The Companies Consolidation and Reform Bill is due to be enacted into law in 2013. This legislation is expected to introduce significant changes in how private companies are administered. The first part of this Bill, dealing with private companies, has been published, with the second part due to be published later this year.
Some of the key changes envisaged with regard to private companies are summarised below:
- Only one director will be required, negating the current practice of having at least two directors, one of whom may not be actively participating in the business.
- A single ‘Company Constitution’ will replace the Memorandum and Articles of Association.
- Small companies with more than one shareholder will be allowed dispense with the need to convene an annual general meeting.
- Private companies limited by shares will become known as ‘CLS’ (Company Limited by Shares) rather than ‘Ltd’.
- Directors duties will be defined in the legislation:
- Act in good faith in the company’s interest
- Act honestly and responsibly in conducting company affairs
- Act in accordance with the Company Constitution
- Not use company property for own use
- Avoid conflicts of interest
- Use discretion only in the interest of the company
- Exercise care, skill and diligence in carrying out duties; and
- Always have regard to the interests of company members.