Companies Act 2006

On 1 October 2009 virtually all sections of the Companies Act 2006 that had not been implemented earlier came into force.  This tour de force of UK legislation (the largest Act on the statute book, now)  has reached the end of its marathon along the implementation timetable.  The main areas of change are in relation to the formation of companies, the memorandum and articles, share capital, and directors’ home addresses.  This is a helpful note that is on Law-Now (my firm’s website) which sets out the detail of the new regime.

Debt buy-backs – not so popular?

The tax treatment of debt buy-backs has been changed with immediate effect.  A Ministerial Statement explaining this was published on Hansard  on 14 October.  This will affect any transaction that involves debt being bought back by a borrower group.  If a borrowing company is released from a liability and pays less than the amount borrowed in order to do so, the discount is normally subject to tax. Until now, the practice in such transactions was to rely on an exemption avoiding a tax liability.  Now, however, the rules have been tightened.  Are the reasons for this an underlying policy for all government departments to do what they can to swell the public coffers?  There was a perceived abuse of the exemption, e.g. by healthy companies buying back their listed debt at a discount without paying tax but surely overall, buying back debt should be encouraged? The Finance Bill, when published, will have details of the proposed legislation.