3.2. Companies Act 2006 Flashcards
Companies Act 2006
Primary source of legal accountability in the UK and largest legal act in the UK (aimed at protecting the shareholder).
Managers and directors have a fiduciary duty: guardians of shareholder interests.
Managers and directors should maintain adequate accounting systems (must file an annual report and accounts to shareholders and with Companies House, including income statements, statements of financial position, statement of cashflow and notes to account).
Transparency of businesses…
A company must be capable of disclosing, with reasonable accuracy, at any time, the company’s financial position.
They must keep accurate details of cash transactions; record of assets and liabilities; inventory records and records of credit transactions.
Business review…
In addition to financial performance.
Details:
- The future direction and prospects of a company.
- Any risks and uncertainties facing the company.
- Environmental policies and key relationships that impact development.
The business review goes beyond the shareholder and is for wider society.
Legal requirements of companies…
Corporation tax must be paid to HMRC.
There are general employment laws, such as health and safety; employment; equality; consumer rights; copyright and licensing; competition and insurance.
Stock markets may also require specific disclosures to be published to ensure that corporations are following the rules and regulations of country-specific exchanges.
