New Companies Bill receives Royal Assent. By Nichola Ross Martin

Posted by AccountingWEB PM | on Wed, 15/11/2006 - 16:03 7188 1 comment

The new Companies Bill received Royal Assent last week. Aside from being massive in size, it introduces sweeping changes to simplify and improve company law. The 1985 and 1989 Companies Acts, and the 2004 Companies (Audit, Investigations and Continuity Enterprise) Act have been substantially rewritten to make it easier to understand and more flexible - especially for small businesses.

Trade secretary Alistair Darling said: "This Act will help ensure Britain remains one of the best places in the world to set up and run a business.

Continued...

Transition Rules

steveoneill | Fri, 17/11/2006 - 14:09 | Permalink

I am with Nichola on reserving judgement on the effectiveness of the Act until the small print is finally known. There is no doubt theat there are some benefits to the smaller company contained within the Act, but there are many pitfalls.

The use of service addresses being available to any director was described by the members of the House of Lords as being "a rouges charter", ID fraud being mainly paper based and it contradicts one of the main aims of the act which was "transparancy". It also contradicts in some areas the implimentation of the 3rd ML Directive.

Existing companies will not benefit from the majority of Act on its implimentation. They will be deemed to remain virtually as they were. I have read and commented on the proposed transition rules for existing companies, which will not be released until Feb 07. The main thrust of them are, if you want to take part in the benefits of the new Act you will have to "opt in". Basically converting your memorandum & Articles from the existing table A to the new standard with any variance that is required.

This may even become a compulsory obligation. Since most of the previous Acts have now been included into the 2006 Act, the question is when will they be repealed? Transition rules by their very nature are to get you from the old to the new over a set period of time.

This means all companies will have a cost of transition at some stage to the new Act. In Australia when they bought in a new Act, it was made compulsory to re-register every company in exisitance. Ours may be of an opt in nature, but if the previous Acts are repealed it is compulsory re-registration by the back door.

Steve O'Neill
Business Tax Centre
Company Registration Agents