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Company Health Check

Would you find it useful?

Hi,

We carry out corporate law work and see (almost on a daily basis) instances where a company has not complied with the Companies Act, the most common scenarios include: -

  • Shares being allotted and then ignored on all subsequent Confirmation Statements/Annual Returns and Accounts. These shares are issued and live but have not been reported so the company is non-compliant
  • Shares allotted on a company with pre-2006 Companies Act Articles and exceeding the authorised share capital. The authorised share capital still exists on pre-2006 companies unless changed by Resolution
  • Share restructures created by filing a form SH01 only, with no details of the rights. No resolutions no forms to reclassify and no amended Articles stating differential dividends or other rights
  • Purchase of own shares dealt with by filing one form with no other paperwork. No resolution(s) or contract created/filed validating the transaction
  • Reductions dealt with by one resolution only with no Companies House forms or statements of solvency

My question is, would a Company Health Check service/report, for a small fee of £15.00 be beneficial to you? I'm asking you as Accountants as you are our core client base, so your feedback is obviously valued!

Cheers

Adrian

Replies

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By mrme89
14th Feb 2018 19:22

Clients don’t care.

CH don’t care.

The lack of compliance is usually by companies that don’t care about compliance. If they don’t care about compliance, they won’t part with a quid, let alone fifteen.

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14th Feb 2018 19:39

I take your point, particularly regarding CH.

Maybe if they understood the ramifications, for instance if HMRC investigate they may pay more attention.

I appreciate your feedback.

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14th Feb 2018 19:42

It’s about the price of a cod and chips twice down here. I totally understand the features and benefits of cod and chips but I’m not sure about the health check. You might need to elaborate because it seems cosmetic and academic.

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to andy.partridge
15th Feb 2018 10:24

Bless us all !! We're more haddock people round here but still less than a fiver a head.

The trouble with this service is that the people who actually need it won't use it.

Would I be prepared to use at off my own bat for client companies - just to check whether I was advising them correctly ? Hmmm - maybe. At £15, I could easily build that into my fees in the same way as other software and costs.

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14th Feb 2018 19:46

"Features" as above really, common scenarios.

"Benefits" as in ramifications: -

If a complaint is lodged then the company could receive a fine or prosecution

The Directors are also liable for prosecution

If the company is being sold it is always checked for compliance, so non-compliance could hold up the sale

If HMRC investigates the company it could be a major issue if the company hasn’t got the correct wording to allow differential dividends

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to Adrian Smart
14th Feb 2018 21:23

I understand the theory and threat. How often does this happen in practice? If something will ‘definitely’ happen that tends to grab clients’ attention. If there is just a small chance it is diffcult to enthuse.

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14th Feb 2018 21:35

The only times I've seen non-compliance discovered is at a sale, when the sharp eyed buyer solicitor spots something.

Waivers or whatever are put in place and everything just rumbles on.

I've never seen HMRC care one little bit about share capital errors with filing (even if they know, which they usually don't), because no tax liability is likely to crystalise until those shares are disposed of anyway.

It's a cheap service but I can't imagine many small clients will take it up (where it is likely to be the biggest 'issue').

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15th Feb 2018 08:11

As all above - it’s a well priced product, but no-one cares enough to part with it. They’d rather grumble about paying for 7hrs City Centre parking than spend the money on something they see as pointless.

As @TheValiant, the only time anyone cares is if the company is sold, if due diligence is done properly.

If I was you, I’d raise the price - to say, £95 - and target companies that are on the market trying to sell.

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15th Feb 2018 09:18

Small companies dont comply with vast swathes of legislation as it they did, they wouldn't have time to run their business.

No one cares until it hits them in the pocket.

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to ireallyshouldknowthisbut
15th Feb 2018 11:16

And the reason they can is that there is no enforcement of these rules and regulations.

A 15% shareholder insists on an audit - the directors ignore it. The cops scream round that day and arrest the lot! Never happens.

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By johnt27
15th Feb 2018 13:01

The service sounds nice but in my experience it is the clients that do their own Company Secretarial that tend to make the mistakes referred to above.

Sometimes the accountant will catch them, other times not, but as many have said there really are no real world consequences for non-compliance. So whilst I'm happy to wield the legal threat what's the impact?

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15th Feb 2018 16:25

I appreciate all your comments and it's given us food for thought. It's obviously useful to do our market research before launching any new services

Adrian - First Corporate Law Services

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