In an unforeseen move, the Government announced this week that full implementation of the Companies Act 2006 is being delayed by one year. The final commencement date is now expected to be 1 October 2009 rather than 1 October 2008. This means companies will have to switch between the 1985 and the 2006 Companies Acts for another two years.
The reason given for the delay is to allow Companies House more time to make changes to its systems and processes required by the 2006 Act. The Registrar of Companies was not confident that the changes could be completed by next October. Advisers and companies alike are assessing the impact that the delay is likely to have on businesses. For example, should companies update their articles of association now, to take advantage of the streamlining provisions introduced this October, and then again in 2009? Or should they opt for the (potentially) cheaper option and make all the amendments in one go, in 2009, but not enjoy the 2007 changes for two more years?
"The delay is frustrating as we have worked extremely hard to help our clients prepare for the October 2008 deadline and now the goalposts have been moved. Things remain uncertain," said Mills & Reeve corporate partner, James Hunter.
On a positive note, the Government has indicated that the provisions due to be introduced on 6 April 2008, including accounting and audit changes and the abolition of the requirement for private companies to have a company secretary, will continue as planned. And it is hoped that some of the October 2008 changes, such as the removal of the restriction on financial assistance for private companies, will still go ahead on that date.
A final version of the amended commencement timetable is expected in December and for the moment Mr Hunter advises businesses to "watch this space" adding: "Whilst this delay is unexpected our lawyers have a good handle on the Act and are responding swiftly to help clients adjust to the new timetable."