FROM October 1 this year all businesses across the UK needed to comply with a broad range of new regulations that came into force.

Now, one month into the new legislation does your company comply with the new rules and regulations?

It is all about the Companies Act 2006, which has developed into the single largest piece of legislation ever made - it has no less than 1300 sections - and is designed to allow greater flexibility in how business operates.

The Act also aims to reflect in a more realistic way the modern needs of the business world.

Business Link has produced this guide to explain the changes that businesses need to be aware of.

This not only includes changes to the Companies Act 2006, but also VAT invoicing, holiday entitlement and the new National Minimum Wage rates.

The changes to the Act will be implemented in three stages: October 2007, April 2008 and October 2008.

Some of the changes are:

  • The Act gives companies responsibility for a new statutory statement detailing directors' duties and responsibilities.
  • The directors of medium-sized and large private companies and all public companies must now include a business review in their reports. This should include information on environmental, employee, social and community issues related to the company's long-term success.
  • There is now no requirement for a private company to hold an annual meeting. But shareholders can still demand a meeting if at least 10 per cent (five per cent in some circumstances) require it.
  • As an alternative to calling meetings of shareholders, written resolutions signed by shareholders will now be an acceptable alternative option and will no longer need to be signed by all shareholders - instead this will mean a simple majority of the eligible shares for ordinary resolutions, or 75 per cent for special resolutions.
  • Proposed written resolutions will no longer have to be notified to the auditors (although following other recent reforms, most small companies are no longer required to appoint auditors).
  • Objects and powers currently set out in a Memorandum of Association (one of the documents required to incorporate a UK company and explain its objectives) will be deemed to be a part of the Articles of Association, the regulations governing the relationship between shareholders and directors. The impact of this is that companies will have the power to do anything lawful, unless specifically restricted by their Articles.
  • Companies are now allowed greater flexibility to opt into or opt out of default provision of the Act by having appropriate provision in their Articles. It could mean, for example, having power to allot shares without restriction or allowing automatic auditor reappointment.

Remaining provisions state that it will no longer be necessary for private companies to appoint a company secretary - a position that has been a legal requirement for decades.

New regulations relating to VAT also applied from October 1. Businesses most likely to be affected are those that are selling to business customers in other member states and those who use Margin Schemes or Tour Operator's schemes in the UK. This states that:

  • Sequential numbering of invoices must be used.
  • If the goods supplied are exempt to businesses in other member states where a VAT invoice is mandatory - the reason for exemption must be given.
  • When making margin scheme supplies, you will no longer have to use the mandatory margin scheme wording - you will be able to choose how you indicate this on your invoices.
  • Making travel-related supplies that fall within the scope of the Tour Operators Margin Scheme - must be shown on invoices.

Although the law applies from October 1, HMRC says that, as is common with new regulations of this type, penalties for non-compliance will only be issued in the first year in exceptional cases.

The first phase of legislation that provides statutory holiday entitlement for workers in England, Wales and Scotland also came into force on the first of last month.

This means that the holiday entitlement will rise from four weeks (20 days) to 4.8 weeks (24 days). But this can include bank and public holidays.

From April 1, 2009, all workers will be entitled to 5.6 weeks (28 days) holiday.

Companies that already provide full-time and part-time employees with a minimum of 5.6 weeks annual leave do not need to take any action.

The new National Minimum Wage is relevant to all businesses, and came into force in October. Eligible workers are entitled to:

  • £5.52 an hour to adult workers aged 22 and above
  • £4.60 an hour to workers aged 18-21
  • £3.40 an hour to workers aged below 18 who are no longer of compulsory school age.