[Proposal: “The Impact of Companies Act 2006 on Directors' Duties, Minority Shareholders' Protection and Commercial Contracts”]

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Proposal on “The Impact of Companies Act 2006 on Directors' Duties, Minority Shareholders' Protection and Commercial Contracts”

Background

This paper presents a proposal on the topic “The impact of Companies Act 2006 on directors' duties, minority shareholders protection and commercial contracts”. The Companies Act 2006 regulates companies within the jurisdiction of the United Kingdom. The Act was brought into on 1 October 2009 and superseded the Companies Act 1985.

Problem Statement

There exist a lot of problems regarding the implementation of Companies Act 2006 due to the fact that it remains unclear about certain provisions aimed at facilitating the minor shareholders. The objective of this particular Act is to streamline the management of small stakeholder limited companies. There are many instances that companies have failed to implement the provisions of the Act after its declaration from the competent authority, thus forcing the promulgation of a Directive instead, in the year 2007. This Directive has proposed several changes in the existing Companies Act of 2006.

Purpose of the Study

The purpose of the study is to highlight the provisions of the Companies Act 2006 with regards to the duties and responsibilities of the directors. The Act also guarantees the protection of small shareholders, and the requirements on part of the companies to enter into a commercial contract.

Objectives of the Study

The objectives of the study are to:

Highlight the provisions of Companies Act 2006.

Discuss the duties of directors in relation to the Act's implementation.

Discuss the prevailing practices in the corporate sector and the impact of the Companies Act 2006 on their functions.

Analyse the provisions of the Act on the protection of small stakeholders

Analyse the requirements and conditions for the firms going into a commercial contract.

Significance of the Study

The significance of this particular study is evident from the fact that there is no substantial research available on the current practices of limited companies operating in the Great Britain (Micklethwait, 2008, 10). Although the Companies Act 2006 is meant to protect the rights of small stakeholders, but there exist no sound mechanism for the implementation. This is the reason why the implementation of the Act was postponed till 2009. The conditions for the limited firms to enter into commercial contracts may vary from county to county, thus there was a need for having a codified Act that should encompass all the areas of related concerns.

Literature Review

The Companies Act 2006

Britain has upgraded its corporate law with the so-called comprehensive Companies Act 2006. This was announced by the German-British Chamber of Commerce and Industry on 21.3.2007. The Companies Act 2006 applies, inter alia, companies in the form of a private company limited by shares (limited), public company limited by shares (plc), and in July 2005 established community interest company (CIC) and to facilitate the establishment and management. In English law the place of the registered office is not an element essential to the jurisdiction of British courts (Micklethwait, 2008, 11). Different rules exist when one is dealing with ...