The statutory statement of directors’ general duties makes the well established law in this area more accessible and brings it into conformity with modern business practice.
Companies will be able to make greater use of electronic communications for communications with shareholders.
Liability for reports to the market has been clarified.
Directors will automatically have the option of filing a service address on the public record rather than their private home address.
There will be improved rules for company names.
Companies will no longer be required to specify their objects.
The company memorandum will become a formal document recording the position at the point of registration, with just the articles being the continuing constitutional document.
Shareholders will be able to agree limitations on the liability of auditors.
Private companies
There will be separate and simpler model Articles of Association for private companies, reflecting the way small companies operate.
A separate, comprehensive code of accounting and reporting requirements for small companies.
Private companies will not be required to have a company secretary.
Private companies will not need to hold an annual general meeting unless they positively opt to do so.
It will be easier for companies to take decisions by written resolutions.
Private companies will no longer be prohibited from providing financial assistance for the purchase of their own shares.
There will be simpler rules on share capital, removing provisions that are largely irrelevant to the vast majority of private companies and their creditors.
Key benefits: Shareholders
The business review requirements will promote higher quality narrative reporting by quoted companies.
The Bill sets out the criteria whereby a shareholder can bring a derivative action on behalf of the company against a director for breach of duty, while making sure that unmeritorious suits are quickly dismissed and costs fall to the person bringing the claim.
There will be greater rights for indirect (i.e. those who hold through a nominee) shareholders. These will include the right to receive information electronically or in hard copy if they so wish.
Enhanced proxy rights will make it easier for shareholders to appoint others to attend and vote at general meetings.
Shareholders will receive more timely information, reflecting improvements in technology and the increased rate at which information becomes out of date.
There will be more timely accountability to shareholders by requiring public companies to hold their AGM within 6 months of the financial year-end
There is a new right for shareholders of quoted companies to have a resolution proposed for an AGM to be circulated at the company’s expense if received by the company before the financial year end.
The Government has made clear that it would like institutional investors to disclose how they use their votes. While we believe this can be achieved through a best practice approach, the Bill provides a power, which could be used to require institutional investors to disclose how they have voted.
