The Government response to the consultation on the implementation of amendments to the 2nd Company Law Directive

URN No: 07/1300

The consultation on the implementation of the amendments to the 2nd Company Law Directive (Simplification of the Capital Maintenance Rules) was published on 28th February 2007. It formed part of Chapter 6 of the consultation on "Implementation of the Companies Act 2006" the consultation process closed on 1 June 2007 the government response is set out below.

Question

Do you agree that no further action should be taken to implement the Directive amending the Second Company Law Directive? If not, which elements of the Directive do you consider should be implemented and why?

Response

There was a small response to this question. The majority of those responding wanted the government to give further thought to implementing the optional provisions in the Directive on the grounds that in principle they offer choice and flexibility to companies. In particular they wanted the government to consider implementation of the option to relax the cap on the acquisition by a company of its own shares.

For purposes of clarity, respondents indicated that we should amend the requirement in respect of safeguards for creditors to reflect a shift in the burden of proof from the company to the creditor when objecting to a reduction of capital.

In response to the consultation the government will arrange to amend the Companies Act to reflect the provisions in Directive 2006/68/EC;
in respect of the safeguards for creditors in the case of a reduction in subscribed capital, and to consult further in respect of the option to extend the facility for companies to hold “treasury shares”.