The final report of the Department of Trade and Industry's (DTI) Company Law Review was published on July 26 2001. The report is a major undertaking which lays down a blueprint for reform and modernization of UK company law. Among other things the Review recommends:
- the creation of new statutory statements of directors' duties to give clear guidance to directors as to what is expected of them;
- for public and quoted companies a tighter annual reporting cycle, with more effective use of new technology to open up financial and other information for shareholders and others;
- requiring most public companies and large private companies to publish an Operating and Financial Review (OFR) as part of the annual report and subject to review by the auditors. The OFR will provide a review of the business's performance plans and prospects and information the directors judge necessary for an understanding of the business, such as relationships with employees, suppliers and customers, environmental and community impact, corporate governance and risk management;
- reforming the existing capital maintenance rules by simplifying the rules for public companies on giving financial assistance for the acquisition of shares (as well as abolishing the restriction altogether for private companies), abolishing authorized share capital, providing an alternative to the present court procedure for capital reductions and codifying the common law rules on companies' distributions;
- streamlining decision making procedures and other internal administrative procedures for private companies so that, for example, private companies need not hold annual general meetings or appoint a company secretary, as well as reducing the burden of financial reporting and audit for small companies;
- modernizing the process of forming a company, including the replacement of the memorandum and articles of association with a constitution in a single document; and
- new institutional arrangements to keep the law up to date and responsive to changing needs in the future.
Implementation of the recommendations will necessitate changes to existing legislation. No timetable for passage of implementing legislation has yet been set.