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Corporate Finance

Companies Act 2006 - Eighth (and final) commencement order published

The Companies Act 2006 (Commencement No. 8, Transitional Provisions and Savings) Order 2008 was made by Parliament on 6 November 2008. This is the final Companies Act 2006 (the Act) commencement order and will bring the remaining provisions of the Act into force on 1 October 2009.

Among the provisions being brought into force in October 2009 are those relating to the abolition of authorised share capital, the allotment of shares by private companies, disclosure of directors and secretaries addresses and the new style memorandum of association.

It should, however, be noted that the Act is likely to be subject to further limited changes when the Government implements the EU Shareholders' Rights Directive in August 2009. Further, the Government has indicated that, at the same time, it intends to correct some anomalies in the existing law on shareholders' rights contained in the Act.

View our more detailed Companies Act 2006 implementation timetable.

28 November 2008

FSA Market Watch newsletter - Issue No. 29

The FSA published Market Watch No. 29 on 30 October 2008. The newsletter contains an update from the FSA in relation to the unauthorised trading at Société Générale and the FSA's assessment of market abuse controls within hedge funds. We give an overview of these two sections of the newsletter below.

Market Watch No. 29 also covers the Alternative Instrument Identifier (that is, the data firms need to provide when reporting transactions in derivatives admitted to trading on regulated markets where the ISIN is not the industry method of identification) and a reminder of firms' transaction reporting requirements under the Markets in Financial Instruments Directive (MiFID).

Unauthorised trading at Société Générale: update
Following Société Générale's announcement in January 2008 that unauthorised trading had been identified within the organisation, the FSA contacted a number of firms in London to discuss informally their own reviews of the systems in place to deter unauthorised trading, and, where it occurrs, to detect it promptly and take corrective action. The FSA provides an update on the work it has undertaken since it published its initial response to Société Générale's rogue trader incident in Market Watch No. 25 back in March 2008. The FSA reports that the majority of firms have not found extensive control failures. The three most common factors identified by firms as potential gaps in their risk management were mandatory vacation periods for traders, access to IT systems and "cancel and correct" trades. The FSA also considers how firms can improve the time taken to identify abnormal trading.

Market abuse controls: hedge fund managers
In Market Watch No. 24 published in October 2007, the FSA reported on hedge funds' market abuse control procedures following visits to a number of hedge fund managers in 2007. The FSA has now provided some additional observations following visits to a wider cross-section of hedge fund managers. It highlights examples of good practice as well as areas where there is scope for improvement. The newsletter focuses on particular areas, namely, culture and senior management responsibility, compliance procedures and the use of consultants, control of inside information, monitoring of trading activity, training, personal account dealing and telephone taping/ mobile phone policies.

View Market Watch No. 29 (12 page pdf).

28 November 2008

FSA Market Watch newsletter - Issue No. 30

The FSA published Market Watch No. 30 on 19 November 2008. The newsletter reports on the FSA's thematic review of the firms' policies relating to market rumours and the interaction between credit default swaps and the market abuse regime. We give an overview of these two sections of the newsletter below.

Market Watch No. 30 also reports on the regulatory issues that arise where UK based trading platforms want to allow intermediary firms to offer clients direct access to their markets through a system known as "sponsored access".

Market rumours
In Market Watch No. 26 published in April 2008 the FSA announced that it had begun a review of firms' policies relating to market rumours. Market Watch No. 30 sets out the FSA's findings in the following three main areas:

  1. Firms' policies on rumours: firms' should adopt formal guidelines and policies on handling rumours. Such policies shall include:
    • a definition of market rumours;
    • a clear prohibition on originating rumours;
    • a clear prohibition on spreading rumours about competitors to win new business;
    • limitations on whom and in what circumstances rumours can be passed on with appropriate disclaimers;
    • internal procedures that need to be adhered to (including compliance/senior management involvement when acting on the basis of or communicating rumours);
    • a warning that in nervous and volatile markets extra caution needs to be taken when handling rumours.  

    If rumours are passed on (inside or outside a firm) the origin of the rumour should be sourced where possible, the information should be clearly stated to be a rumour, no additional credence or embellishment should be given to the rumour and it should be clearly stated that the information is unsubstantiated/ not verified.

  2. Training and communication of policies: formalised training programmes help place handling of rumours higher on the compliance agenda and ensure staff learn about any new policies and measures that are put in place. Senior management should emphasise the importance of training in this area and remind staff about the need to comply with rules on handling rumours. This is particularly important in nervous and volatile markets, when both the opportunity for and the adverse impact of spreading rumours increase.
     
  3. Monitoring firms' communications and trading: monitoring trading activities as part of firms' general surveillance practices is a strong tool in the fight against market abusive behaviour.

A helpful summary of industry best practice on handling rumours is set out on page 9 of Market Watch No. 30.

Credit default swaps and the market abuse regime
The FSA indicates that it sometimes receives questions as to whether credit default swaps (CDSs) are caught by the UK market abuse regime. The FSA states that although CDSs are not admitted to trading on a prescribed market, most CDSs are likely to be caught by the UK market abuse regime. For example, CDSs will be caught by the insider dealing and disclosure of inside information provisions where they are 'related investments', that is investments whose price or value depends on that of a qualifying investment.

View Market Watch No. 30 (13 page pdf).

28 November 2008

ICAEW - Guidance on financial and accounting duties and responsibilities of directors

In October 2008, the Institute of Chartered Accountants in England and Wales (ICAEW) issued Technical Release 06/08 entitled "Financial and Accounting Duties and Responsibilities of Directors". The release provides guidance on directors' duties and responsibilities of a financial or accounting nature. Split into three parts (general duties and responsibilities of directors, financial reporting and accounting responsibilities and other financial responsibilities of directors), the guidance sets out what is considered to be good practice rather than what may be acceptable as the legal minimum.

View the ICAEW guidance (79 page pdf).

28 November 2008

ICSA - Guidance on corporate governance role of the company secretary

The Institute of Chartered Secretaries and Administrators (ICSA) has published an updated version of its paper on the role of the company secretary entitled "ICSA Guidance on Corporate Governance Role of the Company Secretary". The paper, published on 24 October 2008, draws together and summarises a company secretary's main responsibilities in the area of corporate governance including responsibilities derived from the Combined Code on Corporate Governance, statutory and regulatory compliance and corporate responsibility.

View the ICSA Guidance on Corporate Governance Role of the Company Secretary (5 page pdf).

28 November 2008

Companies Act 2006 - Implementation timetable

The table below is intended to provide guidance on the commencement timetable for the Companies Act 2006.

This table was last updated on 28 November 2008. Whilst it cannot be considered definitive, the table has been compiled based upon the first, second, third, fourth, fifth, sixth, seventh and eighth Companies Act 2006 commencement orders.  Future commencement dates may be subject to change. Certain provisions of the Act are subject to transitional provisions which are outside the scope of the table below.

The orange highlighting indicates those provisions which are already in force.

 Part   Commencement Date
1  General introductory provisions (sections 1 to 6) 1 October 2009
Exceptions:  
  • section 2 (The Companies Acts)
6 April 2007
2  Company formation (sections 7 to 16) 1 October 2009
3  A company's constitution (sections 17 to 38) 1 October 2009
Exceptions:  
  • section 17 (a company's constitution) which came into force so far as necessary for the purposes of those provisions brought into force in October 2007 and again in April 2008 so far as necessary for the purposes of those provisions brought into force in April 2008
1 October 2007
  • sections 29 (resolutions and agreements affecting a company's constitution) and 30 (copies of resolutions or agreements to be forwarded to registrar)
1 October 2007
4  A company's capacity and related matters (sections 39 to 52) 1 October 2009
Exceptions:  
  • section 44 (execution of documents)
6 April 2008
5  A company's name (sections 53 to 85) 1 October 2009
Exceptions:  
  • sections 69 to 74 (similarity to other name in which person has goodwill)
1 October 2008
  • sections 82 to 85(1)(b) (trading disclosures)
1 October 2008
6 A company's registered office (sections 86 to 88) 1 October 2009
7  Re-registration as a means of altering a company's status
(sections 89 to 111)		 1 October 2009
8  A company's members (sections 112 to 144) 1 October 2009
Exceptions:  
  • sections 116 to 119 (rights to inspect and require copies of the Register of Members)
1 October 2007
  • sections 121 (removal of entries relating to former members) and 128 (time limit for claims arising from entry in register)
6 April 2008
9  Exercise of members' rights (sections 145 to 153) 1 October 2007
10  A company's directors (sections 154 to 259) 1 October 2007
  Exceptions:  
  • sections 155 to 159 (underage and natural directors)
1 October 2008
  • sections 162 to 167 and 240 to 246 (directors' residential addresses)
1 October 2009
  • sections 175 to 177 and 182 to 187 (directors' conflict of interest duties)
1 October 2008
  • sections 180(1), (2) and (4)(b) (consent, approval or authorisation by members) and 181(2) and (3) (modification of provisions in relation to charitable companies)
1 October 2008
  • section 247 (power to make provision for employees on cessation or transfer of business)
1 October 2009
11  Derivative claims and proceedings by members (sections 260 to 269) 1 October 2007
12  Company secretaries (sections 270 to 280) 6 April 2008
Exceptions:  
  • section 270(3)(b)(ii) (private company not required to have secretary)
1 October 2009
  • sections 275 to 279 (provisions applying to private companies with a secretary and to public companies)
1 October 2009
13  Resolutions and meetings (sections 281 to 361) 1 October 2007
Exceptions:  
  • sections 308 (manner in which notice to be given), 309 (publication of notice of meeting on website) and 333 (sending documents relating to meetings etc in electronic form)
20 January 2007
  • sections 327(2)(c) (notice required of appointment of proxy etc) and 330(6)(c) (notice required of termination of proxy's authority)
Not being brought into force
14  Control of political donations and expenditure (sections 362 to 379) 1 October 2007
Exceptions:  
  • section 362(a) (introductory) and the words "and to independent election candidates"
1 October 2008
  • section 363(2)(a) (political parties, organisations etc to which this part applies) and the words "or an independent election candidate to whom"
1 October 2008
  • section 363(3) (political parties, organisations etc to which this part applies)
1 October 2008
  • section 363(4) (political parties, organisations etc to which this part applies) and the words "or independent election candidate" and "independent candidate"
1 October 2008
  • section 364(3) (meaning of "political donation")
1 October 2008
  • section 365(1)(a) and (b)(i) (meaning of "political expenditure") and the words "or an independent election candidate"
1 October 2008
  • section 366(1)(a) (authorisation required for donations or expenditure) and the words "or to an independent election candidate"
1 October 2008
  • section 367(3)(a) (form of authorising resolution) and the words "or independent election candidates"
1 October 2008
  • section 378(2) (donations not amounting to more than £5,000 in any twelve month period) and the words "or to an independent election candidate"
1 October 2008
15  Accounts and reports (sections 380 to 474) 6 April 2008
Exceptions:  
  • section 385 (quoted and unquoted companies) which came into force in so far as necessary for the purposes of those provisions brought into force in October 2007
1 October 2007
  • section 417 (contents of directors' report: business review)
1 October 2007
  • section 463 (liability for false or misleading statements in reports)
20 January 2007
16  Audit (sections 475 to 539) 6 April 2008
  Exceptions:  
  • sections 485 to 488 (appointment of auditors by private companies)
1 October 2007
17  A company's share capital (sections 540 to 657) 1 October 2009
Exceptions:  
  • section 540(1) and (4) (shares) which came into force so far as necessary for the purposes of those provisions brought into force in April 2008
6 April 2008
  • section 544 (transferability of shares)
6 April 2008
  • sections 545 (companies having a share capital), 546 (issued and allotted share capital), 548 (equity share capital) and 629 (classes of shares) which came into force so far as necessary for the purposes of those provisions brought into force in October 2007 and again in April 2008 so far as necessary for the purposes of those provisions brought into force in April 2008
1 October 2007
  • section 558 (when shares are allotted) which came into force so far as necessary for those provisions brought into force in April 2007
6 April 2007
  • sections 641(1)(a) and (2)-(6) (circumstances in which a company may reduce its share capital), 642 (reduction of capital supported by solvency statement), 643 (solvency statement), 644 (registration of resolution and supporting documents) and 654 (treatment of reserve arising from reduction of capital)
1 October 2008
 
  • sections 610(2) to (4) (application to share premium account as if it were paid up share capital) and 652(1) and (3) (liability of members following reduction of capital) which come into force so far as necessary for those provisions brought into force in October 2008
1 October 2008
18  Acquisition by limited company of its own shares (sections 658 to 737) 1 October 2009
  Exceptions:  
 
  • section 733(5) and (6) (application to capital redemption reserve as if it were paid up share capital) which comes into force so far as necessary for those provisions brought into force in October 2008
1 October 2008
19  Debenture (sections 738 to 754) 6 April 2008
20  Private and public companies (sections 755 to 767) 6 April 2008
21  Certification and transfer of securities (sections 768 to 790) 6 April 2008
22  Information about interests in a company's shares (sections 791 to 828) 20 January 2007
Exceptions:  
  • sections 811(4) (right to inspect and require copies of entries), 812 (court supervision of purpose for which rights may be exercised) and 814 (register of interests disclosed: offence in connection with request for or disclosure of information)
6 April 2008
23  Distributions (sections 829 to 853) 6 April 2008
24  A company's annual return (sections 854 to 859) 1 October 2009
25  Company charges (sections 860 to 894) 1 October 2009
26  Arrangements and reconstructions (sections 895 to 901) 6 April 2008
27  Mergers and divisions of public companies (sections 902 to 941) 6 April 2008
28  Takeovers etc (sections 942 to 992) 6 April 2007
29  Fraudulent trading (section 993) 1 October 2007
30  Protection of members against unfair prejudice (sections 994 to 999) 1 October 2007
31 Dissolution and restoration to the register (sections 1000 to 1034) 1 October 2009
32  Company investigations: amendments (sections 1035 to 1039) 1 October 2007
33  UK companies not formed under the Companies Acts
(sections 1040 to 1043) 		1 October 2009
Exceptions:  
  • section 1043 (unregistered companies)
6 April 2007
34  Overseas companies (sections 1044 to 1059) 1 October 2009
35  The registrar of companies (sections 1060 to 1120) 1 October 2009
Exceptions:  
  • sections 1060 (the registrar) and 1061 (the registrar's function) which came into force in so far as necessary for those provisions brought into force in April 2007
6 April 2007
  • section 1063 (fees payable to registrar)
6 April 2007
  • sections 1068(5) (registrar's requirements as to form, authentication and manner of delivery), 1077 to 1080 (public notice of receipt of certain documents), 1085 to 1092 (inspection etc of the register), 1102 to 1107 (language requirements: translation) and 1111 (registrar's requirements as to certification or verification)
1 January 2007
  • sections 1068(1) to (4), (6) and (7) (registrar's requirements as to form, authentication and manner of delivery), 1114 (application of provisions about documents and delivery), 1117 (registrar's rules) and 1120 (application of this Part to overseas companies) which came into force so far as necessary for the purposes of those provisions brought into force in January 2007
1 January 2007
  • section 1068(1) to (4), (6) and (7) (registrar's requirements as to form, authentication and manner of delivery) which came into force so far as necessary for the purposes of The Companies (Cross-Border Mergers) Regulations 2007
15 December 2007
  • section 1117 (registrar's rules) which came into force so far as necessary for the purpose of enabling rules to be made under that section before the date on which the section is brought into force generally
6 April 2008
36  Offences under the Companies Act (sections 1121 to 1133) 1 October 2009
Exceptions:  
  • sections 1121 (liability of officer in default), 1122 (liability of company as officer in default), 1125 to 1131 (general provisions) and 1133 (transitional provisions) which came into force so far as necessary for those provisions brought into force in January 2007
20 January 2007
  • sections 1121 to 1123 (liability of officer in default) and 1125 to 1133 (general provisions, production and inspection of documents and supplementary) which came into force so far as necessary for those provisions brought into force in April 2007
6 April 2007
  • sections 1121 to 1123 (liability of officer in default) and 1125 to 1133 (general provisions, production and inspection of documents and supplementary) which came into force so far as they apply to offences under Part 14 or 15 of the Companies Act 1985
1 October 2007
  • sections 1121 to 1123 (liability of officer in default), 1125 (meaning of "daily default fine") and 1127 to 1133 (general provisions, production and inspection of documents and supplementary) which came into force so far as necessary for those provisions brought into force in April 2008 and again in October 2008 so far as necessary for those provisions brought into force in October 2008
6 April 2008
  • section 1124 (amendments of the Companies Act 1985)
1 October 2007
  • section 1126 (consents required for certain prosecutions)
6 April 2008
37  Companies: supplementary provisions (sections 1134 to 1157) 1 October 2009
Exceptions:  
  • sections 1134 (meaning of "company records"), 1135 (form of company records) and 1138 to 1140 (duty to take precautions against falsification and service of documents on the company, directors, secretaries and others) which came into force so far as necessary for those provisions brought into force in April 2007
6 April 2007
  • section 1137(1), (4), (5)(b) and (6) (regulations about inspection of records and provision of copies)
30 September 2007
  • sections 1139 (service of documents on company) and 1140 (service of documents on directors, secretaries and others) which came into force so far as necessary for the purposes of those provisions brought into force in April 2008
6 April 2008
  • sections 1143 to 1148 (sending or supplying documents or information)
20 January 2007
  • section 1157 (power of court to grant relief in certain cases)
1 October 2008
38  Companies: interpretation (sections 1158 to 1174) 1 October 2009
Exceptions:  
  • section 1158 (meaning of "UK-registered company") which came into force so far as necessary for the purposes of those provisions brought into force in October 2007

1 October 2007
  • sections 1159 and 1160 (meaning of "subsidiary" and related expressions) which came into force so far as necessary for the purposes of those provisions brought into force in April 2008

6 April 2008
  • sections 1161 (meaning of "undertaking" and related expressions), 1162 (parent and subsidiary undertakings), 1164 (meaning of "banking company" and "banking group"), 1165 (meaning of "insurance company" and related expressions), 1169 (dormant companies) and 1172 (references to requirements of this Act)

6 April 2008
  • section 1167 (meaning of "prescribed")

30 September 2007
  • sections 1168 (hard copy and electronic form and related expressions) and 1173 (minor definitions: general) which came into force so far as necessary for the purposes of those provisions brought into force in January 2007 and again in April 2007, October 2007, December 2007, April 2008 and October 2008 so far as necessary for the purposes of those provisions brought into force in April 2007, October 2007, December 2007, April 2008 and October 2008
1 January 2007
  • section 1170 (meaning of "EEA State" and related expressions)
6 April 2007
  • in section 1173 (minor definitions: general) the definitions of "credit institution" and "working day"

6 April 2008
39  Companies: minor amendments (sections 1175 to 1181) 6 April 2007
Exceptions:  
  • sections 1175 (removal of special provisions about accounts and audit of charitable companies) which came into force so far as it relates to Part 7 of the Companies Act 1985
1 April 2008
  • sections 1180 (repeal of certain provisions about company charges) and 1181 (access to constitutional documents of RTE and RTM companies)
1 October 2009
40  Company directors: foreign disqualification etc (sections 1182 to 1191) 1 October 2009
41  Business names (sections 1192 to 1208) 1 October 2009
42  Statutory auditors (sections 1209 to 1264) 6 April 2008
Exceptions:  
  • sections 1242 to 1244 (registered third country auditors: duties and information)
29 June 2008
43  Transparency obligations and related matters (sections 1265 to 1273) 8 November 2006
44 Miscellaneous provisions (sections 1274 to 1283) 1 October 2009
Exceptions:  
  • sections 1274 (grants to bodies concerned with actuarial standards etc) and 1276 (application of provisions to Scotland and Northern Ireland)
8 November 2006
  • sections 1277 to 1280 (information as to exercise of voting rights by institutional investors)
1 October 2008
  • section 1281 (disclosure of information under the Enterprise Act 2002)
6 April 2007
  • section 1282 (expenses of winding up)
6 April 2008
45  Northern Ireland (sections 1284 to 1287) 1 October 2009
Exceptions:  
  • section 1284 (extension of Companies Act to Northern Ireland) which came into force so far as necessary for those provisions brought into force in April 2007 and again in September 2007, October 2007, December 2007, April 2008 and October 2008 so far as necessary for those provisions brought into force in September 2007, October 2007, December 2007, April 2008 and October 2008
6 April 2007
 
  • section 1286(1)(a) and 2(a) (extension to Northern Ireland of Great Britain enactments relating to limited liability partnerships) which comes into force so far as relating to the application of Part 15 (accounts and reports), Part 16 (audit) and Part 42 (statutory auditors) to limited liability partnerships
1 October 2008
46  General supplementary provisions (sections 1288 to 1297) 8 November 2006
Exceptions:  
  • section 1295 (repeals) which comes into force in stages so far as necessary to repeal existing legislation as appropriate
1 January 2007
47 Final provisions (sections 1298 to 1300) 8 November 2006

28 November 2008

 

28 November 2008