The Government’s approach of “think small first” is likely to have a significant impact on private companies and the SME sector when this Bill is enacted. Over 90% of all UK companies are small private entities and the criticism of the current law is that it is too elaborate for the operations of most users.
The approach is to simplify the complexities of company law so that smaller companies can operate easier without the Victorian complexities of the past.
Broadly:
- the way companies are formed will change;
- the company’s constitution will in future consist of the articles and resolutions-the objects will effectively disappear;
- a company’s objects will be unlimited so there will be no restrictions on what it can do;
- new simpler forms of model articles will be introduced;
- authorised share capital will be abolished;
- AGM’s will no longer be mandatory;
- directors would be able to withhold private addresses from the public register;
- added protection will be afforded to minority shareholder so less than 25% with entrenched rights being granted;
- directors’ duties will be laid out in statute for the first time;
- these may include controversially a “duty to the community”;
- extraordinary and elective resolutions are to be abolished;
- the procedures for written resolutions will be simplified and
- members’ resolutions will be allowed by was of email or website signatures.
All in all a set of very radical and extensive changes that not so much tinkers with the existing laws but rewrites them comprehensively.
The changes are welcomed and should make the operation of company affairs much easier in the future.
