October 25, 2012What’s in a name? Get the details right
When dear old Woolies closed down a few years ago, the manager of the branch in Dorchester decided to save her colleagues’ jobs and open a similar shop selling similar goods under the name Wellworths.
But the Channel Islands-based Barclay brothers who own the Woolworths name complained and forced the name to be changed to Wellchester. The solicitor’s fees and costs of changing the name and signage were too much for the embryonic business and it closed after three years. A Poundland has taken its place.
This cautionary tale illustrates how tricky naming conflicts can be, so it made sense to investigate the legal background and to seek advice from the experts at Companies House on how best to avoid costly repetitions of the Wellworth’s experience.
September 14, 2012The delayed rise of the Company Voluntary Arrangement
Created in 1986, the Company Voluntary Arrangement (CVA) has, historically at least, been a much under-utilised insolvency procedure.
With the correct application the CVA can be a useful tool in the fields of both business recovery and job preservation. Essentially the CVA is a contract between a Company and its creditors whereby an Insolvency Practitioner becomes the Supervisor and administers the operation of the CVA, the directors remain in control of the business. The Insolvency Practitioner will firstly have acted as Nominee in providing assistance to the directors in preparing the CVA Proposal and commenting on the Proposal’s content to the creditors.
The Proposal is presented to creditors and needs to be approved by 75% in value of those attending the creditors meeting. Proposals will typically provide for a certain monthly contribution from the Company (for a period of say 3 to 5 years) to the Supervisor who will in turn distribute the proceeds pro-rata to the creditors. Just how the Proposal is structured is flexible and will not need to solely consist of income contributions. Other matters which could be included are sales of certain assets or the rather topical “clawback” mechanisms for commercial landlords, think Travelodge.
In order to ensure not only approval but also a successful CVA there is the utmost need for a strong underlying business, the support of creditors and a strong and committed management team.
A CVA affords directors the ability to continue to trade with the same vehicle as they have previously with protection from existing creditors. It must be noted that secured creditors cannot be bound into a CVA without their consent and creditors incurred post approval of the CVA must be paid as and when the debt falls due.
More often than not Company directors consult Insolvency Practitioners far too late and creditor discontent is often already above and beyond the 25% needed to block approval. The sooner the advice is sought, the more likely a company can be “rescued” rather than “liquidated”. It could also be said that there has been a tendency within the insolvency profession to steer clear of CVAs and advise directors to take the Administration or Liquidation route, such a mind-set could have been fostered by the comparative difficulty of approving CVAs, the need for creative thinking on the part of the IP in order to draft a viable and attractive CVA and the lower fee levels they generate for the Insolvency Practitioner as compared against other insolvency procedures.
There has been a change in the landscape over the last two years and we have seen an increase in the number of CVAs being approved. There are a number of factors contributing to this and I would suggest these include low interest rates, the comparatively weak value for which assets can be sold as measured against a few years ago, a general belief amongst unsecured creditors that the procedure can sometimes offer a greater return than Administration or liquidation, the paucity of funding for new companies out of Administration and a shift in the attitude of the banks and the Crown.
Lawrence King of Critchleys
October 24, 2008Late Filing Penalties
Section 441 of the Companies Act 2006 requires all companies to deliver annual accounts to the Registrar of Companies by the due date. Section 453 specifies that a civil administration penalty shall be payable if the accounts are delivered late, and provides for the Secretary of State to specify the level of this penalty through regulations.
To increase the effectiveness of the late filing penalties, when section 453 comes into force Companies House will change the current schedule of late filing penalties as contained in section 242A of the Companies Act 1985. In parallel, the Government will amend section 242A of the 1985 Act so that these changes also apply to accounts prepared under the 1985 Act but delivered late on or after 1st February 2009 when the updated penalties come into force.
What are late filing penalties?
Late filing penalties were introduced in 1992 to encourage directors of limited companies to file their accounts on time because they must provide this statutory information for the public record.
All penalties to be increased to take account of inflation between 1992 and 2007
A faster rate of increase in penalties for companies who file more than one month late.
A doubling of the penalty for any company which files late having also filed late in the previous year.
The new table of penalties is a follows:
|Late delivery of accounts||Penalty - Private Company||Penalty - PLC|
|Not more than one month||£150||£750|
|More than one month but not more than three months||£375||£1500|
|More than three months but not more than six months||£750||£3000|
In addition where there was a failure to comply with filing requirements in relation to the previous financial year (and that the previous financial year had begun on or after 6th April 2008), the penalty will be double that shown in the table.
The new penalties will apply from 1st February 2009.
September 22, 2008Companies Act 2006 implementation commences 1 October
It may have received Royal Assent almost two years ago, but the start of next month will a see a further stage in the implementation of the Companies Act 2006, specifically to changes in the requirements for corporate and underage directors.
From 1st October a company will be required to have at least one director who is a natural person / individual. A company can no longer have all corporate directorships.
The only exemption to this is a grace period until October 2010 for any company that had only corporate directors on the 8th November 2006, the day the Companies Act received Royal Assent.
“This flexibility has sometimes been abused by those who
wish to conceal who is controlling a company,” said BERR, “For example those intending to commit fraud may use a company with corporate directors to help obscure the identity of the individuals involved.
The Government did consider the option of banning corporate directors, but concluded an outright ban might harm those companies who make use of the current flexibilities for entirely legitimate reasons.
The Act also introduces a minimum age for a director of 16 years old. On 1st October 2008 existing underage directorships will cease with no notification to the Registrar required. However, companies will need to amend their register of directors to reflect the fact that the appointment has ceased. It also removes the restriction on directors over 70 years old.
The following Companies Act 2006 provisions also share the same implementation date:
Objection to Company Names - Sections 69 to 74
Trading Disclosures - Sections 82 to 85
Provisions relating to the directors', 'conflicts of interest duties' - Part 10
Share capital reduction through the solvency statement route - Sections 641 to 644
Control of political donations and expenditure, provisions relating to an independent candidate - Sections 362 to 379
Power of court to grant relief in certain cases - Section 1157
Restoration for personal injury claims of companies dissolved prior to 16 November 1969 - Section 1295 of the 2006 Act, and Schedule 16 (repeals)
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