Company

There are many different types of entity through which your business can operate, such as limited companies, partnerships, limited liability partnerships, charities and community interest companies and we can provide legal advice you on the options and guidance on which structure may best achieve your aims.

Decisions affecting a limited company are made either by directors or by shareholders. The division of powers between directors and shareholders is a fundamental aspect of company law. Directors have control of the day-to-day running of the business while the shareholders govern the internal management of the company, for example, they have the power to change the business objects of the company, to allot shares and to ultimately distribute the proceeds and liquidate the company. Some decisions of the shareholders will require a simple majority while others will require either 75% assent or unanimity. In a meeting of the shareholders each shareholder present will initially have one vote each, however, should a shareholder request so, they will have such number of votes as they hold shares in the company. 

Shareholders agreements are most commonly used to protect minority shareholders, to give effect to the particular and special needs of the business of the company and of its shareholders and to provide exit mechanisms from the company. Furthermore shareholders agreements are not public documents and can therefore be kept from the eyes of both creditors and employees of the company.

A partnership comes into being where persons are "carrying on in business in common with a view to profit" and unless there is a written partnership agreement then the provisions of the Partnership Act 1890 will automatically apply, often with unintended consequences. Unless there are specific provisions to the contrary, the Partnership Act 1890 provides that (a) profits and losses are to be divided equally; (b) no partner can be expelled and (c) if any partner dies the entire partnership is dissolved and the partnership's assets must be realised and liabilities paid. A properly drafted partnership agreement can enable your partnership to be structured to reflect your specific business requirements.

Over the lifetime of a company the directors and shareholders may come and go, and the existing structure may no longer work for the remaining parties. Along with your tax advisors we can help you to implement new shareholding structures, by carrying out transfers, demergers or reorganisations, and ensure that you have the correct legal framework in place to govern your business relationship going forwards.

Over the lifetime of a company the directors and shareholders may come and go, and the existing structure may no longer work for the remaining parties. Along with your tax advisors we can help you to implement new shareholding structures, by carrying out transfers, demergers or reorganisations, and ensure that you have the correct legal framework in place to govern your business relationship going forwards.

The introduction of a private investor into your business will usually have some effect on the balance of power within the company. This may be through shares being issued to the investor diluting the existing voting power of the current shareholder of the company and rights to a dividend. The investor may also want representation on the board of directors, which could result in the founding directors being outvoted on matters of day-to-day management of the business. It is important to have the effective documentation in place to properly reflect the rights and obligations of all of the parties.

If you or your business partner has decided to exit the business then please speak with us, as we can advise and prepare heads of terms, confidentiality agreements, and exit documentation.

Employee share incentive plans are not only used to recruit, retain and motivate employees, they are also used to help align the interests of employees, particularly senior executives, with those of shareholders upon an eventual sale of the business. Some types of share scheme attract particular tax and national insurance contributions advantages and can be used to make payroll savings. There are a huge range of share schemes but the most popular are the HMRC-approved and, in particular under EMI option legislation. Our specialist team, along with your tax advisors, can help you implement these schemes by documenting the arrangements.

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