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Some commentators and representative bodies have been quick to focus on the positive aspects of the delay, namely allowing extra time for preparations.

Others, including many solicitors, accountants and businesses themselves, rightly see this as a disappointing development that hits hard at the very target group the act was meant to benefit: small and medium size enterprises (SMEs).

Extra work and costs 

SMEs will find themselves burdened with extra work and costs in the short term. Having already spent time and money road-mapping their compliance with the new legislation, many SMEs will now have to revise their plans as will those that have timetabled transactions to take advantage of its new regime.

Furthermore, the period of time that companies are predominately governed by more than one Companies Act is extended.

The Companies Act 1985 will now still apply to some areas of company law until 1 October 2009, whilst those provisions of the Companies Act 2006 that have already come into effect will also need to be observed.

Many fear this is going to increase confusion and result in extra legal costs for SMEs in order to ensure their compliance over this period.

Financial assistance 

On a more positive note, BERR are looking at the possibility of implementing some significant provisions in 2008 and aim to release a revised implementation timetable this December.

One such provision is the greatly welcomed change that allows private companies to provide financial assistance for the purchase of their own shares.

It is hoped that this will be brought into force in October 2008 as planned, which would allow a significant number of transactions that have been timetabled to take advantage of it to go ahead as planned.

Another important provision under consideration for early implementation relates to directors’ conflict of interest duties.

This will have an impact on situations where directors of SMEs are also shareholders, or where transactions take place between two companies that have common shareholders and directors.

Share capital ceiling 

Many of the other highly beneficial changes are, unfortunately, unlikely to be introduced until the new 1 October 2009 target date.

These are almost certainly to include changes to company formation, changes to the constitution of companies, changes to a company’s share capital and the protection of directors’ residential addresses.

One of the most vital of these is the abolition of an authorised share capital ceiling that caps the number of shares that a company can issue. Any companies that were planning to amend their Articles of Association in 2008 to take advantage of this will have to wait another year.

So what should SMEs do now? SMEs that have already made plans should revisit them based on the new implementation schedule when it is released in December. In the case of transactions, delay may be possible or desirable in some situations.

Other, more time-sensitive events may need to be reconsidered to make the best of the current regime.

As always, it is sensible to play safe and seek advice from a commercial solicitor, not only to ensure that you remain compliant over the next two years, but to ensure your business takes maximum advantage of the new legislative provisions as they happen.

Not all the benefits are immediately apparent and qualified advice will help identify which apply to your particular business and how they can be used to attain optimum profitability.

Sarah Liddiard is a Commercial Solicitor with SA Law LLP.

Related articles

• Companies Act final timetable announced

Related links

• SA Law LLP
• Department for Business Enterprise and Regulatory Reform (BERR)