Business Law Advice for Finance Directors

For those fulfilling the role of finance director, the responsibilities and duties that come with this position will be diverse. With the commercial and legal landscapes continually evolving, it is vital that you can call on the best legal support to meet the challenges faced by you and your business.

Altmore Business Law's company lawyers will work closely with you to ensure that all fiduciary duties are met, advising on matters relating to directors' responsibilities and associated legal requirements. Our solicitors are well versed in relevant areas of company law and are always up to date on legislative developments that impact upon your role as a director and the way in which your company operates. With many years' experience acting on behalf of a wide range of clients, Altmore Business Law is excellently placed to advise on matters such as corporate governance, corporate transactions, regulatory compliance and company insolvency amongst others. Contact us today to find out how we can help with your commercial needs.

Role of the finance director

The finance director him or herself has a particular position in the corporate household. Invariably they have particular professional qualifications, knowledge and experience. Section 173 of the Companies Act requires the director to exercise independent judgement – something which might come more easily to a professional finance director. Section 174 requires the exercise of reasonable care, skill and diligence and sets a higher standard of expectation for the trained finance director.

Company law and accounts

The relationship of finance director and company law solicitor is one of frequent interdependence going back to the very creation of the limited liability company and the requirement for accounts.

Accounts are required as a quid pro quo for the provision of limited liability. Arguably everything a company does involves questions of recognition, value and record and thus what is and is not permissible in company law. This calls upon skills of statutory interpretation of accountancy related defined terms (of which there are around 250, from “abbreviated accounts” through to “wholly-owned” via “distributable profits” “liabilities” and “redenomination reserve” in schedule 6 of the Act and many more elsewhere).

Corporate governance advice for finance directors

Since 2008 there has been a heightened focus on corporate governance and the role financial directors play in ensuring company law and corporate codes are adhered to. Further, due to the uncertainty following the EU referendum, which will continue over the next few years as the UK’s departure from the EU takes effect, financial directors should be prepared for potentially new unforeseen risks.

Our business law specialists regularly provide expert corporate governance advice and legal services to finance directors, including:

  • Constitutional documents (drafting and reviewing)
  • Convening and conduct of meetings
  • Accurate computation of votes securing reliable resolutions
  • Best practice to ensure compliance with laws, regulations and codes of practice
  • Guidance on finance directors’ duties and conflicts
  • Advice on director and shareholder meetings and procedures
  • Advice on corporate tax governance

The finance director and board colleagues will wish to know that transactions will not be set aside as unenforceable for want of capacity, authority, incorrect execution or other breakdown in the legal process, such as inaccurate counting. Defects from poor governance may lead to a flawed asset on the balance sheet or require analysis and note or numerical disclosure of a contingent liability, for example. Company law requires consideration of materiality and insists upon provision of a true and fair view. Analysis of the underlying legal characteristics is key to this.  

Corporate transactions advice for finance directors

We provide specialist corporate law advice and bespoke legal services to finance directors when dealing with a wide range of corporate transactional matters including:

What are the reorganisation reliefs and clearances available to your company or group? What are the SDLT implications or land [and building] transaction tax in now partially devolved Scotland and Wales?

Our company lawyers will take the time to get to know your business and your commercial objectives. We will steer you through the financial aspects of your corporate transaction, supporting and advising you throughout.

Regulatory compliance advice for finance directors

It can be challenging to keep on top of the numerous financial regulations that companies are required to comply with, as well as how best to fulfil these obligations in practice. Does a group relationship exist? What accounting standards do we wish to follow – IAS of some kind or FRC – and can we change?   What form of agreement should we have for staff loans and must we report? How and what do we report, and when, for share options? We are willing to assist finance directors through the complex landscape of financial regulatory compliance and provide tailored advice on routine or complex financial issues.

Insolvency law advice for finance directors

Questions frequently arise concerning insolvency law where there is doubt about the company’s future. Where cash flow becomes tight or unreliable, questions will arise about the meaning of wrongful trading under section 214 of the Insolvency Act and whether and on what basis the company may continue to trade without the directors exposing themselves to personal liability. Is a letter of support from another group company good enough? The same Act contains a number of provisions for setting aside transactions retrospectively and imposing personal liability on the board – for example where transactions are found to have been implemented at an undervalue (section 238). What does value mean? What are the implications of a transaction between the company and a director or someone connected with him or her? Should a valuation be obtained? The finance director will have these factors in mind even where insolvency is not in contemplation out of basic prudence. For example, if your company is sold and then enters into difficulty with new owners, a liquidator will look at transactions for which pre the sale directors were responsible!

We sometimes see companies faced with a winding up petition without any warning – is this allowed? What does inability to pay its debts mean under the Act? Transactions can be thrown off balance when during due diligence a party comes across past proceedings not removed from a court register somewhere.

While we do not undertake insolvency work, finance directors frequently see our company lawyers as a discrete port of call for advice on the ramifications of insolvency law in a wide range of circumstances. Our company lawyers regularly act for finance directors in insolvency situations. We provide guidance on your duties during insolvency, including putting creditors’ interests first, maintaining records of all actions of the company and ensuring full cooperation with the liquidator, to help you minimise your risk of liability. Your position as a director will be significantly strengthened if you receive expert legal advice during a company liquidation.

Inter-dependence and collaboration

The inter-dependence operates at sector body too. In June 2018, the City of London Law Society and the Law Society released joint guidance, prompted by elements of contrary opinion in ACAEW tech documents of April 2017. The guidance on the lawyer side is that a guarantee given by an English company to a creditor of its parent or fellow subsidiary, in relation to a normal financing transaction, will not constitute a distribution of assets to its members. In separate lawyer guidance, the advice is that a normal on-demand loan (whether or not interest-bearing) from an English company to its parent or fellow subsidiary, is not a distribution of assets to its members. The Law Society notes go on to give examples of when distributions may arise. If a company makes an unlawful distribution, principally where there are not available distributable profits of the amount involved (in these scenarios the sum paid out is called a guarantee or unrepaid loan, each of which frequently involves substantial sums) the directors may be found personally liable to make good – as has happened.

Contact our Business and Company Lawyers Birmingham, London, Cambridge, Oakham, Nottingham & Loughborough Today

At Altmore Business Law, we provide holistic, expert company, tax, commercial and bank finance law advice. Whatever your instructions, we will work in partnership with you to achieve your desired outcome. Contact our business law specialists today to find out more about our exceptional service and our competitive fees by calling 0845 094 9000 or emailing chris.muris@altmorebusinesslaw.com.

Simon Hunt CEO at Close.global

What was the job? Business critical legal contract with the largest IT distributor in Europe. Dynamics, American lawyer, trying to use German law. Altmore to guide us to a successful speedy conclusion.

Why the particular lawyer or firm chosen? Altmore was known to us through friends and by reputation. Altmore was chosen because the firm offered a flexible approach to its fees which when coupled with their grasp of the contract and reputation made this an easy decision.

What happened? Altmore engaged in a 1 hour “fact find” to orientate, grasped the key areas where the contract was biased in the other side’s favour and negotiated with the other side’s lawyer a swift conclusion. Can’t recommend them highly enough. We will default to using Altmore going forward.