Yes, after numerous years in gestation, The Companies Act 2006, the largest Bill in the history of Parliament has finally received Royal Assent.

The last few weeks have produced a flurry of activity in both Houses of Parliament, with a huge number of last-minute amendments being introduced and debated. Many of these arose from the decision earlier on in the summer to consolidate the 1985 Companies Act into the new Act, although some were more substantive and led to very heated debate (such as the new requirement on listed companies to provide information about their supply chains). The Opposition argued strongly for more time to debate the Bill, but the government was determined to push it through, and so they did on the 8th of November.

The government claim that the Companies Act 2006 will help businesses save £250 million a year, including £100 million for small businesses. Alistair Darling, Secretary of State for Trade and Industry stated: “This Act will help ensure Britain remains one of the best places in the world to set up and run a business. It makes sure the regulatory burden on business is “light-touch”, promotes shareholder engagement and will help encourage a long-term investment culture in the UK. “

The Act introduces sweeping changes to company law – the aim throughout has been to simplify and improve it. Time will tell whether this has in fact been the case, and obviously many “improvements” have proved very contentious, such as the codification of directors’ duties and the new right for shareholders to bring derivative claims (that is where a shareholder, acting as the company, brings an action against a director for breach of duty).

In terms of the practicalities and timeframe, the government has carried out its consultation exercise as to what the transitional provisions will be for existing companies and we are awaiting their response. Meanwhile, we have all been given even more breathing space than expected in terms of implementation. Due to the massive amount of work that still needs to be done, most of the new Act will not be coming into force until October 2008. Indeed, the only areas that will be implemented before that (and this is expected to be in January 2007), are those required to implement the Takeover Directive, those required to implement the Transparency Directive (dealing with minimum transparency requirements for information which must be provided by companies whose securities are traded on a regulated market, such as a stock exchange), and those dealing with communications with shareholders (allowing electronic communications rather than paper).

Meanwhile, please do feel free to get in touch with your usual contact at Davenport Lyons with any specific queries that you may have. Details of specific training on the Act that we will be offering our clients will follow in due course.