Trade and Industry Secretary Alistair Darling has announced that simplification of business legislation through the Company Law Reform Bill will benefit small firms to the tune of £100 million.
The Bill will make sweeping changes, making company law easier to understand. It is estimated that it will save businesses of all sizes £250 million in total, while savings for small businesses will amount to £100 million a year. The aim of the Bill is to maintain Britain’s status as ‘one of the best places in the world to set up and run a business’.
‘We needed a thorough overhaul of the law to make it more suited to the needs of our companies,’ said Darling. ‘The measures set out in the Bill will achieve that. It will help to ensure that our company regulation and financial markets continue to be regarded as among the world’s best.’
The changes for small businesses include:
- Restructuring those parts of company law most relevant to small businesses making it easier for them to understand what they need to do
- Simpler rules for forming a company
- Abolition of the requirement for a company secretary
- Making AGM opt-in rather than opt-out
- New model articles for private companies.
For all businesses there will be benefits from a range of measures including:
- Greater clarity on directors’ duties, including making clear that they have to act in the interests of shareholders, but have to pay regard to wider factors including the interests of employees, suppliers, consumers and the environment
- Greater use of e-communications and removing the need for hard copy share certificates
- A service address on the public record for all directors rather than a private address.
The Trade and Industry Secretary’s speech came before the Bill was debated in the House of Commons on 6 June.