To accompany AccountingWEB’s Financial Reporting channel, associate editor Jennifer Adams has compiled this collection of guidance documents relating to company law.
Companies may be inanimate objects but they still have a life comparable with that of a human. They are born (incorporation) and die when they are struck off or liquidated. Sometimes they marry (merge) and have children (divisions of shares). But through all these phases of their lives companies are subject to specific legal rules and conditions.
AccountingWEB publishes articles covering events that happen over the life of a company. Many of these articles stem from questions asked and comments posted on our Any Answers page. This Company Law Library brings together all those articles in one place for easy reference. Many of the articles include practical checklists covering points that may not be found in legal textbooks.
CONTENTS - click links to see listings of detailed guides
Companies Act 2006 overview
The Companies Act 2006 remains the foundation stone of current company law. The articles in this section date from when the act was first implemented (2009-10), but still provide a convenient overview of the main provisions. With the government keen to lighten the red tape burden on business, also check the AccountingWEB Company law tag page for updates on relevant developments such as the Small Business Enterprise and Employment Act 2015. These articles remain relevant as at December 2015
Company formation and after
Incorporation can bring many benefits to a business not least in the form of tax savings, but there are a number of factors that should be considered before taking the plunge. The articles here discuss the legalities and how to tackle them. Several incorporation methods are discussed - whichever is chosen, additional practicalities need attention post incorporation. There are rules for naming a company - the Company Name articles detail those rules.
- Incorporation - why bother? October 2015 update. A checklist of the financial, legal and practical factors to consider when making the decision. Following the Summer Budget 2015 the level of tax benefit achieved on incorporation changed, details are to be found in this article.
- Company formation: what’s best for you? September 2015 update. An examination of the pros and cons of the different methods of incorporation, whether DIY via Companies House, through an agent, online or on paper.
- Post-incorporation procedure November 2015 update. Checklist of the most important matters to address, and some that are not so urgent.
- Company names and name changes November 2015 update. Explains the importance of choosing a name carefully, includes a checklist of company naming tips.
- New company name rules come into force Details the new regulations introduced in January 2015 concerning ‘Sensitive Words and Expressions’ and ‘Names and Trading Disclosures'.
Different corporate structures
UK company law allows the creation of companies other than those limited by shares. This section details different types of company and their uses in different situations, including dormant companies.
- Companies limited by guarantee August 2015 update - Differences between companies limited by shares and by guarantee and the advantages and disadvantages of each type of company. Includes sections on distributing profits, accounts and taxation, community interest companies and mutual trading firms.
- Not for profit companies October 2015 update. Procedures on incorporation and administrative processes for different types of company including CICs and Charitable Incorporated Organisations.
- Charitable Incorporated Organisations What you need to know about CIOs. This article remains relevant as at December 2015.
- Flat management companies Details of different company structures - resident management companies; companies limited by shares; companies limited by guarantee; and Right to Manage companies. This article remains relevant as at December 2015.
- Dormant companies September 2015 update. Covers the different definitions used by Companies House and HMRC and includes a checklist of the returns required by each department.
- Property Investment Clubs Outline of the key considerations and regulatory issues arising on incorporation of a property investment club.
Filing matters
UK corporate law imposes filing obligations and responsibilities on directors of all UK registered companies. This section includes articles detailing those obligations including submission of an Annual Return. Although online filing helps keep errors to a minimum by automatically completing some sections of the forms, errors do still occur that can result in rejection. One of the articles in this section lists the common errors and how to avoid them.There is also an article detailing the new filing requirements under the Small Business Act 2015.
Directors’ responsibilities
Many directors do not appreciate that a director’s prime duty is to manage the company on behalf of the company’s shareholder owners. Within this remit each director must ensure that the company complies with the law. An article detailing the regulatory bodies legally permitted to view a company's records is included. In addition the section contains articles on the directors' role and responsibilities, the risks and liabilities and methods of appointment and removal/disqualification. The section also includes an article on Directors Loan accounts which is an area of confusion for many directors and their accountants.
- Directors’ legal duties A checklist of statutory duties and suggestions for compliance, not just with Companies Act 2006, but also other relevant regulations including Companies House filing requirements. A separate article sheds more light on what HMRC expects from company directors.
- An induction policy for new directors. Emphasising the value of having a directors’ induction policy, with suggestions as to what to include in an 'induction pack'.
- Document retention Details the minimum retention periods of documents relevant to a company, with a checklist on what to include in a company document retention policy.
- Conflicts of interest Explains the legal duty of directors to minimise ‘conflict of interest’, with a checklist of potential scenarios and suggestions on dealing with regulatory, transactional and situational conflicts.
- Overdrawn directors’ loan accounts A checklist of disclosure requirements that sets out typical problems and the correct accounting approaches in different scenarios, some of which is drawn from an HMRC toolkit on the subject.
- Disqualifications April 2016 update. When and why the BIS will disqualify a director, including checklists on insolvency practitioners’ reports, and the effects of a disqualification order.
- Removal of directors April 2016 Update. What to do when directors disagree, including procedures for removal, resolutions, legal obstacles such as ’Bushell v Faith’ clauses, derivative claims, and the sacked director’s recourse.
- Resignation and removal of directors April 2016.What happens if no removal procedure is in place. S168 CA 2006 removal. 'Bushell v Faith'. Checklist of the practicalities - who must be informed. Form TM01
- Protection against personal claims Protection afforded to directors under the Companies Act 2006 and model articles and how to minimise the effects of a director being sued, including insurance and indemnities.
- Directors’ duties for companies in difficulty During an insolvency process the directors’ duties change. Checklists are provided on the pre-cessation procedure and what the directors should do.
- Inspection of records: Who’s allowed to view? Discusses the Companies House new ‘transparency rules’ and details which other Regulatory Bodies have the right to view a companies records.
- Protecting directors from litigation. March 2016.Gives examples of instances whereby directors may be held personally liable. Details the company's position.
Company meetings
This section includes articles that detail the legalities and practicalities relevant to company meetings whether held as a meeting of the Board of Directors or as the company’s Annual General Meeting. With the advent of technology meetings need not necessarily be held face to face. With that in mind there are articles in this section that discuss the future of meetings using virtual technology.
Share capital and dividends
This section covers the capital of a company and its shares, including commentary on dividends and dividend waivers as well as the legalities on share reorganisation. For a quick overview see Companies Act 2006 - company capital.
- Dividends checklist Points to consider when making a dividend payment, with important advice about the correct way to make declarations and avoid illegal payments
- Dividends - are minutes necessary? Whether minutes must be prepared and counterfoils issued to support a dividend payment.
- Share reorganisation Examines the reasons for reorganisations and includes checklists for issuing bonuses, reducing shareholdings and registering the changes with Companies House.
- Rights issue of shares When and why they are necessary, with a checklist covering practicalities and procedures. Includes a discussion of the ‘Duomatic’ principle
- Share buybacks Checklists on the legal conditions and procedures for arranging a buyback, plus a discussion of how to fund it.
- Accounting for share buybacks Explains the accounting issues relating to buybacks, including example calculations, and Companies Act rules on exceptions. More buyback advice here.
- Share valuation A checklist on carrying out minority shareholding valuations with recommendations for action following the Erdal tax case on a minority share valuation.
- Shareholders’ agreements What is a shareholder agreement, and when should it be used? Includes sample clauses and a comparison with articles and the pros/cons of each approach. This article remains relevant as at December 2015.
- Dividend waivers December 2015 update. When to use a waiver and how it works. Includes checklists on specific options and the issues that may arouse HMRC’s interest. More dividend waiver advice here.
- Alphabet Shares Published December 2015. Written in checklist format. The differences between dividend waivers and Alphabet shares. Consideration of the 'Settlement rules' and the practicalities involved in creating ABC shares.
Closing a company
There are different methods that can be used to close a company - which one to use will depend upon the reasons for closure. This section covers the different methods of ceasing a company and the legalities in doing so.
