Question 1: I am a director of a Company, what do I need to think about when making decisions?

Answer: When making decisions there are certain factors prescribed by s172 of the Companies Act 2006 that should be considered. These include:

• The consequences of the decision in the long term;
• The interests of your employees;
• Your business relationships with others;
• The impact that the decision will have on the environment and the community;
• Maintaining high standards of business; and
• Acting fairly between the members of the Company.

Ultimately, all decisions must be made in the best commercial interests of the Company considering not only its members but its creditors as a whole. Every decision you make as a director will naturally have an impact on the company, its operations and people that it deals with. What is in one person’s interests may not align with another’s and you need to be able to justify a particular decision as in the Company’s best interests.

Question 2: What do I do if there is a conflict between my interests and the Company’s?

Answer: This will depend on what is in your Company’s Articles of Association. It may be possible to continue to participate in the meeting if you have the necessary authority from either your Articles or the Shareholders. If you don’t, the rule of thumb is that you cannot count for quorum or voting purposes.

For more information and to find out how we can help, contact the Franklins’ Business Services team who would be happy to assist on 01604 828282 / 01908 660966 or at BusinessSevices@franklins-sols.co.uk.

As any director should be aware, under s248 of the Companies Act 2006 the board of a company are required to keep minutes of proceedings of directors. They must be retained for at least 10 years and a failure to comply is an offence by any officer in default. It is easy to picture a large corporate boardroom full of directors who account to the shareholders for their actions and to understand the requirement for Board Minutes in these circumstances. However, when it comes to SMEs, owner-managed and family run businesses the requirement for board minutes often seems draconian and an unnecessary burden on the individuals involved. Nevertheless, they remain equally as important to evidence due procedure and ultimately the reason behind your decision-making.

It’s an Offence!

Firstly, failure to maintain board minutes is an offence under the Companies Act 2006. However, this is not the only potential consequence of failure to maintain appropriate minutes.

They are a Defence against Proceedings

I would hope that it never comes to this, however litigious proceedings can be an unfortunate part of business. You can be forced to defend a claim even if it is unfounded and certain claims, such as fraud or misrepresentation, could all hinge on whether or not there was the requisite authority to enter into a contract. See our Case Study on how Board Minutes can impact proceedings.

Similarly, you may find yourself relying upon them in winding up proceedings to justify your actions and decision making. Whilst Board Minutes are not a defence to any decisions made, they can certainly evidence why you made a decision and what you consider to be in the best commercial interests at the time and reduce your risk of exposure.

Ultimately, maintaining board minutes might be a chore, but they go a long way to protecting you as an individual as they evidence due process and compliance if the decision in question is ever challenged in any capacity. If you would like to know more about the process for convening a board meeting, please see our How To guide.

If you would like to know more about directors duties, decision making and maintaining appropriate minutes contact Holly Threlfall at holly.threlfall@franklins-sols.co.uk or on 01604 828282 / 01908 660966.

Disney announced on February 25th 2020 that Bob Iger, its CEO for over 15 years, is ‘passing on the torch’ to Bob Chapek. His legacy will survive him and the company will no-doubt continue to be the success that we know due to a strategic succession plan being implemented, which has been in the pipeline for several years – Iger having identified Chapek as his successor following a thorough interview process.

Iger is staying on in the immediate future as executive chairman to support Chapek and ensure a smooth handover and transition into his new role.

All companies, big and small, should think about their succession planning, how to protect their core assets and ensure the continuation of their own legacy. As Bob Iger said in his interview with CNBC – “What’s next?”

If you are looking at succession planning within your business, we can help, please contact our Business Services team on 01980 660966/ 01604 828282 or email businessservices@franklins-sols.co.uk 

Don’t I just need a Stock Transfer Form?

As a corporate lawyer, dealing with the transfer of shares is fundamental to the nature of work that I undertake. Whether a sale to a third party, a company restructure or Management Buy-Out, transferring shares is key to corporate transactions. However, what worries me is the number of enquiries that I receive expecting that all you need to do is sign a Stock Transfer Form.

Whilst a Stock Transfer Form is undoubtedly necessary to any share transfer, it is only one element of a transaction and fundamentally lacks detail that can be imperative to protect both buyers and sellers and maximise a return on the deal. As a Seller, what happens to all of your hard-earned cash that is vested in the Company? As a buyer, how can you be sure that you are getting what you are paying for and protect future goodwill of dianabol buy sternocleidomastoid dianabol buy the Company? What about the structure and tax implications of the deal? A stock transfer form on its own does not address these points or offer any protection.

So, what do you need?

Due Diligence

Almost everyone has heard of the phrase ‘Buyer Beware’. This applies to buying and selling shares just as it does any house purchase. The buyer should raise enquiries to ensure that they have an understanding of what they are buying before they proceed.

Share Purchase Agreement

This is key to any share transaction and includes the obligation to buy shares itself. It can also determine:

• any adjustments to the price based on its net asset value at completion;
• how historic tax liabilities are dealt with;
• the scope of any warranties the seller is giving the buyer in relation to the company; and
• limitations on the seller’s liability and exposure under the contract.

No two transactions are the same and as a result the Share Purchase Agreement may be very simple or it may be complex depending upon the terms agreed, value and nature of the transfer taking place.

Disclosure Letter

A Disclosure Letter is a key protection for any seller as it formally notifies the buyer of facts or circumstances in relation to the Company that could otherwise give rise to a claim. It gives the buyer reassurance and certainty as to the scope of any concerns with the company and enables them to plan on how to address them once they have control.

Ultimately, a Disclosure Letter alongside the Due Diligence is about transparency and certainty for both parties.

Power of Attorney

This may seem like an unusual one for a share transfer, but it is crucial from a technical perspective for any prospective buyer. Most people are not aware that legal ownership of shares does not transfer until Stamp Duty has been paid on your transaction and the Statutory Books written up. Once the Stock Transfer Form has been delivered to you duly signed and you have paid the seller the monies they are due, it then has to be sent to HMRC for stamping. This must be done within 30 days … and I am going to make no comment on the time that it may take for HMRC to stamp and return the Stock Transfer Form to you! However long this may take, you do not legally own the shares, and therefore company, that you have paid for during this time. If you declare a dividend, that would still belong to the Seller as the current owner. The Power of Attorney transfers all rights to you in this interim period so that you can exercise all powers in respect of the shares and benefit from them as an owner of the Company notwithstanding that your Stock Transfer Form may still be with HMRC.

Ancillary Documents

Every company must comply with the provisions of the Companies Act 2006. Failure to do so is an offence and could stand to undermine a transaction on the ground of lack of authority. Every transaction therefore has a series of ancillary documents which are required to approve the share transfers and company changes that may happen as a result. This may include board minutes, shareholders resolutions, resignation letters and notices for the changes in persons with significant control over the company. Certain forms would also need to be filed at Companies House to notify of changes that have taken place in respect of the Company. The scope of ancillaries can be small for a more straight-forward transaction, but if you are transferring shares as part of a restructure or if you have a complex company transaction the number of ancillaries can be significant!

Your success

Structuring a transaction properly with the requisite documentation affords protection to the parties, clarity to the contract and ultimately can make sure that a transaction is structured in a tax-efficient manner. It reduces the risk to you, maximises the return you receive and ultimately ensures a successful transaction allowing you to realise the return on your investment.

For more information on Stock Shares, visit our Business Services page.

If you would like to discuss the structure of a transaction and requirements for share transfers, please contact Holly Threlfall, Solicitors in our Business Services team holly.threlfall@franklins-sols.co.uk or call 01604 828282.

When you decide to buy a business, the first thing you need to do is evaluate what you are purchasing – both the good (assets) and the bad (liabilities).

The due diligence (DD) process is the pathway for you to: 

• obtain information about the company – is it a good deal or not?
• get a feel for what conditions and warranties you need going forward;
• assess the appropriate corporate structures (to acquire and for the target) and put those in place;
• make sure all regulatory or other consents are in hand (or made conditional) prior to the acquisition; and
• agree a price and mechanism for adjustment if necessary.

Why should you undertake DD? 

The primary purpose of the DD review is to obtain sufficient information about the target’s business to enable the buyer to decide whether the proposed acquisition represents a sound commercial investment. DD is effectively an audit of the target’s affairs – legal, business and financial. It is therefore a crucial bargaining tool for the buyer. 

A DD enquiry should establish the following key information about the target business: 

• Does the seller have good title to the shares in the target company (on a share purchase) or assets being sold (on an asset purchase)?
• Are there any unstated or understated liabilities? 
• Detailed information on the target business so that the buyer is in a better position to: 
  • – Make a final decision on whether to proceed with the acquisition and, if so, at what price;
  • – Bargain with the seller;
  • – Plan the integration of the target business;
  • – Determine any consents that may be required for the transaction. For example, the consent of industry regulators, tax authorities, competition authorities, shareholders or important customers of the target. Where one of the main assets of the target is customer contracts, it will be imperative for the buyer to find out through DD whether there are any contractual prohibitions on transfer; and 
  • – Determine whether any ancillary documents will be needed (for example, a transitional agreement).

As well as answering these questions, the DD process should put the buyer in a better position to identify the steps necessary to take effective control of the target’s business.

Financial DD

As part of the DD process, the buyer may instruct accountants to prepare a report (the accountant’s report or long-form report) on the financial aspects of the target business. 

This financial DD is not the equivalent of an audit, and accountant’s reports will usually make this clear. However, financial DD should focus on those areas of the target’s financial affairs that are material to the buyer’s decision, so that the buyer can assess the financial risks and opportunities of the deal and whether, given these risks and opportunities, the target business will fit well into the buyer’s strategy. Financial DD may also help quantify:

• Potential synergies;
• The best acquisition and financing structure;
• The impact of the acquisition on the buyer’s performance metrics. When the buyer’s accounting policies are more conservative than those followed by the target business, it may be necessary to make appropriate adjustments in order to measure the true impact. 

How can Franklins help? 

The scope of a DD investigation will depend on the value and purpose of the acquisition. The extent of the investigation tends to be influenced by practical realities: 

1. How much time do you have?
2. What resources are available? 
3. What is the overriding need to get the deal done? 
4. How transparent is the seller in terms of providing information?  
5. Do you have internal or third party resources to back up what the lawyers can find? 

Franklins can help throughout – from agreeing the appropriate scope of the DD exercises through to data room protocols, document analysis and formal reporting. We have a whole range of specialist sector experience and can bring market expertise as well as legal advisors, which means we can offer a wrap-around service. 

Only the buyer’s own personnel will be able to make effective judgements as to the commercial importance and potential risk brought to light by the DD process, but Franklins can make sure that this information is presented in an accessible and useful format and informs all subsequent negotiations.

Find out more on our Due Diligence page.

For more information contact our Due Diligence team ddaudit@franklins-sols.co.uk or call 01908 660966/ 01604 828282. 

More and more people are incorporating their own company online because registering at Companies House can be a simple process and having your own company can be a great business structure to use as it limits your personal liability. However, many people simply incorporate and don’t tailor a company to the needs of the business. This can result in invalid decisions, disputes amongst members and even affect the ultimate sale value of your business.

Inappropriate Articles of Association

Articles of association are a foundational document for any company. These are a set of rules which a company is bound by and essentially dictate how a company is to be managed and governed and what its members and directors can do. When you incorporate online, you must adopt model articles of association as prescribed by the Companies Act 2006. Whilst these can be a good starting point for any company, much like shoes; one size does not fit all, each company will operate differently and have different needs and requirements. Take, for example a small owner managed company with one shareholder and director, model articles of association are not suitable because quorum is set at two so decisions will automatically be invalid until a second director is appointed. Another example would be for instance a medium sized company with investor shareholders. The investors are likely to want to have a representative involved in all decision making to protect their financial interests. Therefore, they may require that a certain director or their appointed director be present before quorum can be satisfied and this would need to be detailed in the articles of association. These are just two examples that demonstrate how vital it is to ensure that the articles of association are tailored on a company by company basis when incorporating online.

Not considering Shareholder requirements

Oftentimes the difference between shareholders and directors is overlooked. In small owner-managed companies they are often the same person and this can cause complications which whilst not insurmountable, need to be planned for. Many decisions of directors under the Companies Act 2006 can only be made with shareholder consent, therefore, in cases where these job titles fall under the responsibilities of one person; when making decisions it must always be considered with which ‘hat’ are you thinking to ensure that the appropriate documentation is prepared and signed. Any decision requiring shareholder consent is not in the articles but prescribed by the Companies Act 2006 and therefore is not evident if you do your own incorporation. You could then find yourself committing an offence under the Companies Act 2006 and facing a fine.

Where there are multiple shareholders, it is strongly recommended that you have in place a shareholder agreement. Unlike articles of association, this is not a public document but a contract between the shareholders in a company whereby they each agree how they will deal with one another and manage the company’s affairs. This can be crucial in preventing and navigating disagreements between shareholders and also serve to protect each shareholder’s interests. However, this is not a mandatory document and must be tailored to each individual business. Many people who incorporate online overlook this form of document and it only comes to their attention when it is too late and shareholders are already in dispute.

Failure to maintain company records

Directors are in charge of the day to day running of a company and must run it to the benefit of its members. There are strict obligations and limitations on their decision making abilities imposed on them under the Companies Act 2006. Moreover, although your liability as a shareholder may be ring-fenced you can still be held to account as a company director. It is not only important therefore to understand what these responsibilities are so the business is run correctly and compliantly from the start, but to evidence these decisions properly to show that you have done just that. Board minutes therefore are not only required under the Companies Act 2006 but are a crucial document for directors to demonstrate that they are operating correctly. Whatever means of incorporation you use, you will need to make sure that you maintain both your Board minutes and statutory books from the start. Not being aware of these obligations is not an excuse.

For more information or advice on incorporating your own company and how we can assist you, please feel free to contact me on 01604 828282 or via email

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A basic partnership is easy to form; just carrying on in business with another, intending to profit, gives rise to a partnership by law. However, as partners, you will have very little protection and could face a claim, fail to receive a just return on your investment or find yourself in a difficult situation where you cannot remove a troublesome partner.

Limitations on Liability

With a basic partnership, each partner will be jointly and severally liable for the actions of all of the partners. Therefore, in the unfortunate event that the partnership faces a claim, you personally are responsible even if it was not your actions that caused the problem. This can be avoided by setting up as a Limited Liability Partnership (an LLP). Not doing so could expose you to great personal risk. That is not to say that the best way forward is for all partnerships is as an LLP but limiting personal liability is certainly something that should be considered.

Division of Profits

The absence of a partnership agreement, each partner is entitled to an equal share of the profits. Consider though the situation where one partner invests more than the others. For example, they could invest more time, more capital or even individually own the premises from which the partnership operates. That partner has no right to a greater share of the profits or capital than the others and unless the terms of occupation and use of the premises is clear there is a risk that property could be deemed a partnership asset. If the property is a partnership asset, the other partners would all be beneficially entitled to an equal share of that partner’s property. Therefore, partners should always consider putting into place a partnership agreement to make it clear as to how profits and assets will be be shared.

Governing the Relationship

A partnership agreement isn’t just used to determine division of profits but to govern the relationships between the partners. In the event that someone falls seriously ill, for example, the agreement will dictate what will happen and how the partnership can proceed. Another key consideration is removing partners. Without an agreement, there is no right to exclude a partner even if, for example, they are acting negligently or recklessly. A partnership agreement can govern this and allow for removal of a partner and help to protect the remaining partners.

These are but a few considerations and concerns relating to partnerships. As a partner, you should ensure that you are adequately protected and that the relationship is effectively governed to prevent significant risks, costs and claims arising in the future.

For more information or advice on partnership agreements please feel free to contact me on 01604 828282 or via email

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The Companies Act 2006 was introduced nearly 10 years ago, yet not all companies are up to date and not all directors are aware of their obligations. If a company was incorporated prior to 1 October 2007, then unless it has expressly adopted the new amendments, the company and its articles are affected. This could lead to compatibility issues with the new legislation further down the line. further down the line.

The Companies Act 2006 streamlined the previous provisions and made it easier for directors to act for their company. Although there are similar provisions, for example quorum being set at two, there are also variations which can result in incompatibilities between those companies operating under Table A Articles and current legislation. Some key changes in the legislation include:

• Removal of entrenchment provisions
• Removal of authorised share capital
• Director’s are no-longer required to publish their private address
• Codification of Director’s duties
• Company’s must now have at least one individual as a director, and cannot have a board consisting entirely of other companies and ‘non-natural’ persons

These are just a few of the positive changes made by the 2006 Act. Theer are yet more changes to the 2006 Act that are being introduced and it is important that companies ensure that their constitution is up to date with current legislation.

If your company was incorporated prior to October 2007 you should consider updating your articles to avoid confusion, conflict and incompatibility with the 2006 Act and take advantage of some of the changes introduced.

For more information and advice on articles of association please feel free to contact me on 01604828282 or via email

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Are you a Director of a Company? Did you know that any business decisions you make must comply with the Companies Act and your Company’s Articles of Association? Most directors know this in theory, but few take the steps to ensure compliance. If decisions aren’t made and recorded properly it is qualified as an offence and penalties can be imposed. The future value and possible sale of your business could also be jeopardised.

These are my top five tips, which I share with my clients – to ensure compliance:

TIP 1: Record Board Minutes detailing key decisions

Minutes evidence that correct procedures were followed, the underlying reasoning behind the decision and the benefit to the Company. Minutes should be kept with the Company’s Statutory books for at least 10 years.

Implementation tip: your minutes need only be a page long. Use headings like: date, attendees, apologies, subject matter of meeting, notes of points discussed, the conclusion of the meeting and any action points to be taken.

TIP 2: Be familiar with your Company’s Articles of Association

Articles should be up-to-date and relevant to your Company and current Share Structure. They govern how decisions must be made in certain circumstances – for example when allotting shares, shareholder approval may be required.

Implementation tip: if you haven’t read your AoA in a while, ask your accountant for a copy, if you are a small business they should have one.

TIP 3: Have the requisite number of Directors appointed and ensure quorum is met when making decisions

If not then the decision becomes invalid.

TIP 4: Ensure that you do not have a conflict of interest

If there is a conflict, the relevant authority from Shareholders will need to be obtained.

Implementation tip: ensure that any conflict of interest matters are noted in the minutes of meetings where these were formally raised and noted.

TIP 5: Complete any filing for Companies House within the deadline

The deadline for your Annual Return is different to your financial and tax year returns. Check Gov.UK for more information – but generally your deadline is one year after your year of incorporation or a year from the date of your last annual return. You can file your return up to 28 days after the due date – but good practice is to submit it within 15 days of receiving the notification from Companies House.

I hope those quick tips have helped to be clear on your duties as a director with regards to your decision making process. If you would like to discuss these or your other duties as a Director, please feel free to contact me by email, or give me a call on 01604 828 282.

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