Corporate transactions

Creating transparency and trust in corporate life

Following the G8 summit in July, Vince Cable published a discussion paper ‘Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business’. The purpose is to encourage corporate transparency in an effort to combat some of the shadier aspects of international corporate activity including tax evasion, money laundering and financing of terrorist operations.

New regulations on share buy backs aim to boost wider employee ownership

The government is committed to promoting wider employee ownership of businesses as part of a drive to encourage more diverse ways of running businesses. In 2012 the Nuttall Report on Employee Ownership gave Parliament the impetus to draft new regulations simplifying the process for private companies wanting to buy back shares from departing employees. These regulations have now been approved by Parliament and will be incorporated into the Companies Act 2006.

Simplified regime for the registration of charges

The new regime for the registration of UK company charges was implemented on 6 April 2013. The amendments, which introduced a single UK-wide scheme, are to be broadly welcomed: they have streamlined and simplified the old registration process as well as making it less costly by introducing online filing.

Directors’ Duties are now enshrined in law

The most significant change to the Companies Act was the codifying of Directors’ Duties for the first time. These statutory duties replaced common law principles relating to the conduct of directors, both executive and non-executive, based on seven main requirements, the purpose of which was to introduce higher standards of conduct and management within business.

Secured directors' loans - helping you to get your loan repaid

Do you intend to make a loan to a company? Would you like to increase the likelihood of that loan being repaid? Many directors provide loans to their companies on an unsecured basis. However, if a loan is unsecured and the company becomes insolvent, the director’s loan will rank alongside all the other unsecured creditors and there is a substantial risk that all or at least some of the lent monies may not be recovered. As an alternative, a director can provide a secured director’s loan.

Bespoke articles and shareholder agreements for companies

In the absence of a written shareholders’ agreement, the relationship between the shareholders of a company is governed by the company’s articles of association, the Companies Act 2006, case law and certain other relevant pieces of legislation. The default provisions under the articles of association and company law may not always be suitable for all companies and very often a formal written shareholders’ agreement is desirable, or necessary, to vary certain of the shareholders’ rights and obligations.

Loans to directors of private companies

Under the Companies Act 1985 (the “1985 Act”) all companies were prohibited from making loans to their own directors, directors of their holding companies or persons connected with such directors. Under the 2006 Act the general prohibition on making loans to directors was removed and all companies are now permitted to make loans to their own directors or to directors of their holding companies, provided that shareholder approval is obtained.

Key characteristics of Limited Liability Partnerships

A Limited Liability Partnership (‘LLP’) is an alternative corporate business vehicle that combines the flexible structure of a partnership with the benefits for its partners of limited liability. LLPs are relatively new entities, the legislation creating them having come into existence in April 2001. They have a number of statutory requirements and failure to comply may result in a fine for the LLP and/or for all members in default.

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