Tuesday December 4, 2012 at 10:03am
I often advise companies who believe that a director can be removed from office simply by sending Form TM01 to Companies House. Unfortunately, this does not remove a director and is unlawful unless the correct steps have been taken beforehand. The following procedure should be followed: 1. Look at the Company’s Articles (and any shareholders’ agreements) as these will set out certain requirements that your particular company must follow. They will also set out certain circumstances t....
(read more...)Monday July 30, 2012 at 4:03pm
Is there increasing friction between you and your fellow shareholders and/or directors? Are your board meetings starting to bear a striking resemblance to Alan Sugar’s ‘Apprentice’ ones? If so, then you need to take action and start to think tactically. The first points to consider are as follows. Know your legal powers Are you a shareholder, director, or both? The voting powers of directors at Board Meetings are usually equal (although often a Chairman will have the casting vo....
(read more...)Friday March 30, 2012 at 9:12am
As a solicitor who defends directors when they get into problems with liquidators, fellow directors and shareholders, suppliers and customers, as well as government bodies, I am constantly struck about how most of these problems could have been avoided if directors hadn’t made a few basic mistakes. So here’s my list of 6 mistakes that I’ve seen since the beginning of the year that have led to real problems, heartache and unforeseen expense for my director clients.
Going in....
(read more...)Wednesday December 21, 2011 at 5:59pm
I must confess to a fascination with the Leveson Inquiry into the Culture, Practice and Ethics of the press. Piers Morgan was in the witness box yesterday answering questions about his time as editor of the Daily Mirror. His evidence echoed that of James Murdoch given to the House of Commons Culture, Media and Sport Committee: he didn’t know what was going on in his organisation. It’s something I hear a lot from company directors facing claims against them personally arising from the....
(read more...)Tuesday November 29, 2011 at 5:23pm
If you’re considering removing a director, or if you are a director facing the prospect of being removed by your company, there are many tactics to consider to obtain the most favourable result. Taking early legal advice from a solicitor who specialises in directors’ duties is essential, not only to obtain the best outcome you can, but also to reduce the mental and emotional stress that comes with the territory. After all, you spend more of your waking time at work than you do with y....
(read more...)Tuesday October 4, 2011 at 9:46am
M & S has been fined £1m for breaches of health and safety legislation. The Crown Court said it had failed to protect customers, staff and workers from potential exposure to asbestos whilst refurbishment works were carried out to a store. Ceiling dust possibly containing asbestos fell to the shop floor whilst it was open. M & S were also ordered to pay £600,000 costs after the prosecution by the Health & Safety Executive.
Marks & Spencers we....
(read more...)Wednesday June 22, 2011 at 1:45pm
The Bribery Act comes into force on 1 July 2011. In February and April I blogged on the implications, but I would just like to recap on the main points and highlight 2 Case Studies.
The Act creates 2 general offences, one of offering, promising, or giving a bribe, and the second of requesting, agreeing to or receiving a bribe. These are offences committed by individuals. There is also an offence of bribing a foreign official, and perhaps the most important offence as far as all organisations a....
(read more...)Wednesday May 11, 2011 at 5:10pm
Many directors of SMEs are taking huge risks when it comes to paying themselves without realising – and it is often on their accountant’s advice. It is very common that a company’s accountant will advise directors of owner-managed companies to take the majority of their pay as dividends with either no salary or a very low one. This has a financial advantage, particularly as far as national insurance contributions are concerned. The director then simply draws a monthly sum from ....
(read more...)Wednesday January 5, 2011 at 11:26am
Current market conditions mean that many business owners and directors are having to face up to the consequences of personal guarantees they signed when they first started their business, took out a loan or signed a lease agreement. I've heard of numerous small business owners who have had their business loan called in by the bank. If they haven't got the money in the business to pay it back they will more than likely be personally liable as a result of having signed a personal guarantee. I....
(read more...)Tuesday January 4, 2011 at 9:56am
As we enter 2011, one thing is for sure: company directors have never before faced so many duties, responsibilities and potential personal liability for the companies they control. Based on recent trends, we predict that the following 4 areas will be the main ones for directors of SMEs to watch out for in 2011. Directors Pay The law on how and when a director can be paid is complex and there are strict procedures that must be followed. We have seen a large increase recently in the volume of clai....
(read more...)Monday December 6, 2010 at 7:56pm
What surprised me most about the news story of MP Phil Woolas losing his seat for lying is the number of politicians who came forward to say that lying is just a part of the “rough and tumble” of electioneering. Do we, as a society, really think it’s OK to lie in public? As a litigation solicitor with considerable court experience, I have seen many individuals lie in the witness box or, as their lawyers will usually put it, “being mistaken”. That’s why most of....
(read more...)Thursday November 25, 2010 at 6:27pm
If a director who has loaned money to their company resigns, or is dismissed, can they get their loan back? Many companies, especially in the current economic climate, seem reluctant to repay a director’s loan in this situation. The first thing to look at is the loan agreement itself, if there is one. It may set out the circumstances when a loan can be repaid. If the written agreement doesn’t deal with this point or, if there is no agreement, then the loan will generally be repayable....
(read more...)Monday November 15, 2010 at 2:10pm
In my blog of 15th September 2010, I pointed out that breaches of directors’ duties can have serious consequences for a director, particularly if a company becomes insolvent or after it is sold. It is in these situations that directors frequently find themselves facing claims to pay often-huge sums into the company. One of the areas where it is easy for a director to slip up is in ‘conflicts of interest’. The law is complicated but, for SMEs, can be summarised as follows:
....
(read more...)Wednesday September 15, 2010 at 7:36pm
Company directors are subject to so many duties that, if they are not careful and don’t take proper advice, they can easily find themselves in breach of one or more of their duties. But, in SMEs and family-owned companies, the directors and shareholders are usually the same people; so who cares anyway and how would anyone find out about the breaches? Some breaches are very easy to commit, and many directors don’t even know they are doing anything wrong. For example, there are various....
(read more...)Friday June 11, 2010 at 5:44pm
Directors are under a legal duty to maintain detailed accounting records of their company. In particular, they must maintain records:
to show and explain transactions, and disclose the financial position of the company at any time with reasonable accuracy;
to enable them to compile balance sheets and profit and loss accounts;
to keep records of all money received and paid out by the company on a day-to-day basis;
to maintain records of the company’s assets and liabilities;....
(read more...)Thursday October 8, 2009 at 10:26am
The new Companies Act has made some changes as to who directors are and registration requirements. Most of these new rules came into effect on 1st October 2009 but it seems many Directors know nothing about them.Who is a director?A director is anyone who has either been formally appointed as a director (by the shareholders or board as set out in the company’s Articles), occupies the position of director (even if they are called something else) or someone whose directions or instructio....
(read more...)Tuesday August 18, 2009 at 4:28pm
As businesses continue to struggle at the moment, there’s been a recent increase in the number of SMEs who are making Directors redundant. It can often make sense: if a company’s activities have shrunk, with fewer sales and a reduced workforce, it can now appear too top heavy and under performing directors might be at risk. Handling a Director redundancy can be much more complicated however than making a staff member redundant as we explain in the more detailed article on Director Re....
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