Implementation and scope

The Second Company Law Directive was implemented in the UK by the Companies Act 1980. The Companies Act 1981 provided for the purchase by companies of their own shares and the issue of redeemable shares so as to take advantage of the exemptions granted in the Directive. As part of the implementation of the Directive, the 1980 Act revised the definition of the private company and the public limited company so as to make the private company rather than the public company the “default” structure. The provisions of both the 1980 and the 1981 Acts were then consolidated in the Companies Act 1985 which has now been now further consolidated and reformed in the Companies Act 2006.

The amendments to the Directive introduced by Directive 92/101/EEC of 23 November 1992 involved provisions already in existence in Section 23 of the Companies Act 1985 as amended by the Companies Act 1989 and now to be found in Sections 136 to 144 of the Companies Act 2006. The changes introduced by Directive 2006/68/EC of 6 September 2006 were implemented in respect of mandatory creditor protection provisions by The Companies (Reduction of Capital) (Creditor Protection) Regulations 2008 SI 2008/719, which introduced an amendment to the Companies Act 1985 effective from 6 April 2008. The Companies (Share Capital and Acquisition by Company of its Own Shares) Regulations 2009 SI 2009/2022 continued the creditor protection provisions of SI 2008/719 after the coming into force of the relevant part of the new Companies Act 2006 on 1 October 2009, replacing the amended provision of the Companies Act 1985. The other provisions of SI 2009/2022 increased from eighteen months to five years the period of validity of authority for a company to purchase its own shares and removed the maximum holding limit applicable to treasury shares held by a company with effect from 1 October 2009. The latter take advantage of non-mandatory possibilities permitted by Directive 2006/68.