The decision to start in business is an important one and amongst the many considerations for you, you will be thinking about limiting personal liability and how to make it the most tax efficient vehicle. You may want to be a community interest company or generally set up as a social enterprise, perhaps you intend to have a charitable purpose, but more likely you will want to be a profit making enterprise. In any case, you still have more choices to make.
§ Bespoke and Off-the-Shelf Formations
Companies limited by shares or limited by guarantee and Limited Liability Partnerships can all be created and ready for you to start business in short order. Take time, however, to look at all aspects of your proposed business before you launch in to the buying process.
We can assist you in checking that the chosen company name is not already in use, ensure that domain names or business Facebook pages are available and give advise on how to protect the founding member(s) for the future.
The time spent now at the inception will be rewarded with years of strength and growth without the heartache caused by imperfect or deficient governance and regulation.
§ Changes in share structure
Companies mature and evolve over time and the ownership structure of the company will need to be flexible enough to enable this. In a company limited by shares, the Company’s Articles of Association and any shareholders agreements will settle the way in which shares can be bought and sold. An agreement for a smaller family enterprise will aim to protect the existing shareholders against uninvited newcomers, whereas one prepared for a more entrepreneurial venture might provide options to encourage new investment and might allow the transfer of shares to outside parties.
Making plans to provide not only for those retiring, but also for those coming in to take the company to its next level is a worthwhile exercise. It may seem strange having an exit plan built in at day 1, but knowing how things are to be handled and what will be required on the happening of certain events can make the future an easier pathway for all concerned.
Care is needed at all stages to ensure that the share structures provide rights where intended and do not suddenly pass control in to new hands. Decisions will be made by a given majority of the shareholders and a weak constitution may allow voting power to be diluted in unexpected ways.
These points and more require consideration when setting up and when making changes in share structure.
§ New classes of shares
All shares have some rights attached to them and often a company limited by shares will be created with several separate classes of shares with different rights attached. These can be tailored so that, for example some classes of shares will be for voting purposes, others may enable differentiation between varying levels of seniority of participants in terms of dividends.
Share classes can be added or changed by way of appropriate resolutions of the membership and advice will be needed to ensure that the correct legal and statutory framework is followed.
A company relies on the making of focused and relevant daily decisions by its board of directors. The board will vote by resolution based on a majority of those present.
Shareholder resolutions on the other hand are made by reference to the number of shares held by a member and most resolutions require a simple majority, but some decisions can only be made by a special resolution involving 75% agreement.
The Companies Act 2006 has made it simpler to run a company by allowing for written resolutions and Board meetings often take place over the telephone.
Making sure that resolutions, passed in whatever format, are properly recorded in signed Minutes and filed where necessary with Companies House is a vital part of Company management, providing a record in the event of a dispute and evidencing intentions and decisions for anyone needing to know.
§ Restoration to the Company Register
If things have conspired against you and the company has been struck off the register, it may be of major importance to reinstate the company. The main reason for needing reinstatement could be that the company had assets or there may have been was a successful business being continued. A striking off of a company could arise due to indifference being shown to the secretarial functions of filing returns or filing accounts, but in this day and age with online filing this should be a rare occurrence. Sometimes difficult events with absences through illness or perhaps managerial problems might bring about a lapse in filing, resulting in the striking off.
The Devine Law corporate team can handle this sensitive area for you with an application to reinstate and our specialists will walk you through the issues and aim to reinstate your business with as little fuss as possible.
§ Related Topics