High Court Decision: The Rectification of a Company’s Register of Members

 

What do you do if a company’s sole member and director dies leaving the company unable to function without them, and you’re the executor of the will?

The case of  Williams v Russell Price Farms Service (2020) was a turning point for business law. The High Court granted the application made by executors under section 125 of the Companies Act 2006 (the Act) in order to rectify the company’s register of members following the death of the sole director and shareholder of Russell Price Farms Services.

Why is this case so important?

As the deceased was the sole member and director of the company, when he passed, it left the company withy no directors or living shareholders. This means that no one was able to do the necessary things such as accessing the bank account to pay creditors and running the day-to-day operations. Additionally, there was no mechanism in place for appointing new directors as the articles of association did not give the executors the power to resolve the issue. This is what lead to the executors to apply to the High Court to replace the deceased name with their own name. By doing this, they would be able to pass a resolution and appoint new directors to run the business.

In the application to the High Court, the executors stressed their intentions to apply for probate which reportedly, was important in the court’s decision to grant the order. The High Court granted an order, in accordance with section 125 of the Act for rectification of a company’s register of members to replace a deceased sole member and director with the executors named in his will.

What does this mean?

Firstly, this case highlights the importance of a company’s statutory registers as it does not appear enough to reply on the Companies House records. Also, it shows the importance of a company’s articles of association and ensuring that they are flexible. This will help to deal with unfortunate circumstance, protecting your company if things like this ever do happen.

Secondly, this case shows that you can apply to the court to rectify a company’s register of members. However, it can be a complicated process with many moving parts, so it is best to seek legal advice before doing so.

At Four Oaks Legal Services, we have the perfect balance of business law and private client law meaning we are well equipped for the job. If you want to discuss how we can help, please contact us on 01543 440308 or email us at stuart@fouroakslegalservices.com

CHARITY GOLF DAY 2022!

We are excited to announce that we are again teaming up with Tamworth Wellbeing & Cancer Support Centre for our THIRD Charity Golf Day!

Our 3rd fundraising Charity Golf Day in aid of Tamworth Wellbeing and Cancer Support Centre. It is taking place on Wednesday 7th September 2022 at Aston Wood Golf Club, Blake Street, Sutton Coldfield. The Tamworth Wellbeing and Cancer Support Centre is a registered charity that supports people affected by cancer and other chronic illnesses.  They not only support the person suffering from the illness but their loved ones too.  To find out more about the Charity, go to:

https://www.tamworth-wellbeing-cancer-support.com. 

You can read more about our event using the link below or contact us at tracey@fouroakslegalservices.com

https://fb.me/e/1TZqEGAV5

 

Lasting Powers of Attorney – Why are they so important?

A power of attorney is a legal document that allows those you trust to make decisions for you, or act on your behalf, if you are no longer able to or if you would like some help with making your own decisions.

Two women sit at a desk reviewing documents: by Gabrielle Henderson/Unsplash
Image by Gabrielle Henderson in Unsplash

Just a few reasons why you might need someone to act or decide for you…

  • A temporary situation. For example, you are admitted into hospital, and you need someone to look after your bills, property or even your business.
  • For long term plans. For example, you have been diagnosed with dementia or are in an accident meaning you may lose the mental capacity to make your own decisions in the future.

 

What do we mean by mental capacity?

  • For a person to lack mental capacity, they must lack one or more of the following:
    • understand the information relevant to the decision
    • retain that information
    • use or weigh up that information as part of the process of making the decision
  • Many people believe that if someone has dementia, they automatically lose their mental capacity. This is not true. Needing more time to understand and communicate does not mean you lack mental capacity.

What are the different types of LPA’s we offer?

Ordinary Power of Attorney and Business Power of Attorney

An ordinary power of attorney allows your attorney, one or more person, to make financial decisions on your behalf. The power you give your attorney can be limited so that they can only deal with certain matters and assets. For example, your bank accounts to pay the bills but not your property itself. There are two types of ordinary powers of attorney, LPA for financial decisions and LPA for health and care decisions.

LPA for financial decisions cover things like paying the mortgage, investing money, paying bills and buying and selling property. The attorney can be restricted in the decisions they make, or you can let them make all the decisions on your behalf. Your money and accounts must be kept separate from your attorneys, and you can ask for regular updates on how your money and accounts are being handled.

LPA for health and care decisions covers things such as your medical care, where you should live, what to eat and who you should have contact with. Although these seem like substantial aspects of your life, this can only be used once you have lost mental capacity. However, having an LPA in place for health and care can be crucial as it does give special permission or your attorney to make decisions about life-saving treatment.

Business power of attorney only apply to a business and nothing more. When you spend so much time and effort building a business, you want to make sure it is protected if something were to happen to you, and this is where a business power of attorney can help. allows a business owner to appoint a person or people, known as attorneys, to make decisions in the best interests of the organisation should he or she become mentally incapacitated or unavailable.

We are available to talk through options with you and advise you on how to achieve your aims. Contact us on 01543 440 308 or email adam@fouroakslegalservices.com.

12 steps in the legal process of buying a business

 

 

Four Oaks Legal Services has a business and commercial department, which provides a full range of company related legal advice. Here Stuart McIntosh, commercial Solicitor and Director at the firm, takes a look at the step-by-step process of buying a business.

If you want to own a business, but don’t like the idea of starting from scratch, then buying an existing company could be worth considering.

It may involve more upfront costs but buying an existing business could present less risk as you have a better idea of actual profit and loss, plus you can often acquire valuable intellectual property, such as patents, trademarks, and copyrights.

Once you have secured the right business, based on location, size and industry, it’s a good idea to contact your Solicitor. Here at Four Oaks Legal Services we pride ourselves on our professional and friendly approach, which involves transparency every step of the way. We partner with entrepreneurs that are looking to buy a business and enable them to steer their new company in a fresh and exciting direction.

While every business sale is unique there are often similarities with most ownership transfers. Here are some of the steps we go through when someone wants to purchase an existing business:

1, Due Diligence: This is commonly the first step in the business buying process and put simply it is when you first check out the state of the business you want to buy. It is important to assess whether the business is sound and at first glance worth the money you are prepared to pay.  You will want to check the condition of the physical assets and value of the goodwill, and at this point, line up your Solicitor and accountant.

2, Heads of Terms: This is also known as a memorandum of sale and consists of an outline of what is being sold. This agreement will include such things as an asset list, any exclusions, proposed completion date, details of the lease and importantly the sale price. While this document is not legally set in stone, it is considered morally binding so a major change at this stage will usually be frowned upon.

3, Instructing Your Solicitor: Following on from drawing up of the heads of terms this is when the Solicitors are formally instructed to start the legal process. At Four Oaks Legal Service we highly recommend you contact us as early on in the process as possible so a solid and accurate legal basis can be drawn up right from the start. The memorandum of sale is important as it is used as a guide to assist in writing up the contract.

4, The Contract: The business seller’s Solicitor usually draws up the first draft of the contract and very often it will be in favour of the seller. This then starts a process of each Solicitor amending the document to suit their own party until eventually an agreement comes out that is acceptable to all. At Four Oaks we always ensure we are right by your side, particularly at the contract negotiation phase. It is vital that you can fully trust your legal advice, which should give you complete peace of mind at this critical stage.

5, Restraint of Trade Clauses: This is a particularly interesting step in the process, which is usually carried out in favour of the buyer. Essentially, we include these clauses to prevent the seller having an unfair advantage over the buyer once the sale has happened. A perfect example is preventing the seller from setting up an identical business next door to the one you have just bought from them.

6, The Business Premises: In a business sale that involves lots of land and buildings this is an important topic. Often the premises will be leased, so inevitably this brings in a third party – the landlord.  The land or building owner will want to ensure they won’t be worse off from having a new business owner, so usually a separate document will be drawn up detailing the obligations of all parties. This document is known as the “licence to assign”.

7, Business Goodwill: The goodwill of a business is often the most valuable part of the sale and principally refers to the future profitability of the business. Such factors as brand, a good name and the value of the customer relationship play a big part here. Goodwill can be described as an “intangible asset” because it isn’t definite like a physical asset.

8, Enquiries, Searches and Inspections: This is similar to the process that takes place during a domestic house sale. Enquiries and searches are carried out on behalf of the buyer and commonly use the services of a third party, such as a local authority, energy provider or environmental agency. The process will result in reports being drawn up which will further inform the buyer and may affect the sale price agreed.

9, Employees: Transfer of Undertakings (Protection of Employment) (TUPE) law state that when a business is transferred as a going concern, usually employees’ contracts also pass over to the new owner. Under these conditions the contracts do not change, and the new owner automatically inherits the rights and obligations from the seller. At Four Oaks we will advise if the TUPE laws apply to your particular case.

10, Contracts, Book Debts and Liabilities: Every business sale will involve a collection of existing contracts with both customers and suppliers. There will also likely be a certain level of existing debts that the business is owed by its customers. The ownership and management of these contracts and debts will need to be agreed between the buyer and seller, and this is where the joint expertise of the Solicitors will be in high demand.

11, Licences and Permits: Some business sectors need licences or other such permissions to be able to trade, for example pubs and book makers. In business sales, these licences can be transferred to the new owner or the buyer will need to apply from the necessary authority for their own.

12, Completion: Finally, we come to the happy day of completion. This is the legal term given to the point where the sale and purchase go through and the business transfers in law from the seller to the buyer. Both Solicitors will have already agreed a completion date suitable for both buyer and seller. The final sign off will usually include the following documents: sale of business contract, licence to assign, authorised guarantee agreement, deed of assignment of goodwill and any transfer deeds relating to property.

If you are thinking of buying or selling a business we advise getting in contact with a Solicitor as early as possible in the process. We have considerable experience advising clients on all steps of the buying process. Why not call today to set up an appointment or alternatively use the enquiry form on our website.

Tel: 01543 440 308

Contact

Your guide to the UK Trust Register changes

Four Oaks Legal Services has created an information leaflet that explains the UK Trust Register changes that are taking place this year.

The leaflet looks at whether the trust that you look after (as a trustee) or the trust that you created (as a settlor) needs to be registered and how to do it. The information leaflet can be downloaded here.

The UK Trust Register is simply a central record of information held by HMRC relating to trusts.  Prior to 1st September 2021, only trusts that had a UK tax liability needed to register.  However, the rules have now changed and the scope of the trust register has increased, and more trusts are required to register. The changes impact new trusts and existing trusts and HMRC may impose penalties if a trust does not register by the deadline.

Is COVID changing how we plan for the future?

Family surrounding a dog in a garden

Writing a Will has three major benefits:

  • You can ensure your wishes are carried out.
  • Personal bequests got to the people and charities that you want to benefit.
  • You don’t leave a stressful situation for family and friends to sort out after your death.

The difficult times we have lived through since March 2020 appear to have prompted more people to draw up Wills.

Will writing service Farewill reported a 267% increase in people making a Will from home compared to 2019.  There have also been reports of more disputes over Wills.

Insurers Legal & General decided to launch a survey to find out how our views on making Wills may have changed since COVID-19 emerged.

How old are the people who are making Wills?

Some couples have sensibly made Wills when they start living together, when they take on their first joint mortgage, or when they marry. It’s something we recommend. It’s not always the case that your estate passes to your partner if you are not married.

Traditionally, making a Will has been something that many people only think about later in life when their house has increased in value and they have acquired some savings perhaps.

Legal & General found that about 39% of people aged 25 to 34 have a Will, compared to 61% who don’t. The average across all UK adults is that 47% have a Will, and 53% don’t.

But, attitudes are changing with more than a fifth (22%) of respondents aged 16-24 strongly agreeing that their perspective on Will writing had changed since the pandemic.

Among those who said they had updated their Will recently, 18% of young people (aged 16-24) said they did so after falling ill from COVID-19. Only 1% of respondents who were 55 and over said that was why they had updated their Will.

Why make a Will?

Legal & General’s survey asked people to give their top reasons for making a Will.

Some 47% of respondents said an important reason was to make sure their assets were left to the right people while 43% said it was to ensure that their family was provided for financially. Being able to specify who would manage their financial affairs was a reason for 32% of people and 18% said it was so they could say who would look after their children.

Moving down the list, other top reasons were: to avoid paying more inheritance tax than necessary (13%); ‘the pandemic has made me more aware of my mortality’ (12%) and to give to charity (9%).

Our four-legged friends

As dog-lovers ourselves, we were interested to see that 9% of people gave the reason ‘to state who should care for my pets’.

The survey found that overall 5% of respondents said they would be leaving assets to provide for their dog, cat or other pet companion. The percentage rose to 15% in the 16-24 age group – the highest out of any other age group. Perhaps this was influenced by the trend of buying pets since Covid-19 was identified. The Pet Food Manufacturers’ Associations claims that 3.2 million pets were bought during lockdown.

What would make you write your Will?

In answer to the question ‘If you do not have a Will, what would make you write one?’ some 35% of people said it would be if they came into money. We believe that people often underestimate the value of what they have to leave.

Four Oaks Solicitor Joanna Parkin said: “We would advise anyone who has not yet made a Will to talk to a solicitor to understand exactly what makes up your Estate. It could be more than you think – and most people want to be in control of who benefits.”

Falling ill, getting older or having children were also popular reasons that those without Wills gave for what might make them change their minds.

Joanna added: “None of us know what the future holds, and the pandemic has made a lot of people realise that, but there are still many people who have not made a Will. My colleagues and I work hard to make the process as easy and pleasant as possible, and many clients tell us that once they’ve made a Will they feel a powerful sense of relief and peace of mind.”

The full Legal & General survey press release can be read at www.legalandgeneral.com/insurance/over-50-life-insurance/wills/planning-for-future

We are available to talk through options with you and advise you on how to structure your Will to achieve your aims.

Image by CDC on Unsplash.

Simple or complicated, what’s your Will type?

Photo of a man carrying children through a field

Search online for ‘simple’, ‘free’ or ‘cheap’ will writing and you’ll be presented with a range of website results including sponsored adverts promising that you can sort everything in five minutes flat.

In theory, you could scribble who you want to leave your earthly goods to on any scrap of paper and sign it. Then, as long as your signature is witnessed and signed by two independent adults aged 18 or over, it might be legally binding. But does that mean it’s a good idea?

One step up from that are the DIY kits you can buy from stationery shops and online that allow you to write your own Last Will and Testament.

In the digital age, many people have high expectations of doing things at the click of a button. As a result, online will writing services have become popular, especially since the start of the pandemic. These online services range from quick and basic online templates to more detailed customer journeys where you will be asked questions to find out more about your personal circumstances and finally options where you can speak to an advisor through a phone or online call.

When should you NOT consider a DIY online Will?

Circumstances that make a will more complicated, so that a DIY online option would NOT be recommended include:

  • If you have people who are financially dependent on you, other than your immediate family, such as children from previous relationships.
  • If you own a property abroad or have overseas investments or bank accounts.
  • If you own a business.
  • If you have wishes that are slightly complicated or open to misinterpretation.
  • If you want to try to reduce the Inheritance Tax obligations of your loved ones.

The clear difference that puts clients first

Solicitors at Four Oaks are all legally qualified and experienced and Adam Penn also holds a Diploma in Trusts and Estates from STEP (the Society of Trust and Estate Practitioners). This is the gold standard qualification in the industry.

Experience tells us what questions to ask to really understand the situations of our clients and to advise them if their instructions are likely to result in heartache for loved ones in later years.

A recent survey by independent research and consultancy firm Funeral Solution Expert found that 65% of UK consumers who believe their affairs are simple, actually have much more complex needs when it comes to their Will.

We recognize that some traditional law firms may have driven people towards online will writing services and DIY options because of complicated fee structures, slow response times and the hassle of getting an appointment. At Four Oaks Legal Services, we set out from the start to be clearly different. We are upfront about our fees and we are happy to arrange appointments outside normal office hours and to take instructions in the homes of our clients if it is difficult for them to get to us.

Who Cares?

Care homes are increasingly asking potential residents of their homes to ensure that the resident has Lasting Powers of Attorney (LPAs) in place.  We have had a number of cases recently where clients have asked us to assist with this due to requests from the care home management team.  But why?

 

LPAs are legal documents which allow a person to appoint another person or a number of people to act on their behalf in relation to either (or both) their financial affairs or their health and welfare, usually when the donor of the power is finding it difficult to, or cannot, deal with these matters themselves. 

Putting in place an LPA is a valuable arrangement, particularly for care home providers.  If a potential resident has arranged a legal appointment of another person, the care home can deal with that appointed person, should their resident no longer be able to make decisions about their finances or their own welfare issues.  This means that delays are avoided when immediate decisions need to be made and access to funding is required. 

Without a Property & Financial Affairs LPA, the care home could be caught in ‘financial limbo’ whilst the resident’s family applies to the Court of Protection to appoint someone to manage the resident’s financial affairs. If the family is unable to pay the fees in the meantime, the care home will be placed in a difficult situation.

Without a Health & Welfare LPA, the care home may find that no-one can make decisions about the resident’s care on a day to day basis, such as whether they should visit the dentist or have their flu jab, or more major decisions about hospital care, treatment and operations.  As the care homes job is to provide care, they have to be sure those making decisions for the resident are legally authorised to do so.

With the rise in dementia-based illnesses (some 850,000 have a dementia diagnosis in the UK), care homes are naturally worrying about making sure they do the right thing by their potential and existing residents.  As it can take several months to put an LPA in place, this is why they are encouraging those with capacity to make LPAs before moving into a care home.  It can save stress and worry for the resident, and the care home, later.

If you want to discuss making a lasting power of attorney, please contact Joanna Parkin or Adam Penn on 01543 440308.

 

Should I Get A Solicitor to Write My Will?

The ongoing pandemic has understandably caused many people to make Wills for the very first time.  “Do It Yourself” Will-making kits have become an increasingly common means of creating a Will in recent years.  They are a cheap alternative to a professionally prepared Will.

But beware, homemade Wills may still come at a significant cost.

The recent decision in the case of Face v Cunningham has increased the likelihood of homemade Wills being challenged via the Courts.  The Court heard that the alleged Will of the late Mr Face could not possibly have been signed by the gentleman himself.  Whilst such incidents of fraud are rare, the real impact of the judgement is to reverse the burden of proof from the complainant to the estate.  In future, it is the Executors of the deceased who must take the time and trouble to issue Court proceedings to prove a Will.

This is a considerable departure from the Court’s previous position and means that homemade Wills will come under very close scrutiny in future. There is an automatic presumption that if a Will has been prepared by a Solicitor that the Will has complied with the requirements for legal execution. Home-made Wills are not afforded the same protection.

If you have a homemade Will or, like Mr Face, you have a complex family dynamic, your Will may be challenged in the Courts.  You may be able to avoid any future disputes by executing a Will prepared by a Solicitor.

Please call us on 01543 440308 if we can help.

The Small Business Online and Copyright

On Thursday 4th June, Four Oaks Legal Services Director, Stuart McIntosh, ran an online Zoom session aimed at small businesses.  The session covered copyright issues that affect small businesses online.  The feedback from the session was fantastic, so for those of you who missed it but would like to watch it, click on the link below.

https://drive.google.com/file/d/10GEJqiLRdyz9lJHdvvsar8bKnb1kx2UN/view?usp=sharing

If you have any questions about the issues raised in the session, please email Stuart on stuart@fouroakslegalservices.com or call him on 07969 929 452 and he will be pleased to chat to you.