Companies Act 2006 – What is the Companies Act 2006?
The Companies Act 2006 is the primary source of UK company law. It covers almost every aspect of how a company should be run, managed, and financed.
Debitoor invoicing software is designed to help freelancers and small business owners keep on top of company finances. Try Debitoor free for 7 days.
The Companies Act 2006 amended and replaced the Companies Act 1985. The Act came into force in stages between November 8th 2006 and October 1st 2009.
Why was the Companies Act 2006 introduced?
The main aims of the Companies Act 2006 are:
- To modernised and simplify corporate law
- To codify common law (particularly in relation to the duties of directors)
- To improve shareholders’ rights
- To simplify the administration process
The Act also united company law across the entire United Kingdom. Before this, Great Britain and Northern Ireland had two separate systems.
What does the Companies Act 2006 Cover?
When it was published, the Companies Act 2006 was the longest Act of Parliament in history – it has more than 1,300 sections and nearly 700 pages.
Some of the main features of the Companies Act include:
- Updates to articles of association
- A simplified incorporation process
- Codification of directors’ duties
- More rights for indirect shareholders
- Limited companies no longer need to have a company secretary
- Company directors can provide a service address, rather than being required to have a private address on a public records
Corporate law in the United Kingdom
Corporate law covers two main fields: corporate governance and corporate finance. Corporate governance covers the rights and duties of shareholders, directors, employees and creditors. Corporate finance addresses the ways a limited company can raise money.
As well as the Companies Act 2006, other sources of company law in the include:
- The Insolvency Act 1986
- The UK Corporate Governance Code
- European Union directives.