Shareholder Protection Companies Act 2006 Essay

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Abuse of power also adds to the list.

In regard to the remedies that may be used in taking care of unfair prejudice. It is therefore evident that the Companies Act 2006 has several changes that are relevant to the protection of the shareholder. The most relevant parts being sections 994 and 996

Creditor protection

Creditor protection is noted by Bachner (2009) as an important element of every company. The changes contained in the Companies Act 2006 are noted to affect the area of creditor protection within the UK companies.

The UK's Department of Business Innovations and Skills (2007) indicated that the UK government via BERR had resorted to amending the Companies Act 1985 as well as the one for 2006 in order to reflect the elements of creditor protection of the new Directive. The particular focus was on shifting the burden of proof from the firms to the creditor whenever they are objecting case of reduction in capital.

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The next change to the Companies Act 2006 in regard to creditor protection is the repealing of the financial assistance prohibition for the private companies (Moorcrofts,2012). According to this action, until the October 1st, it was illegal for any company to provide 'financial assistance' to aid anyone in acquiring a stake in the same company. This is regarded as a creditor protection mechanism. This is because a creditor who knows of the risk of exposing themselves in the event that the firm collapsed would themselves shunted down the usual pecking order right behind a bank which is secured.

Conclusion

This review has indicated that the Companies Act 2006 has several changes that affects shareholder as well as creditor protection. It is therefore important for amendments to be made to various clauses and sections in order to reflect the dynamic nature of the corporate governance landscape......

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