BLP CONSOLIDATION
BLP CONSOLIDATION .....................................................................................................................................1
INTRODUCTION TO BLP ..................................................................................................................................... 2
INTRODUCTION TO COMPANY DECISION MAKING ........................................................................................... 3
PERSONAL TAXATION ........................................................................................................................................ 4
COMPANY INCORPORATION ............................................................................................................................. 6
COMPANY PROCEDURE ..................................................................................................................................... 7
COMPANY CONSTITUTION ................................................................................................................................ 8
EQUITY FINANCE ............................................................................................................................................... 9
DEBT FINANCE ................................................................................................................................................. 10
BUSINESS ACCOUNTS ...................................................................................................................................... 12
ROLES, RESPONSIBILITIES AND REQUIREMENTS OF DIRECTIONS (I) ................................................................ 13
ROLES, RESPONSIBILITIES AND REQUIREMENTS OF DIRECTIONS (II) ............................................................... 14
INTERNAL DISPUTES (I) .................................................................................................................................... 16
INTERNAL DISPUTES (II) ................................................................................................................................... 19
RETURNING VALUE TO SHAREHOLDERS (I) ...................................................................................................... 21
RETURNING VALUE TO SHAREHOLDERS (II) ..................................................................................................... 23
ACQUISITIONS (I) ............................................................................................................................................. 26
ACQUISITIONS (II): CONTRACTUAL ISSUES ...................................................................................................... 28
CORPORATE TAXATION ................................................................................................................................... 29
INSOLVENCY PROCEDURES ............................................................................................................................. 31
CORPORATE INSOLVENCY: INVESTIGATING DIRECTORS AND CHALLENGING PAST TRANSACTIONS ............... 33
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, INTRODUCTION TO BLP
Business • History and background • Management/operation requirements
Plan • Mission statement/objectives • Financial information
• Products or services • Summary action plan
• Market info • Appendices
• Resources employed
Practical • Conflict of interest check; check redundancy plan (e.g., non-compete clause)
steps before • Fees/costs structure – ability of client to pay
accepting a • Check that we have the right competence and resources
new client • Signing client care or engagement/retainer (including complaints procedure, anti-money laundering regulations, client’s
rights, what services and who (staff) are on the matter, type/frequency of communication
• Understanding client’s business/instructions/questions
Private and
Public Private company Public company
companies
Name must end Must end with limited or ltd. (s59(1)) Must end with public limited company or p.l.c. (s58(1))
with
Minimum no of 1 (s7(1) and 8(1)) 1 (s7(1) and 8(1))
shareholders
Minimum no of 1 (s154(1)) 2 (s154(2))
directors
Company No (s270(1)) Yes (s271)
secretary required
Certificates Certificate of Incorporation Certificate of Incorporation (s15(4))
required before (s15(4))
commencement Cannot commence business until a trading certificate is
of trading Can commence business as soon as it is issued by Registrar showing that the company’s allotted
incorporated share capital is not less than the minimum (s761(1)(2))
Minimum share Must have at least one share (s8(1)(b)) Minimum of £50,000 (or prescribed euro amount)
capital to be (s763(1)(a)(b))
issued
CA 2006 allows Prohibited (s755(1)) Permitted under CA 2006 (but note that FSMA imposes
offer of shares to considerable other restrictions – see Chapter 5)
the public
Method of No restriction on method of payment Payments in cash only or where consideration has been
payment and (s582(1)(2)) independently valued (s593(1))
minimum amount
payable for share Shares can be issued without immediate 25% of nominal value must be paid on allotment plus the
capital payment whole of any premium (s586(1))
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, INTRODUCTION TO COMPANY DECISION MAKING
General Directors have a general power under MA 3 to exercise all the powers of the company.
Resolutions
Board Resolutions Ordinary Resolutions (s283(1)) Special Resolutions (s282(1))
Passed by Directors Shareholders Shareholders
Meeting Board meeting General meeting General meeting
Purpose Day-to-day decisions that Decisions that CA 2006 or Articles say require Decisions that CA 2006 or
don’t require OR or SR OR Articles say require SR
To call GMs where OR or
SR needed
Voting Simple majority (> 50%) Simple majority (>50%) ≥75%
threshold or unanimity
Counted One vote per director Show of hands: one vote per member (s284(2)) Show of hands: one vote per
member
Poll: one vote per share (s284)
Poll: one vote per share
Company can change this position via a
provision in its articles (s284(4))
BM Quorum at a BM may be fixed from time to time by a decision of the directors but must never be less than two and otherwise
Quorum fixed at two (MA 11(2)). If a Director abstains from voting on an issue, they are not counted in the quorum for that issue.
GM
Sandwich BM 1 GM BM 2
1. Who calls? 1. Notice period 1. Who calls?
2. Notice 2. Quorum 2. Notice
3. Quorum 3. Agenda 3. Quorum
4. Agenda 4. Voting 4. Agenda
5. Voting 5. Close 5. Voting
6. Close/adjourn 6. Close BM
7. PMM 7. PMM
Post- ü Company’s internal records (minute books and registers) to be brought up to date.
meeting ü All SRs must be filed (s17(b) and 29(1)(a)).
matters ü Copies of resolutions affecting company’s constitution to be sent to CH within 15 days of being passed.
ü Copy of any amended Articles must be filed together with company forms (s26(1)).
Written The directors must ensure that the company keeps a written record of every decision made in any way by the directors for at least
record 10 years (MA 15 and s248)
A shareholder has negative control if they have 25% of the voting rights; this is extremely powerful as they can block a special resolution.
Look at what would happen if a vote happened on a show of hand AND a poll.
If somebody is “not keen” on a decision, see if they can block anything under SoH and/or poll.
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, PERSONAL TAXATION
Income Step 1: Identify income received by individual (non-savings, savings, dividends) TOTAL INCOME
Tax Step 2: Subtract available tax reliefs (interest on qualifying loans, pension scheme contributions) NET INCOME
Step 3: Deduct personal allowance (if available) TAXABLE INCOME
Step 4: Split. Subtract SAVINGS and DIVIDENDS from TAXABLE INCOME to get NON-SAVINGS
Step 5: Calculate whether personal savings allowance is available (by looking at TAXABLE INCOME)
Step 6: Apply relevant tax rates to the different types of TAXABLE INCOME
Step 7: Add together the amounts of tax calculated at Step 6 TOTAL TAX LIABILITY
2021/22 Personal allowance of £12,750; personal allowance is reduced by £1
for every £2 of net income above £100,000. If net income is
Band of taxable income Tax rate £125,000 or above, none of the personal allowance is available
£0 - £37,700 Basic 20% Personal saving allowance:
£37,701 - £150,000 Higher 40% • Basic rate tax-payer: £1,000
• Higher rate tax-payer: £500
over £150,000 Additional 45% • Additional rate tax-payer: nil
• Dividend nil rate: first £2000 at 0%
Following the dividend nil rate, the tax rates are as follows:
The first £2,000 of dividend income is taxed at • Basic (7.5%)
0% • Higher (32.5%)
• Additional (38.1%)
Capital Step 1: Calculate the sale proceeds of each capital asset
Gains Tax • If the asset is sold ‘at arms’ length’ (i.e., ordinary commercial sale with no vested interests) – sale proceeds = actual
consideration received
• If the asset is transferred to another as a gift – sale proceeds = asset’s actual market value
• If the asset is sold at an undervalue – sale proceeds = asset’s actual market value
• If the asset is sold to a ‘connected person’ – sale proceeds = asset’s actual market value
Step 2: Deduct allowable expenditure from the sale proceeds
• Cost of acquiring asset
• Incidental costs (e.g., solicitors’ fees)
• Subsequent expenditure enhancing the value of the assets
• Cost of disposing the asset
Step 3: Deduct the annual exemption amount (AEA)
• Sale Proceeds – Allowable Expenditure – AEA = (TAXABLE) CHARGEABLE GAIN
Step 4: Carry forward any losses
• If any net capital losses were made in previous years, carry those forward to reduce the Taxable Chargeable Gain
• TCG – Net Capital Losses
Step 5: Apply the relevant tax rate
• 10% if Business Asset Disposal Relief or Investor Relief applies
• 10% if Taxable Income plus gains is within the basic rate threshold
• 20% if Taxable Income plus gains exceed the basic rate threshold
• If Taxable Income is less than basic rate but after gains are added, it exceeds this threshold then:
o Part of the gains with the unused part of the basic rate tax band charged at 10%
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, o Any part that exceeds the threshold charged at 20%
Step 6: Does any relief apply?
• Rollover relief on replacement business assets
• Hold-over relief for gifts of business assets
BADR Lifetime limit of £1 million
Dispose all or part of Conditions:
a business • Trading business
• Owned for at least 2 years prior to date of disposal
Dispose of assets Conditions:
used in a business • Owned for at least 2 years before it ceased to trade
that used to trade • Assets must have been used in the business
• Assets must have been disposed of within 3 years of business ceasing to trade
Dispose shares in a Conditions:
company • Must have been a trading company for at least 2 years
• Shares must have been held for at least 2 years
• Person holding the shares must be an office or employee of the company and hold at least
5% of ordinary voting shares, entitled to at least 5% of profits for distribution and 5% of net
assets on a winding up for at least 2 years before date of disposal
Dispose shares in a Conditions:
company that used to • Owned for at least 2 years before it cased to trade
trade • Person holding the shares must be an office or employee of the company and hold at least
5% of ordinary voting shares, entitled to at least 5% of profits for distribution and 5% of net
assets on a winding up for at least 2 years before it ceased to trade
• Shares must be disposed of within 3 years of the company ceasing to trade
Investors’ Lifetime limit of £10 million
Relief
Investors’ Relief Conditions:
• Fully paid up ordinary shares that were issued for cash consideration on or after 17 March
2016
• Company must be a trading company or the holding company of a trading group
• None of the company’s shares are listed on a recognised stock exchange
• Shares are held for at least 3 years from 6 April 2016; i.e., relief only available for qualifying
disposals taking place on or after 6 April 2019
• Individual is not an officer or employee of the company
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