business_view_autumn2011_newsletter

CONTENTS 1–2 Companies House Webfiling 2–3 Assignment and Novation – the Difference 3

Business View

Shareholder Abstention

3–4 Recent Cases 4

New Solicitors

Corporate & Commercial News Autumn 2011

Companies House Webfiling How to use Companies House Webfiling Webfiling is the online system for filing Companies House forms.

It is quicker and cheaper than filing by paper copy and can be found at https://ewf.companieshouse.gov.uk/.

On accessing the service online for the first time, you will need to register by applying for a security code, which is personal to you and will be sent to the e–mail address used by you.

To file documents you will need the company’s authentication code, which you can also apply for on the Webfiling website. It will be sent to the company’s registered office address within 5 working days. The authentication code can be requested more than once

◆ Form AD03 (change of location of the company records to the

single alternative inspection location (SAIL))

and is the only paper part of the Webfiling process. ◆ Form AD04 (change of location of the company records to the

Once you have your own security code and the authentication code

registered office)

for the company, you can file the documents listed below. ◆ Form AP01 (appointment of director)

Information such as changes to address details, officers and new

◆ Form AP02 (appointment of company director)

appointments can be submitted free of charge. There are processing fees of £14 for an Annual Return and £8 (standard service) and £30

◆ Form AP03 (appointment of secretary)

(for same day service) for a Change of Name.

◆ Form AP04 (appointment of corporate secretary)

If you do not have an account with Companies House, you can pay

◆ Form TM01 (termination of appointment of director)

by credit card or paypal.

◆ Form TM02 (termination of appointment of secretary)

Forms which can be submitted online

◆ Form CH01 (change of director's details)

◆ Form AA01 (change of accounting reference date)

◆ Form CH02 (change of corporate director's details)

◆ Form AR01 (annual return)

◆ Form CH03 (change of secretary's details)

◆ Form AD01 (change of registered office address)

◆ Form CH04 (change of corporate secretary's details)

◆ Form AD02 (notification of single alternative inspection location

◆ Form SH01 (return of allotment of shares) ◆ Form NM01 (change of name by resolution)

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(SAIL))

Companies House Webfiling continued

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You can also submit the following accounts via the Webfiling service. ◆ Audit Exempt Small Full Accounts (with abbreviated option)

A company which does so enters into an agreement with the Registrar that it will file certain specified documents electronically using the webfiling service (or the more complicated software

◆ Audit Exempt Abbreviated Accounts

filing service). Companies House will then not accept those

◆ Dormant Company Accounts ( Form AA02)

documents if delivered in paper form.

Accounts are provided as a downloadable PDF template, which

The forms covered by the PROOF scheme are:

requires the user to have Adobe Reader. You can also access the

◆ Appointments

Joint Filing accounts template (for joint filing of accounts with Companies House and HMRC) by selecting the HMRC link from the main menu within Webfiling.

PROOF When using Webfiling to file for a company online you will be asked whether you wish to join PROOF, which stands for Protected Online Filing. Companies using Webfiling can submit information securely using a company authentication code which is confidential. However, this does not prevent any changes made to their company records using paper forms. To protect themselves against the risk of having false filings made companies can sign up to PROOF.

◆ Terminations ◆ Change of Particulars (Company Officers) ◆ Change of Registered Office Address ◆ Annual Return

eReminders You can also request eReminders when adopting Webfiling.

Companies House will send you email reminders as to when accounts and annual returns are due. If you set up an eReminder service paper notifications will no longer be sent.

Assignment and Novation – the Difference The words assignment and novation are often used interchangeably,

It is not always necessary to have a deed of novation in place. Taking

but they are very different ways of transferring rights and obligations

the asset purchase example, if the buyer contacts all suppliers after

in a contract.

completion explaining that it has taken over the business and that

Novation

acknowledge the communication by dealing with the buyer, their

Novation is where a party’s rights and obligations under a contract

conduct may be construed as a novation of the original agreement.

are transferred to a third party with its consent. Though we talk

However, care needs to be taken to check the wording of the original

about a transfer, what actually happens is the original agreement

contract in that if it requires the supplier’s prior written consent it

is terminated and a new one is put in its place.

is unlikely that this will be inferred. The advantage of having a

their contracts have transferred to it, then if those suppliers

In order to novate a contract all three parties need to agree to that.

novation set out in writing it that it ensures that there is clarity as

For example, in an asset purchase transaction, the buyer, seller and

to what has been agreed.

third party supplier would all have to agree to the novation of a supply contract and normally enter into a deed of novation. The seller would then be released from its original obligations and the buyer would become bound by them.

Assignment Due to the logistics of having to enter into a deed of novation, an assignment is commonly used as an alternative to novation. Under an assignment only the benefit, and not the burden, of the contract

Novation is only normally used for contracts which are essential

can be assigned. With an assignment the consent of the third

to the business and have a restriction on assignment or where the

party supplier is not required, and notice of the assignment is given

outgoing party wishes to be released from future liabilities under

to the third party supplier after the event.

the contract.

Assignment and Novation – the Difference continued

Once assignment has taken place the assignee (buyer in the case of an asset purchase) is entitled to the benefit of the contract and can bring proceedings against the other contracting party to enforce its rights. However, as the burden of the contract cannot be transferred the assignor (seller in the case of an asset transfer) remains liable to perform any part of the contract which is still to be fulfilled. Often in an asset purchase agreement indemnities would be put in place covering the assignor (seller).

Shareholder Abstention A company’s shareholders pass or reject resolutions in general meetings by them or those who are their proxies, casting votes which do or do not meet the threshold of over 50% for an ordinary resolution and 75% for a special resolution.

The question occasionally comes up as to whether shareholders who abstain are to be taken into account in

Care needs to be taken to check whether the original contract

ascertaining whether sufficient votes have been cast in

contains non-assignment provisions. Wording in an asset purchase

favour. The answer to this is that they are to be disregarded

agreement will often look to circumvent any restrictions on

on the basis that the shareholder has not exercised the right

assignment in the original contract by stating that the benefit of

to vote (in the same way as a shareholder not attending

the contract is held in trust by the assignor for the assignee.

the meeting or asking a proxy to abstain). To abstain is not to vote and the requisite majority is based on the total voting rights of those who do actually vote. For this reason it is good practice for a proxy form not to present an abstain

Recent Cases

option as well as the usual yes/no choice.

Competing Sellers

seem that each such case will be judged very much on its own

It is normal for the seller of a business to undertake not to canvass,

facts [jet2.com Limited v Blackpool Airport Limited].

solicit or seek to entice work from its clients for an agreed period.

An accountant who had sold his business on such terms entered

Entire Agreement

into a secret agreement with a rival firm to solicit new work from

It is common for sale and purchase agreements to have what are

the client base of the business he had sold and introduce it to the

known as entire agreement clauses whereby such things as

rival firm. The High Court held that he was liable to the buyer,

representations or even promises made before it has signed, orally

noting that there had to be an active component to the behaviour,

or in writing, are agreed not to be of contractual or other effect

a positive intention and direct or targeted actions [Baldwins (Ashby)

in the absence of fraud. A recent Court of Appeal decision has held

Limited v Maidstone].

that the particular wording was not effective in that liability for

All Reasonable Endeavours

it is good practice to state specifically any implied terms which

misrepresentation was not clearly stated. It was also made clear that

The High Court has emphasised the uncertainty of “endeavours”

might fall to be excluded. The scope for unexpected liability is wide

clauses, which are often best avoided by agreeing what steps need

and careful drafting is all the more required in the light of this

to be taken and expressly saying so. Occupying the middle ground,

judgement [AXA Sun Life Services Plc v Campbell Martin Limited

an “all reasonable endeavours” provision was included in a contract

and others].

about providing a low cost base for an airline at Blackpool Airport.

Nothing was said about opening hours and suddenly the airport

Quantum Meruit This is reasonable remuneration for services or goods in the absence

opening hours (as it had been previously doing). The airport argued

of an agreement on price, including if a contract fails to be binding

that it should not be required to act against its own commercial

or is found to be void. In this case the Court of Appeal held that

interests but that was not accepted. It is important that the matter

assessing what should be paid did not just include looking at the

was within the airport’s own control as distinguished from it being

value to the paying party and the terms of the agreement which

required to pay unduly to achieve something outside that. It does

had failed to become binding. Instead, it held that these were just

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refused to accept arrivals or departures outside its published

Recent Cases continued

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factors to be considered along with other communications between

a residential care home operated by an NHS Trust was closed and

the parties and, particularly important, expert evidence on the

their care transferred to a private sector care provider. However,

market value. Indeed, it was said that the award should never be

the residents were re-housed into their own homes and the

less than the bottom end of the market value range [Benedetti v Sawiris].

Employment Appeal Tribunal held that there was such a

TUPE Transfer

that there was no TUPE transfer. The NHS Trust remained liable,

fundamental difference between the old and new arrangements It is well known that if services are transferred to a new provider

of course, to those of its former employees who were providing

it is quite likely that the employees engaged in providing them will

the care services [Nottinghamshire Healthcare NHS Trust v

automatically become employees of the new provider. In this case

Hamshaw and Others].

New Solicitors We are pleased to announce the following appointments: Daisy Barnett and Chris Sharpe as solicitors in our Commercial Property team. They both joined in May 2011 and are based in our Daisy Barnett

London office.

Chris Sharpe

Jon Moore as a solicitor in our Dispute Resolution team. He joined in May 2011 and is based in the firm's Bath office.

Seiw Li Yap as a solicitor in the Business Property team. She joined in June 2011 and is based in our Melksham office.

Jessica Partridge as a solicitor in our Trusts and Estates team.

She joined in September 2011 and is based in our Bath office.

Jon Moore

Seiw Li Yap

Jessica Partridge

Your Contacts Roy Butler Partner

email: rab@stoneking.co.uk

Caroline Leviss Associate

email: crl@stoneking.co.uk

Stone King LLP 13 Queen Square Bath BA1 2HJ Tel. 01225 337599 Fax. 01225 335437 16 St John’s Lane London EC1M 4BS Tel. 020 7796 1007 Fax. 020 7796 1017 Wellington House East Road Cambridge CB1 1BH Tel. 01223 451070 Fax. 01223 451100 New Hall Market Place Melksham Wiltshire SN12 6EX Tel: 01225 337599 Fax 01225 335437

www.stoneking.co.uk email: corporate&commercial@stoneking.co.uk

© Stone King LLP 2011

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