The Companies Act 2006
The Companies Act 2006 provides for major revisions in company law, and therefore has some impact on charitable companies.
Perhaps the most notable provision in terms of its effect on charitable companies will be the requirement for each company to have only one document regulating its administration, ie the articles of association. Most clauses in the memorandum, including the objects, will be incorporated automatically when this provision comes into force in October 2009. Charities do not need to do anything to ensure that they remain charitable as their objects limiting their activities to their charitable purposes will remain in place.
Listed below are some other notable points which affect charitable companies (annotated with the relevant section of the Companies Act), some of which came into force on 1 October 2007 and some of which will be implemented at a later date.
More detailed information about the Act can be found on the Companies House website.
Already in force:-
- New duties on directors including that directors of charitable companies have a duty to achieve the purposes of the company (s.128);
- Measures facilitating the disclosure of information by the Takeover Panel to the Charity Commission (s.948 and para 38 of Part 2 of Schedule 2);
- Provisions permitting members of a company to authorise a director to carry out an act involving a breach of duty (s.180(4)), or to release a director from liability for a breach of duty that has already occurred (s.239) do not apply in the case of charitable companies.
April 2008
October 2009
- The Charity Commission will be required to give notice to the registrar of companies when it appoints an interim manager to a charitable company (s.1154);
- A court order is no longer required in every case to restore a company to the Register (ss. 1024 to 1028);
- Any company which is a charity will be automatically exempt from the requirement to have the word “limited” in its name (s.60(1)(a))
Date to be announced
- New rules on conflicts of interest , eg duty to avoid conflicts of interest is disapplied in relation to transactions between a charitable company and its directors only to the extent that the company’s articles specifically allow for it.