Companies Act 2006: in force from 3 August 2009
Practitioners should be aware that on 3 August 2009 detailed changes occur to provisions in the CA 2006 by virtue of the European Shareholder Rights Directive.
The intention of the directive is to harmonise shareholder voting rights throughout Europe.
The following affect private companies and are especially relevant to those with a large shareholder base.
Shareholders' power to call general meetings
The regulations provide that shareholders with an aggregate of 5% or more of the total voting rights in a company can require the directors to call a general meeting.
This represents an increase to minority shareholder rights, as the current percentage to require a general meeting is 10%. (s 303).
Advance voting on a poll
New s 322A allows votes to be cast in advance of a shareholders' meeting (if the articles allow) and for those votes to be counted if a poll is taken at the meeting.
Corporate representatives and proxies
The provisions of the 2006 Act relating to shareholders' ability to appoint multiple corporate representatives and proxies have been improved.
In particular there has been uncertainty about how these provisions work when votes are decided by a show of hands. (ss 282-285 and 323).
The changes are, in summary:
- multiple proxies appointed by a single shareholder will only have one vote between them on a show of hands
- on a show of hands, a single proxy appointed by multiple shareholders will have only one vote if all of his appointers instruct him to vote in the same manner. If some of his appointers instruct him to vote for and some against, then he will have one vote for and one vote against and
- multiple corporate representatives will be able to vote differently in relation to different blocks of shares (both on a show of hands or on a poll).
New section 360A clarifies that no references in the CA 2006 part 13 to requirements for holding meetings are to be taken to preclude holding meetings by electronic means (e.g. by telephone or video conference).
Provision is made elsewhere in the act for the convening of meetings for the removal of a director and the auditor so meetings of these kinds are not covered by s 360A.
Our bulletin next month (August 2009) highlights the main final changes to company law. These occur on 1 October 2009 at which point all the provisions of CA 2006 will have been brought into force.
What will be left?
The CA 2006 replaces and repeals the CA 1985, the CA 1989 and the Companies (Audit etc) Act 2004.
The provisions within these earlier statutes that will remain in force are, broadly:
- investigations, assistance to overseas regulators, financial markets and insolvency and
- the Financial Reporting Council and its Financial Reporting Review Panel.
Provision for Scottish floating charges and Scottish incorporated charities now fall under Scottish legislation.
Section 155 introduces a new requirement for companies to have at least one director who is a natural person.
Companies without a natural person as a director on 8 November 2006 (when the CA received royal assent) will have until 1 October 2010 to appoint at least one natural person as a director.