The Companies Act 1989

Article Abstract:

The Companies Act of 1989 was developed because of the need to bring UK law into compliance with the European Community's Seventh and Eighth Directives which concern consolidated accounts and the regulation of auditors, respectively. The Act redefines parent and subsidiary companies to place emphasis on majority voting control, and the Act also implements statutory authorities to approve auditors. Other changes wrought by the Act include: creating an elective regime for private companies in the interests of deregulation; requiring large companies to state whether their accounts conform to applicable accounting standards and allowing the Secretary of State to require defective accounts to be revises; and making revisions to specific aspects of company law, including the doctrine of ultra vires and the registration of changes.

Laws, regulations and rules, European Union, European Community

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ESOPs - from fable to fact

Article Abstract:

The Finance Act of 1989, through the introduction of tax relief for employee stock ownership plans (ESOPs), recognizes the statutory existence of ESOPs in the UK for the first time. ESOPs are increasingly being used in management/employee buyouts in the UK. There are a variety of advantages to ESOPs including: providing employee motivation through capital ownership and income participation; creating an internal share market, allowing the company to avoid outside shareholders; and offering the owners of private companies a means to realize value from their shareholdings without losing control by placing shares in friendly hands. ESOPs require careful legal and accounting preparation and must be tailored to each company's circumstances.

Employee stock ownership plans

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