It is vital for all companies, irrespective of size, to have a corporate structure that achieves their desired end goals.
Our specialist team can advise you on the best route to take, whether you’re just starting up or already have a well-established business. As well as assisting with the incorporation of your company and its constitutional documents, we can provide ongoing corporate governance policy advice to ensure that you are aware of the compliance issues that impact your business.
If you require advice or support with corporate structure, incorporation or governance, contact our Yorkshire-based solicitors today by calling 0333 323 5292. Alternatively, fill in our online form and we will get back to you shortly.
We have extensive experience of acting for clients on all types of joint venture and shareholders’ agreements. Our experts can draft and negotiate bespoke constitutional documents to govern the day-to-day management of your company’s business, but also to deal with issues such as resolution of deadlock, restrictions of the transfer of shares and good leaver/bad leaver.
It is vital that documents are tailored to your exact requirements and it pays to take the right advice, particularly when it comes to tax implications. Your preferred structure will inevitably have knock-on effects in terms of how the stakeholders extract benefit during your ownership period and when you decide to sell. The expertise of our corporate tax team in that sense is invaluable.
Corporate Governance Advice
The Companies Act 2006 restated the law relating to directors’ duties - previously, it was a matter of common law, but now the law is set out in statute. Therefore, it is even more important that directors are aware of their personal duties and obligations owed to a company and its stakeholders.
In broad terms, a director must act in a way that they consider would be most likely to promote the success of the company for the benefit of the members as a whole. Director’s duties are owed to the company of which they are the director, and it is, therefore, principally the company’s right to take action to enforce those duties.
Directors must also understand and procure observance by the company of the provisions of a company’s articles of association. We are able to provide guidance on these generally or in circumstances where a particular issue or conflict arises.
Who is Responsible for the Day-to-day Management of the Business?
The Companies Act 2006 dictates that a majority of the board has the authority to make decisions on behalf of the company. However, you should consider whether or not shareholders who are in the minority should also have the right to be consulted in relation to certain key decisions.
Restrictions on the freedom of shareholders to transfer shares is another key issue, which should be considered at the outset. In the absence of bespoke provisions contained in the company’s articles of association or a shareholders’ agreement, a shareholder is free to transfer shares to any third party as they see fit.
However, shareholders between them may prefer shares to be offered on a pre-emptive basis amongst themselves before they are offered to outsiders. Furthermore, there may be circumstances in which a shareholder should be compelled to transfer their shares, for example, should they cease to work for the company.
What happens on the death of a shareholder is another issue that should be considered and provided for in a shareholder’s agreement, rather than simply relying on the default positions as set out in the Companies Act 2006.
It is often the case that some of these issues have not been considered between shareholders who are understandably focusing on running the business. It makes sense to take legal advice at the outset in order that a fair and proportionate shareholders' agreement can be considered. Legal advice can also provide a mechanism for the various possible eventualities which may materialise, and offer a means of resolving disputes amongst shareholders.
Corporate Joint Ventures/Shareholders’ Agreements
Whether you are a majority shareholder who controls the board of the company, or simply an employee holding a few shares, it is important to consider whether or not an agreement to regulate the conduct of the company’s affairs between the various shareholders is appropriate.
In the absence of a bespoke contract, the company’s affairs will be conducted in accordance with the Companies Act 2006 and the company’s articles of association, which may not actually provide a framework that is consistent with the commercial agreement that has been agreed between shareholders.
Your articles may be outdated and a shareholders’ agreement may be required to set in writing the ideas that the shareholders have on running the company.
Incorporation of Limited Companies
There are many benefits to incorporating your business - you may be looking to take advantage of limited liability status or require a vehicle for an acquisition or as part of a group restructuring.
Lupton Fawcett can provide guidance on the best structure to meet your end goals. This includes advising on the benefits of creating different classes of shares for different stakeholders, preparing bespoke articles of association and drafting shareholders agreements.
We will deal promptly and efficiently with your incorporation including all post incorporation legal requirements such as the preparation of statutory books. We can also ease the burden of ongoing administrative requirements.
Don't forget tax. Changing the status of your business will inevitably involve implications for both the business itself and its stakeholders. Speak to our corporate tax team to make sure that you get it right first time.
Contact Us for Help
With offices in Leeds, Sheffield and York, we can offer our corporate governance structure services either on a face-to-face basis, by post or email. Get in touch with our team today by calling 0333 323 5292 or sending us an email. Alternatively, fill in our online form and we will get back to you.
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