Directors are appointed to manage a company’s day-to-day operations. Their primary responsibilities include acting in the best interest of the company, exercising care and diligence, and avoiding conflicts of interest. Directors have a fiduciary duty to shareholders, meaning they must prioritise the company’s welfare over their personal interests. Additionally, they are responsible for ensuring the company’s compliance with relevant laws and regulations, including financial reporting, corporate governance, and statutory obligations.

The articles of association are a vital document that outlines how the company operates internally and third parties. This document sets out the rights and responsibilities of directors, shareholders, and other stakeholders. It typically covers important aspects like how directors are appointed and removed, how meetings are conducted, and the voting rights of shareholders. The articles must comply with the laws of the jurisdiction where the company is registered, and they can be changed as needed, usually with the approval of the shareholders. Another example of the effects of articles of associations on how a company operates are the “Objects” these are now often removed from the articles but in the past they were prevalent, whilst many may view them as simply setting out what the company aims to do they can also place restrictions on the directors as to what they can do with consequences if they are deemed as operating in breach of them.

Both directors and the articles of association must adhere to the law and regulations governing them. If they don’t, there can be serious consequences, including fines, disqualification of directors, and damage to the company’s reputation.

In summary, knowing the roles of directors and the importance of the articles of association is crucial for good corporate governance. Directors need to do their jobs diligently, while the articles serve as the foundational document guiding the company’s operations. Being familiar with these elements is essential for anyone involved in managing or advising a company.

If you have any questions regarding your position as a director, your company’s articles of association or company law, do not hesitate to take legal advice. As we highlight above, the consequences of it going wrong can be serious.

Please contact our expert Corporate Commercial Law team if you require further advice on the above.

Article written by Commercial Assistant Lara Kljajic.

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A director’s powers and authority stems from legislation, the Companies Act 2006 being the most relevant legislation, and the articles of association of the company in question (see our previous blog post on articles of association here) which acts as the company’s constitution.

There are areas of the articles of association that need consideration where there is only one director of the company.

One area may be how a company executes documents/binds itself.

Another involves decision making. A board meeting is often required for decisions and authorisations relating to key parts of a company’s business such as borrowing money. A board meeting involves more than one person, and a quorum is often defined in the articles as two directors or more.

The model articles, which are the template that many companies do not alter when they are incorporated, requires a quorum of two directors but also allows for sole directors to make decisions – usually via sole director resolutions. However, the case of Hashmi v Lorimer-Wing (also known as Re Fore Fitness Investments Holdings Ltd) relating to whether a sole director had the power or authority on their own as the sole director led to lenders and banks requiring a change of articles before they would lend to sole director companies as it would affect their ability to recover monies that they have lent.  

The subsequent case of Re Active Wear Limited (in Administration) reversed the decision of the previous case but bearing in mind that interpretations of the law can change, it is worth checking your articles of association if you are a sole director as the contents could be written for companies with more than one director.

Updating and ensuring the articles reflect the structure you have in place rather than a hypothetical one can help your company continue to operate smoothly (and is most certainly worth doing if you are looking to sell the company at some point in the future).

The corporate / commercial department at BTTJ advises businesses across all sectors, from long-established companies to enterprises that are just starting up.  Our team consists of commercial and corporate law solicitors with extensive expertise – and the experience required to adopt the right strategy in every situation. Please contact us for further advice.

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The accuracy requirements of this Act include that registered office addresses must be an ‘appropriate address’ at all times. Many companies utilise a registered office address that is not their trading address (it is often, for example, their accountants). The Act defines an appropriate address as one where:

• any documents sent to the address should be expected to come to the attention of a person acting on behalf of the company; and
• any documents sent to that address can be recorded by an acknowledgement of delivery.

It has been the case previously that companies could provide a PO box or an address such as a paid office for their registered office address. This meant that documentation sent to the address or served at the address would not necessarily be brought to the attention of the company or it’s directors. As a result of this, when chasing payment for unpaid bills, it would be standard practice to not send preaction letters to the registered office address as they would be assumed not to have been read by the directors of the company.

The consequences of not having an appropriate address are that the company could be struck off.  If the address is identified by Companies House as not appropriate, they will change the address to a default address at Companies House providing the company with 28 days to change the address to an appropriate address or Companies House will begin the striking off process.

The act also requires a “registered email address” to be provided to Companies House, this address will not be shown on the public record, but it must be an appropriate email address. An email address is an “appropriate email address” if, in the ordinary course of events, emails sent to it by the registrar would be expected to come to the attention of a person acting on behalf of the company.

For further advice or assistance on this matter, please contact our expert Corporate Commercial team who will be happy to assist.

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As we look at the rules that have changed, it has also been reported that a well-known business in the UK (even the writers of this article have been customers of the business) has been under the spotlight for a misfiling.

Introducing measures in accuracies of Companies House Filings.

Improving the accuracy of the Companies House register has become a priority for Companies House due to the recent increase in the cases of misfiling or errors filed by companies.

One recent example is Shein UK, which has been reported as having breached company law by listing Roadget Business Pte Ltd, which is based in Singapore, as its PSC (person of significant control) and not an individual.

UK Companies are legally required to declare to Companies House the person with significant control. In some cases, another company can own the shares but it is necessary for the ultimate owner to be traceable. In the event that the company that owns the shares is registered outside of the UK then the UK company must include the ultimate beneficial owner individual as the PSC.  

It is essential for companies to adhere to these regulations to maintain transparency and accountability in their operations.  The Economic Crime and Corporate Transparency Act 2023 aims to ensure that companies make accurate filings.

Recent changes to UK Company Law

In March 2024, the first measure under The Economic Crime and Corporate Transparency Act 2023 was implemented. The following changes were introduced:

• All companies are now required to provide a registered email address;
• Company registrars have the authority to request information and supporting evidence;
• Companies must have appropriate registered office address;
• Strict measures are in place to verify company names and address any inaccuracies;
• Directors must confirm that their company will operate lawfully and disclose its intended future activities to be lawful on the confirmation statement.

If you are unsure of your obligations under the new laws applying to your company and its compliance with them please contact our experienced Corporate Commercial team.

Article written by Corporate Commercial Paralegal Ann George.

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Whilst it can be a more cost-effective way of running the company, as businesses seek funding to establish themselves or grow further if they are fortunate enough to have an asset (like a property) to secure borrowed funding against, model articles are a standard template and are often required to be amended by lenders wishing to reduce risks associated with lending. The requested amendments can be a multitude of things, some common requested amendments have been changes to the provisions regarding the number of directors required or the rights of the directors.

Recently, the amendments to the articles of association requested by lenders have required that the constitution of a company include that the company has the power to borrow monies, grant mortgages and own property. Whilst to a Corporate Lawyer a company as a separate legal person (an entity) has the capacity to enter into agreements, handle monies and own property, some lenders have required that the articles of association contain a confirmation that the company is able to do so.

The requirements of lenders have to be met in order for funding to be obtained. If you are considering borrowing funds, restructuring your asset ownership or moving forward with acquisitions or other transaction, you may need to amend your articles to ensure that matters progress smoothly. There can be serious consequences if you do not follow your articles of association.

If you aren’t sure about your articles of association and/or your obligations, it is always worth seeking legal advice to make sure you are on the right track and to prepare amendments if you need them.

Contact us for assistance. The corporate / commercial department at BTTJ advises businesses across all sectors, from long-established companies to enterprises that are just starting up.  Our team consists of commercial and corporate law solicitors with extensive expertise – and the experience required to adopt the right strategy in every situation.  

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What is an EPC contract?

EPC contracts have been the most frequent form of contract utilised on projects that involve construction and engineering works by the private sector extensively. Complex infrastructure projects across numerous different industry sectors which includes and are not limited to power, oil and gas, transport water and waste.

EPC contract stands for ‘Engineering, procurement and construction’, this is also referred to as a ‘turnkey’ contract due to its idea being that once the project (venture) has been completed it is ready to be passed over to the owner and from there on the owner is able to start operating it. In the EPC contract it is the contractors role to hold the responsibility for the entire project, from designing and engineering to acquiring materials and equipment to constructing and installing the project. An EPC contractor is responsible for the delivery and completion of projects to the owners.

Key aspects of an EPC contract – what might it look like:

• A fixed contract price with limited liability for the contractor to claim additional costs which provides certainty for the owners regarding project costs.
• A fixed time frame for project completion with limited ability for the contractor to claim an extension of time providing assurance for the owners to complete within schedule.
• Single point responsibility whereby contractors are responsible for the whole project which streamlines communication between different parties.
• Contractors are responsible for proving their performance and reliability of the completed project.
• An aim on the long-term performance and operation of the project and its capacity to generate income.

 Key parties involved in EPC contract:

• Owner
• EPC Contractor
• Subcontractors
• Suppliers

EPC contracts are an option for complex ventures by owners that demand fixed price, fixed time and a single point of contact, however, EPC contracts also carry its risks and challenges and may not provide the right option for all projects/ventures, therefore in view of EPC contracts, it is vital to weigh the advantages and disadvantages, drafting and carefully negotiating the contract is imperative in order to mitigate risks and protect your interests. 

Our Corporate Commercial department at BTTJ advises businesses across all sectors, for further advice please contact us.

Article written by Commercial Paralegal Ann George

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Please note that this is just a simple summary of what has been announced, some of which involves tax, Brindley Twist Tafft & James are not tax advisors and do not provide tax advice, if you have any questions regarding the tax liability implications, please speak to your tax advisor. Any reference to any form of tax is not intended to advise but provide additional information.

The government has announced funds for house building projects, which although have been highlighted as in specific areas may mean more business in the housing development sector.

Relating to property, the Chancellor announced that it is intended that the Multiple dwelling relief on Stamp Duty Land Tax will end but there will be a reduction in the Capital Gains Tax payable on the sale of property which is not the person’s home.

For employers, National Insurance contributions have been reduced by 2% starting from 6^th April 2024.

It has also been announced that the Covid era government loan scheme has been extended.

The Chancellor announced further funds to be injected into a fund for green energy projects and funds for high tech industries such as electric cars. The intention being to encourage the uptake of green energy projects (some of which we have written about before Renewable energy – a short look at what could be the future | Brindley Twist Tafft & James (bttj.com) across the country moving towards a greener future.

In addition to the additional funding for green energy and high-tech industries, further monies have been allocated to assist in moving to the next phase in development of a new nuclear reactor.

This has been a focus on the effects for businesses that the new budget has brought, naturally there were other announcements which could affect individuals and families more than businesses.

If you wish to speak to a member of our Corporate Commercial team to discuss moving forward with your business plans in light of the new budget, please do not hesitate to contact us.

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It isn’t often that we can provide an example of why you should always be careful of what terms you contract with. However, I have recently come found an example on why you should ensure you read your terms.

“As part of a gift, I received a copy of a new game for my console from a well known studio. As part of the initial set up of the game on the console, I had to configure the brightness setting with the advice being generally being to set it so that the text was barely visible. Against the settings suggestion, I set the maximum level of brightness, what was revealed was a joke set of terms potentially selling my person and likeness to an in-game character corporation with a poor record on respecting the rights of individuals.

Naturally it was a joke, such a contract would not be enforceable in England (but it did provoke my brain to think about it for a few minutes) and not without hesitating and actually pressing the button to go back I proceeded with setting the brightness and playing the game.”

The terms, whilst clearly a joke, highlight why it is important to review the terms you are about to agree to and if you are unsure, to take legal advice before proceeding. In many cases it could easily be a set of terms with an unfavourable limitation of liability clause or including an indemnity for risks that you may not agree with.

There are also the pitfalls of whom a contract is with, for example, a consumer customer triggers different requirements and rights by law such as the 2-week period in which they can change their mind and cancel the contract between you or the different additional rights consumers have in relation to the return and/or refund for products.

It is important to carefully review the terms of an agreement you are about to enter into as a business and make sure you understand what it is that is required of you in the contract. Although contracts may tend to come under scrutiny only really for performance when a court is involved, good practice is to know your contracts and what you are agreeing to.

If you are a business and require assistance in drafting contracts or dealing with terms and conditions, please contact our specialist Lawyers in our Corporate Commercial team.

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The complexities of the government’s leasehold reform proposals affecting millions of homeowners came under the spotlight at a seminar organised by Coventry and Warwickshire’s law firm Brindley Twist Tafft & James and property experts ehB Residential Surveys.

Forty invited guests – including estate agents, surveyors, private finance advisors and conveyancing lawyers were among those who attended the event at the Warwick Arms Hotel on Tuesday.

The event follows Michael Gove’s plans to shake up England and Wales’s ‘feudal’ leasehold system were announced in the King’s speech in November.

Gove said the proposed leasehold Reform Act would overhaul the system and prevent developers from selling new houses under leasehold, ensuring a fairer deal for leaseholders.

It would also make it easier and cheaper for leaseholders to extend their lease agreement or buy their freehold, giving them more control of the land on which their property is built.

Alex Khan, Partner and Property Solicitor at BTTJ said the problems within the current system are compounded by issues such as multiple ground rents – the charge for renting the land from the freeholder – diminishing lease terms, excessive insurance commissions and overcharging of service charges.

Under the current legislation the standard lease extension term is currently 90 years. The proposed new legislation will increase this to 990 years – saving leaseholders the headache of a long, complicated and expensive process of extending leases which can cost thousands of pounds.

The reforms also aim to ensure service charges and ground rents are transparent and reasonable.

The Conservatives have also promised greater transparency of the system, the banning of excessive insurance commissions and an end to the requirement for a new leaseholder to have owned their property for two years before being able to extend the lease or buy the freehold, resulting in a rising premium.

They have pledged to remove the ‘marriage value’ cap meaning leaseholders with less than 80 years left on the lease will no longer have to share the hypothetical profit of the property with the freeholder, meaning they could potentially benefit by thousands of pounds.

Alex Khan said the government is also proposing to allow leaseholders of mixed use properties with up to 50 per cent of non-residential floor space to buy the freehold and manage the building, a move which Mr Khan said would allow residential tenants who live above a business, but have no experience in commercial property, to manage their entire building.

“Often referred to as ‘fleecehold’, leasehold is a diminishing asset.  It was first brought about by barons who would finance their crusades abroad by leasing their land to tenants for a peppercorn rent on the basis they knew the land would always be theirs. The system itself actually does work but in the last 20 years it has been abused, so what used to be an £8 ground rent is now £300, £500, going all the way up to £10,000 for the lifespan of a lease, and it prevents people from selling a property so the system has spiralled into an abyss.”

Jonathan Selby explored a number of options which may be implemented by the government, including abolishing the marriage value or introducing a ground rent cap either at 0.1 per cent of the property value, or at £250.  Other option included re-setting the ground rent to the initial ground rent set out in the lease or freeze it at the current value.

He said: “Mr Gove says he will have all of this in place before the general election scheduled for later this year, but realistically I think we could still be talking about this in four or five years’ time. The legislation that may go through may be so watered down that it barely affects anyone at all.”

Conversely labour says it would scrap the leasehold system altogether within if it wins the general election.

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A CIC can be company limited by shares, both private and public, or a company limited by guarantee, it cannot change from one set-up to the other. A CIC of either type must include certain regulations/points in their constitutional documents (or “Articles of Association”).

Part of the requirements to be complied with is that that the CIC appoints an “Asset Locked Body”, although this can later be appointed, an Asset Locked Body is either a charity or another CIC to whom the assets of the CIC will be passed to should it be wound up, and in the case of insolvency, wound up after the creditors be satisfied. If the Asset Locked Body owns shares in the CIC then they may be able to receive dividends. The intention behind this concept is that the CIC’s success or its assets at least (in the event it is closed) will be paid forward into projects for the community/social development.

A political party may not be a CIC.

CICs are regulated under the CAICE – Companies (Audit, Investigations and Community Enterprise) Act 2004 which also establishes a regulator, which is a separate department with Companies House, a company can either be incorporated as a CIC or  incorporated as a ordinary company first and then apply for CIC status with this regulator, this process takes roughly 10-15 working days and involves changing the name of the company to reflect its CIC status.

A CIC, like many other companies, can be organised as having a small number of members that are also directors or have a board of directors and a larger number of members.

CICs are required to deliver to the Registrar of Companies an annual community interest company report with its annual accounts. This report records their activities for that year including any details on assets transferred for less than market value, dividends paid and the remuneration of directors.

CICs are still covered by company law so in addition to answering to the regulator and the CAICE Companies (Audit, Investigations and Community Enterprise), they will be subject to the Companies Act 2006.

The concept of a CIC is to create a type of entity that can be ran for the benefit of a community and not solely for profit but include some of the benefits (such as limiting liability) that a company can provide.

If you are a CIC or are thinking about starting setting one up and need legal advice, please get in touch with our Commercial and Corporate Law Solicitors who can offer clear and cost-effective expert advice.

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