Newsletter Spring 2007
The Companies Act 2007. This is a major new piece of legislation which makes the first significant changes to the law relating to companies for 20 years. It repeals or replaces virtually all of the 1985 and 1989 Acts. Some of those changes have already come into force-some won't until 2008. These are the highlights:
Company documentation. Since 1 January 2007 all company documentation-including invoices, emails and websites-must disclose the company’s registered name and number, place of registration and registered office address. All of this information should already be included but review your documentation to make sure.
Electronic communication. Again since 1 January 2007 it is permissible to notify shareholders electronically, even though the old Companies Act specifies “writing”. This is potentially an enormous saving in time and paper. However, before this can be done the shareholders have to approve it by a simple majority in a properly constituted meeting, and even die-hards can still insist on paper notification.
M and A. The memorandum of association will become simply the present subscription clause; the present table A will be replaced by one of three sets of model articles which will operate by default. The private company version consists of just 27 clauses instead of table A’s 118.
Company secretaries. These will no longer be required for private companies, and directors will be able to file a service address which is different from their home address to avoid the abuse of unrestricted public access to potentially sensitive information.
Directors’ duties. This codifies the case law, and applies seven “general duties”. One is particularly interesting: directors will owe a duty to their company to promote its success for the benefit of members as a whole. They must have regard, amongst other matters, the long-term implications of their decisions, the impact on the community and the environment, and the desirability of maintaining a reputation for high standards of business conduct.
Claims by members against wrongdoing directors. This has always been difficult, historically, as it was necessary to prove that there was a “fraud on the majority”. This has now been extended to include “wrongdoing” generally. It will still be necessary to prove that the member bringing the claim has a prima facie case however, and to get the permission of the Court to continue with the claim.
Occupational stress claims. Recent case law has shown that, unless there are exceptional circumstances, these claims are very unlikely to succeed. But the House of Lords in the case of Majewski has approved the principle of bringing a claim for personal injuries as a result of workplace bullying under the Protection from Harassment Act 1997. The judgment has serious implications for both employers and employees. There’s a detailed article about the subject on our website, linked from the page at www.cleggssolicitors.com/stop_press.htm.
Data Protection Act. It is worth reminding yourself that if you hold personal information electronically-for instance about your staff, or your Clients-you should probably be registered under the Act. It only costs £35, but a fine can run to thousands of pounds. There are exemptions but it’s not worth taking a chance on it!