Introduction
The Companies Act 2006 is an act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act modernises company law and updates the current framework with new rules governing the formation, organisation and operation of companies. It also establishes a new Companies House system of company registration.
The Act is divided into four Parts. The first Part deals with the regulation of companies, setting out the rules on when a company should be formed and providing information on how a company should be incorporated. The second Part contains general provisions relating to the regulation of companies, including the registration of companies and their dissolution. The third Part provides for the setting up of separate bodies such as the Financial Conduct Authority and the Companies Appeals Tribunal. Finally, Part IV sets out the offence and penalty provisions applicable to companies.
mechanisms
The Companies Act 2006 is based on the principles of corporate governance and provides a number of mechanisms to ensure that companies comply with the regulations.
First, the act requires companies to comply with the rules set out in the 2006 regulations and any subsequent legislation. This legislation sets out the requirements for companies to keep accurate and up-to-date records, to ensure transparency when filing financial statements and to maintain proper systems for internal control.
The Act also sets out the requirements for directors and other key personnel. These key personnel must have the necessary skills, qualifications and experience to adequately run the company and must act in accordance with the law. The Act also establishes the framework for an internal audit function to ensure that the company is behaving in accordance with the rules.
The Act also provides for the establishment of an independent body - the Financial Conduct Authority (FCA) - which is responsible for enforcing the regulations and overseeing the activities of companies. Such mechanisms help to ensure that companies comply with the law and do not engage in illegal activities.
Conclusion
The Companies Act 2006 is an important piece of legislation that sets out the rules governing the formation and operation of companies in the UK. The Act establishes mechanisms to ensure that companies comply with the regulations and sets out requirements for directors and key personnel. The establishment of the FCA acts as an additional safeguard to ensure that companies act in accordance with the laws. As such, the Act provides an important framework for the establishment and running of companies in the UK.
