Commercial Review - May 2008
In this issue we look at the next stage of the phased implementation of the Companies Act 2006 i(from 6 April 2008) -What are the main changes that will affect you?; a brief round-up of recent developments for landlords and tenants; Budget 2008; Freeth Cartwright’s The Sunday Times 100 Best Companies to Work for 2008 award and details of how to enter a team for our Corporate Challenge bike ride!
Companies Act 2006
Property focus
Budget 2008
Freeth Cartwright ranked in The Sunday Times Best 100
Freeth Cartwright Corporate Challenge Sunday 22 June 2008
The next stage of the phased implementation of the Companies Act 2006 is
upon us (from 6 April 2008). What are the main changes that will affect you?
Secretaries
Private companies no longer need to have a company secretary if they do not want one.
Key points:
• If your company has articles of association which require a secretary then you will still need to have one unless you amend your articles
• If your company has “Table A” as the basis for its articles, then a secretary is not required and no amendment to your articles is necessary
• Public companies must still have a secretary
• If your company does not want a secretary then notice of the resignation must be filed at Companies House on a form 288b (the form number will change from 1 October 2009)
• If you choose not to have a secretary, the work done by the company secretary will still need to be done and, until 1 October 2009, the proper person to do that is a director (from 1 October 2009 the directors can authorise a third party to do anything required or authorised to be done by the secretary)
• A Register of Secretaries must still be maintained by public companies and for those private companies which choose to have a secretaryExecution of Deeds and Documents
One director of your company will be able to sign deeds and documents if their signature is witnessed.
Key points:
• This is in addition to the traditional methods of signing ie for a deed, two directors or a director and company secretary if there is one; by using the company seal
• The witness must see the director sign the document and then sign the document him/herself and also print his/her name and address
• This will be useful for those companies that choose not to have a company secretary
• This right exists irrespective of any requirements in your company’s articles on the execution of documents
Accounts and Auditors
• Filing of Accounts: for accounting periods commencing on or after 6 April 2008, company accounts must be filed at Companies House:
* Within six months of the accounting period end for public companies; and
* Within nine months of the accounting period end for private companies
• Copies of Accounts to Members: all members are entitled to receive a copy of their company’s accounts:
- For private companies, copies must be sent to members on the earlier of the latest date for filing or the actual date of filing
- For public companies there is no change - copies of the accounts and reports must be “laid” before the company in general meetings and copies must be sent to members 21 days in advance of that meeting (which must take place before the latest filing date)
- Copies need not be sent to a person for whom the company does not have a current address
- Companies listed on the main market of the London Stock Exchange must post their accounts on their website as soon as is reasonably practicable
• Auditors Limitation of Liability: your company auditors can now, and may want to, agree a “liability limitation agreement” with you to limit their liability to you in respect of negligence, default, breach of duty or breach of trust occurring in the course of their audit work. The LLA must be approved by the members for each financial year and is not effective to limit the auditor’s liability to less than such amount as is fair and reasonable in all the circumstances having regard to:
- The auditor’s responsibilities
-The auditor’s contractual obligations
-The professional standards expected of an auditor
• Auditors’ Liability: there is a new criminal offence for auditors who knowingly or recklessly include misleading or false information in their auditors’ report
• Directors’ approval of accounts: directors must not approve company accounts unless they give a true and fair view of the assets, liabilities, financial position and profit or loss of the company
• Form and content of accounts: for accounting periods commencing on or after 6 April 2008, the Companies Act 2006 will apply in relation to the form and content of the accounts, rather than the Companies Act 1985
Shares
• If your company is asked to register a transfer of shares it must either register the transfer or, if it refuses to register it, the 2006 Act states that it must now give reasons for the refusal
• The minimum share capital for public companies can now be in sterling or the euro equivalent
For more information please contact Bethan Davies and Paul Thorogood.
Bethan Davies Paul Thorogood
bethan.davies@freethcartwright.co.uk paul.thorogood@freethcartwright.co.uk
A brief round-up of recent developments for landlords and tenants and a look at key changes arising from the 2008 budget.
Cap on landlord’s claim for dilapidations Most leases oblige a tenant to repair the premises during the term and hand them back to the landlord in no worse a state than they were at the start of the lease.
The landlord can claim against the tenant for the breach of these obligations. In a recent case, the tenant handed the premises back in a seriously dilapidated state, but as the landlord had obtained planning permission to redevelop the property, the court awarded the landlord less than half the amount he was claiming. The amounts that a landlord can claim are limited by statute and the statutory provisions should be investigated when facing a large dilapidations claim from your landlord.
Almost a costly error
A landlord omitted to include £260,000 worth of service costs in its annual service charge estimate, in the quarterly invoices sent to the tenant (as is usual, the service charge was payable quarterly on account) AND in the annual statement of actual expenditure at the end of the financial year. However, the court decided that the landlord could serve a further statement which included the missing sum, so whilst the tenant has some breathing space, it’s not off the hook completely and will have to pay up if the landlord serves a revised statement.
No parking
Parking spaces are a precious commodity these days. If you have agreed informal parking arrangements with your landlord, try and get these included in your lease. If you don’t, the rights may not be included when you come to renew your lease.
Tenants beware!
A tenant had to foot a £9,000 repair bill when water leaked into his premises from another part of the building, even though the landlord was responsible for maintaining and repairing the defective part. This was because the defect existed before the tenant took the lease. Make sure that you inspect a property, and the building of which it forms part, thoroughly before taking a lease and protect yourself by making the landlord responsible for defects in the lease itself.
Keep your options open
Does your lease contain an option to purchase the landlord’s freehold interest in the property? You must register the option so that it is binding on anyone who buys the freehold from your landlord in the meantime. Your landlord may deliberately seek to avoid your option by transferring the property to, say, a subsidiary company. In a recent case, the landlord was ordered to direct the subsidiary to transfer the property to the tenant when the tenant exercised the option, but litigation (which took 3 years to conclude) could have been avoided if the option had been registered properly in the first place.
House work
If you operate your business from a property that used to be a house but which has been converted for commercial use, and your lease was granted for a term of 21 years or more, you may be entitled to acquire the freehold or to have your lease extended in the same way that tenants of residential premises are, following a recent case decided by the House of Lords.
For more information please contact Heloise Horton 
on 0115 934 3902 or email heloise.horton@freethcartwright.co.uk
SDLT - property investment partnerships
If your business is a partnership whose sole or main activity is investing or dealing in interests in land, transfers of interests in land within that partnership will not be subject to SDLT. This change is retrospective and applies to all such transfers since 19 July 2007.
SDLT - group relief
Companies may currently claim ‘group relief’ on transfers of assets between group companies, but HMRC can claw back the relief if a property is transferred to a group company and then the purchaser company ceases to be in the same group as the vendor company because it leaves the group.
There are various avoidance schemes designed to circumvent the claw back provisions but changes to the relevant legislation mean that companies will no longer be able to avoid claw back of group relief if the vendor company leaves the group or there is a change in the control of the purchaser company within three years of that company acquiring an asset.
VAT - option to tax
From 1 June 2008, the law relating to the option to tax will be amended so as to simplify the legislation and improve practical administration of the option to tax. The changes will cover a number of issues including the revocation of an option to tax.
Freeth Cartwright ranked in The Sunday Times Best 100
Staff at law firm Freeth Cartwright always knew it was a good company to work for - and now it’s official!
With offices in Nottingham, Derby, Leicester, Birmingham and Manchester, we have been selected to join the coveted Sunday Times 100 Best Companies to Work For 2008 list. It’s a great accolade for us, particularly as it was the first time the firm had entered the awards and comes just weeks after it scooped a separate Best Companies award.
Chairman Colin Flanagan commented: “It’s great news for us. We have a vision for the firm and I believe that the result is testament to the teams of people who are working hard to turn that vision into reality and ensure that working at Freeth Cartwright is rewarding both professionally and personally. Ensuring that this is a great place to work is at the heart of our vision.
Partner Philippa Dempster and Senior Human Resources Manager Carole Wigley receive the award from Richard Caseby, Managing Editor of The Sunday Times.
Freeth Cartwright Corporate Challenge Sunday 22 June 2008
Freeth Cartwright would like to invite you to take part in our inaugural Corporate Challenge by entering a team (of up to five cyclists) for the purpose of raising £50,000 for five nominated charities.
The Challenge is part of the Great Notts Bike Ride which is taking place during national Bike Week. The supported charities are Marie Curie Cancer Care, Cerebral Palsy Sport, When You Wish Upon a Star, Rainbows Hospice and the Geoff Thomas Foundation.
Each rider in every team will be asked to complete the whole of the 18 or 50 mile route - this is not a relay race. The emphasis is on teams of people from the business community getting together, having fun and most importantly, raising as much money for charity as possible.
The Challenge is to be the team raising the most money in sponsorship. The price of entry is £250 per team (with £100 going directly to charity) and a prize will be awarded to the team that raises the most money.
After the event there will be hospitality at Holme Pierrepont for the weary teams.
For more details about the Corporate Challenge log onto www.freethcartwright.co.uk or contact Marie Quinn: 0115 934 3917 / marie.quinn@freethcartwright.co.uk
