Paula Mestre, Conveyancing

Welcome to our spring Business Update. We hope that the topics included will be of interest. This issue deals with the Companies Act 2006, Rent Payable During Notice Periods, Deeds Not Protecting the Assignor, Guidance on

May 2009

Companies Act 2006 –

The Next Round

The next round of changes resulting from the Companies Act 2006 came into effect on 1 October 2008. The most important of these are as follows:

· Every company must have at least one director who is a ‘natural person’. This means that companies where the directors are exclusively other companies (as is not uncommon for subsidiaries) will have to appoint at least one individual as a director. There is, however, a concession which allows companies that did not have a natural person as a director on the date on which the Act received Royal Assent (8 November 2006) to delay compliance until 1 October 2010;

· The restrictions on providing financial assistance for the acquisition of a company’s own shares are repealed (Part 18). This will make it easier for smaller companies to widen the base of their shareholdings. There are other changes in the rules governing reductions in share capital (Part 17);

· Substantial changes are made relating to a director’s duties with regard to avoidance of conflicts of interest. These are contained in Chapter 2 of Part 10 of the Act and are sufficiently important to be recommended reading for all company directors. See http://www.opsi.gov.uk/acts/acts2006/ukpga_20060046_en_13 (and scroll down);

· An objection to a company name may be made if it is sufficiently similar to another name that is owned by the objector and compromises their goodwill (Part 5); and

· New regulations requiring companies to display specified information at their trading premises and on documents or communications.

Failure to comply with any of the new requirements may leave the company and/or its directors liable to a fine. The final round of changes is due to come into effect in October 2009.

We can help you make sure your company complies with the Companies Act and other applicable legislation and can advise directors on their rights and responsibilities. Contact Stewart Hinds.

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The courts often have to deal with disputes over the payment of rent and charges for the period after a tenant has given notice to vacate a let property. A recent case concerned just such an issue.

The circumstances were that premises were occupied under licence, with the licensee paying £450 plus VAT per month. The licence could be determined by either party by giving a month’s notice. After a short period, the licensee and the landlord agreed that the licensee could make a one off payment of £6,000, to cover the VAT inclusive charge for occupancy for the next 12 months. This represented a discount of approximately £25 plus VAT per month.

The licensee emailed the property owner to confirm that during the 12 month period for which the charge was prepaid the property owner’s right to give a month’s notice, as provided for in the licence, would be suspended.

About eight months later, the licensee gave notice to terminate the agreement and claimed the balance of his prepayment back from the landlord.

Rent Payable During Notice Period

Welcome To Our Special Business Newsletter For Commercial Clients

Stewart Hinds, Litigation

Andrew Ransley , Conveyancing

Employment Status, Business Failures Reaching a New Peak and the Validity of Impractical Insurance Terms.

Please do let us have your comments and if there are any other topics that you would like us to include we will try to do so at a later date.

In court, it was ruled that the licensee’s email had only suspended the landlord’s right to terminate the arrangement on a month’s notice, not his own. Therefore, the balance of the payment was refundable. The landlord appealed to the Court of Appeal.

The Court of Appeal took account of the email, but considered that it must be regarded as preventing either party from exercising the right to terminate the arrangement on a month’s notice. The occupier had secured the right to occupy the property for the full 12 months by making the payment, but could not then demand a refund for leaving the premises earlier, nor could the owner of the property compel him to vacate it before the 12 month period was up.

Contact Paula Mestre for advice on any commercial property matter.