| The Companies Act 2006 was given royal ascent | | | | to operate as a sole director company. There is |
| in November 2006. The latest act updates the | | | | no requirement to have another company officer |
| previous Companies Act 1989 and has introduced | | | | appointed. However, this change will mean that |
| significant changes to the way limited companies | | | | many companies will need to update their |
| operate. The changes have been implemented on | | | | constitution. Many companies may find that their |
| over a staged period to allow companies time to | | | | current memorandum and articles of association |
| update their constitutional documents to reflect | | | | do not reflect this important change to legislation. |
| the changes. | | | | A further change to the appointment of company |
| The constitutional documents for UK companies | | | | directors was implemented in Nov 2008. The new |
| are called the memorandum of association and | | | | laws now prohibit the use of sole corporate |
| the articles of association. These should clearly | | | | directors for any company registered after |
| define the activities of the company, and set out | | | | November 2006. This means that a person needs |
| the structure of the company. | | | | to be appointed as a director of the company and |
| The memorandum of association typically states | | | | that a corporate body cannot be appointed as a |
| the company name, the objects which define | | | | director unless another person is appointed at the |
| what the company will do, the extent of the | | | | same time. |
| members liability, the authorised share capital, the | | | | If a company wants to switch to being a sole |
| value of the shares and the number of shares | | | | director organisation the memorandum and |
| issued at the time of incorporation. | | | | articles of association should allow for a single |
| The articles of association states how the | | | | officer to make decisions without the need to |
| company will operate. This may include how | | | | appoint a secretary ro second director. This may |
| shares are allotted and transferred, how and | | | | require new documentation to be adopted as the |
| when meetings shall be conducted, how company | | | | new constitution for the company. If the existing |
| officers are appointed or replaced, and how the | | | | memorandum and articles of association do not |
| company seal is to be used. This document is | | | | allow for sole directors then the company may be |
| derived from the Companies Act is often | | | | operating unlawfully. |
| referred to as Table A. It is common practice for | | | | It is not acceptable for a UK registered entity to |
| the articles of association to be amended to | | | | ignore changes to the Companies Act. Appointed |
| adopt various sections of Table A. | | | | officers are legally responsible for ensuring that |
| One of the major changes to the Companies Act | | | | the company operates within the law and that all |
| is the amendments to company officer | | | | of the legally required documents are correct. |
| requirements. From April 2008 it is now possible | | | | |