Codification of Company Law: Taking Stock of the Companies Act 2006

Abstract

The Companies Act 2006 was presented by the Labour Government of the day as a tour de force in legislative drafting, pursuing a multi-faceted policy agenda designed to appeal to a range of stakeholders. This article considers the lengthy review process which led to the drafting and enactment of the Companies Act 2006. Particular regard is had to the underlying work of the Company Law Review and the English and Scottish Law Commissions which laid the groundwork for the drafting of the Companies Act 2006. The Act is evaluated at a macro-level from the perspective of its avowed objectives as both a codifying and reforming Act and one which was designed to advance a pro-enterprise mandate. The article also examines the plain language agenda which was designed to make company law more accessible, as well as how the transfer of the common law and equitable duties of directors to statute was handled at drafting stage. In this regard, sub-sections 170(3) and (4) of the Companies Act 2006 contains a unique set of instructions in relation to the replacement of the duties albeit with a dissonant instruction to interpret the new statutory duties with regard to the rules and principles they replace, something which proved controversial during the Parliamentary process. The manner in which the courts in the intervening years have approached the interpretation of these statutory duties is therefore examined.