If you’re looking to buy a pre-existing limited company in the UK, it can seem daunting if you don’t know where to start. There’s a long list of requirements for a limited company acquisition, and making a mistake in even one document can have serious legal or monetary ramifications further down the line.
While it isn’t the easiest process, purchasing a limited company can be an extremely valuable way of entering a new industry, or expanding your current business opportunities. There are hundreds of benefits to buying a business in the UK, whether its a limited company, PLC or any other form of business.
Here at Chelsea Corporate, our experienced team of business brokers are here to run you through the entire process and help you to buy a UK business. Where required, we can even provide practical services, such as the initial discovery of the right company for you, in addition to ongoing support and professional advice.
Finding The Perfect Limited Company In The UK
The first step, when you’re looking to purchase a limited company, is to find the right one. You’ll need to ensure it fits in with your business goals, and offers potential for growth. To do this, you’ll need to carry out an extensive amount of research into the industry or sector of interest, find out who the key players are, and make sure that the company you’re looking at is a good fit for you.
Chelsea Corporate can provide as much assistance as you need in finding the right company, and we have access to a wealth of statistics and data on UK businesses.
Understanding The Requirements For Limited Company Acquisitions
When it comes to buying a limited company in the UK, there are several legal and financial requirements that must be met. These include understanding the company assets, liabilities and stakeholder structure, as well as any debt or banking arrangements in place. You will also need to consider HMRC regulations and the applicable laws for business transfers.
Our team of legal experts can help you identify any potential risks associated with a particular acquisition, provide advice on negotiating price and terms, and help you to understand the legal requirements for a successful transaction.
What’s Involved In A Standard Business Acquisition?
While every acquisition is unique, there are some standard steps that you, your legal team (or your business broker) will need to carry out. Not all of these are necessary across every business acquisition, but understanding the range of potential steps can help you to understand the overall process.
For most business acquisitions in the UK, you’ll need to carry out most of the following steps, but you’re better off talking to a professional before getting stuck in yourself.
Drafting And Negotiating A Share Purchase Agreement
The Share Purchase Agreement (or SPA) is the legal document that outlines the terms of the transaction, and is legally binding. This agreement will cover all aspects of the acquisition process, including liabilities and responsibilities, warranties, indemnities, price and payment terms, as well as many other things.
It’s important to ensure that both parties understand and agree to all of the terms in the SPA, so it’s usually a good idea to have a solicitor look over it before signing.
Drafting And Negotiating Guarantees And / Or Charges
Depending on the nature of the business and its assets, it may also be necessary to draft and negotiate guarantees or indemnification charges. This is basically an additional security measure that ensures that both parties are protected in the event of any liabilities arising from the acquisition.
It’s important to note that these agreements will usually remain in place after the completion of the transaction, so it’s important to understand all of the terms before signing.
Review The Title Or Lease To The Business Premise
If the company you’re buying owns a property, then you will need to review the title or lease of the premises. This is especially important if there are any ongoing obligations that you would be required to fulfill after completion.
Drafting And Completing Stock Transfer Forms
If the company you’re purchasing is trading in physical stock, then it’s likely that you’ll need to draft and complete some sort of Stock Transfer Form. This form will list out all the items that are being sold, their value and condition, as well as any other important information you may need.
It’s important to ensure that this form is completed accurately, as it can affect your legal rights to the stock after completion.
Drafting The Required Board Minutes And Resolutions
It’s usually necessary, particularly for larger acquisitions, to draft board minutes and resolutions at both companies. This is a legal requirement for the transfer of ownership, and ensures that both parties are legally represented in the transaction.
Drafting The Paperwork In Relation To The Resignation Of Directors And Company Secretary
In some cases, it may also be necessary to draft the paperwork in relation to the resignation of any current directors and company secretary. This is usually required for larger companies, and ensures that all individuals involved in the transaction are aware of their responsibilities.
Drafting The Paperwork In Relation To The Resignation Of Employees
It’s usually necessary to draft any paperwork in relation to the resignation of any current employees. This is a legal requirement and ensures that all individuals involved in the transaction are aware of their rights and obligations.
Drafting The Paperwork In Relation To A Change Of The Company’s Registered Office
It may also be necessary to draft the paperwork in relation to a change of the company’s registered office. This is usually required for larger companies, and ensures that all individuals involved in the transaction are aware of their rights and obligations.
Drafting The Powers Of Attorney Document
If you are looking to exercise the powers associated with the acquired shares from day one then it may be necessary for you to draft the relevant Powers of Attorney. This is usually required in order to protect your legal rights associated with the company, and ensure that all parties involved in the transaction have a clear understanding of their obligations.
Drafting And Negotiating The Shareholders Agreement
It’s also usually necessary to draft and negotiate the shareholders agreement. This document will outline the powers, rights and obligations of each party involved in the transaction and is often required for larger acquisitions.
Drafting The PSC Letter
If the company you’re buying has shareholders who are individuals, then it may be necessary to draft a PSC letter. This document will remove the seller as a person with significant control in relation to the company after completion of the transaction.
Drafting Indemnities In Relation To Lost Share Certificate(S)
It’s also important to draft any necessary indemnities in relation to any lost share certificates. This is necessary in order to protect the buyer from any potential liabilities that may arise after completion of the transaction.
Drafting The Paperwork To Appoint New Directors
It’s also necessary to draft any paperwork required for the appointment of new directors. Without this paperwork, the new directors will not be legally recognised as the rightful owners of the company.
Drafting The Paperwork To Appoint A Corporate Secretary
In some cases, it may also be necessary to draft paperwork in order to appoint a corporate secretary for the company. This is important to ensure that all legal requirements are met, and that all documents associated with the company are properly filed with Companies House.
Submitting Priority Searches Pending Registration Of Company Property
It is also often necessary to submit priority searches pending registration of company property. This ensures that the company’s titles are clear and that any potential liabilities associated with the purchase are identified before completion of the acquisition.
Submitting The Forms To Companies House Within 14 Days Of Completion (E.G. Forms TM01, TM02, AD01, AP01, AP03, STF, SH03, SH06 And PSC)
Once all of the paperwork has been completed, you’ll need to register the acquisition with Companies House. This ensures that any changes in ownership or control are recorded and visible on public record.
You’ll need to submit any and all relevant forms for your acquisition, such as Forms TM01, TM02, AD01, AP01, AP03, STF, SH03, SH06 and PSC within 14 days of completion.
Failing to do so could result in a fine, legal repercussions or even companies house refusing to recognise the business acquisition.
Registration Of The Lease Within 30 Days Of Completion (In The Case Of A New Lease)
If you’ve acquired a lease for the business then it must be registered with the Land Registry within 30 days of completion. This is to ensure that any changes in ownership are recorded and visible on public record.
Registration Of Charges And / Or Debentures At Companies House Within 15 Days Of Completion
If you have taken out a charge or debenture then this must also be registered with Companies House within 15 days of completion. This will ensure that all relevant companies house filings are up to date and any potential liabilities associated with the loan are recorded.
Paying Stamp Duty Land Tax On Any Property Transaction Within 30 Days Of Completion
You may also be liable to pay Stamp Duty Land Tax (SDLT) on any property transaction. This must be paid within 30 days of completion, or a fine could be imposed.
Paying Stamp Duty On The Purchased Shares Within 30 Days
Stamp duty may also be payable on the purchased shares. This must also be paid within 30 days of completion, or you could face a fine.
Buying A Limited Company With Chelsea Corporate
At Chelsea Corporate, we provide a comprehensive service for anyone looking to purchase a limited company in the UK. We take care of every aspect of the process, from initial discovery and research, through to completion and post-transaction support. Our team of experts are here to guide you through the entire process, meaning you can rest assured knowing that all your legal requirements have been taken care of.
If you’re looking to purchase a limited company in the UK, don’t hesitate to reach out to us today and speak to one of our experienced business brokers.