Late Accounts Penalties
Length of delay (measured from
the date the accounts are due)
Private
company
Public
company
Not more than 1 month £150 £750
More than 1 month but not more than
3 months
£375 £1,500
More than 3 months but not more
than 6 months
£750 £3,000
More than 6 months £1,500 £7,500

7. Offences, Fines and Penalties
Late Accounts Penalties
• Double Trouble!
• The late filing fees will be doubled in cases where:
• The accounts are filed late under the Companies Act
2006; and
• The previous year’s accounts under the 2006 Act were
also late.

8. Offences, Fines and Penalties
• New general offence of filing false, deceptive or
misleading documents at Companies House (s.1112)
• Beware clients’ “self-help” solutions
in shareholders disputes

9. New Companies House forms
• Approx 200 new forms
• Can be downloaded from Companies House website
(www.companieshouse.gov.uk)
• Replace existing forms
• Incorrect format will be rejected!

10. New Companies House forms
• Prefixes to identify type of event (i.e. AP, AD, SH etc)
• Designed to be more user friendly
• Longer
• Many forms require more information
• Must use black ink!

11. New Companies House forms:
The “Statements of Capital” minefield
• New concept appearing on many new forms (including annual
returns and share returns)
• Can prove particularly difficult where a company has:
• Multiple classes of shares with differing rights
• Complex financial history to the shares (e.g. share premium
accounts, different amounts paid on the same class of share)
• Lack of clear guidance and further amendments to the legislation
and forms may yet be required
• Until then BIS advise companies and their advisers to “do what they
can” to complete the forms!

12. New Companies House forms:
The “Statements of Capital” minefield
• Companies House have produced further guidance and
sample wording on their website for companies with
“simple” share structures that have Model Articles
• Institute of Chartered Secretaries and Administrators
have also published helpful advice on their website
(www.icsa.org.uk)

13. Single Alternative Inspection Location (“SAIL”)
• Alternative to keeping certain records at Registered
Office
• Single location for all statutory records
• Same part of UK as the company is incorporated in
• Must notify Companies House
• Address of SAIL
• Records kept there
• Have notice visible to visitors

14. Directors residential addresses
• Directors can now provide service addresses
• Still required to provide residential address to
Companies House but this does not appear on the public
record
• Make sure you fill the forms in correctly!
• Limited use for existing directors

15. Changed format for statutory books
• Register of Members should only include service
addresses
• Separate Register of Directors’ Residential Addresses
• No longer a requirement for Register of Directors
Interests
• Various minor changes to information to be recorded
• Time to invest in new templates?

16. New format of Memorandum & Articles
• Three sets of new “Model Articles” replace “Table A”
• New short form Memorandum
• Cannot be amended after incorporation
• For existing companies all provisions of the
Memorandum now “deemed” to form part of the Articles
• Articles (as amended) now constitute constitution

17. New format of Memorandum & Articles
• Take extra care when amending existing Articles
• Don’t delete “invisible” deemed articles by mistake
• Make sure the Articles continue to have a limited liability
statement …
… otherwise the shareholders liability is unlimited!!

18. New rules of issuing shares
• New default position on issuing shares
• For companies incorporated after 1st
October 2009 with
only one class of shares:
• Directors automatically authorised to issue shares
• No requirement for shareholder authority
• No limit on time or number of shares
• Authorised share capital abolished for post-1.10.09
companies

19. New rules of issuing shares
• How do your standard shelf companies deal with this?
• Make sure your clients know the new rules
• Can amend the Articles to set out the position you want
• More important than ever to get a shareholders
agreement

20. Notices & Resolutions (Part 13)
• Amended statutory requirements for wording to appear
on notice forms (i.e. appointing proxies for AGMs)
• New statutory written resolution procedure (which
overrides any conflicting provisions in the Articles)
• Directors initiate the process
• Passed as soon as the relevant majority approves
• No need for unanimous consent

21. Loans to directors now permitted (s.197)
• No longer illegal for companies to
• Make loans to director; or
• Provide guarantees to support loans to directors
provided shareholder approval is obtained
• Must also circulate “memorandum of lending”
• Nature of transaction
• Amount and purpose of loan
• Extent of company’s liability

22. New out of court share capital reduction
(Part 17 Chapter 10)
• New procedure to enable reduction of share capital without having
to go going to court
• Includes share premium and capital redemption account
• Requires
• Solvency statement from the directors
• Special resolution of shareholders
• Excess share capital converted to distributable reserves
• Can then be distributed back to shareholders
• Very useful in practice

23. Conclusion
• Make sure you refer to the correct law
• Can’t simply recycle last year’s documents
• Take advantage of the new provisions
• Avoid the bear-traps
• And if in doubt …
…contact your friendly neighbourhood corporate
lawyers!

24. Denison Till solicitors
• A leading Yorkshire-based commercial law firm
operating nationally and internationally
• Specialist departments comprising: corporate and
commercial, commercial property, employment, dispute
resolution, construction, ecclesiastical, family, wills &
trusts

25. What people say about us …
The Legal 500 “The outstanding lawyers at Denison
Till treat you like a human being
rather than just a case, which is
extremely reassuring. They are
absolute heroes”.
Chambers & Partners “Exceptionally organised and
receptive. This York group keeps
abreast of fast-moving market trends”.
Client comment “Like a top-flight Leeds practice, but at
York prices”.

26. Contact details
Denison Till
Stamford House
Piccadilly
York
YO1 9PP
Tel: 01904 611411
Fax 01904 646972
www.denisontill.com
Martin Frost
Partner
mfbf@denisontill.com