We are all well aware of the regulatory burden facing small companies nowadays. Here, at last, is some good news. The government, which has added so much to that burden in recent years, is actually doing something to reduce it.

1 November saw the Company Law Reform Bill introduced into Parliament. This aims to cut down the complexity of company law as it relates to small companies. There will be simpler rules for forming private companies and shorter and clearer articles of association for them. Private companies will not be required to have a company secretary and the AGM will be an opt-in, rather than opt-out as at present.

The use of e-communications will be encouraged, the requirement for hard-copy share certificates will be dropped and directors of private companies will be able to use a service address, rather than their private address, on the Companies House record. Also, the highly complex rules relating to the acquisition and purchase of own shares by private companies are likely to be abolished and it will be easier for private companies to make capital reductions.

Don’t get too excited just yet, though. The Bill still needs to complete its passage through Parliament and is unlikely to come into force until 2007. It also contains a provision for private companies to file their annual accounts within nine months of the year end, rather than ten as it stands now, so it isn’t all good news. It’s a start, though.

For further information please contact David Kay

07/12/2005