UK legislation

The Companies Act has completed its long journey into law, and with the recent publication of its implementation timetable, it has become apparent that the new legislation is likely to impact all areas of the business world.

Nearly eight years after the Company Law Review began the process of modernising the UK’s antiquated and piecemeal legislation for business, the Companies Act has received Royal Assent.

Its reforms rest on four key objectives:

• Enhancing shareholder engagement and a long-term investment culture
• Ensuring better regulation and a 'think small first' approach
• Making it easier to set up and run a company
• Providing flexibility for the future.

One of the aims of the review is to promote an internationally-competitive environment for UK business that balances the need for confidence in the legal framework with the flexibility for market-simulated governance to allow best practice to evolve.

The terms of the Act will affect the role and responsibilities of executives and non-executives, including finance and human resource directors. Its key features include new obligations relating to:

• Directors' duties
• Corporate reporting
• Shareholder relations and e-communications
• Indirect investors
• Institutional investor voting
• Indemnifying pension trustees
• Proposals on auditor liability

As the Act moves into law, a number of provisions require regulations and guidance to be developed before it can be implemented in full. Business is pressing for an implementation date of October 2007.

While the DTI has yet to issue a response to this, it has confirmed that the e-communication provisions (allowing companies to default to online communications with their shareholders) will take effect from January 2007.

This particular move is likely to save business a great deal of money, and the DTI is under pressure to implement the wider legislation within a reasonable timeframe.

PricewaterhouseCoopers' specialists consulted with regulators on various aspects of the Act, and are well placed to help companies identify and find solutions to any concerns that might emerge as a result of the legislation.