The Companies Act 2006 finally came into full force with effect from the 1st of October 2009, repealing the Companies Act 1985 and associated legislation. This legislation impacts every company in England and Wales.
The act brings in new model Articles of Association for companies registered after that date. These will apply in the absence of bespoke Articles being filed when the company is registered.
If your company was registered before 1st October 2009, you will not automatically benefit from the relaxations in the legislation if your existing Articles contain restrictions which override the legislation. Alternatively, if your company has been registered since October 1st 2009, you may not want some of the relaxations to apply. You may therefore wish to consider whether now would be a good time to review your Articles of Association to bring the changes on board or exclude them.
If you can answer YES to any of the following questions, your current Articles would probably benefit from a revamp:
- Do you want to remove the limit on the number of shares the company may issue?
- Do you want the directors to have the freedom to allot shares without having to go to the members for approval?
- Do you want the power of the directors to allot shares without going to the members for approval to be restricted?
- Do you wish to dispense with the requirement to appoint a company secretary?
- Do you still want to be required to hold an Annual General Meeting?
- Do your articles contain reference to the Companies Act 1985?
- Do your articles contain references to Extraordinary General Meetings?
- Do you want to specify a method of changing the name of your company in the articles without passing a special resolution?
- Do you want the company to have unrestricted objects (i.e. Power to do what it chooses)?
- Do you want to make greater use of the internet and other electronic means to communicate with members and other to save resources?
- Do you want directors and members to be able to attend meetings by electronic means?
These are just examples of typical questions that may be relevant to your business. Whilst undergoing this process, it would also be a great opportunity to consider whether there are other aspects of your Articles which could benefit from an overhaul such as exit provisions which may not seem important till you need them.
Legal Services for Business provides advice on company law to businesses across London, Hampshire, Surrey and Berkshire. My details are listed below should you wish to contact me.