Industry comment, updates and news from the Websters team.

10 things you need to know about the Companies Act 2006

Friday, December 4th, 2009 in Landlord, Managing Agent, News

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

Ian Stubbs demystifies the Companies Act changes

Thursday, December 3rd, 2009 in Landlord, Managing Agent, News


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.


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.

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Rogue residential managers in Ulster to be investigated

Wednesday, November 18th, 2009 in Managing Agent, News, Residential, Service Charge

A report in the Belfast Telegraph says that the Stormont parliament may investigate property management companies who do not fulfil contracted services such as common parts cleaning and garden services.

Interesting to read the comments under the article – some residents seem to think sacking the managing agent is a solution, but surely an independently audited service charge account would serve the purpose?

BCSC Conference

Wednesday, November 4th, 2009 in News

Next week the annual BCSC Conference rolls into town in Manchester. 

Websters Partner Andrew Salmon and Birmingham office head, Richard Brown will be attending.

Let us know if you would like to meet us there.

Effect of VAT ‘normalising’ on service charges

Wednesday, October 28th, 2009 in Commercial, Landlord, News, Residential, Service Charge

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!

The Companies Act 2006 may have arrived

Wednesday, October 21st, 2009 in Landlord, Managing Agent, News

The final parts of the 2006 Companies Act bring changes of interest to landlords, managing agents and company secretaries of property management companies.  On 1 October 2009 the following changes will take effect:-
1.                   New forms must be used to notify Companies House of events occurring after 1 October 2009.
2.                   PROtected On-line Filing (PROOF) has been introduced at Companies House to prevent unauthorised and malicious filing of incorrect documents.
3.                   The private addresses of directors no longer need to be published at Companies House, although such information has to be available to regulatory authorities such as the police and Inland Revenue. Previously filed private addresses can be removed for a fee of £140.
4.                   In addition to the registered office, companies can nominate a Single Alternative Inspection Location, where registers can be kept for inspection.
5.                   New companies can now have a “Constitution” based on model articles, which are much simpler than the old “Table A”.  There are a number of simplifications available under the Constitution and therefore it is generally preferable for companies to make the transition.
6.                   In future, the Articles may be set up to permit the change of the company’s name, which will be a far simpler process than the previous requirement for a special resolution.
7.                   Redeemable preference shares no longer need special authority from the Articles.

This is necessarily a very brief review of the changes.  Please let us know if you would like further details or clarification about how they affect your business.

Ian Stubbs, Partner

Tenant dissatisfaction continues?

Wednesday, October 14th, 2009 in Commercial, Landlord, News, Service charge audits

A recent article in Property Week written by Christopher Hedley, a director of IPD, about Occupiers and Management highlighted the general dissatisfaction of tenants with how their managing agents and landlords deal with service charges.

The majority felt that the large increases in service charge costs could not be justified and that control and communication of costs by managing agents was poor – so much so that fewer than 10% of occupiers felt they were getting value for money.

The tenants also expressed major concerns over exceptional expenditure and improvement costs.  At best these create unpredictable variations in service charges year on year and at worst may be outside the scope of recoverable service charge expenditure.


Article on how to challenge landlords’ service charge demands

Wednesday, August 5th, 2009 in News

We found an article written by Karen Philips at DWF lawyers setting out some clear advice on how tenants can challenge landlords’ service charge demands for the forthcoming year.

She has some good suggestions:

  • collaborate with other tenants
  • check other sites and compare costs
  • consult your landlord early about your dissatisfaction
  • react quickly to the demand
  • pay the part you have no issue with
  • know your lease terms
  • check the RICS Service Charge Code of practice

Here’s the article in full, thanks Karen for a timely reminder.

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Service charge provisions within leases

Thursday, July 16th, 2009 in Commercial, Landlord, News, Residential, Service Charge

A nice article in the Liverpool Daily Post about the lease contract between landlord and tenant in mixed-use properties affecting service charge claims.

The question is whether tenants are able to rely on their lease provisions to force landlords into giving the best value for the services they are obliged to provide?

Best value is an ambiguous concept, particularly where the price paid for shared services may be negotiated several years at a time and may not rise and fall rapidly as market conditions vary.  But we like the suggestion that the best Landlords will always be BPF Lease Code compliant.

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