Owning and managing a business involves significant responsibilities and potential liabilities. Understanding the key legal issues is vital. Bringing in the right personnel and putting strong management practices in place will help you avoid potentially serious mistakes.
Running a successful business requires robust and efficient corporate governance arrangements. You need to be clear about how you want to run your business and what your objectives for it are. You can use a company’s articles of association, a shareholder agreement or a partnership agreement to pin these key issues down.
In a limited company, the board of directors is at the heart of corporate governance. You should aim to build a board with the skills and experience to develop a successful business strategy and to oversee its execution. Where necessary, supplement your in-house expertise with external specialist advice.
Business ownership considerations can be a source of complication and conflict, particularly when it comes to allocating control, financial returns as well as potential liabilities. In a private company these issues can be clarified using articles of association or a shareholder agreement, as well as by issuing different classes of shares. In a partnership, a written partnership agreement serves a similar purpose.
Private companies no longer need to hold an annual general meeting of the shareholders unless their articles of association specifically require them to. However, some decisions still need to be referred back to shareholders. For example, the Companies Act says that a company’s name and the contents of its articles of association can only be changed following a decision of the shareholders.
Efficient company administration forms an important part of ensuring compliance with key aspects of business law. And it also reduces the likelihood of unnecessary mistakes or aggravation throwing you off course.