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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Understanding corporate finance: the legal and regulatory framework: the key legislation

The legal and regulatory framework: the key legislation

The Companies Act 2006

All companies operate within the legal framework of the Companies Act 2006. A company’s Memorandum of Association will generally confer powers to undertake a wide range of financial transactions, including the power to borrow or raise money on such terms and on such security as it thinks fit, operate bank accounts, issue financial instruments of various types, deposit and invest monies not immediately required, deal in investments, lend money, give credit, enter into guarantees, contracts of indemnity etc. From 1 October 2009, a company’s objects will be included in its Articles of Association.

The Financial Services and Markets Act 2000

In addition, companies operating in the financial sector are regulated by the Financial Services Authority (FSA) in accordance with the provisions of the Financial Services and Markets Act 2000 (FSMA2000) in the interests of consumer protection and the wider economic stability of the financial sector. In particular, banks, other deposit takers, insurers, and similar regulated entities are required to comply with rules on how their conduct their business, and in particular on the amount of capital they must hold. CFM14030 has more details on FSMA 2000.

The Building Societies Act 1986

Building societies are regulated by the FSA, subject to legislation set out in the Building Societies Act 1986. That Act has subsequently been amended a number of times most notably by the Building Societies Act 1997 and FSMA2000.