Corporate Legal Services
From time to time it may be necessary, for legitimate business reasons, to make changes to a company’s issued share capital, the company’s constitution or rules of management or to generally reorganise the company’s structure. We are regularly instructed to provide board and shareholder documentation for the following more common transactions:
Updating Articles of Association (Companies Act 2006 compliant)
With the advent of the Companies Act 2006 regulation of many private limited companies has been relaxed and the regulations themselves have been updated and simplified. In order to take advantage of these relaxations and to ensure that the company's constitution is fully up-to-date and compliant with the Companies Act 2006, it will be necessary for the company to update its articles of association. Some of the main benefits of updating the articles of association are:-
- to simplify the company's decision-making process when there is a sole director.
- to remove the limitation on the business the company may conduct (ie – adopt unrestricted objects and make the old provisions obsolete – if this is not addressed any objects stated in the old Memorandum will be regarded as a restriction on the company)
- to remove the regime of “authorised share capital” so there is no upper limit restriction on the number of new shares the directors can allot if the company has one share class
- to provide the directors with enduring authority to allot shares without shareholder approval
- to extend the company's power can to use electronic means to communicate with its shareholders and hold electronic meetings of the directors
- to address the directors conflict of interest restrictions now placed on them by the Companies Act 2006
Reduction of Capital
A company may reduce its share capital either by applying for an Court order or, if a private limited, company, by the new regime using a solvency statement as prescribed by the Companies Act 2006. A company using the solvency statement procedure to reduce its share capital (which includes its share premium account and capital redemption reserve) will avoid the need to go to Court to effect the reduction. The procedure is potentially very fast and less expensive than the Court method and no specific additional creditor protection steps are needed.
Purchase of Own Shares
An alternative way in which a company can reduce its share capital is to buy back shares from its shareholders. This is a very technical transaction and it is imperative it is conducted in compliance with legislation – board meetings and shareholder meetings must be convened in accordance with the law and documentation must be absolutely correctly drafted. Quorum provides a comprehensive package of documents available for a purchase of a company’s own shares and will assist with the timetabling of the procedure and the filing of the necessary documentation at Companies House.
Re-organisation of Share Capital
From time to time a company may have to re-organise its share capital by either creating A or B share classes to facilitate payment of dividends or subdividing shares into smaller denominations or consolidating the shares into higher value denominations
It is now more important than ever that the resolutions and other documentation are fully compliant with the requirements of the Companies Act 2006 in order that future problems do not arise (which can be expensive to remedy) and to ensure that Companies House does not reject the documentation.
A company may have been struck off by the Registrar of Companies for various reasons, including involuntary striking off for the failure of the directors to file the necessary financial accounts and annual returns. This is potentially disastrous for the Company as any assets which may have been owned by the Company immediately become the property of the Crown. However, steps can be taken by the former shareholders of the company to have the company restored by the Court in order to recover the lost assets or to continue trading.
Under the Companies Act 2006 there are various types of re-registrations available to companies eg Private to Public; Public to Private; Limited to Unlimited; Unlimited to Limited. All re-registrations involve the passing of special resolutions (in some cases the convening of a general meeting), board minutes and other legal statements and procedures prescribed by the Companies Act 2006.
Preference and Redeemable Shares
From time to time a company may seek to create preference shares or redeemable shares in order to provide and facilitate structures to allow for investment in the company or to provide different voting, dividend and repayment rights to shareholders.
The above sets out the most popularly requested services. We also provide support for other legal transactions not mentioned in this section.
In all cases Quorum will provide all the fully drafted documentation and forms which you will require and which are fully compliant with the current legislation (eg the Companies Act 2006).
If you are interested in any of our legal services or have any general corporate legal queries click here to send us an email and one of our advisers will contact you to discuss your requirements and confirm our fees.