In the class room: there's a new act in town
The year ahead may be a daunting one for finance professionals who need to get to grips with the new Companies Act 2006
Although many provisions in the new Act do not come into force until October
2008, it is the longest piece of legislation ever passed in the UK, having been
eight years in the making. Finance directors should begin preparing to ensure
they and their finance teams are completely ready for the new regime. With this
in mind, one of the most useful ways finance professionals and advisers can make
a dent on this year’s quota of continuous professional development hours is to
seek out practical training on the new provisions introduced in the Act.
Until the transitional arrangements are published, it is difficult to provide
a definitive list of actions to be taken, particularly in relation to existing
companies. However, this period does give those in the industry a unique
opportunity to become acquainted with the new regime and to put in place a
timetable for updating all their company’s practices.
Given the volume of changes departments should waste no time reviewing and
planning their procedures. By comparing their existing constitutional documents
with the new draft model articles, which have been published, they can see what
changes are necessary and how they will affect the business.
As well as familiarising themselves with the legal aspects of the Act,
finance professionals also need to find out how in practice external
stakeholders are intending to deal with specific provisions. For example, while
the restrictions on private companies providing financial assistance have been
relaxed, it is likely that banks may well insist on their own checks remaining
similar to those previously existing.
The more senior your role, the more you should therefore focus on training
that offers viewpoints from a range of professionals including accountants,
bankers, company directors and lawyers.
The Act represents a major overhaul of the previous regime and will affect
every UK company so it is essential that time is invested in training between
now and October 2008. Getting to grips with the Act will be a significant
challenge and one which finance professionals are well placed to take the lead
on. It is also one clear illustration of the practical benefits of CPD to
support efficient transition to this new regime.
Si Hussain is chief executive of professional
development at BPP Professional Education
