6 A pril 2008 commencement
In connection with the commencement of most of the provisions of Part 15 (accounts: CA 2006, ss 380–474) and Part 16 (audit: CA 2006, ss 475–539) on 6 April 2008, a number of statutory instruments have been made, as follows (# indicates that the SI (or part of the SI, where shown) applies to companies financial years’ beginning on or after 6 April 2008, so that any provisions revoked or repealed continue to apply for earlier financial years):
Companies (Revision of Defective Accounts and Reports) Regulations 2008 (SI 2008 No 373) #, which set out how the provisions of the CA 2006 are to apply to revised annual accounts, directors’ reports, directors’ remuneration reports and summary financial statements (SFSs) prepared under CA 2006, s 454;
Companies (Summary Financial Statement) Regulations 2008 (SI 2008 No 374 )#, which regulate SFSs;
Companies Act 2006 (Amendment) (Accounts and Reports) Regulations 2008 (SI 2008 No 393) #, which implement in part Directive 2006/46/EC;
Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (SI 2008 No 409) #, which specify the form and content of the accounts and directors’ report of companies subject to the small companies regime under Part 15 of the CA 2006;
Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008 No 410 )#, which specify the form and content of the accounts and reports of companies under Part 15 of the CA 2006, other than those subject to the small companies regime;
Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 (SI 2008 No 489 ; # applies in relation to auditor remuneration);
Statutory Auditors (Delegation of Functions etc.) Order 2008 (SI 2008 No 496) #, which transfers most of the functions of the Secretary of State under Part 42 of the CA 2006 (statutory auditors) to the Professional Oversight Board; and
Companies (Late Filing Penalties) and Limited Liability Partnerships (Filing Periods and Late Filing Penalties) Regulations 2008 (SI 2008 No 497) , which determine the penalties which companies (and LLPs) must pay to the Registrar of Companies if they file their annual accounts and reports late (and which broadly increase late filing penalties from 1 February 2009, for all financial years).
1 October 2008 commencement
The Fifth Commencement Order brings further provisions of the CA 2006 into force on 1 October 2008; the Companies (Trading Disclosures) Regulations 2008 (SI 2008 No 495) have been made, which come into force on that date.
(Thursday, 24 January 2008) Written by Stephen Barc
In November 2007, the Department for Business, Enterprise and Regulatory Reform (DBERR) issued a consultation document on specific policy proposals for the application of the Companies Act 2006 (CA 2006) to limited liability partnerships (LLPs).
Proposed legislative approach
Subject to further views in response to the consultation, the Government proposes to apply the CA 2006 provisions to LLPs, as far as possible to replace those provisions of the Companies Act 1985 (CA 1985) that are currently applied to LLPs.
The document outlines the approach that the Government proposes to take in drafting regulations to apply the CA 2006 provisions to LLPs:
make consequential amendments to the Limited Liability Partnerships Act 2000 (LLPA 2000) resulting from CA 2006, using the power for the purpose in CA 2006, s 1294;
apply specified CA 2006 provisions to LLPs by setting out those provisions in full, as modified to take account of the particular characteristics of LLPs; and
use the powers in Part 15 of CA 2006 (ss 380–474), as applied to LLPs, to make two separate sets of regulations relating to LLP accounts: one relating to the accounts of small LLPs, and one relating to the accounts of medium-sized and large LLPs (thus following the approach being taken for companies).
Proposed amendments
Incorporation
Government policy on the structure and incorporation of LLPs remains unchanged. Therefore, no change is proposed to the incorporation of LLPs, other than to apply the changes relating to members’ residential addresses (see below), and to make consequential amendments to the relevant provisions of LLPA 2000.
Execution of deeds
CA 2006, s 46, on the execution of deeds, restates section 36AA of CA 1985, which was inserted by the Regulatory Reform (Execution of Deeds and Documents) Order 2005 (SI 2005/1906). CA 1985, ss 36 and 36A are applied to LLPs. However, due to an oversight, when section 36AA was inserted it was not applied consequentially to LLPs. The Government proposes to rectify this to ensure clarity and equality with company law as currently applied to companies.
Names
To ensure consistency and clarity, the Government proposes to amend Part 1 of the Schedule to LLPA 2000 to be consistent with Part 5 of CA 2006 (a company’s name), and to apply Part 5 to LLPs to the extent that it is not reflected in the amended Schedule. In the Government’s view, any other approach would create confusion for LLPs and for the public accessing company information.
There could be potential anomalies where a name not accepted under the companies provisions could be allowed under the LLP provisions. Companies House would also encounter difficulties in handling two different regimes.
Members’ residential addresses
The document outlines the significant changes to be introduced by CA 2006 in relation to the public availability of directors’ residential addresses. Information on the LLP members’ addresses is open to abuse in the same way as those of directors.
The Government therefore proposes to apply the provisions of CA 2006 relating to directors’ addresses to LLP members.
Not doing so would lead to inconsistency in the treatment of essentially the same type of information that appears on the register. There may also be an anomaly where a company director is also an LLP member, so that information protected under one requirement would be available to the public under another.
Accounts
As outlined in the February 2007 consultation on the general approach to applying CA 2006 to LLPs (as part of the consultation on implementation of CA 2006 generally), to avoid Companies House operating different systems for companies and LLPs, the Government proposes to proceed to implement the CA 2006 provisions on filing periods and late filing penalties for LLPs (see CA 2006, ss 442(2)(a), 443 and 453) at the same time as for companies in April 2008. The new rules and penalties should apply to all late filings on or after 1 February 2009 .
So far as the other accounts provisions in CA 2006, Pt 15 are concerned, the Government proposes to continue the existing approach of applying to LLPs the rules as they apply to a private company. The proposal is that these changes will be implemented in October 2008 .
Auditors
As stated in the February consultation document, the changes in CA 2006, Pt 16 will be implemented in October 2008 .
The Government proposes to take the same approach as in the current LLP regulations, of applying to LLPs the rules as they apply to a private company, with adaptations to take into account the different internal arrangements of an LLP. In terms of the major changes in Part 16 compared with the corresponding CA 1985 provisions, this means applying the following provisions to LLPs:
signature by senior statutory auditor (CA 2006, ss 503–506);
new offence in connection with audit report (CA 2006, ss 507–509); and
strengthened rules on statements by those ceasing to be auditor (CA 2006, ss 519–525, as they apply to unquoted companies).
On the other hand, the document states that the new power for members of a quoted company to raise audit concerns (CA 2006, ss 527–531) has no application to LLPs. Also, the new provisions on auditors’ liability (CA 2006, ss 532–538) will not be applied, as the general rule making void any limitation (currently in CA 1985, s 310) has never been applied to LLPs.
Statutory auditors
The document points out that the provisions in Part 2 of the Companies Act 1989 (CA 1989) concerning who may act as a company auditor are currently applied to auditors of LLPs. The Government therefore proposes that Part 42 of CA 2006 (which replaces Part 2 of CA 1989) should also apply to those who act as auditors of LLPs.
Dissolution and restoration to the register
Section 1013 of CA 2006 changes the time limits for executing a disclaimer in relation to property that passes to the Crown on dissolution of a company. As such time limits in CA 1985, s 656 are currently applied to LLPs, the Government proposes to apply the changes made by CA 2006 to LLPs.
Chapter 3 of Part 31 of CA 2006 concerns restoration to the register for a company which has been struck off. Most of the sections in CA 1985 on striking off are applied to LLPs. CA 2006, ss 1024–1028 provide a new system of administrative restoration to the register. CA 2006, ss 1029–1032 provide a new single procedure for court restoration replacing the two procedures in CA 1985, ss 651 and 653. The Government proposes to apply the provisions in CA 2006 on restoration to the register to LLPs.
Registrar of Companies (Companies House)
Part 35 of CA 2006 largely replaces Part 24 of CA 1985 setting out the basic functions of Companies House.
As the document states, many of the sections in Part 35 have no equivalent in CA 1985. Of those that do, CA 1985, ss 704–711 and 713–715A have been applied to LLPs. A number of the new provisions in CA 2006, Pt 35 already apply to LLPs and many of those that do not could be applied with only minor modifications. Only a few would require substantive modification.
Many of the Registrar’s functions apply to LLPs in the same way as they apply to companies. The Government proposes that where in practice the functions of the Registrar are common or similar to those for LLPs, those sections that are not automatically applied to LLPs should be applied with any necessary modification.
Service of documents by LLPs
Section 1139 of CA 2006 replaces section 725 of CA 1985; it ensures there is a place at which a document may be served on companies registered under the Act. CA 2006, ss 1140–1142 contain new provisions on the service of documents on directors, secretaries, and others, define “service address”, and qualify requirements elsewhere to give an address. As CA 1985, s 725 applies to LLPs, the Government proposes to apply CA 2006, ss 1139–1142 to LLPs.
Company communications
The document seeks views as to whether the “company communications provisions” (CA 2006, ss 1143–1148, and Schs 4 and 5) should apply to LLPs. If so, would LLPs want to be able to contract out of the new statutory provisions, i.e. make them subject to contrary agreement by the members so that, for example, the members could forfeit their rights to receive hard copies.
If this was supported, the Government would propose to apply these provisions to LLPs in October 2008.
Overseas LLPs
Part 23 of CA 1985 places certain requirements on companies incorporated outside the UK with a place of business or a branch in Great Britain, in relation to registration and disclosure. Parallel provisions exist for Northern Ireland.
Part 34 of CA 2006 contains power to make similar provision by regulations, covering places of business (including a branch) in all parts of the UK.
The document goes on to point out that the current requirements for overseas LLPs with branches in the UK are less onerous than for overseas companies. It asks for views as to whether the application of Part 34 of CA 2006 (and any regulations made under it) should extend to LLPs. One of the principal issues would be how to identify an overseas LLP.
One option would be to extend the provisions to any overseas body that has a legal personality and limited liability but is not a company.
Cross-Border Mergers Directive
The Government proposes to apply the Directive to LLPs from October 2008 .
Other issues raised
The document states that in the Government’s view, the following provisions should not be applied to LLPs (or members of LLPs), and asks whether consultees agree with the Government’s views in each case:
the statutory duties of directors (CA 2006, Pt 10);
derivative actions (CA 2006, Pt 11);
narrative reporting (CA 2006, s 417).
The document states that in forming its response on these issues, the Government took into account the views of respondents to the February 2007 document, the constraints of the regulation- making powers under LLPA 2000, and the policy of applying company law only to the external facing aspects of an LLP and not to the relationship between its members.
Next steps
Comments are requested on the policy proposals in the document by no later than 6 February 2008. The document can be accessed on the DBERR website .
As mentioned above, the Government is proposing to apply the provisions on accounts and audit, cross-border mergers, and possibly e-communications from October 2008 . The plan is to publish draft regulations on these subjects as soon as practicable after 6 February 2008 .
For the main implementation of CA 2006 for LLPs in October 2009 , the aim is to publish draft regulations for consultation in the middle part of 2008 to give LLPs time to adjust to the changes.
From Company Secretary's Review, Issue 19
Article on revised implementation timetable - December 07
(Thursday, 20 December 2007) Written by Stephen Barc
Minister’s statement
On 13 December 2007, the Minister for Competitiveness at the DBERR, Stephen Timms MP, made a further Written Statement to Parliament regarding the commencement of the Companies Act 2006 (CA 2006). This followed his earlier Written Statement on 7 November 2007.
In the December Statement, the Minister stated that, following discussions and meetings with key stakeholders, the Government has decided that most of the provisions listed in the November Statement as subject to consultation, should be commenced with effect from 1 October 2008.
However, one set of provisions subject to consultation will instead be commenced from 6 April 2008, namely sections 811(4) , 812 and 814 (inspection of register of interests in a company’s shares). In addition, sections 121 and 128 (register of members: removal of entries relating to former members) will also be commenced from 6 April 2008; these provisions are in Part 8 (a company’s members: CA 2006, ss 112 to 144 ), the remainder of which is scheduled for commencement on 1 October 2009.
The Minister also announced that, in view of the strength of business representations and of further advice from the Registrar of Companies, the Government has decided in addition to commence, with effect from 1 October 2008, some provisions not listed in the November statement as subject to consultation. These provisions (sections 544 , 641(1)(a) and (2)– (6) , 642 , 643 , 652 and 654 ) relate mainly to the new procedure for private companies to make capital reductions supported by a solvency statement instead of by a court order; they are in Part 17 (a company’s share capital: CA 2006, ss 540 to 657 ), the remainder of which is again scheduled for commencement on 1 October 2009.
The December Statement comments that stakeholders highlighted the major benefit to business of implementing this new procedure in 2008. The Government had originally not proposed this, because it would require some changes to Companies House systems and processes. However, the Government have looked at this again in the light of the points made by business, and the Registrar of Companies believes that the necessary changes can be made by October 2008.
Commencement Order No 5. Subsequently, as promised by the December Statement, on 17 December 2007 a commencement order (the Companies Act 2006 (Commencement No 5, Transitional Provisions and Savings) Order 2007 (SI 2007 No 3495) ) as made in respect of all
provisions to be commenced in 2008, other than those relating to
capital reduction supported by a solvency statement and the removal of
special provisions about accounts and audit for charitable companies.
The capital reduction provisions (including section 654 o n distributions of reserves
arising from a capital reduction) will be commenced through a separate
commencement order to be laid in draft in 2008. There will also be a
separate commencement order on the audit of small charitable companies.
The remainder of this article sets out the provisions commencing in April 2008 and October 2008.
Provisions commencing on 6 April 2008
CA 2006, s 44 (execution of documents);
CA 2006, ss 121 and 128 (register of members: removal of entries belonging to former members);
Part 12 (CA 2006, ss 270 to 280 — company secretaries), other than s 270(3)(b)(ii) and 275 to 279 ;
Part 15 (CA 2006, ss 380 to 474 — accounts and reports), other than ss 417 and 463 ;
Part 16 (CA 2006, ss 475 to 539 — audit), other than sections 485 to 488 ;
Part 19 (CA 2006, ss 738 to 754 — debentures);
Part 20 (CA 2006, ss 755 to 767 — private and public companies);
Part 21 (CA 2006, ss 768 to 790 — certification and transfer of securities);
CA 2006, ss 811(4) , 812 and 814 (inspection of register of interests in a company’s shares);
Part 23 (CA 2006, ss 829 to 853 — distributions);
Part 26 (CA 2006, ss 895 to 901 — arrangements and reconstructions);
Part 27 (CA 2006, ss 902 to 941 — mergers and divisions of public companies)
CA 2006, s 1172 (references to requirements of CA 2006);
Part 42 (CA 2006, ss 1209 to 1264 — statutory auditors);
CA 2006, s 1282 (payment of expenses of winding up, in effect reversing Re Leyland Daf ).
Provisions commencing on 1 October 2008
CA 2006, ss 69 to 74 (objection to company names);
CA 2006, ss 82 to 85 (trading disclosures);
CA 2006, ss 155 to 159 (provisions relating to corporate directors and under-age directors);
CA 2006, ss 175 to 177 , 180(1), (2) (in part) and 4(b), and 181(2) and (3) (general duties of directors in respect of conflicts of interest, and supplementary provisions);
CA 2006, ss 182 to 187 (declaration by a director of an interest in an existing transaction or arrangement);
control of political donations and expenditure: provisions relating to independent election candidates;
CA 2006, ss 544, 641(1)(a) and (2)–(6), 642, 643, 652 and 654 (share capital provisions; see above);
CA 2006, s 1157 (power of court to grant relief in certain cases);
CA 2006, ss 1277 to 1280 (information as to exercise of voting rights by insitutional investors);
repeal of the restrictions under the Companies Act 1985 on financial assistance for acquisition of shares in private companies, including the ‘whitewash’ procedure.
