The arrival of new legislative initiatives always attracts interesting and challenging questions, from both in-house and private practitioners. In recent months, the Practical Law Corporate team has addressed questions around the intricacies of the national security and investment regime, corporate transparency and register reform, and the new trust registration service, among others, as those in practice seek to navigate their way through the new and complex requirements. We now also expect to start seeing questions around the government’s proposed audit and corporate governance reforms.
Single director companies
For in-house subscribers, the conduct of boards and of individual directors – their decision making, authority to act and conflicts – have perennial appeal. The judgment in the recent case of Hashmi v Lorimer-Wing [2022] EWHC 191 (Ch), on the question of whether the model articles for private companies permit single director companies, appeared to go against what many had considered to be established practice: that a sole director could take decisions notwithstanding the default two-person quorum requirement of model article 11(2). We have amended a number of our precedent articles of association as a result of the court’s judgment (Have you made any amendments to precedent articles of association in light of the decision in Re Fore Fitness Investments Holdings?). For background on the decision, see Legal update, Interpretation of articles: model articles and sole directors (High Court).
Board and shareholder meetings
The COVID-19 pandemic forced a large number of companies to consider how best to hold board and shareholder meetings in extraordinary circumstances. With the relaxations permitted by the Corporate Insolvency and Governance Act 2020 now behind us, the early part of the year brought interest in whether and how companies should amend their articles to provide expressly for a broader means of holding meetings (Do you have sample articles permitting hybrid or virtual-only meetings?).
Execution of documents
As we move into summer, we typically expect to see a slow-down in queries on new law, transactions and company meetings. During this time, we often see a renewed interest in the fundamentals of private company law and recent months have started to indicate this growth.
Matters relating to the execution of documents remain a prominent source of questions from in-house subscribers across the spectrum. The already fast-growing adoption of electronic execution took a further, huge upswing during the COVID-19 pandemic. This, coupled with the Law Commission’s work on the electronic execution of deeds, has brought great interest from subscribers. Of particular interest in recent months has been the apparent restriction on the use of electronic seals (Can a company use an electronic seal?).
PSC regime
More than six years after its implementation, the detailed requirements of the PSC regime still challenge both subscribers and Practical Law’s corporate editors more than any other significant legislative development of recent years. Much of the focus is on how to apply the regime to corporate structures with overseas holding entities or shareholders (Can an overseas company subject to its national beneficial ownership regime be a registrable relevant legal entity in a UK PSC register?).
Returns of value
Although the law remains relatively stable, we consistently see questions on returns of value across the range – reorganisations, distributions and returns of capital (Can a private limited company carry out a solvency statement reduction of capital if it has losses?, Would a return of capital to shareholders ahead of a voluntary dissolution constitute a distribution?). Queries on how to address the discovery of historic issues will always play a key part of Ask for the Practical Law Corporate team, alongside questions of interpretation of the Companies Act 2006. We welcome these, as we hope to develop our resources in this significant area of difficulty for practitioners.
