In short, yes! The Companies Bill is due to come into force in 2007 and contains the most drastic changes that company law has seen in the last ten years. Once implemented it is intended to simplify and improve the existing regulations. The Bill is designed to try and reduce the regulatory burden on businesses and in particular small enterprises. It will make it easier to form a small company by providing clearer instructions of what you need to do and a private company will no longer be required to have a company secretary or to hold an Annual General Meeting.
One of the main areas of reform is the codification of director's duties. This should make it easier for directors to find out what is expected of them, as general company and common law duties will be laid down in legislation. The provisions include ensuring that directors act in the interest of shareholders and they will actually have a statutory duty to promote the success of the company. Directors will also be obliged to think long term about several issues including employees, relationships with suppliers, greater use of e-communications with shareholders and the interests of the environment.
The Bill also has a proposal to introduce limitation of auditor liability reflects the extent to which the auditor is responsible for any loss. However, this is subject to shareholder approval. Shareholders will also be given powers to question auditors over audit reports and a new offence has been introduced for recklessly or knowingly including misleading, false or deceptive matters in an audit report.
These are just a flavour of the changes that the new Act heralds. |