Many voluntary organisations, particularly those that employ staff, hold contracts or own buildings or leases, are incorporated bodies.  Usually this takes the form of organisations being a Company Limited by Guarantee, or a ‘CIC’ if you are a social enterprise, so company law applies.

The Companies Act 2006 is the largest piece of UK legislation ever!

The changes have been brought in gradually and the main final phase applies from this October.

Memorandum and Articles

From this October, all new companies will have a Memorandum, which merely records those who have agreed to set up a new company and its name.  Everything else, including the ‘objects’ will now be in the ‘Articles’ and these will now become known as the ‘constitution’ of the company.

This makes it especially important to be clear if there are to be any clauses or Articles that cannot normally be amended.

Duties of Directors

If you are a company, the people on your Board are Company Directors. Their seven basic duties are now spelt out in law, and a criminal offense is committed if there is a deliberate breach.

It is good practice for a board to remind themselves of these seven duties at the first meeting after each Annual General Meeting (AGM), and for each Director to declare in writing any general or continuing outside interests that might be seen as causing a ‘conflict’. You should make sure your ‘Articles’ spell out how potential conflicting interests must be dealt with.

Members’ rights

All ordinary members of a company now have the legal right to appoint a ‘proxy’ to vote for them if they cannot attend a general meeting, and any notice of a general meeting should remind members of this right.

Other changes include:
It is no longer compulsory to have an AGM or a Company Secretary, but for charitable companies this will still be advisable.
Directors must now be at least 16 years old.

All company business correspondence must include the name, company number, and registered office address on all business correspondence, including emails (note that this applies to company emails even when working from home), but more business can now be done electronically.

Directors’ home addresses can now be kept from public view, but the public have a right to see members and Directors lists at a publicly named premises.

You must keep minutes of Board meetings and general meetings for at least ten years.

Accounts must now be filed within 9 months, and changes to the company name or ‘constitution’ within 15 days
In many cases your current Memorandum and Articles will still prevail, unless and until they are altered.

The examples above are just a ‘sample’, intended as a general reminder for charitable companies and social enterprises to keep up to date with the new law.

Graham Partridge
Community Groups Legal Advice Worker,
Avon and Bristol Law Centre
Tel: 0117 924 8662
Email: grahamp@ablc.org.uk