Updates to the Companies Act

On 6 April this year, a further raft of Companies Act 2006 legislation came into force. Whilst much of it simply restated the existing law, there were a number of more notable changes:

  • Company secretaries - private companies no longer need to have a company secretary. It is now possible to have a company that only has one director. In tandem, the rules on execution of document s have also changed . Whereas previously the execution of documents required the signatures of two officers, companies with only one director and no company secretary can now execute documents with a single witnessed signature.
  • Accounts filing deadlines - for accounting periods starting on or after 6 April 2008, private companies now have nine months (previously 10 months) after the end of the period in order to file their accounts at Companies House. For public companies, the equivalent filing deadline is reduced to six months (previously seven months).
  • Annual general meetings - private companies are no longer required to hold an AGM and lay the accounts before the shareholders at that meeting. Companies must still, however, send accounts to shareholders by the end of the filing deadline at Companies House or by the actual filing date if earlier.
  • Change in company size limits - for accounting periods starting on or after 6 April 2008, the turnover and balance sheet thresholds for companies to qualify as small and medium sized have increased. For small companies, the thresholds have increased to £6.5m for turnover and £3.26m for the balance sheet total; and for medium-sized companies, the thresholds have increased to £25.9m and £12.9m respectively.
  • Increase in audit exemption threshold - for accounting periods beginning on or after 6 April, the turnover and balance sheet thresholds for audit exemption have also increased to £6.5m and £3.26m respectively.

On 1 October 2008, there will be further important changes affecting private companies, such as abolition of the rules restricting financial assistance for the acquisition of a company’s own shares, simplified procedures for capital reductions and a new minimum age of 16 for directors.

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