Is it time to spring clean your business?

There have been a great number of changes in company and partnership law over the last few years. 

A lot of these changes have been with the aim of making it simpler and more straightforward for businesses to be managed and operated as limited companies and limited liability partnerships.

Therefore now is a good time to review whether your business is taking advantage of these changes and its existing structure meets the owners’/managers’ requirements.

Here’s our top housekeeping tasks to consider:-

Companies

• Check your company’s records at Companies House are up to date by reviewing its filing history for free at the Companies House website.
• Make sure you have the necessary details to allow you to file documents with Companies House electronically, rather than by post.
• Locate the company’s statutory registers (usually a lever arch file which includes a legal record of the company’s ownership) and check they are up to date.
• Download a copy of your company’s current memorandum and articles of association (the company’s internal rules and constitution) for review.
• If your company was established prior to 2009, its articles of association are likely to be based on a form which doesn’t reflect current company law, particularly regarding share capital and the approval of directors’ conflicts of interest.
• Look at whether your company’s articles of association reflect the way in which it actually operates on a daily basis, to avoid the risk of directors’ decisions being challenged at a later date.
• Consider amending the company’s articles of association to include rules/procedures to be followed where a shareholder wishes to transfer his or her shares. This will avoid any disputes at a later date.
• Check that the company has appropriate delegated authorities in place so that directors and employees have clear processes to follow and that a company signatory will always be available.

Limited Liability Partnerships

• Do you have an up-to-date limited partnership agreement among the members?In the absence of an agreement, the law provides for a default set of rules which may not suit the members’ requirements.

Partnerships

• Do you have an up-to-date partnership agreement among the members?  As with LLPs, in the absence of an agreement the law provides for a default set of rules which may not suit the members’ requirements.

Sole traders

• Consider the benefits of incorporating your business as a company or LLP – particularly the benefit of limited liability for the business owner – and whether these will outweigh the increased regulatory burden, such as the need to file accounts.  Ensure you take tax advice on the impact of incorporation.

This is a sponsored post by Brodies LLP.

Brodies provides advice on all aspects of company and partnership law. For further advice, contact Alasdair Dunn at Brodies LLP.