Bruce Wallace Associates London
Bruce Wallace Associates London

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July 2021

19 July, 2021

Q: I have a small private limited company, what do I need to think about before I allot some shares?

A: Below are some important points to consider when allotting new shares in a private limited company:-

• Constitutional documents and any shareholders’ agreement
The Company’s articles and any shareholders’ agreement in force should be checked for any provisions or restrictions on the allotment of shares.

The requirement to have an authorised share capital was abolished under the Companies Act 2006 (“CA 2006”), if the Company with share capital was incorporated under the Companies Act 1985 or earlier, it will have an authorised share capital clause set out in its memorandum of association stating the maximum number of shares that can be issued.

• Authority to allot new shares

For a private limited company with only one class of shares, the directors have a general authority to allot shares (section 550 of CA 2006) of that class without requiring any further authority, unless there are restrictions in the Company's articles (or shareholders’ agreement).

For a private limited company with more than one class of shares, under section 551 of CA 2006, the directors need authority to allot new shares by either a provision in the Company's articles or by a shareholders’ ordinary resolution. The ordinary resolution can be passed either as a written resolution or at a general meeting of the shareholders.

• Pre-Emption rights

Under section 561 of CA 2006, shares being issued have to be offered first to existing shareholders in the Company. Therefore, you should check the Company’s articles to verify whether statutory pre-emption rights on the allotment of shares have been dis-applied, the terms of any existing shareholders’ agreement will also need to be checked.

Statutory pre-emption rights can be waived by passing a special resolution of the Company’s shareholders or by including a provision dis-applying pre-emption rights in the articles of association (any changes to the articles will also require a special resolution to be passed by shareholders).

Post Allotment

Following an allotment of shares, the Company’s register of members and register of allotments should be updated to reflect the allotment, a return of allotment (Form SH01) should be completed and submitted to Companies House within one month of the allotment and any shareholder resolution passed should be filed at Companies House within 15 days of being passed. If the new shareholder qualifies as a PSC (a person of significant control) the PSC register should be updated and the appropriate PSC form filed at Companies House. A share certificate should be issued within two months of the allotment.

If you need help with the allotment of shares or any of your compliance or governance policies generally, please contact us. All our contact details are on our website www.brucewallace.co.uk


June 2021

17 June, 2021

Q: Where can I find an up-to-date copy of the Company’s Articles of Association?

A: The Company Secretary should have a copy of the latest Articles of Association (“Articles”) of the Company. If not, Companies House in Cardiff stores all information for companies and LLPs registered in England and Wales and makes that information available to the public.

You can carry out a search at Companies House (https://www.gov.uk/get-information-about-a-company) where you can download a copy of the incorporation documents which should include a copy of the Articles. It is worth remembering that details of any changes to the Articles approved subsequent to the incorporation, need to be forwarded to Companies House. It is therefore important that you check the filing history to ensure no later versions of the Articles have been submitted and that you have the most up to date version.

You may also need to obtain a copy of the relevant Table A or Model Articles to have the complete document. These are default articles of association which are automatically applied to any company that does not adopt its own articles on incorporation. These default articles may apply in full or may be varied.

Copies of all the versions of Table A (before 28 April 2013) and of the Model Articles can be found at Model articles of association for limited companies - GOV.UK (www.gov.uk). You should find reference to which version of Table A (or Model Articles) applies set out in the Articles.

If you need any assistance with any company secretarial matters or with corporate governance generally, please contact us. All our details are on our website www.brucewallace.co.uk


May 2021

6 May, 2021

Q: Who should I include on my PSC register?

A: Part 21A and Schedule 1A to the Companies Act 2006 came into force on 6 April 2016 to increase transparency over who ultimately owns and controls UK companies. Accordingly, all UK companies and limited liability partnerships (LLPs), and UK Societates falling within Part 21A CA 2006 should now be maintaining a register of people with significant control (PSC Register) and continue to take reasonable steps to identify its PSCs or registrable relevant legal entities (RLEs). If there are no registrable PSCs or RLEs, a statement must be made and filed with Companies House. The PSC Register must never be blank. Changes to the PSC Register must be recorded within 14 days and notified to Companies House by filing Form PSC04 (PSC) and/or Form PSC05 (RLE) within a further 14 days.

A PSC is by definition an individual or RLE who meet at least one or more of the following conditions in relation to a company:

Condition 1 – holds, directly or indirectly, more than 25% (in nominal value) of the share capital of the company.

Condition 2 – holds, directly or indirectly, more than 25% of the voting rights in the company.

Condition 3 – holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company.

Condition 4 – has the right to exercise, or actually exercises, significant influence or control over the company.

Condition 5 – has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm (that is not a legal entity) which would itself satisfy any of Conditions 1 to 4 in relation to the company if it were an individual.

You can find the full guidance for PSC at

https://www.gov.uk/government/publications/guidance-to-the-people-with-significant-control-requirements-for-companies-and-limited-liability-partnerships

If you need any help with your CH filing obligations or with any of your compliance or governance policies generally, please contact us. All our contact details are on our website www.brucewallace.co.uk

March 2021

19 March, 2021

Q. We have just been informed our 2019 accounts are incorrect. As these accounts have been filed at Companies House and sent out to members, what can we do to rectify this?

A. The directors of the company may prepare revised annual accounts if the original version did not comply with the requirements of the Companies Act 2006 (CA 2006) section 454(1). As copies of the original accounts have been sent to members and delivered to the Registrar, the revisions must be confined to the correction of those respects in which the original accounts or reports did not comply; and the making of any necessary consequential amendments (CA 2006 s454(2)).

The Companies (Revision of Defective Accounts and Reports) Regulations 2008 (SI 2008/373) and the Companies (Revision of Defective Accounts and Reports) (Amendment) (No.2) Regulations 2013 (SI 2013/2224) allow the directors of the company to correct the original defective accounts and reports by either replacing the accounts and reports in substitution for the originals or by a supplementary note indicating the corrections to be made to the originals. The regulations set out how the revised accounts are to be prepared and give details of the procedures to be adopted for approval and signing of the revised accounts and reports.

The original defective accounts will remain on the public record, therefore any revised accounts submitted to Companies House must be clearly marked as "Amended" on the front page. The revised accounts must be for the same period as the original accounts, must clearly state that they replace the original accounts and are now the statutory accounts and must be prepared as they were at the date of the original accounts. If only one part of the accounts is to be amended, there must be a note signed by a director and filed with a copy of the original accounts which states what has been changed.

If you need any further information or help with your accounts or any other company secretarial matters, please contact us. All our contact details are on our website www.brucewallace.co.uk.

February 2021

8 February, 2021

Q: Our Board needs to have more regular oversight of ESG matters across the Company. What factors should we be considering in order to initiate this?

A: Given the breadth of issues involved, Environmental, Social and Governance (ESG) matters should not be viewed as a separate topic on the board agenda but rather consideration of these factors should be embedded across the organisation. Firstly, the Board should understand why consideration of these matters is important, not just in terms of existing and potential investors, but ensuring the business operates in a sustainable manner alongside achieving strong financial returns. Keeping the Board updated on how ESG matters are progressing across a business can be a challenge, so it may be helpful to follow a short step plan to address the issues involved:

  • Environmental: Has the Company determined what factors it needs to report on regarding its environmental impact? The FRC is encouraging companies to report against the TCFD framework, however whilst not yet mandatory for all companies, there may be alternative frameworks and measures that are more appropriate. Involving the Board on this decision would be helpful and ensure there is clarity on the ongoing information to be provided.
  • Social: Have all of the Company’s stakeholder groups, such as its suppliers, workforce, shareholders, customers and the communities it operates within, all been identified? Is the Board aware of what two-way engagement has taken place between the Company and its stakeholders? Has consideration been given to these groups and /or input been received, to help inform the decisions before the Board?Deliberating these questions at the Board as part of strategic discussions on ESG, would in turn aid future oversight.
  • Governance: Whilst the Board will continue to evolve its governance structures, and could form a relevant Committee or give responsibilities to individual Non-Executives, giving thought as to how ESG matters feed into key decisions is crucial in ensuring these are continually considered.

If you need any further information or help with your reporting requirements, please contact us. All our contact details are on our website www.brucewallace.co.uk.

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Martha Bruce

martha@brucewallace.co.uk

Susan Wallace

susan@brucewallace.co.uk

Chloe Higgins

chloe@brucewallace.co.uk

Adrienne Graham

Adrienne@brucewallace.co.uk

Anne-Marie Palmer

anne-marie@brucewallace.co.uk

Registered office:
118 Pall Mall
London
SW1Y 5ED.

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