Companies Act 2006 - do we need to change our memorandum and articles?

The provisions of the Companies Act 2006, which fundamentally change the structure of the memorandum and articles of association of companies, come into force at the start of October this year.

The 2006 Act does not include any specific requirement for a company to amend its memorandum and articles of association but, it does introduce a number of significant changes to company law which mean that companies should seriously consider updating their constitution.

What will these changes mean?

Such changes would allow a company to:

• remove redundant or inconsistent provisions and out of date references to the 1985 Act, Table A or earlier legislation
• ensure that the provisions of the 2006 Act do not affect the validity of any existing provisions of the articles
• take advantage of some of the new provisions of the 2006 Act, particularly some of the relaxations for private companies, for example:
  • the use of email and the internet to communicate with members
  • the abolition of the requirement to have a company secretary or an AGM
  • easier ways of allotting new shares or changing the name of the company
• remove any unnecessary restrictions, for example:
  • objects clauses are no longer required, but will continue to restrict the company unless they are removed
  • companies no longer require an authorised share capital in addition to an issued share capital provided their articles are amended appropriately
• add additional restrictions where increased flexibility is seen as undesirable, e.g. in the case of charities or similar organisations

The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.