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Business
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2/11/2010
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Company law changes to effect pharmacies
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Company can have unrestricted objects unless restriction is included in Articles of Association
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The Companies Act 2006 (CA 2006) has introduced wide ranging changes to company law and will be relevant to all pharmacy companies. Jenny Packer looks at the main changes that took effect in the last stage of implementation on October 1 2009.
Company Constitution The Memorandum of Association (the “Memorandum”) has been greatly simplified for new companies. Any new companies will have unrestricted objects unless a restriction is specifically included in the Articles of Association (the “Articles”).
For companies in existence prior to October 1 2009 the objects and the majority of the content
set out in their Memorandum will automatically become part of the Articles. It is possible to delete the objects or alternatively adopt new Articles which do not contain objects.
Previously, a special resolution was required to change the name of a company. It is now possible for a company to include a provision in its Articles which allows for the company’s name to be changed by a less onerous procedure (for example this could be by simple majority or by a board resolution).
Share Capital
The requirement to have an Authorised Share Capital has been abolished. For companies existing before October 1 2009, any statement of Authorised Share Capital in the Memorandum
will automatically be deemed to transfer to the Articles and will act as a “cap” on the number
of shares that can be allotted.
The previous requirement for directors to obtain shareholder approval in order to allot shares has now been abolished for private companies with one class of share. Public and private companies with more than one class of share still need to have shareholder consent either contained within the Articles or via a shareholder resolution.
For companies pre-existing October 1 2009, it will be necessary for the shareholders to pass
an ordinary resolution removing the “cap” on allotments in order to benefit from this relaxation
in procedure.
In any event, any pre-emption rights (both statutory and those contained within the Articles) remain valid and so any new shares must first be offered to existing shareholders
in accordance with those pre-emption rights before being offered to a third party.
It is no longer necessary for private or public companies to have specific authorisation in their Articles to reduce their share capital or purchase their own shares. A company is now free to do so unless their Articles contain a specific prohibition.
A private company no longer needs authority in its Articles to allot redeemable shares and it is also now possible to allow the redemption payment to be made after the redemption date (previously the payment had to be made on the date of redemption).
Previously, any variation of class rights required a special resolution. It is now possible for companies to specify less onerous procedures for varying class rights in their Articles. Existing
companies would need to pass a special resolution amending their Articles in order to benefit from this change.
Administrative Matters
It is now possible for directors to file two addresses at Companies House, the first being
a service address which is publicly available and the second being their home address which will only be disclosed to public authorities and credit reference agencies. Directors who are at risk can also apply for further protection. The addresses already held at Companies House
will be deemed to be service addresses and will remain publicly available. It is possible in some circumstances for a director to make an application to remove a home address filed previously provided this was entered onto the register after January 1 2003.
Companies are now obliged to maintain a register of the directors’ confidential addresses
in addition to the register available for public inspection.
Companies are also required to inform a person who requests to see the register of members whether or not the information is up to date and if not, the date to which it has been made up. The company and each director may be liable to a fine if they fail to comply. There is also a new procedure which enables a company to refer a request to view the members register to the courts if they suspect a request may have been made for improper purposes.
All Companies House forms have now been amended. In some cases the content has been amended to reflect the new Act and in all cases the forms have been renumbered.
Operators of pharmacy companies should ensure they are aware of not only the above changes, but also the changes previously introduced in 2007 and 2008. Although no immediate amendment is necessary to the constitutional documents of a company, it is recommended that companies undertake a
review of their documents and consider whether they should amend them so as to take advantage of the deregulatory provisions and to modernise their constitution.
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