April 2006

Will shareholders be the biggest winners?

In a recent edition of the Business Briefing we explained how The Company Law Reform Bill gives all shareholders the statutory right to bring a derivative action in the name of the company against present and former directors claiming negligence and breach of duty. As well as this new power the Bill contains many other measures designed to help shareholders. They include:

  • all companies will be allowed to have just one shareholder;
  • shareholders will be able to obtain copies of directors' service contracts;
  • proxies will be able to speak at all general meetings;
  • there will be new rights for the personal representatives of deceased shareholders;
  • there will be measures to help empower indirect investors, such as the beneficial owners of share-based ISAs; and
  • companies will be required to give their reasons for refusing to transfer shares and to answer questions about those reasons.

The Bill will lead to the biggest shake up to company law for decades. It will pave the way for hundreds of changes. As well as introducing these rights for shareholders there are changes that will affect the way that companies operate. In particular there will be changes that affect a company's auditors, its directors and its employees. Company Secretaries are one group that will be dramatically affected because the Bill makes this position voluntary in all the two million plus private companies. Hopefully a large number of directors will want to retain the valuable services of a company secretary and it will be these professionals who will no doubt help companies find their way through the myriad of changes confronting them.

Roger MasonRoger Mason has carefully monitored the progress of the proposed changes to Company Law since 1998 when the DTI launched a long-term fundamental review. Roger has great knowledge of Company Law and has written several books on this and related subjects. He writes and presents many seminars for UK Training and he is well recognised as being a foremost expert in Company Law. The number of times that delegates have heaped praise on Roger are too many to recount, the common message is 'Roger certainly knows his stuff and knows how to put it over'. For details of seminars that Roger is presenting please go to www.uktraining.info/roger.

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