Lifecycle of a Business
Setting up and running your own business is an amazing achievement. It requires vision, creativity, motivation and stamina.
On occasion, it can even bring you fame, riches and fortune. But it can also result in reams of paperwork and cause sleepless nights. And as someone once said to me about children “It doesn’t get easier, it just changes”, so the same can be said for your business throughout its lifecycle. From setting up to exit, it will force you to consider issues that you might not previously have known anything about and it will need you to make many decisions, sometimes very quickly. What it certainly is not is mundane.
With this in mind, the corporate team at Forsters, together with some of our specialist colleagues, has written a series of articles about the various issues and some of the key points that it may help you to know about at each stage of a business’s life. Not all of these will be relevant to you or your business endeavours, but we hope that you will find at least some of these guides interesting and useful, whether you just have the glimmer of an idea, are a start-up, a well-established enterprise or are considering your exit options. Do feel free to drop us a line or pick up the phone if you would like to discuss any of the issues raised further.
First Things First
Which business structure should I choose?
There are several options when it comes to choosing a business structure and the right one for your business will depend on a number of factors. Choosing the correct structure is an important decision as it will affect the way that your business is organised, your and your business’ legal obligations and tax position, filing requirements and your personal liability to third parties.
Private or public company?
When setting up a UK company limited by shares, a decision will need to be made about whether to incorporate as a private limited company or a public limited company (PLC). Most UK companies are incorporated as private companies.
Setting up a Family Investment Company
Family investment companies, or “FICs” as they are commonly known, have become increasingly popular over recent years and are now widely used by wealthy individuals for succession planning purposes. They offer a number of tax advantages over trusts, and are also popular with international clients from jurisdictions that do not recognise trusts, and who may feel uncomfortable with involving a professional trustee company in their affairs.
A Guide to Setting Up Business in England and Wales
Setting up a business in a new jurisdiction can be both an exciting and daunting prospect. From getting to grips with the corporate requirements to considering the tax consequences to understanding the registration and filing requirements, there will be plenty to think about and many decisions to be made, but once you’ve determined on the best corporate structure and understand the tax position, what other issues need to be dealt with?
Registers, Records and Filings
Depending on the type of entity that you’ve set up, you will need to make certain filings and maintain various records throughout the entity’s life. In this article, we focus on the principal corporate records and filings relevant to a private limited company incorporated in England and Wales.
Directors - Lights, Camera, Action
Becoming a Director – What to Consider
In England and Wales, every private company limited by shares is required to have at least one appointed director who is responsible for undertaking the day-to-day management of the company.
Appointing Directors
The board of directors of a company is responsible for setting company strategy and managing the company on a day-to-day basis. Before they can engage in these important tasks, directors need to be appointed correctly, so that they have the necessary authority to act on behalf of the company.
Sole directors – is this still a problem?
Every company has directors to run their affairs and take decisions – but how many do you need? And what are the consequences if your company doesn’t have enough?
Staging a Coup – removing a director from office
Every company is run by its directors, but what can the members do if they are unhappy with how the directors are performing – can they kick a director out and replace them? It is a fundamental principle of company law that ultimately the members decide who is appointed to run their company, but how does this work in practice?
What are my duties as a director?
Whether you’re the sole director of a small owner-managed company or the CEO of a multinational enterprise, you’ll be subject to various duties and obligations and it’s imperative that you’re aware of these before you’re appointed and remember them throughout your directorship (and in some cases, after it ends as well).
Directors are best-placed to make the commercial decisions
We recently wrote an article about the general duties of directors as set out in the Companies Act 2006 (the Act). As mentioned in that article, section 172 of the Act sets out the duty to promote the success of the company for the benefit of the members as a whole and includes a non-exhaustive list of factors that the directors should consider when making any decision.
Money, Money, Money: Directors’ Duties and Financial Accounts
We’ve recently written about the general duties of directors which are set out in the Companies Act 2006 and in that article, briefly mentioned that other, more specific duties and obligations may also apply, including, for example, in relation to a company’s financial accounts.
Fundraising: Show Me The Money
So, you need to raise funds for your business?
It is likely that at some stage after setting up a business you will need access to finance from third parties. You may have approached friends and family for loans and initial investments while your business was in in its earliest stages, but now be seeking a more significant financial boost as it grows.
Fundraising in a Tax Effective Manner
Last week, we discussed some of the fundraising options for a company. While the considerations set out in that article are important, fundraising decisions are often tax-driven and no discussion would be complete without considering these tax consequences.
Are You Ready to Raise Funds?
We’ve recently been discussing a company’s options in relation to third party fundraising and the various tax consequences. But what practical steps can you take to help the fundraising process?
Demystifyng the Term Sheet
You’ve considered your fundraising options, have all your records and documents in place and have an investor in mind, so now it’s time to consider the term sheet.
Shareholders
What are your rights as a shareholder?
A company acts through two bodies of people – its shareholders and its board of directors. While the directors manage the day-to-day running of the business, shareholders can still exert a significant amount of influence.
Protections for Minority Shareholders
Minority shareholders are those who cannot, by themselves, control the direction a company will take and, as a result, may be adversely affected by decisions made by the majority shareholder(s).
Dividends
Our recent articles have referred to the payment of dividends to shareholders . In this article, we delve into how profits and retained earnings of a private company can be distributed among its shareholders by way of dividend.
General meetings – a step by step guide
While the board of directors of a company is responsible for the day-to-day, operating decisions of the company, there are various issues which, under the Companies Act 2006 (the Act), require shareholder approval. (A company’s articles of association (the articles) and any shareholders’ agreement which is in place may also set out matters which require shareholder consent.)
How can a company reduce its share capital?
Every company limited by shares has a share capital. This is the amount of money paid to the company by its shareholders when they subscribe for their shares and consists of the nominal value of the share plus any share premium. It might total pennies or hundreds of millions of pounds.
Employment: 9 to 5
What to think about as a first-time employer
A key part of any operating business is its workforce. To the untrained eye, becoming an employer appears to happen overnight; one minute there is just a company name, the next it has employees (…and much more!).
Getting the most out of recruitment and motivating and retaining valued staff
Our recent article talked about the steps that a first-time employer needs to take before they actually employ any staff . We’re now going to think about the next stage.
An Introduction to Incentive Arrangements and their Associated Tax Treatment
In this article, we briefly outline some of the common types of share and cash incentives provided to directors/employees, and their associated tax treatment.
Commercial Contracts
Commercial Contracts: Key Features
In this article, we take a brief look at some of the key commercial terms. (Note that the legal requirements to create an enforceable contract are not discussed).
Talking Non-Disclosure Agreements
The use of confidentiality or non-disclosure agreements (an NDA) has come under press scrutiny over recent months, largely because of their abuse in relation to sexual harassment cases. Their use in the commercial and corporate world is, thankfully, far less sinister, but it is nonetheless important to understand how NDAs operate, when you might be asked to sign one and what you should look out for before signing one.