Freehold Company Limited by Shares - How do new owners get their share certificates

carl_h

We bought the freehold for our flats. The freehold company is limited by shares. If a flat changes hands how does the new owner obtain their share certificate? We were expecting this process to be described in the Articles of the Freehold Company but it is not. Can the Directors create their own process? Is the absence of a description in the Articles important? Any advice gratefully received.

Hoenir

Who is the Company Secretary ? 

carl_h

We have 3 Directors, no Secretary. There is no legal requirement to have a Secretary.

gm0

While there is not formal legal requirement to have one.

The 3 directors need to discharge the relevant duties of a Ltd board to external stakeholders - HMRC. Companies House etc. And run things for the owners according to the articles.  At least as they apply to this class of company.  Many property freehold container Ltds are a bit lax about some of this.

Some of these duties were traditionally referred to as belonging to the board member given the title "company secretary".   In reality any director can sort these various things out.

It is a common enough scenario.  But a bit painful.  As shareholdings would normally be updated on CH filings.  And you do want processes that are a) legal b) prescriptive enough that freehold company ownership definitively stays locked to the leases and is unaffected so far as possible by other events - birth/marriage/divorce/death etc. of leaseholders.  No part interests wandering off.

Can't help with details as we are Ltd by guarantee and have a register and no certificates and so don't have to update CH

You can update company articles if they are missing some parts you think you need (wrong template earlier on) but this requires engaging owners.  And is a bit of a bootstrap problem if you haven't got your evidence of ownership / share register in place.

We are ltd by guarantee (register version, no shares, no registration at CH) so I can't be more help than that.

Hoenir

carl_h said:

We have 3 Directors, no Secretary. There is no legal requirement to have a Secretary.

Ideally someone should have the expertise. Alternatively outsource . 

carl_h

OK. We don't have the expertise which is why I thought I'd ask here. What would we be outsourcing exactly?

poseidon1

carl_h said:

We bought the freehold for our flats. The freehold company is limited by shares. If a flat changes hands how does the new owner obtain their share certificate? We were expecting this process to be described in the Articles of the Freehold Company but it is not. Can the Directors create their own process? Is the absence of a description in the Articles important? Any advice gratefully received.

I assume a solicitor acted for you and Co lessees in the acquisition of the  freehold  and creation of the freehold reversion holding company, and this company is now listed online at Companies House.

If so,  one of you ( as the lead director ) should have been supplied by the solicitor with the following documents pack:

* Memorandum and Articles of Association  ( a document setting out the objectives and powers of the company and confirming the number of ordinary shares in issue)

* Certificate of Incorporation - setting out the name of the company and the company number at Companies House.

* Share certificates for each of the original company shareholders

* Combined Company Register- either in folder or A4 book format.

The combined company register, is the important reference ' manual  ' for the administration of your company - see below a blog on the subject

https://www.qualitycompanyformations.co.uk/blog/what-company-registers-do-i-need-to-maintain/


You should have received  the combined register with the share register ( section) already completed with the names of the  original  shareholders .

There will also be various partitions in the book/ folder  containing a minutes book, register of directors, register of (share ) transfers, etc. Crucially it should also contain blank share certificates (with company name and number pre printed) to facilitate changes of shareholders whenever flats change hands in future.

However stock transfer forms ( upon which change of shareholders are actually facilitated) might not be supplied, but are easily found on the Internet - see example template link below.


https://www.pdffiller.com/jsfiller-desk10/?flat_pdf_quality=high&mode=force_choice&requestHash=8603198b6cf923135ddcee78ba7b0a532674a2b5357baabb18c4b7bddc26bb96&lang=en&projectId=1779201667&richTextFormatting=true&jsf-page-rearrange-v2=false&jsf-redesign-full=true&act-notary-pro-integration=false&isSkipEditorLoadFrequency=true&jsf-desktop-ux-for-tablets=false&jsf-socket-io=false&jsf-offline-mode=false&jsf-fake-edit-stream-editing=false&routeId=d73522acb6fb229a596546c92bf9a90e#158e5853b12c49408150db3e1d702fc2


As regards process and procedure, this is definitely not a 'make it up as you go along scenario'.

 Companies House lays down strict rules with regard to internal record keeping and external Companies House compliance requirements. Finding your company being struck off for non compliance is not a situation either you or you co directors would wish to ever find yourselves.

So as indicated by Hoenir, one or other of you will have to undergo some basic training, otherwise outsourcing to a third party ( at a cost) would be your other option.

According to the article below, the Leasehold Advisory Service apparently runs a free course for people in your situation. I have no idea how effective or thorough it might be but could be worth a try if you all are determined to manage company compliance yourself.

https://blockinabox.co.uk/rmc-director-training/

In passing I would mention I have been single handedly administering our freehold company since inception in 2008. However , I already had certain pre exsisting experience in these matters so can't vouch for how easy or difficult you will find it.

carl_h

Thanks. Is the freehold company you administer limited by guarantee?

poseidon1

carl_h said:

Thanks. Is the freehold company you administer limited by guarantee?

No, we are the limited by the nominal value of our £1 shareholdings. 

Incidentally to avoid the hassle of filing 'active' company annual accounts we have no company bank account, and  conduct administration at joint leaseholder level, eg  I pay for buildings insurance cover taken out in the name of the company and co lessors reimburse me. 

Therefore able to file annual 'dormant' company accounts on that basis. Worth thinking about, since if none of you have accountancy experience, preparation of formal company accounts together with lodging potential corporation tax returns, will be a burden best avoided.

gm0

IMHO the no bank account version is really more suitable to split houses than larger number of flats - 2-3 players - all directors.

Even with a bank account and a director appointed MA.  And accounts.  It can be hard to sustain "continuity" ove the long term in flats with more.   I dread to think how an informal arrangement without financial record keeping would play out over 20-40. But accounts and how vigorously to audit them, and dormancy, and CH filing are regular topics of debate for retired accountants and lawyers who often have competing views of what is by the book.

carl_h

poseidon1 said:

carl_h said:

Thanks. Is the freehold company you administer limited by guarantee?

No, we are the limited by the nominal value of our £1 shareholdings. 

Incidentally to avoid the hassle of filing 'active' company annual accounts we have no company bank account, and  conduct administration at joint leaseholder level, eg  I pay for buildings insurance cover taken out in the name of the company and co lessors reimburse me. 

Therefore able to file annual 'dormant' company accounts on that basis. Worth thinking about, since if none of you have accountancy experience, preparation of formal company accounts together with lodging potential corporation tax returns, will be a burden best avoided.

We have 50 flats but 5 opted out & still pay ground rent. Where would this "income" go if there is no company account? We have a Management Company for maintenance etc. Would this "income" be directed to their account & used to offset other costs?