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Just registered as a Limited Company and confused

Discussion in 'Legal' started by EssentialParadox, Mar 8, 2018.

  1. EssentialParadox

    EssentialParadox UKBF Newcomer Free Member

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    My business partner and I have recently registered as a Limited Company and getting our heads around being directors and shareholders of what is in effect now a separate entitiy from us. We also have additional shareholders on board.

    We’re in the process of getting a small office on a 6 month lease, and the agent originally sent us the contract in my name. I explained they’d need to change it to being in the name of our Limited Company but they’ve simply changed it to say my name again: “Luke Smith trading as ACME” — Is this correct?

    It’s a pretty established commercial estate agents who’ve sent it to me, and they have surely dealt with companies before, and I don’t want to look like an idiot in calling them wrong. However my understanding was that any legal documents we sign from now on should be in the name of the company, not our personal names. I just wanted to clarify if I’m right or wrong here. Is this normal? Or maybe it isn’t actually that strict for Limited Companies and doesn’t matter that much?
     
    Posted: Mar 8, 2018 By: EssentialParadox Member since: Jul 15, 2016
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  2. thevaliant

    thevaliant UKBF Contributor Free Member

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    They may be trying it on slightly. If you want the lease in the name of the company it HAS to be in the name of the Company, ACME Limited (or whatever).

    Sign it in your own name and if something goes pear shaped, YOU are liable for the rest of the rental term.

    The whole point of limited liability companies is to avoid this.

    I suspect the commercial agents are all too aware of this, hence they want it in YOUR name, so they can have your house.
     
    Posted: Mar 8, 2018 By: thevaliant Member since: Dec 9, 2008
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  3. thevaliant

    thevaliant UKBF Contributor Free Member

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    And for the avoidance of doubt, do NOT sign the lease (well, unless you don't like your house and want to give it to them) and ask for the lease to be drawn up in the name of your new company. It should also state the company number as well, for avoidance of further doubt.
     
    Posted: Mar 8, 2018 By: thevaliant Member since: Dec 9, 2008
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  4. obscure

    obscure UKBF Ace Free Member

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    As others have said - don't sign the lease as is, unless you are willing to be personally liable to pay. The lease needs to be in the name of the Limited Company.

    Unfortunately, many landlords these days won't allow a a new start up Ltd to sign a lease. They will want the Directors to sign personally or to at least give a personal guarantee so that they can pursue you if the company fails.

    You should also be aware that most personal guarantees make you "jointly and severaly liable" which means that you liable both together and separately. So, if your business collapses and your partner does a runner the landlord can pursue you for the total amount.
     
    Posted: Mar 9, 2018 By: obscure Member since: Jan 18, 2008
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  5. KAC

    KAC UKBF Enthusiast Free Member

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    Off the point, but have you set up a shareholders' agreement? If not, get one sorted now before you start
     
    Posted: Mar 9, 2018 By: KAC Member since: May 7, 2017
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  6. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    A lease is a complicated legal document and written for the protection of the landlord, it can have various bits in it about repairing the place and making good especially at the end of the lease where you may have to put the building in a better state than when you took over or other expensive items

    You need to have the building surveyed and the lease taken to your solicitor before signing anything for the solicitor to safeguard your company interests

    Do you have a business plan and understand fully the legal parts of being directors and shareholders
     
    Posted: Mar 9, 2018 By: Chris Ashdown Member since: Dec 7, 2003
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  7. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    It should be in the Limited company's name but I suspect even if they change it they will add a PG clause into it.
     
    Posted: Mar 9, 2018 By: Lisa Thomas Member since: Apr 20, 2015
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  8. EssentialParadox

    EssentialParadox UKBF Newcomer Free Member

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    Thanks for the replies everyone, you’ve basically confirmed my suspicions. I will be firm with them and tell them to fix it.

    I don’t mind a personal guarantee but, at the end of the day, it’s the Limited Company taking out the lease — not me.

    And to answer a few concerns: Yes, we do have a shareholders agreement. We’ve actually been in business for 3 years already, we’ve just recently transitioned the business from a partnership into a Limited Company. We’re not getting any surveyors or solicitors involved on this lease as it’s also only £125 monthly 6-month term on a small office, but it’s our 3rd lease so we can compare the contract to the others and see if there’s anything missing or out of the ordinary.
     
    Posted: Mar 9, 2018 By: EssentialParadox Member since: Jul 15, 2016
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  9. ethical PR

    ethical PR UKBF Legend Free Member

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    If you are going for a personal guarantee do make sure it is the name of both partners.
     
    Posted: Mar 9, 2018 By: ethical PR Member since: Apr 19, 2009
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  10. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Bear in mind dilapidations, as well as rent arrears, interest and charges will often fall under a PG.
     
    Posted: Mar 9, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #10