The structure and governing of a company can be complicated, especially when considering the regulatory infrastructure of the Companies Act. Company owners and shareholders often know internally what their objectives and desired outcomes are, however, putting the correct company documents in place to support this is can be difficult.
Our experienced corporate lawyers can provide easy to understand advice on:
- Directors’ duties and obligations
- Shareholder agreements and associated rights
- Articles of association
- Issue of shares
- Director employment contracts
- Partnership agreements.
Good planning and putting the appropriate arrangements in place early are extremely important if business owners are to have a trusted and productive working relationship. Such measures will not only prevent a dispute from arising but, if a dispute is unavoidable, can mitigate the adverse consequences of that dispute so the business continuity is not disrupted.
Our company law solicitors’ expertise
There are a whole range of options for structuring your business and, without expert guidance, it can be difficult to know which option is best for you.
Our specialist corporate lawyers can provide clear, practical advice about the implications of your structure, including:
- Liability – sole traders and partners in unlimited partnerships are personally liable for the debts their businesses accrue. Directors of limited companies and partners of limited liability partnerships are somewhat protected from liability
- Taxation – such as Income Tax, Corporation Tax, Capital Gains Tax, and employment associated tax (such as your employees’ Income Tax and National Insurance contributions)
- Disclosure – Limited companies and limited liability partnerships must register with Companies House and file annual accounts. Sole traders and unlimited partners only have to declare to HMRC
- Commercial contracts – a business’s success is often defined by the suitability of its agreements, such as shareholder agreements, articles of association, and partnership agreements
We have a skilled commercial law team with considerable experience in company law and business structuring. We advise a wide range of clients from sole traders, to partnerships, to SMEs, to large regional and national corporations. Our commercial sensitivity and commitment to professional development means we can swiftly align our advice with your business strategy and objectives. Our expertise includes:
As a company director, you will have vital legal duties to comply with, including to:
- Act within your powers as set out by the articles of association
- Promote the success of the company
- Exercise independent judgment
- Exercise reasonable care, skill and diligence
- Avoid conflicts of interest
- Not accept third party benefits
- Declare any interests in transactions with the company
If you breach your duties, you might have to pay substantial compensation or damages and in some cases, you may even commit a criminal offence.
We can provide professional support and guidance on complying with your duties and avoiding any conflicts which may negatively affect your business and its reputation.
Shareholder agreements are essential for setting out how the business will be controlled and how the relationships between the shareholders should be conducted. Shareholder agreements are important for:
- Setting out the shareholders’ rights
- Regulating the management of the company, such as how certain decisions should be made
- Protecting minority shareholders, for example, by allowing for the issue of additional shares only with the unanimous agreement of the shareholders preventing the dilution of shares
- Controlling the transfer of shares, for example, by giving existing shareholders a “right of first refusal” when another shareholder decides to sell up
- Linking shareholding to employment as, in many cases, the majority of shares are held by directors or employees
- Setting out mechanisms to resolve disputes
We can draft and review agreements to ensure the rights and obligations of the shareholders are set out unambiguously, minimising the risk of disputes.
If a shareholder acts outside of the shareholders agreement, the other shareholders will likely have a claim for breach of contract if they suffer loss as a result.
Articles of association
All registered companies must have:
- A memorandum of association – a legal document signed by the directors and shareholders agreeing to the incorporation of the company
- Articles of association – a legal document setting out the rules of the company, how it should be operated and how disputes should be resolved
You can either use the “model articles” which are standard rules set out in the Companies Act, or we can help you write your own articles. The articles will control fundamental matters such as:
- How new shares will be issued
- The procedures for shareholder decisions and board meetings
- The appointment and removal of directors
- Restrictions on the sale of shares
The company cannot act outside of its articles of association and if it does, such actions are likely to be legally invalid.
Issue of shares
Whether you plan to generally increase the share capital of the company, issue shares to new shareholders, or issue shares to employees as part of an EMI scheme (Enterprise Management Incentive scheme), you must comply with the articles of association and any shareholders agreement.
We have substantial experience providing advice in relation to the issue of shares, shareholder rights, and resolving any conflicts.
Director’s employment contracts
Our corporate solicitors can provide specialist advice about the drafting and effective implementation of director’s employment contracts (also known as director service agreements).
We will ensure all important matters are dealt with clearly, including:
- Working hours
- Bonuses and other reward schemes
- Termination and resignation
- Intellectual property
- Restrictive covenants
- Acceptance of gifts and benefits
With our assistance there will be little ambiguity about the directors’ position as employees, minimising any risk of dispute.
A partnership agreement is essential to set out the relationships between partners in a partnership. We can provide advice about all aspects of partnerships, including the formation and drafting and implementation of an effective partnership agreement.
We will help you clearly set out rules relating to matters like the death or incapacity of a partner, the sale of the business, how decisions will be made, and termination of the partnership.