Business Structures and Reorganisations

Andrew Bradley, a member of the Shulmans corporate team, answers some of the questions you may have.

What business structures are available to me?

There are a number of ways in which you can structure your business. For example, you may undertake a number of different operations; operate across a number of sectors; or produce a number of different types of goods – as a result you may wish to create a company group structure or keep parts of your operation separate from the main business.

In the UK there are various choices available. These include setting up a private company, which may be limited by shares or by guarantee (or in some circumstances may have unlimited liability), forming a public limited company or a limited liability partnership, or trading as a sole trader or through an unincorporated partnership.

The choice will depend on factors such as the nature of the business, tax and accountancy issues, managing third party risk and the importance of market perception for the business. A properly capitalised limited company is likely to give a better impression to a potential customer than a sole trader.

Tax reliefs may be available at the outset. For example, on the formation of a company relief may be available under the Enterprise Investment Scheme (EIS).

We also advise on joint venture arrangements where the corporate structure can be of critical importance.

What issues do I need to consider when setting up a company?

If there is more than one shareholder then it is usually better to have a shareholders’ agreement to set out the rights and responsibilities of the parties. Such an agreement will typically cover:

  • How the company will be managed;
  • What happens in the case of disagreement;
  • The scope of a party’s authority and influence;
  • Whether any block of shares has a veto on major decisions;
  • What happens if a shareholder dies or wishes to leave the business;
  • The terms for transferring shares.

Under what circumstances might we want to alter our company structure?

We advise on reorganising groups of companies, for example demergers where a group might want to split off part of its operations, or where shareholders want to split up the group to then go their separate ways. There are circumstances where it is sensible to hold property in an entity which is separate from the trading vehicle or where you may wish to separate part of a division as a first step to selling off part of the group. These transactions sometimes involve insolvency procedures or demergers which are achieved by declaring dividends or making use of capital reduction legislation or schemes of arrangement.

We work closely with our clients’ accountants and tax advisors, as accountancy and tax issues are quite often the main drivers behind the reorganisation of a group structure.

Whatever you need to achieve, our team can help you find a solution that is both efficient and cost effective.

Our team

Andrew Bradley

Partner

Corporate

Direct Line +44 (0)113 297 7737

Marcus Armstrong

Partner

Corporate

Direct Line +44 (0)113 297 7736

Jeremy Shulman

Partner

Corporate

Direct Line +44 (0)113 297 7748

Chris Peace

Partner

Corporate

Direct Line +44 (0)113 297 7733

Emma Greenwood

Partner

Corporate

Direct Line +44 (0)113 297 8068

Oliver Whelligan-Fell

Solicitor

Corporate

Direct Line +44 (0)113 297 3795