Press Release
Articles of Association and the Companies Act 2006
19 December: Attendees at a breakfast briefing held today by the Institute of Chartered Secretaries and Administrators (ICSA) were advised that public companies must act by October 2008 and adopt new articles of association in relation to directors’ conflicts of interests. The revised articles, which should be reviewed at the next AGM, need to reflect the provisions covered by the Companies Act 2006 and give directors wider power to authorise directors’ conflicts of interest.
Although it is now possible to hold general meetings on 14 days notice, it was further recommended that all companies make a specific amendment in the articles for this notice period to be reduced in the event of a special resolution. Proxies have new rights under the Act and these too should be reflected in the articles, with any voting relating to corporate representatives removed.
Listed companies should make amendments in light of the new provisions for e-communications, particularly in relation to deemed notice and non-receipt. A common approach to listed company articles, recently agreed by a group of city law firms, is summarised in a circular which will be available on the ICSA website shortly.
By April 2008, private companies wishing to dispense with appointing a company secretary should remove any references that refer to this requirement. However, private companies are reminded that the duties performed by a company secretary still need to be performed, and they should consider the advantages of maintaining this role. Other changes to be included are the adopting the statutory written resolution procedure and providing the right for a proxy to vote on a show of hands.
Derek Woodward, Head of Secretariat at Centrica plc and member of the ICSA’s Company Secretary Forum commented ‘Companies should be working with their advisers on new sets of articles and conduct a thorough review to check that they haven’t been overruled by the new provisions under the Act.’
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