Why do I need a Shareholder Agreement?

When starting a new business, the shareholders are hopefully in agreement about what they want to achieve and how the business should operate. This is fine but things change and shareholders can find they want different things.

So where there is more than one shareholder, we recommend a Shareholder Agreement is put in place which sets out individual responsibilities, how decisions are to be made and how disagreements are to be resolved should there be a stalemate.

Sadly disagreements between shareholders can escalate and harm the prospects of the business so it is better to have the agreement in place before any problems arise and whilst the shareholders agree..

Howell & Co work closely with Edward Hands and Lewis Solicitors whose commercial department are experts at drafting such agreements. If you would like further advice, please contact us.

Changes to Small Company Accounts

It may not be a major priority for directors of small companies but the format of their accounts is set to change. Small company accounts are currently prepared using the Financial Reporting Standard for Smaller Entities (FRSSE) but for accounting periods starting on or after 1 January 2016 this is being replaced by FRS102.

Whilst this will not impact many company owners there are some significant changes that may affect their balance sheets value and the amount of information that needs to be shown.

The major changes are:

  • Goodwill should be written off over five years which is a shorter period than allowed at present
  • Revaluation gains or losses on investment properties must be shown in the profit and loss account
  • Financial instruments to be shown at “fair value” and any gain or loss shown in the profit and loss account
  • FRS102 accounts must include a cashflow statement

There is an alternative for very small companies. Companies that have sales turnover of under £632,000 can elect to prepare “micro entity” FRS105 accounts which have much simpler rules and do not require investments, etc to be included at market value.

Deciding to use the FRS105 format may appear the simpler choice but it may not be right for everyone, particularly where you are looking to grow the business or attract outside investment.We recommend discussing with your accountant before making a decision.