The Companies Act Essay Example | Topics and Well Written Essays - 4500 words

The Companies Act - Essay ExampleNot only the shareholders and directors of the companies being freshly incorporated tho those of the companies that are already in existence need to study the general duties of the directors in the Act. Executive drumhead The companies Act in 2006 are a pioneering law contemporary times that places great moral and friendly responsibility on the directors of the companies. Definitely, UK has taken the lead in calling for a more(prenominal) mature and trusty behavior on part of the Directors of a company. The Companies Act 2006 replaces the companies of 1985 and 1989. The Act, it is hoped, result usher in an era of the more responsible role for people in billet leading to enlightened shareholder approach. The shareholders will hold the directors more accountable for their acts leading to the generation of awareness for the social and physical environment. The government feels that business atmosphere, society, and the environment are inextricably linked to each other and the positive or negative side effect of one affects the others. The registration of companies started in 1848. Earlier in the Companies Act of 1948 originated the True and Fair View (Bucheery, n.d.). This entailed upon the directors to stool a true and fair view of the fiscal position of the company and the profit and loss were reflected in the annual balance sheet for the knowledge of shareholders. Later this system was incorporated in the fourth guiding of Company Accounts of the European Economic Commission (Flint, 1982). Earlier the refrain in the corporate world was to increase profits at any cost. But with the world coming together due to globalization and the check of negative fallouts of the trade and commerce like emission of greenhouse gases, deforestation, and a yawning gap in the midst of the developing and the developed world, a need was felt for enactment of a law that required great business transparency, a commitment to the social and p hysical environment and reinforcement of confidence of the people in business systems.