Overview of the Act
6.The Act is divided into three parts and has 67 sections and eight Schedules.
7.Part 1 is intended to strengthen the independence of the system of supervising auditors, the enforcement of accounting and reporting requirements, the rights of auditors to information and the company investigations regime; and relaxes the prohibition on provisions made by companies to indemnify directors against liability to third parties.
8.Part 2 makes provision for the establishment of a new corporate vehicle, the “community interest company”, intended to make it simpler and more convenient to establish a business whose profits and assets are to be used for the benefit of the community. There will be a statutory "lock" on the profits and financial assets of CICs and, where a CIC is limited by shares, power to impose a "cap" on any dividend. Companies wishing to become a CIC are required to pass a community interest test and to produce an annual report showing that they have contributed to community interest aims. A new, independent Regulator will be responsible for approving the registration of CICs and ensuring they comply with their legal requirements. He will have powers to obtain information from CICs, appoint, suspend or remove CIC directors, make orders in respect of the property of CICs, apply to the court for a CIC to be wound up and set the dividend cap.
9.Part 3 contains supplementary provisions concerning repeals, revocations, commencement, extent and the Act's short title.