Next Monday, some of the drier parts of Companies Act 2006 come into force. Things that you might notice change from 1 October are:
- References to signed written resolutions will go. From Monday, shareholders will “signify their agreement to” written resolutions. You should notice these changes coming through in the conditions precedent of loan agreements.
- If you see any extraordinary resolutions being made in new documentation, it will be a mistake. They disappear for ever on 1 October 2007 unless you spot them referred to in existing contracts or memorandum & articles.
- Memorandum & articles will generally disappear as a phrase, to be replaced by “the constitution“. This is to encompass the wider definition of constituting documents under the Act, including resolutions and agreements required to be filed at Companies House and resolutions (shareholders, board, written) or other decisions come to in accordance with the constitution.
- Board minutes might have lengthier wording on how the directors have considered the various statutory duties imposed on them. Opinions differ as to how much should be said about this in board minutes, so there will be some variation.
- Special resolutions will only require 75% of the total voting rights of eligible members (s 283(2) CA 06). But it would be a brave bank that relied on a mere 75% majority for a resolution obtained for Rolled Steel (commercial benefit) purposes. Or in financial assistance cases.
There is a misconception on auditors and written resolutions that from 1 October, mistakenly some people think you don’t have to send written resolutions to the auditors. In fact, under the transitional provisions, you do have to. The requirements of s 390(2) have been repeated in the provisions to apply to resolutions used before 6 April 2008. On that date, s 502 CA 2006 comes into force, under which auditors are “entitled to receive all communications relating to a written resolution as must be supplied to a member”.
