The Bill consolidates, reorganises and reforms company law in a number of respects. The Bill is expected to come into law in 2014. The main changes might be enumerated as follows:-The most common type of company will be the CLS (company limited by shares), where there will no longer be a Memorandum and Articles of Association (hereinafter memo and arts). In place there will be one written document called the company constitution which will not contain an objects clause therefore the ultra vires rule will not apply and the CLS will have the same contractual capacity as natural persons. The CLS can have just one director and one member. Parts 1-15 of the Bill will apply to CLS companies. For private companies, the need for and AGM can be dispensed with in favour of a written resolution which inter alia acknowledges receipt of the financial statements and confirms appointment of auditors (s.176). There is also the option to incorporate companies other than CLS companies including designated activity companies (DAC, Part 16), public limited companies (PLC, Part 17), companies limited by guarantee (CLG, Part 18), external companies (EC, Part 21). DACs will more closely resemble existing private limited companies in that there will be an object clause which will limit their activities. PLCs are required to have memo and arts. There will be three types of unlimited companies, all referred to as UC (Part 19). In terms of transition, existing private limited companies will be treated as DACs for a period of 18 months (unless they opt to register as CLS during this period using form N1 and with that adopt a new company constitution) and at this point they will automatically convert to CLS (with the same memo and arts minus the objects clause) unless they register as DAC within 15 months(using a form N2). It is thought that most companies will either register as CLS within the 18 month transition period or fail to register and become a CLS by default. In the former case the new company constitution which is registered will apply and in the latter case the existing memo and arts will apply minus the objects clause. The work for lawyers will be the drawing up of a new constitution for the company in the 15 month period after commencement which might either be the memo and arts minus the objects clause or a very plain constitution in terms set out Schedule 1 to the Bill. The provisions of company law will apply not only to directors but also shadow directors and...
Changes From The Companies Bill 2012 (Hereinafter The Bill)
|Author:||Mr Stephen O'Sullivan|
|Profession:||Stephen O'Sullivan, Barrister|
To continue readingREQUEST YOUR TRIAL