Company Law, Corporate Governance & Corporate Finance - August 2009

Property of a dissolved company: transitional provisions and savings for sections 1012 to 1023
On 29 July 2009, BIS published for consultation a proposal to change the transitional provisions and savings for sections 1012 to 1023 of the Companies Act 2006 (Property of dissolved company). Views are invited on a possible change of approach to the transitional provisions and savings for sections 1012 to 1023 of the Companies Act 2006. The change of approach concerns the time periods for disclaimer by the Crown of title to the property of dissolved companies, which vests in the Crown as bona vacantia. The time periods have changed in the 2006 Act (see section 1013 of the 2006 Act and section 656 of the Companies Act1985).  BIS also proposes that these changes be applied to limited liability partnerships.

Responses should be received by 21 August 2009.
Source: www.berr.gov.uk/files/file52393.pdf
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-----------------------------------------------------------------------------------------------------------------------------------------Shareholder Rights Directive: ICSA guidance on implementation
On 28 July 2009 ICSA published a guidance note (Reference Note 090729) on the implementation of the Shareholder Rights Directive in the UK. The note explains the key changes to the Companies Act 2006, and sets out practice notes and recommendations, including recommended changes to company articles.

The Shareholder Rights Directive aims to facilitate and encourage effective shareholder control in EU companies, a prerequisite of sound corporate governance, by enabling shareholders to exercise their voting rights and rights to information more easily. It is anticipated that its implementation across Europe on 3 August 2009 will also solve some of the problems associated with cross-border voting. The Companies (Shareholders' Rights) Regulations 2009 (the 'Regulations') implementing the Shareholder Rights Directive in the UK take effect on 3 August 2009 and apply in relation to meetings of which notice is given, or first given, on or after that date.

The full set of Regulations and some related Q&A can be found at the website of BIS at:  www.berr.gov.uk/whatwedo/businesslaw/eu-company-law/directives/page49116.htm l
The ICSA guidance note is available at:  www.icsasoftware.com/dl/Shareholder_Rights_Directive.pdf
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-----------------------------------------------------------------------------------------------------------------------------------------Companies Act 2006: final Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009
On 28 July 2009, OPSI published the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009 and accompanying explanatory memorandum. The order was made on 21 July 2009 and will come into force on 1 October 2009.

The Companies Act 2006 received Royal Assent in November 2006 and is being implemented in stages. Many provisions of this Act have already come into force and consequential amendments were made on 6 April and 1 October 2008 using the Companies Act 2006 (Consequential Amendments etc) Order 2008 to deal with most of the earlier implementation, although some of the earlier Commencement Orders contained limited consequential amendments. Virtually all the remaining provisions will come into force on 1 October 2009. The main purpose of this Order is to make consequential amendments to legislation which contains references to earlier Companies Acts, and to the definitions and concepts found in those Acts.

The Statutory Instrument is published on OPSI at: www.opsi.gov.uk/si/si2009/pdf/uksi_20091941_en.pdf  
The explanatory memorandum is available at: www.opsi.gov.uk/si/si2009/em/uksiem_20091941_en.pdf 
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-----------------------------------------------------------------------------------------------------------------------------------------Community interest companies: final Community Interest Company (Amendment) Regulations 2009
On 27 July 2009 OPSI published the Community Interest Company (Amendment) Regulations 2009 and accompanying explanatory memorandum. The regulations are substantially in the same form as the draft regulations published in June 2009. They were made on 21 July 2009 and will come into force on 1 October 2009.

Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 (the "2004 Act") and the Community Interest Company Regulations 2005 (the "2005 Regulations") introduced the community interest company (CIC) which came into existence in July 2005. These regulations amend the 2005 Regulations to reflect legislative and other developments since the CIC form was introduced. These new Regulations rely on powers in the 2004 Act as amended by the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009 which is also due to come into force on 1 October. These Regulations are therefore dependant on the prior approval and making of that Order.

The Statutory Instrument is published on OPSI at: www.opsi.gov.uk/si/si2009/pdf/uksi_20091942_en.pdf 
The explanatory memorandum is available at: www.opsi.gov.uk/si/si2009/em/uksiem_20091942_en.pdf
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-----------------------------------------------------------------------------------------------------------------------------------------The Legislative Reform (Limited Partnerships) Order 2009
On 27 July 2009, OPSI published the Legislative Reform (Limited Partnerships) Order 2009. The order is in substantially the same form as the draft published in June.

The Order will come into force on 1 October 2009 and apply to limited partnerships for which registration applications are received on or after that date.

The Order is available at: www.opsi.gov.uk/si/si2009/pdf/uksi_20091940_en.pdf
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-----------------------------------------------------------------------------------------------------------------------------------------Companies Act 2006 implementation. Changes to constitutional documents, including model articles: a summary of what the new approach means [draft]
Draft guidance for companies on their articles of association was published by BIS on 5 August 2009. It sets out the differences between the model articles under the Companies Act 1985 (Table A) and the new model articles under the Companies Act 2006. It also includes information on changes to other constitutional documents and guidance for existing and new companies on the procedures to follow as a result of these changes.

Detailed guidance is available at: http://www.berr.gov.uk/files/file52470.pdf  
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-----------------------------------------------------------------------------------------------------------------------------------------Disclosure of loans to directors in company accounts: consultation
This consultation, published by BIS on 5 August 2009, concerns section 413 of the Companies Act 2006 (the 2006 Act) which deals with disclosures in the notes to company accounts of advances, credits and guarantees for the benefit of directors. Section 413 replaced section 232 of the Companies Act 1985 for financial years beginning on or after 6 April 2008.

The consultation addresses two related issues:

  • the particular position in respect of the directors of banking companies and the holding companies of credit institutions under section 413(8);
  • the general position relating to directors of other companies.

BIS is seeking views on the level of disclosures relating to directors' loans in the notes to the accounts and in particular on the following three possible options for amending section 413:

  • Option 1: amend section 413(8) to a similar position that existed under the Companies Act 1985, whereby banks would be required to disclose aggregate amounts of loans, guarantees and credit to their directors.
  • Option 2: repeal section 413(8) which would require banks to publish the same level of information of advances, credits and guarantees as required for non-banking companies.
  • Option 3: require more disclosure by all companies, possibly more closely aligned to sections 197-214 of the Companies Act 2006 Act (information to be made available to members when seeking their approval of loans, quasi-loans and credit transactions with directors).

The consultation is relevant to company law experts, accounting experts, and preparers and users of accounts. Responses are required by 23 October 2009.

The consultation paper is available at www.berr.gov.uk/files/file52466.pdf
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-----------------------------------------------------------------------------------------------------------------------------------------The Registrar of Companies (Fees) (Companies, Overseas Companies and Limited Liability Partnerships) Regulations 2009
On 11 August 2009, The Registrar of Companies (Fees) (Companies, Overseas Companies and Limited Liability Partnerships) Regulations 2009 (Regulations) were published on OPSI together with an explanatory memorandum and come into force on 1 October 2009.

The Regulations make provision for fees payable to the Registrar of Companies (Registrar) for:

  • The registration of documents by the Registrar;
  • The inspection or provision of copies of documents kept by the Registrar; and
  • The disclosure of protected information under the Companies Act 2006 relating to directors of companies, directors and permanent representatives of overseas companies and members of limited liability partnerships.

A draft price list was made available on the Companies House web site on 1 July 2009 and customers have been made aware of this. Once the Regulations are made, all references to fees on the relevant forms and references in guidance will be finalised as will the price list.

In addition, subject to the transitional provisions contained in regulations 6, 7, 8 and schedule 5, the Regulations revoke:

  • The Companies (Fees) Regulations (Northern Ireland) 1995;
  • The Companies (Fees) Regulations 2004;
  • The Limited Liability Partnerships (Fees) Regulations 2004; and
  • The Limited Liability Partnerships (Fees) Regulations (Northern Ireland) 2004.

The Regulations also revoke:

  • The Companies (Competent Authority) (Fees) Regulations 2002;
  • The Limited Liability Partnerships (Competent Authority) (Fees) Regulations 2002; and
  • The Limited Liability Partnerships (Records Inspection) (Fee) Regulations (Northern Ireland) 2004.

Separate Statutory Instruments will set fees for Limited Partnerships, European Economic Interest Groupings, European Public Limited-Liability Companies and other entities.

The regulations are published at: www.opsi.gov.uk/si/si2009/pdf/uksi_20092101_en.pdf
The www.opsi.gov.uk/si/si2009/em/uksiem_20092101_en.pdf
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-----------------------------------------------------------------------------------------------------------------------------------------OFT considers wider use of director disqualification powers
On 18 August 2009, the OFT published proposed changes to its guidance on director disqualification orders in competition law cases.

A company director can be disqualified from acting as a director for up to 15 years if his or her company is involved in a breach of competition law and the court considers he/ she is unfit to be involved in the management of a company as a result.

The OFT's guidance currently indicates that the OFT or a regulator would focus on cases where a director was directly involved in a breach of competition law, such as cartel activity. Under the proposed changes, the guidance would indicate that the OFT or a regulator would also focus on cases where a director should have taken steps to prevent a breach or where a director ought to have known of a breach but did not.

Today's consultation also considers a number of other changes to the detail of the OFT's guidance. The consultation period will end on 20 November 2009. explanatory memorandum is available at:

The consultation paper is available at: www.oft.gov.uk/shared_oft/consultations/oft1111con.pdf
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-----------------------------------------------------------------------------------------------------------------------------------------Companies Act 2006: Companies House publishes draft guidance on restricting the disclosure of addresses
On 18 August 2009, Companies House published draft guidance on the making of an application to restrict disclosure of an address or addresses under section 243 or 1088 of the Companies Act 2006. These sections come into force on 1 October 2009. They provide that application may be made for certain addresses on the public record to be made unavailable for public inspection (including those of certain secured lenders) and for the disclosure of protected information (residential addresses of directors, LLP members and directors and permanent representatives of overseas companies) to credit reference agencies to be restricted.

The guidance is in draft format and is subject to change before Oct 2009. In particular, fees and Statutory Instrument (SI) numbers will be added as and when they become available.

The guidance includes details of:

  • Which addresses can be the subject of an application;
  • Who can make an application;
  • The information and evidence that must be supplied with the application;
  • The fee payable for making an application;.
  • Where and how applications should be submitted;
  • What happens pending and following the Registrar's decision.

Companies House guidance is available at: www.companies-house.gov.uk/about/gbhtml/gp7.shtml
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-----------------------------------------------------------------------------------------------------------------------------------------Revisions to the Rules of the London Stock Exchange effective from 19 August 2009
On 18 August 2009, the London Stock Exchange published two notices making amendments to the Rules of the London Stock Exchange (LSE Rules). The amendments are effective from 19 August 2009:

  • Notice N37/09, Confirmation of rule amendments, together with attachment 1 and attachment 2.
  • Notice N38/09, Confirmation of rule amendments - AIM Secondary Market Registered Organisations, together with attachment 1.

Notice N37/09
Notice N37/09 outlines a number of amendments and additions to existing rules and guidance, as part of a periodic review of the Rules of the LSE Rules. Member firms should note that most of the amendments outlined in the attachments to this Notice are administrative changes or relate to points of clarification. Attachment 1 to the Notice summarises and explains each amendment to the Exchange's rules and Attachment 2 sets out the full text of all amendments to the rules and associated guidance in tracked form. The most significant changes are summarised below.

  • Appeals and Complaints - the guidance to rule 1040 has been amended to clarify that a regulatory decision made by the Exchange may not always be appealed but in these circumstances a complaint can be made against the Exchange's decision.
  • Trade Publication - the guidance to rule 3030 has been amended to clarify that the deferred publication facility is only available to member firms where the trade is between the member firm dealing on own account and its customer. The facility is not applicable where a member firm is acting in an agency or riskless principal capacity.
  • Required content of trade reports - the guidance to rule 3040 has been expanded to emphasise that member firms must ensure that their dealing capacity is entered correctly on every trade report they submit to the Exchange. This information proves important during events such as a member firm being declared a defaulter on the Exchange.  

Notice N38/09
Notice N38/09 relates to third party platforms for trading AIM securities. It creates a new registered organisation regime, specific to AIM, giving member firms the ability to trade AIM securities on other venues while allowing the LSE to maintain a level of oversight that is sufficient to enable it to fulfil its primary market regulatory responsibilities. A new definition of an "AIM secondary market registered organisation" has been added to the LSE Rules and relevant amendments have been made to Rule 3000 (shown in mark-up in attachment 1 to Notice N38/09).

Notice N37/09 is available at: www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2009/n3709.pdf

Notice N38/09 is available at: www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2009/n3809.pdf 

An updated version of the rules is available from: www.londonstockexchange.com/traders-and-brokers/rules-regulations/rules-regulations.htm 
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