Websters Accountants - Property Accounting & Property Auditors

Archive for the ‘Retail’ Category

Friday, December 4th, 2009

10 things you need to know about the Companies Act 2006

The Companies Act 2006 made substantial changes to private company management.
1.  There is no need to appoint a company secretary unless you want to.  If you do he/she will have same responsibilities as now.

2.  All companies must have at least one actual person as a director.  All directors must be at least 16.

Directors file service addressed on the public record with residential addressed held as protected information at Companies House.

3.  Private companies will no longer hold an AGM. 10% of shareholders can demand a meeting (5% in certain circumstances). If private company meetings take place they require a 14 day notice period.

4.  Written resolutions will become easier to use, requiring a simple majority (for ordinary resolutions) or 75% (for special resolutions) of eligible votes.

5.  Arrangements can be made so that communications can be sent and received in certain ways, especially electronically if shareholders agree emails and websites can be used more than at present. Individual members can still ask for hard copies.

A company’s name, number, registered office and other particulars currently required to be displayed on business letters and other documents must now also be provided on electronic documents as well as the company’s website.

6.  Companies formed under the new Act can choose to have new streamlined default model Articles. Existing companies can also choose to take advantage of these new model articles in whole or in part.

7.  The Statutory rule that private companies can’t give financial assistance to buy their own shares has been abolished.

8.  Private companies must file their annual report within nine (previously ten) months of the year end.

The medium-sized group exemption form preparing consolidated accounts has now been removed.

9.  There is now a simpler solvency-based procedure to enable private companies to reduce capital without court approval.

10.  The amount companies have to do has been greatly reduced and they can take steps to take advantage of the deregulatory benefits of the Act.

Transitional arrangements will make it as easy as possible for companies to take up these benefits.

Source: BERR

Posted in Landlord, Managing Agent, News, Retail | No Comments »

Thursday, December 3rd, 2009

Ian Stubbs demystifies the Companies Act changes

THE SIMPLE FACTS ABOUT THE COMPANIES ACT 2006

Decisions taken by shareholders

Written resolutions no longer need to be signed by all the shareholders instead a simple majority of the eligible shares for ordinary resolutions or 75% for special resolutions.

Companies can choose to make more use of electronic methods and resolutions can be circulated by email or other electronic methods such as websites, with shareholders agreement.

Shareholders Meetings Streamlined

Private companies will no longer hold an annual general meeting although shareholders can demand a meeting if at least 10% (5% in certain circumstances) wish to. Shareholders still have the right to receive accounts.

Shareholder meetings for private companies can now all be on a 14 day notice period, unless different arrangements are specified in a company’s Articles.

Company Secretary

Private companies will not have to appoint a company secretary unless they choose to do so.

If they choose to do so they will have the same authority and responsibilities as now and will continue to be registered at Companies House.

Filing Directors Addresses

Directors will be required to file a service address on the public record at Companies House. This may for example be their company’s address, rather than their private home address.

A director’ private address will be held as protected information at Companies House.

Reduction of Share Capital

Private companies can now choose to reduce their capital by special resolution supported by a solvency statement by each of the directors.

Financial Assistance to purchase Private Company’s own shares

The statutory rule that companies cannot give financial assistance for the purchase of their own shares has been abolished for private companies.

Directors Conflicts of Interest

Directors have always had a duty to avoid a situation in which they have an interest which conflicts or may conflict with the company’s interests unless the matter has been duly authorised. At the moment only shareholders can authorise such a conflict of interest.

In future in the case of existing companies, it will be possible for those directors who do not have an interest in the matter to authorise it if this is specifically permitted by the company’s Articles.

Forming a Company from October 2009

The Memorandum of Association will become a historic document which will simply record the facts at the time of incorporation.

The Articles will set out the principles covering the way the company conducts business.

New companies registering under the 2006 Act will be able, if they wish, to take advantage of a new default model Articles of Association for private companies. These are set out in a clear language and reflect the way many small companies operate.

Existing companies can also choose to adopt these new Articles.

In future neither the Memorandum or the Articles do not have to state the objects of the company. This means that companies need not be restricted in what they do, but they can choose to be restricted if they wish.

Electronic Documents

Electronic communications, including emails and websites will in future need to include the company’s name, number, registered office and other particulars.

Accounting Arrangements form April 2008

The deadline for private companies to file annual accounts and reports will reduce from ten months to nine.

The exemption from preparing consolidated accounts by medium sized groups has been changed so as to apply now only to small groups.

Directors

All companies must have at least one actual person as a director and cannot just have companies acting as directors.

A new minimum age of 16 is set for directors. Existing underage directors will cease to be directors when the age criteria comes into force.

The Companies Act 2006 confirms current law in respect of the duties of directors.

A summary of these 10 things you need to know will be published tomorrow.

Reblog this post [with Zemanta]

Tags:
Posted in Landlord, Legal, Managing Agent, News, Retail, Tenant | No Comments »

Wednesday, November 25th, 2009

London Business School research into service charges

The Estates Gazette published a summary of some LBS MBA students’ research into service charges and how they are the cause of friction between landlord, tenant and property managers.  Property Services sponsored the reserach and a summary of the work is on their website.

Reblog this post [with Zemanta]

Tags:
Posted in Commercial, Landlord, Managing Agent, News, RICS Code, Retail, Tenant | No Comments »

Wednesday, October 28th, 2009

Effect of VAT ‘normalising’ on service charges

The short term reduction of the standard rate of VAT, from 17.5% to 15%, introduced from 1 December 2008 in a bid to help alleviate the effects of the recession is due to come to an end at 31 December 2009.

The rate will then return to 17.5%, unless the Government decides that the economy still requires the added stimulus that this reduction was designed to provide and extends the period beyond that date.

Our experience shows that when the rate was reduced some suppliers passed on the benefit of the reduced VAT rate, as the Government had intended, by keeping their net costs unchanged, resulting in a reduction in the gross cost. Other suppliers kept their gross costs unchanged, effectively taking advantage of a “hidden” increase in their net charges.

Presumably, when the VAT rate returns to 17.5%, the gross cost for the former group will simply return to the previous level, whilst the latter group will retain the increased net cost and apply the higher rate of VAT.

In terms of service charge situations the overall effect on a service costing £1,000 plus VAT prior to 1 December 2008 can be summarised as follows :-

Residential service charges Commercial service charges
Option to tax No option to tax
Prior to 1 December 2008 £1,175.00 £1,000.00 £1,175.00
Rate reduced to 15% :
1.) Net cost unchanged £1,150.00 £1,000.00 £1,150.00
2.) Gross cost unchanged £1,175.00 £1,021.74 £1,175.00
Rate increased to 17.5% :
1.) Net cost unchanged when rate reduced £1,175.00 £1,000.00 £1,175.00
2.) Gross cost unchanged when rate reduced £1,200.54 £1,021.74 £1,200.54
Assumes no inflationary increase in the cost of the service during the period.

Therefore, for residential tenants and tenants of commercial non-opted buildings there has been a short-term benefit of lower costs from those suppliers who “played fair” and passed on the benefit of the VAT rate cut, offset by a disadvantage of a higher cost base going forward from January 2010 for those suppliers who took advantage of a hidden price increase.

Watch out for your next service charge statement.

For commercial tenants of opted buildings there is no up-side from suppliers who passed on the benefit of the VAT reduction (other than in cash flow terms), only higher costs going forward from 1 December 2008 for those suppliers who took advantage of a hidden price increase.”

Alternatively, you could just use the first paragraph as a bald statement of fact if you think that my subsequent comments are a bit too cynical!

Posted in Commercial, Landlord, News, Residential, Retail, Shopping Centre, Tenant, service charge | 2 Comments »

Wednesday, July 15th, 2009

Entertainments are not “promotions” for service charge purposes

In the current economic climate landlords and tenants will continue to consider in great detail the service charge provisions in leases and to review what expenditure is and is not recoverable. Service charge disputes are likely to become more common according to CMS Cameron McKenna.

This came about after a legal decision of Boots UK Limited -v- Trafford Centre Limited in 2008 when the High Court held that the landlord could pass on the cost of entertainments, Christmas decorations, a Christmas grotto and a large permanent television screen to its shopping centre tenants via the service charge.

The court held that all these items were each a facility, an amenity or an attraction, rather than a form of promotion of the shopping centre and therefore the entire cost was to be included in the ordinary service charge with no contribution from the landlord. In contrast, had these items been classified as a promotion, then the cost of providing them would have had to be shared between the landlord and the tenant. Source Dorsey & Whitney

.  A summary is downloadable from Ashursts.

Forsters explain in more detail the items Boots contested and why the judge found against them.

Tags: ,
Posted in Commercial, News, Retail, service charge | No Comments »

Tuesday, June 2nd, 2009

Westfield Shopping Centre reduces service charge 7%

It has been reported in Property Week and Retail Week that Westfield Shopping Centre has dropped its service charges for tenants.

The top weighted rate for 2009 of £12.98/sq ft – compared to the original budget projection of £13.94/sq ft that was given to retailers around Christmas 2008.

Driven by ‘unhappy retailers’ who campaigned for a reduction in overheads, it seems this has been achieved by a mixture of cost cutting and streamlining services.

Tags: , ,
Posted in Retail, Shopping Centre, service charge | No Comments »

Monday, April 6th, 2009

BPF members help retailers

An ongoing discussion between large retailers and the UK’s biggest landlords (members of the British Property Federation) has surfaced because retailers object to paying rents quarterly in advance saying this causes them cash flow issues.  Responding, the BPF landlords ran a pilot scheme in four shopping centres to reduce overheads through service charges by delaying maintenance projects and ”and by mutually identifying changes to service requirements.”

This is very interesting because it’s been historically the landlord who sets out the level of ’services’ that tenants receive in a shared occupancy building.  

What if the tenants were able to choose the level of service they wanted in future - for example, weekly cleaning rather than daily or  increased security cameras / guards near their stores.  A menu-driven approach would mean that the days of one-size-fits-all may end and a more flexible service could be delivered enabling retailers to pick and choose from a range of services to suit their particular needs.

the areas where the cost review is focusing its attention include:

  • Engagement with retailers
    Hours of operation
    Cleaning and environment
    Waste management
    Security
    Administration, procurement and purchasing of services
    Plant and fabric maintenance
    Utilities and energy management
    Customer service
    Marketing

The BPF press release

Tags: ,
Posted in Landlord, Retail, service charge | No Comments »

Service charge specialists for commercial and residential property

London 020 7935 1603
Birmingham 0121 262 3733