COMPANY ACT 2006

The Company Act 2006: Capital Maintenance

The Company Act 2006: Capital Maintenance

Introduction

The company act 2006 of United Kingdom is based on some rules and has given small scale businesses with simplified companies according to statutory needs. This Act had received Royal Assent 2006. It implemented its rules in 2007 and is about to be fully commenced in 2009. The Act of 2006 has provided more simple rules which have resulted in easier statutory methods and lesser complex needs including a lot more confidential framework for the owners and the stakeholders.

Capital maintenance

A chain of academic contributions have doubted the relevance of the legal capital rules for the safety of creditors at a very basic level. The White Paper of DTI which is written on the Company Law Reforms states with full confidence that capital maintenance is purely irrelevant to the enormous majority of the private companies and their respective creditors. English Law has made a policy for the maintenance of the capital having an objective and aim to ensure that a particular company which has a share capital should be obtaining a proper criteria of consideration while issuing its share and should not return the funds which are received to it members except of certain situations.

The policy of capital maintenance is a basic principle of English Company Law. It states that a particular company should receive proper thoughtfulness for its issues and after receiving such capital should not return the capital to the members of the company except in some situations.

Company Act 2006

The company act 2006 made by United Kingdom Parliament which holds the prime source of the United Kingdom Company Law. It is the longest Act in the history of British Parliament with 1,300 sections having over around 700 pages and contains not less than 15 schedules. The listing of all the contents is of 59 pages lengthy itself, but still it has become outdated by the Corporation Tax Act of 2009.

The Company Act of 2006 has provided quite an elaborated code of the company's law for United Kingdom and has made a lot of different changes to almost every side of the law which related to companies. This Act has been brought in for implementation into four stages. The implementation of final provision was done in 2009. The Company Act of 1985 was superseded by this act. The legal professionals in United Kingdom have responded very half heartedly to the Act. A lot of concerns have been shown that there too much detail in the Act to cover every situation. While a complete reconstruction was promised about the company law, the Act appears to leave most of the structure in place and some of the aspects nearly at the margin. At the same time, the solvency statement needed is quite parallel to the Company Act 1985 “whitewash” legislative statement for financial assistance. (Douglas 2008, 98)

Solvency statement for Private Company Act 2006

Section 958: A solvency statement made under section 643 must be made by all of the ...