Tougher penalties for misuse of personal data

The Ministry of Justice is proposing to toughen the current maximum penalty fines to include a prison sentence for those found guilty of knowing or reckless misuse of personal data. Currently the maximum penalty is £5000 in Magistrates' Courts and an unlimited fine in the Crown Court. These are to be changed to: two years imprisonment for cases heard in the Crown Court and 12 months imprisonment for cases heard in a Magistrates' Court. The courts will also be able to impose community sentences and fines. The results of the public consultation will be known after 7 January 2010.

To register under the DPA and to provide your staff with guidance how to lawfully manage personal data, please visit the Data Protection Act section on our website.

Tips for directors – business expansion

Are you considering taking your business to the next level? Below you will find important issues to consider if you are planning to expand your company’s operations by acquiring the whole or part of another company, forming a joint venture or a partnership, or merge.

Why do you want to expand?
Establish the reasons behind your company’s expansion and the benefits which the process should bring. This will help you with making decisions in the next steps. For example, is it to take over particular clients you have always wanted or maybe you wish to become a market leader? Is your aim to increase the value of your business for the future sell-off? Perhaps you want to gain the necessary knowledge valued in your sector or change your company’s core capabilities? Or maybe to gain intellectual property rights to a product?

Market research
Do a proper market research. Check what companies are currently operating in the areas of your interest. Get as much information about them as possible, including their clients, employees, organisational culture and plans for the future.

Strategic fit
Out of the prospect companies select the ones which best fit to your organisation’s culture, strategic goals, products and services so that the whole transition process is as quick and smooth as possible and brings the expected growth of your business.

What is the best option for expansion?
Based on your selection of possible target companies, establish how you can get them work for you. Is it by acquisition, merger, joint venture or other form of business expansion?

Calculate all the costs involved
Work out how much money you will need to secure the transaction and how much it will cost you to implement all the necessary changes into your new business. Consider also employment costs as you might have to make some of your existing and new employees redundant, or appoint or promote them. Do benefits exceed the cost?

Proper document preparation
This will often require appointing an outsourced commercial law specialist who will prepare the transactional documents and ensure that the process is legally valid and compliant with the regulations.

Employees’ contracts
Depending on the method of expansion which you have chosen and terms and conditions agreed in the transactional documents, you might be obliged to provide your existing and new employees with new or amended contracts of employment. Again, they should be prepared by someone who has relevant HR experience.

We can manage the legal aspects of your business expansion. Just give us a call and advise what sort of assistance you would require.

The right to request time to train

The new right for employees to request time off work to get a professional qualification or a training which they believe will improve their performance and productivity will come into effect on 6 April 2010. Only employees who have worked at least 26 weeks in a business employing 250 people or more will have this privilege in 2010. The remaining group will gain this right in April 2011.

Implications for employers
Employers will not be required to pay for the training but they will be obliged to seriously consider their employee’s request and respond to this request in a ‘reasonable time period’. If they have a sound business reason to decline the request, they will be able to do so. There might however be alternative solutions to accommodate the time to train request, for example a flexible working time.

More information on the new right to request time to train will be available in January 2010.

Help with new annual returns for residential managing agents

Following the introduction of the new Companies House forms, both manual and online, we have received a number of queries and comments from managing agents who are dealing with the company secretarial side for their flat management clients. Of particular concern seems to be the new Annual Return (the AR01, formerly the 363).

If you are struggling to come to grips with these, let us help you with filing your client's annual return in the new format. Our fee for web-filing the new AR01 is £150 plus VAT, which is based on the information we receive from you and our examination of the memorandum and articles to deal with the question on voting rights. Please contact us for more details.

Company’s addresses

With the new legislation effective from October 2009 many new and existing entrepreneurs might be confused as to how many and what kind of addresses their company should maintain. This article explains what addresses a company may use and which ones are legally required.

Registered office address
Every company is required by law to have an address where official correspondence, such as documents from a court, letters from HM Revenue & Customs or from Companies House, can be served. This is a registered office address which must be provided when registering a limited company or an LLP in the UK.

The registered office must be a valid address and recognised by the Post Office. It is not permitted to use a PO Box as the registered office address. All changes to the address must be reported at Companies House immediately.

The registered office address is available for the general public to view on the Companies House website. Companies must also state their registered address on their stationary, invoices, websites and financial documents. The company’s name must also be displayed at its registered office.

For reputational purposes, efficiency in dealing with official correspondence and to protect the privacy of business owners trading from home, companies often use a third party address as their registered office address.

Business address (trading address)
This is the address where the company’s business operations are carried out and where the company’s assets, such as premises and machinery, are located. The business address may or may not be the same as the registered office address and therefore may not be in the public domain.

Many company directors trading from home choose a third party address for their business use and mail forwarding in order to protect their privacy or to add prestige to their business.

Directors’ usual residential address
This is the director’s home address and must be provided when registering the company. For companies incorporated after 1 October 2009 this address is not shown on the public record.

Directors’ service address
From 1 October 2009 new rules regarding directors’ addresses came into effect. Directors of companies incorporated after this date are no longer required to disclose their residential address to the public. They can use a service address instead.

The service address must be where documents can be delivered and an acknowledgement or receipt can be provided if required, so it cannot be a PO Box or a DX number. A directors’ service address may be the same as the company’s registered office address, but equally, he or she may choose an altogether different address for this purpose.

The reasons for this change in the law are twofold: firstly to protect against identity theft and secondly in response to a criticism that the current system does not adequately protect directors from harassment.

Directors who are on the register before 1 October 2009 will automatically have their residential address shown as their service address, unless the appropriate form is filed with Companies House notifying a different directors’ service address. However, a directors’ residential address shown on historical documents will remain available to the public. If they believe that having their home addresses publically available will lead to a ‘serious risk’ to themselves or their families, they can apply to have this information made private.

The only time when the residential address can be disclosed after 1 October 2009 is if certain public bodies such as the police, HMRC or credit reference agencies demand it. Also, if correspondence remains unanswered for a specified time, and it becomes apparent that the service address is not a suitable place to serve documents, the enquirer can ask the Registrar of Companies for the residential address to be put on the public register.

Secretary’s service address
The appointment of a company secretary is optional for private companies. However, if appointed, the secretary’s service address (but no longer their residential address) must be provided when registering the appointment. Public companies are required to appoint at least one company secretary.

Single Alternative Inspection Location (SAIL) address
The new Companies Act introduced a new requirement for UK businesses effective from 1 October 2009 that a company’s statutory books (including its register of directors and members) must be kept together and must be made available for inspection, either at its registered office or at a Single Alternative Inspection Location (SAIL) address.

Notifications made to Companies house before 1 October 2009 that a company’s registers are held at a location other than its registered office are no longer valid and therefore directors or their company secretaries should file a new SAIL address at Companies House. Only one SAIL address is permitted.

Conclusion
The new law provides alternative solutions for company owners and directors who do not wish to disclose their residential and business addresses to the public. They can enjoy a wider choice and select a combination of addresses which best suits them and their business.

New articles of association

The new form of articles of association for private companies limited by shares was introduced on 1 October 2009 as a key change in company law. Directors and shareholders of companies formed after that date will be able to take advantage of the simplified procedures for running their business as set out in the new Model Articles.

There is no legal requirement for a company established before 1 October 2009 to change its articles, but its existing articles of association are unlikely to incorporate the new procedures. Consequently, directors and shareholders may be uncertain about the extent of their powers and thus increase the risk of a potential breach of the new legislation. We therefore recommend that you amend your company’s articles to be able to take advantage of the recent changes to company law.

For a special price of £75 plus VAT, we will help you adopt the Model Articles for your limited company and enable the company to take advantage of the new provisions of which, we believe, the following will be most relevant to you:

• replace the difficult to understand language of the existing memorandum and articles with user-friendly and easily understood English
• remove any limitation on the type of business the company can undertake
• remove the upper limit on the company’s share capital and allow the directors to issue new shares without permission of the shareholders
• make greater use of electronic communication with shareholders and hold electronic meetings, eg. by telephone, of the directors and of the shareholders
• take advantage of the new provisions in the Companies Act 2006 relating to the pre-authorisation of directors’ conflicts of interest.

To take advantage of this limited time offer and ensure that your company’s governing documents are up to date, go to new articles of association service page and place your order now.

Single alternative inspection location (SAIL)

From 1 October 2009, the new Companies Act introduces a requirement that a company’s statutory books (including its register of directors and members) must be kept either at its registered office or at a Single Alternative Inspection Location (SAIL) address, which must be located in the UK (Scottish companies will need a SAIL address in Scotland and similarly Northern Irish companies in Northern Ireland). A company’s registers must be made available for inspection at the SAIL.

Notifications made to Companies House before 1 October 2009 that a Company’s Registers are held at a location other than the Registered Office are no longer valid. With effect from 1 October 2009 all such records at Companies House have been amended and will show that the Company’s Registers are held at the Registered Office.

Hence, if your company’s registers are not maintained at the Registered Office, for example, your company secretarial function is outsourced to an external supplier or you use external share registrars to manage your Company’s Register of Shareholders, you will need to notify Companies House of your Company’s SAIL address as soon as possible after 1 October 2009.

Only one SAIL address is permitted, which means a company must ensure that all its registers are kept together, either at its registered office or at the SAIL and must not be split between the two.

London Registrars is able to provide its central London address as a SAIL for public and private companies alongside registered office address and directors’ service address for all types of companies. Please go to our single alternative inspection location page for more details.