Over Taylor Biggs

Incorporations

From 1 October 2009 the revised incorporation process will require the filing of an application for registration, a memorandum of association, the articles of association, a statement of compliance and a fee at Companies House.

If the company to be registered is to have a share capital, it must deliver a statement of capital and of its initial shareholdings.

Statement of capital

All companies limited by shares must complete a statement of capital:

•-          on incorporation (see below)

•-          as part of any annual return made up to or after 1 October 2009

•-          on an allotment of shares (see further below).

On incorporation the statement must set out the total shares to be taken by the subscribers including the number, class and the aggregate nominal value of those shares along with the amount paid up or the amount to be unpaid on each of the subscriber's shares.

The statement should also contains details of the rights attaching to any class of shares of the company, for example voting rights, rights to a dividend and any redemption rights.

Memorandum and articles of association

On incorporation the memorandum of association will be a much shorter document than that now commonly used and will be in a prescribed form. It will provide evidence of the intention of each subscriber to form a company and become a member of it taking at least one share each. Information that was contained in the current form memorandum will either be contained in the articles or recorded on the certificate of incorporation. Companies incorporated on or after 1 October 2009 will have unlimited objects unless the articles specifically limit them.

The new form memorandum cannot be altered or amended following incorporation, it is intended to be a ‘snapshot' of the company's constitution on incorporation.

For new companies there will be three types of articles; model articles, model articles with amended provisions and customized articles.

The current existing default articles, known as Table A, will be replaced. There will be separate model articles for companies limited by shares, not limited by shares and public companies. The new model articles will apply as the default articles for companies formed on or after 1 October 2009 who do not submit their own form articles on incorporation.

Alteration to articles of association

Restrictions on changing the articles will no longer be found in a company's memorandum, shareholders will instead be able to entrench provisions in the articles. A provision is entrenched if it can be amended only in the event certain provisions are met and where these provisions are more restrictive than the shareholders of the company passing a special resolution. Provision for entrenchment may only be made on formation of the company or by subsequent unanimous consent of all the shareholders.

Notice of entrenchment must be given to Companies House in relation to the presence of entrenched provisions, when they are removed or any changes to the articles in accordance with the entrenched provisions.

If a company's articles do not contain entrenchment provisions alterations to the articles can be made by the passing of a special resolution of the shareholders.

A company must file at Companies House a copy of the amended articles within 15 days of the amendment taking effect. The resolution (special or otherwise) must also be filed within 15 days of it being passed.

Companies House has the power to serve a notice on a company who fails to file a resolution amending the articles or the amended articles and require the company to do so within 28 days. Failure to comply will be a criminal offence and the company and the officers of the company could be liable to a fine on conviction. There is also a new civil penalty of £200 for failure to respond to a notice from the Registrar. 

Authorised share capital

For companies incorporated on or after 1 October 2009 there will no longer be a limit set out in the memorandum on the number of shares that a director can issue. This means that for newly incorporated companies, where there is only one class of share and subject to authority from shareholders to allot shares or other prohibition in the company's articles, the directors can issue shares without limitation.

Allotments of shares will need to be registered as soon as practicable, with a longstop deadline of 2 months from allotment. Failure to do so could result in a criminal offence, with the company and the directors facing a fine.

Within one month of allotment a return must be filed at Companies House along with a statement of capital.

Private companies will no longer require authority in their articles to issue redeemable shares. Nor will it in all circumstances be necessary to specify the terms and manner of redemption of these shares in its articles.

Class rights

From 1 October 2009 the company's articles can specify a less onerous procedure to alter class rights, for example, shareholders passing a ordinary resolution. The default provision under the legislation will require the passing a special resolution by shareholders.

Companies House must be notified within 1 month of the varying of rights attaching to shares, again failure to do so could lead to a fine for the company and its directors.

Change of company name

A company can set out in its articles of association the method by which it is able to change its name, as an alternative to passing a special resolution as provided by the Act. For example, the company's articles may permit the name of the company to be changed by a resolution passed by its directors.

Companies must notify Companies House of not only the new name but the means by which the new name has been adopted by completing a notice which must be accompanied by a fee.

Directors' address

Every director must provide Companies House with their usual residential address and for each directorship they hold a service address. The service address will be placed on the public record. The home address will be protected information. The service address can be any address the director chooses, and can include the registered office of the company. A director's home address will only be available to regulated authorities such as Her Majesty's Revenue and Customs.

Register of members

From 1 October 2009 the register of members will be permitted to be held in a single alternative location within the same part of the United Kingdom as the company's registered office, provided Companies House has been notified.

Companies will be required to provide anyone exercising their right to inspect the register of members details of when it was last written up.

Administrative restoration

A new administratively more simple power to restore a struck off company will be given to the Registrar of Companies.

Slavenburg charges

Companies House will no longer accept Slavenburg charges created on or after 1 October 2009.

Registrar's Powers

The Registrar of Companies is being given a great range of powers including a power to make amendments to the register without a court order.

Forms

All Companies House forms will be changing on 1 October 2009 in line with the requirements of the Companies Act 2006. Any company event which takes place on or after 1 October 2009 must be notified to Companies House by using the new standard forms. Companies House has advised that it will reject any old forms sent to them. However it will continue to accept the current forms for events which take place before 1 October 2009.

We hope the above article is helpful but if any further advice is required in this regard, please do not hesitate to contact Karl Taylor at first instance.

This briefing note is not intended to be a comprehensive guide and does not cover every aspect of the topic and is not intended to provide legal or other advice.

September 2009