The Companies Bill has received royal assent and introduces sweeping changes that aim to simplify company law.
Now known as the Companies Act 2006, the government claims the new legislation will help businesses save £250m a year, including up to £100m for small businesses.
The first measures to be introduced will include provisions on company communications to shareholders. These will be introduced in January 2007, saving businesses more than £50m by permitting the use of electronic communications rather than paper.
Trade and industry secretary Alistair Darling said: “This act will help ensure the UK remains one of the best places in the world to set up and run a business. It makes sure the regulatory burden on business is ‘light-touch’, promotes shareholder engagement and will help encourage a long-term investment culture in the UK.”
All parts of the Act will be in force by October 2008.
The Act includes measures that:
- give greater clarity on directors’ duties, including making clear that they have to act in the interests of shareholders, but in doing so have to pay regard to the longer term, the interests of employees, suppliers, consumers and the environment
- encourage reporting by companies to be forward-looking, covering risks as well as opportunities, with explicit requirements for quoted companies; and gives
- give all directors and shareholders the option of filing a service address on the public record rather than a private address.
The Act also includes a new offence for recklessly or knowingly including misleading, false or deceptive matters in an audit report. It extends to the whole of the UK, so that there will no longer be a separate regime for Northern Ireland.
This Companies Act 2006 replaces some parts and amends other elements of the 1985 Companies Act.