The Pharmaceutical Journal
Vol 269 No 7208 p126
27 July 2002

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Pharmacy owners to benefit from "think small" company law reform

Small companies, such as those running independent community pharmacies, should benefit from an overhaul of company law outlined by the Government last week.

A White Paper “Modernising company law” issued by the Department of Trade and Industry says: “The Government believes that the starting point for company law should be small companies — to 'think small first' — with additional or different provisions for larger companies being brought in where necessary.” Small companies are defined as meeting any two of the following criteria: turnover of no more than £4.8m, balance sheet total of no more than £2.4m, no more than 50 employees.

Under proposals outlined by the DTI, such companies would no longer have to hold annual general meetings to approve accounts and reappoint auditors unless shareholders specifically request them. Shareholders would be able to make unanimous decisions and take decisions by means of written or electronic communications rather than holding formal meetings. In addition, small companies would not need to appoint company secretaries. The duties of directors are to be set out clearly in new legislation.

Kirit Patel, chairman of the Day Lewis group, said that the “think small first” approach to the proposals was good for small pharmacy corporate bodies, many of which are owned by husband and wife partnerships. A number of current requirements that banks, solicitors or accountants normally undertake for a fee would no longer be necessary, reducing both workload and costs. “The roles of the directors of these small pharmacy companies will be redefined to make them principally responsible for the promotion of the business for the shareholders, which in most pharmacies are the owners themselves,” he said.

Mr Patel, the Royal Pharmaceutical Society's Treasurer, has just been reappointed for a second term on the Government's Small Business Council.

The White Paper contains a number of draft clauses for a new Companies Bill and invites responses by 29 November. Further draft clauses are to be issued later. Copies of a summary document for small businesses are available from the DTI on 0870 1502 500.