News and Insights

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Nominee Purchaser – Bespoke Articles For Your Limited Company

Collective enfranchisement is the right for owners of flats in a building to come together and buy the freehold of that building. This right to buy the freehold is subject to qualification and the process is quite complicated it is advisable that you contact a solicitor or surveyor when going through the process.

Generally, one of the first things you will need to do is check that there are enough qualifying tenants and that the building qualifies. Once you are clear on this and you are able to collectively buy the freehold you will, at quite an early stage, need to choose a nominee purchaser.

A nominee purchaser is the person who puts their name on the notice to the freeholder, conducts the later stages of the buying process and is responsible for managing the building upon completion. There are no laws governing how the nominee purchaser is selected but it is very common for a group of tenants to create a limited company for the purpose of being the nominee purchaser. The tenants usually become shareholders of the company and a few will also become directors of the company too.

The company must be fully established prior to being named in the notice. Part of being fully established means that the company will need to have its own set of articles of association. Every limited company will have a set of articles which set out the rules that must be followed by the officers and the articles also set out the rights of the shareholders.

Unfortunately when tenants come together to buy the freehold they often do not arrange for bespoke articles to be drafted for their new company. It is just not a priority because there is so much to discuss and organise. As a result these companies often end up with standard articles that do not contain any specific reference to the purpose of the company.

It is important therefore to have properly drafted articles because without them serious and costly problems can crop up later. Properly drafted articles designed for the management of your particular block are therefore essential.

Some of the important points to think about are:

  • Will the company be allowed to collect service charges and ground rents?
  • How will communal areas be managed and who will be responsible for this?
  • Will all the other members of the company need to be notified when one member decides to move away?
  • What is the process of transferring membership?
  • How will we appoint and remove directors?
  • Do we need to hold AGM’s and what is the procedure?

The most effective way of avoiding problems in the future is to make sure your company’s articles are drafted properly and that everyone involved is fully aware of the contents of the articles of association. If they are found to be lacking it is advisable that you take action to change them immediately.

Regardless of whether you are just in the early stages and are doing your research, or if your company is in the process of being set up or already exists, M & N Group will be able to advise you. We can help you to establish your company, draft bespoke articles of association and help you manage your annual compliance obligations after completion. We are specialists in the field and are here to assist you with our fast and efficient service.

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Your Private Limited Company’s Registers

Limited companies are legally required to maintain certain statutory registers:-

  • Register of applications and allotments
  • Register of directors and secretary
  • Register of charges
  • Register of members and share ledger
  • Register of transfers
  • PSC register

The registers need to be maintained and updated when any changes occur by a director or a company secretary. You can keep the registers at the company’s registered office address or if that is not convenient at a single alternative inspection location (SAIL). If you are not keeping you company’s registers at the registered office you will need to notify Companies House of the SAIL location. The SAIL location must be in the UK and you must specify which registers are held there.

The registers must be made available for inspection to members of the public upon request and adequate notice must be given to the company. The normal notice period is 10 days but can be 2 days in the case of a member requesting to inspect the registers during the notice period calling a general meeting. You can keep your registers in a paper based form, electronically or use both methods if it is preferred.

M & N Group have extensive experience of maintaining statutory registers and records for all types of companies. We also provide registered office facilities for companies looking for a registered office address, SAIL location or just need assistance with their company’s statutory registers.

 

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Corporate Governance Code 2018

The Financial Reporting Council (FRC) published the 2018 Corporate Governance Code (the “new Code”) on 16 July 2018 with the aim of improving the standard of reporting by companies and strengthen the integrity of UK business – a necessity after the recent collapse of Carillion and the BHS pension scandal.

The new Code encourages more meaningful reporting and focuses on board effectiveness, stakeholder engagement, purpose and culture. It applies only to those UK companies with a premium listing on the London Stock Exchange and these companies are expected to begin complying with the new Code on or after 1 January 2019. The new Code calls on boards to analyse their company’s culture from within and requires them to respond to any matters relating to corporate governance using the ‘comply or explain’ principle.

Under the new Code, a company’s board are required to engage more with their workforce to ensure that they share the same values and that practices are in line with the company’s long-term aims. The workforce should also be able raise any concerns they may have. No guidance is provided on how companies should go about this but a company could, for example, appoint a non-executive director from the workforce as a representative who could communicate any issues.

Another area of the Code to have been amended concerns the division of responsibility. The new Code now includes the requirement that the board receive accurate and timely information. Non-executive directors must also be given sufficient time to meet their board responsibilities.

An additional key feature of the new Code is that it now requires the board to annually evaluate its composition, diversity and how they all co-operate with one another. For example boards will be required to explain in cases where the chairperson’s tenure exceeds nine years.

Reporting on and structuring of remuneration policies has also changed. Policies should now be designed to support strategy and promote the long term success of the company, be more transparent and less performance focused.

The FRC does not currently have the power to penalise companies or board members who violate the Code. A government review of the FRC’s effectiveness will be published at the end of the year so watch this space. Hopefully these changes will motivate boards to engage more with their employees and shareholders, improve diversity and ultimately boost public confidence in UK businesses.

 

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Confirmation Statements

The confirmation statement, formally the annual return, was introduced from 30 June 2017 and is an annual filing obligation for UK companies and LLPs. The purpose of the confirmation statement is to ensure that the information held by Companies House about your company is up to date.

It is the company’s responsibility to ensure that the information held about it on the public record is correct. If you have not previously notified Companies House about any changes that have taken place during the year, the confirmation statement is the perfect opportunity to submit this information.

When you file your company’s confirmation statement, begin by checking what information was given in last year’s confirmation statement and also what is held at Companies House. This is a great opportunity for you to ensure that all the information held about your company is up to date.

Remember to check all the important details such as the registered office address, location of the statutory records if they are not held at the registered office, your company’s standard industrial classification codes, details for the directors and secretary and the share capital, shareholder information, any transfers that took place during the year and your Company’s PSC information.

You will need to be careful as some changes need to be reported alongside the confirmation statement. Other forms may need to be filed at the same time as the confirmation statement if some changes have not yet been reported to Companies House.

If you note any changes to your company’s share structure you will need to update the information contained in this year’s confirmation statement before submitting it to Companies House.

The confirmation date is the date at which the information contained in the confirmation statement is correct and the next confirmation date falls 12 months after the last confirmation. The confirmation can be delivered on paper or filed electronically upon payment of a fee.

For help with your company’s confirmation statement or queries about annual compliance, contact M & N Group so we can help you remain compliant with our fast and efficient service.

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You’ve got a business idea but what are the next steps?

  • Choose your company structure

With several types of companies to choose from, you will need to select the best suited for your business and review the information that must be lodged at Companies House.
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Say Goodbye to Corporate Directors!

As part of the Government’s drive to encourage transparency, a ban on the use of corporate directors will come into force later this year as part of The Small Business. Enterprise and Employment Act 2015.

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What is an SPV?

What is an SPV?

A Special Purpose Vehicle (SPV) is a UK-incorporated company that has been established by another trading company or private individuals for the sole purpose of Buy-To-Let activities i.e. the purchase/remortgage of residential properties for letting.
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