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Company Law Updates

Newsletters

The Stanley Davis quarterly newsletter, Stanley Davis Journal, is distributed free of charge to thousands of our clients providing them with updates within the company secretarial and property support arenas. We also publish regular briefings from our Trademark, corporate compliance and international services departments. To view the latest editions in Adobe Acrobat (.pdf) format click on the shortcuts below.
Alternatively, if you would prefer to receive hard copies by post :- subscribe now.

October 2012 newsletter

May 2012 newsletter

Don't Hesitate Incorporate newsletter - Updated March 2012

Don't Hesitate Incorporate newsletter - Updated March 2011

Don't Hesitate Incorporate newsletter - Updated March 2010

Comparision of Limited Company to LLP

New Service - Provision of Directors Service address

June 2008 newsletter

December 2007 newsletter

June 2007 newsletter

November 2006 newsletter

May 2006 newsletter

November 2005 newsletter

July 2005 newsletter

Industry News

17.01.07 Companies Act 2006

20.03.06 Gibraltar Update

09.03.06 Form 42 Update

09.03.06 Beware Bogus Registries

02.03.06 Filing accounts - consultation

11.01.06 Isle of Man

24.10.2005 Prospectus Filing

10.05.2005 Corporate Law Update

10.05.2005 Thinking of an LLP?

08.03.2005 Treasury Shares

19.01.2005 IR - Form 42

17.11.2004 New Thresholds

03.09.2004 Common hold

02.04.2004 Insurance Company Returns

Companies Act 2006
The Companies Act 2006 was passed late in 2006 and is one of the largest pieces of legislation ever passed in UK Law. This is because it significantly updates the law governing companies and their directors.
Being such a large change to company law means changes required by most companies. Fortunately most of the act does not come into play until 2008.

You can download the act here: Companies Act 2006

Gibraltar update
The tax-exempt company has traditionally been the preferred vehicle in Gibraltar as the fiscal status has been clearly defined in legislation since 1967 and is certain. Conversely its non-resident partner has always been the subject of interpretation of the Corporation Tax Rules by the Gibraltar Income Tax Commissioner.

The legality of the exempt status regime in Gibraltar was challenged in July 2001 by the EU Commission under the EU State Aid Rules which required Gibraltar to close the tax regime immediately and also exposed existing tax exempt companies to the risk of repaying all the tax saved over their lifetime. The Gibraltar Government successfully challenged this in the European Court. The EU Commission then initiated further proceedings and in November 2002 adopted an appropriate measures decision requiring an end to new exempt companies and the withdrawal of exempt status by December 2005. This was rejected by the Gibraltar Government and alternative proposals were made and negotiated. An agreement was approved by the Commission in January 2005 and over the next five years the Tax Exempt company will be phased out.

Existing companies with exempt status may continue to benefit from tax exempt status until 31 December 2010 by which time the European Court will have ruled on the second court case and alternative arrangements will be in place. Should existing exempt companies change ownership and/or activity before 30 June 2006 exempt status will only continue until 31 December 2007. Any changes post 30 June 2006 will result in immediate loss of tax exempt status.

New exempt companies can be formed until 30 June 2006 but will only benefit from tax exempt status until 31 December 2007. In addition the Gibraltar authorities are being selective in relation to the companies to which they now grant tax exempt status; preference being given to companies beneficially owned by non-Gibraltarians, doing no business in Gibraltar or its residents, having a physical operating presence in Gibraltar, employing staff and contributing to the local economy.

Gibraltar wishes to protect the future of the non-resident alternative as this will enable tax exempt companies to exist as non-resident companies where they are no longer able to justify their tax exempt status.

Contact international@yorkplace.com for more information on our international support services

09.03.06 Form 42 Update
The Inland Revenue announced widespread changes to the form 42 reporting requirement on 28 November 2005. Previously all share transactions that came about by reason of employment had to be reported. After consultation some of the rules have been relaxed so that some shares are spefically excluded from the requirement to be reported, notably: Subscriber shares Transfer of shares in the normal course of domestic, family or personal relationships, ie gifts from parents to children Shares in residents' management companies Shares in members' clubs Share for share exchange Rights issues Bonus issues We advise all clients to give us shareholders' details at time of instruction. These shareholders will then become subscribers and there will then be no need to worry about form 42.

09.03.06 Beware Bogus Registries
The latest in a series of bogus trade mark registration fee requests has just reached us via a client. Various scams have come to our attention over the last few years. Most seem to work by the scammer gaining details of a community trade mark application, merging the details into an official-looking letter from an official-sounding organisation and requesting payment of around £1000 normally in euros. The latest comes from FIPTR - the Federated Institute for Patent and Trademark Registry from Florida, USA asking for a grand total of USD 1529.30. We urge clients once again - do not pay any demand for payment unless it comes from Stanley Davis Group!

02.03.06 Filing accounts - consultation
Stanley Davis clients might be interested to know that Companies House and HMRC have launched a consultation on the joint filing of accounts. The consultative document is seeking views on: - the benefit of a joint filing service between Companies House and HMRC for the filing of company accounts and corporation tax returns; - preferences on the timing of a single date for filing these returns (either 7 or 9 months from their accounting date); and - other ways that Companies House and HMRC could work together to offer more integrated arrangements to the benefit of companies. The alignment of filing dates is an essential first step to a single filing system which would remove duplication of work within the two organisations, and at the same time, reduce the burden to companies, particularly small and medium sized ones. Benefits of the proposal include: · reducing the burden on companies of supplying over-lapping information to HMRC and to Companies House · reducing the period of uncertainty during which a company tax return may be selected for enquiry by HMRC · encouraging the take-up of internet services · more consistent data and better data integrity. If you have any queries we'd be happy to pass them on to Companies House. Please email Lynda.Spencer@stanleydavis.co.uk The closing date is Friday 3 March 2006

11.01.06 Isle of Man
The Isle of Man Government remains confident that a zero corporate tax for all businesses (except banks) operating in the Isle of Man will begin in April 2006. The Treasury Minister had already introduced the zero rate in respect of insurance, fund management, space/satellite technology and shipping and from April this year this was extended to manufacturing, film, e-gaming, agriculture, fishing and tourism accommodation. The zero tax corporate rate is part of a strategy by the Island to enable the Isle of Man to remain competitive with Jersey and Guernsey and the BVI. The Treasury is also reviewing the personal tax liabilities of wealthy individuals in order to attract more entrepreneurs to the Island who will invest in new business.

24.10.2005 Prospectus Filing
Under the Prospectus Directive which comes into force on 1 July 2005, public companies will no longer be required or indeed able to file a prospectus at Companies House. The Financial Services Authority, which has been delegated rule making powers by HM Treasury, will be responsible for the approval of all prospectuses.

10.05.2005 Corporate Law Update
Some parts of the Companies (Audit, Investigations and Community Enterprise) Act 2004 were implemented on 6 April 2005, namely the provisions to strengthen auditor regulation, accounting enforcement and company investigations, and to relax the prohibition on companies indemnifying directors.

10.05.2005 Thinking of an LLP?
The first LLPs were incorporated on 6 April 2001. The total number registered is now over 11,000 (as at 14/01/05) with the take-up coming from ground floor business rather than the professions, although this is starting to change.

The diversity of new LLP incorporations indicates a strength in the advice being offered, new entrepreneurial spirit and a need to fend of risk and reduce liability.

Many of the LLP incorporations are from sectors such as PR practices, pharmacies, surveyors, window cleaners, builders, management services, bakeries, recruitment, riding stables, restaurants, schools and design agencies.

We are witnessing a quickening of the take-up pace as more information circulates and others adopt the new regime.

If your practice or a client is considering incorporating as an LLP and would like more information, e-mail info@stanleydavis.co.uk

New Thresholds
New thresholds to determine small and medium-sized companies and eligibility for audit exemption came into effect on 30 January 2004. The Companies Act 1985 (Accounts of Small and Medium-Sized Enterprises and Audit Exemption)(Amendment) Regulations 2004” – (S.I. 2004/16) were made on 9 January 2004 and sets out the following new thresholds:

Summary of regulations made under the Act commencing on 6 April 2005:

Regulations which delegate the Secretary of State's statutory auditor regulation powers to the Professional Oversight Board for Accountancy of the Financial Reporting Council.

Regulations which authorise the Accounting Standards Board of the Financial Reporting Council as a body to issue a reporting standard about the Operating and Financial Review.

Companies Act 1985 (Power to Enter and Remain on Premises: Procedural) Regulations 2005. Regulations which prescribe, for when an inspector or investigator makes a visit to a company's premises, the content of a written statement of powers, rights and obligations to be provided by the inspector or investigator; and the content of a record of the visit.

Regulations which appoint the Financial Reporting Review Panel of the Financial Reporting Council as the body to monitor the compliance of periodic accounts and reports of issuers of listed securities with the accounting requirements of the Listing Rules.

Further information:
http://www.dti.gov.uk/cld/companies_audit_etc_act/index.htm

Treasury Shares
THE COMPANIES (ACQUISITION OF OWN SHARES) (TREASURY SHARES) REGULATIONS 2003 (SI2003/1116)

The above regulations came into force on the 1st December 2003 regarding Treasury Shares.

These regulations amend the Companies Act 1985 by inserting new sections 162A to G to allow certain companies to hold shares in treasury following a purchase of own shares as an alternative to cancelling such shares on purchase. This provides a facility that is not currently available to companies. The regulations relax the requirement for listed public companies to cancel shares that they purchase by allowing the option of either holding the shares “in treasury” for resale/transfer or of cancelling them at a later date.

There are two new forms to allow Companies House to process the information required by the new regulations. The first form will be the 169(1B), which will place the shares into treasury. The second form will be the 169A(2) that will either cancel the shares held in treasury or disclose that they have been sold/or transferred to a third party. The forms have now been agreed and sent to Parliamentary Branch to be prescribed by Statutory Instrument in a Forms Order.

IR - Form 42
The Finance Act 2003 introduced a new reporting requirement on companies in respect of employee-related share movements where there is an unapproved share scheme in existence.

Effective from the tax year 2003/2004 a form 42 must be completed where employees or directors acquire shares, securities or options over such shares or securities in connection with employment. After a second extension of the filing date, reportable events in the last tax year should have been reported by 30 November 2004. Reportable events in the tax year 2004/05 must have be notified by 6 July 2005. Penalties for non-filing of the form are currently £300 per reportable event and a daily default penalty of £60.

The transfer of a company’s subscriber share in addition to the issue of any further shares falls within the definition of a ‘reportable event’ where it is acquired by a director or employee of the company. The information must be provided by a ‘responsible person’ who may be the employer, any host employer, the person from whom the securities or options were acquired and the person by whom the securities were issued. Only one of these responsible persons must file the information.

Although it has been suggested that company formation agents could make the declaration as the transferor of the subscriber shares, it is not our policy to do this as we do not have full knowledge of the employment status of shareholders. All our company formation packages have been updated to include a reminder alerting clients to the possibility that the purchase of the company may have given rise to a reportable event and therefore to the filing of a form 42.

Existing companies should also be aware that any share allotments may be considered reportable events and if so the form must be filed.

Should you have any queries concerning this new form or require us to assist with the reporting of the transfer of the subscriber share to the Inland Revenue, then please contact us on info@stanleydavis.co.uk

Small Companies:
Turnover - £5.6m, Balance Sheet - £2.8m

Medium-sized Companies:
Turnover - £22.8m, Balance Sheet - £11.4m

The audit exemption figures now match those of a small company.

The changes apply on the following basis:

The increases in small and medium company turnover and balance sheet totals thresholds take effect in relation to year ends on or after 30 January 2004

The increase in the company turnover and balance sheet totals threshold for audit exemption takes effect in relation to year ends on or after 30 March 2004

Common hold

Commonhold allows the owners of the units to own their units in perpetuity and be members of the Commonhold Association which will own the land, the structure of the building and the common parts. All unit-owners will have a vote in the operation of the Commonhold Association and, thereby, the management, maintenance, repair and servicing of the building. There will be no separate landlord. The unit-owners will share ownership and management of the building through the Commonhold Association.

With a Commonhold scheme there will be a governing document called a Commonhold Community Statement. This will be based on a template provided by the Commonhold Regulations. It is also be necessary to set up the Commonhold Association as a company limited by guarantee. On the sale of the first unit the Commonhold Association becomes the owner of the freehold title to the common parts and the Commonhold Community Statement comes into force.

Where a group of leaseholders have already bought their freehold they will be able to convert to a Commonhold arrangement subject to the consent of 100% of flat-owners in the building.

Insurance Company Returns
A change has been made to the rules on Insurance Company Returns which means that returns for periods ending after 31 December 2003 no longer have to be filed at Companies House. Traditionally we have obtained copies of these returns for clients by way of a company search. From now on we will need to contact the insurance company directly under Financial Services Authority Rules.

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