Companies Act 2006 - Private Companies

Private Companies

One of the more touted aspects of the new legislation was the simplification of the corporate regime for small privately held companies. A number of the changes brought about by the Act apply only to private companies. Significant changes include:

• Company secretaries - a private company no longer needs to appoint a company secretary, but may do so if it wishes.
• Shareholders' written resolutions - the requirement for unanimity in shareholders' written resolutions was abolished, and the required majority is similar to that for shareholder meetings - a simple majority of the eligible shares for ordinary resolutions, or 75% for special resolutions.
• Abolition of AGMs - private companies are no longer required to hold Annual General Meetings, although they can elect to provide for them in their articles if they wish.
• Short notice of meetings - private companies can convene meetings at short notice where consent is given by holders of 90% by nominal value of shares carrying the right to vote.
• Allotment of shares - where private companies have only one class of shares, the directors will have unlimited authority to allot shares unless the articles otherwise provide.
• Financial assistance - the Act abolishes the prohibition on private companies providing financial assistance for the purchase of their own shares, and the related "whitewash" exemption procedure.
• Reduction of share capital - private companies will be able to reduce their share capital without the need to obtain a court order.
• Filing of accounts - the period in which accounts must be filed has been reduced from 10 months to 9 months from the financial year end.