Statutory registers: helping our client avoid pitfalls during the sale of a company

Moore Barlow recently acted on a substantial transaction relating to the sale of the majority of the share capital in a private limited company.

As part of our initial scoping meeting, we identified a few potential problem areas and, as a result, we agreed to carry out a pre-sale health check of the company’s corporate documents and practices.

Identifying potential issues early

By doing so, we were quickly able to identify key pressure points that were likely to impact the transaction if left unaddressed until the later stages of the deal. In undertaking this review with our client, we were able to formulate a clear plan and take pre-emptive action in order to rectify the issues identified ahead of the main transaction commencing.

By carrying out this pre-sale health check, we quickly identified several points of interest in the context of due diligence. In particular, we noted that the statutory registers had not been maintained and that several key documents relating to the history of the share capital of the company had either not been completed correctly or had been omitted entirely.

In the first instance, we identified missing documents, such as board minutes, shareholder approvals, Companies House filings and missing or incorrect statutory register entries. The second phase was for us to carry out the remedial works necessary to rectify the problems identified and reconstitute the statutory registers accordingly.

The importance of priming your company for sale

This deal highlights, in particular, the importance and value of priming your company for sale ahead of the transaction. The problem areas that we identified in this deal could have delayed completion or even resulted in a renegotiation of terms by the buyer. By working with our client and identifying the issues at an early stage, we were able to work with them to resolve these concerns in an expedient manner.

A residual benefit from this exercise was the enhanced understanding we gained of the company’s business and work practices. This enabled us to understand our client’s expectations which, in turn, allowed them to better engage with us and provide detailed, comprehensive instructions.

By carrying out the pre-sale health check and the required remedial work, we were able to engage with our client based on an informed position and provide clear and detailed solutions, which were greatly appreciated by our client. In turn, the in-depth understanding that we gained of the company ultimately eliminated any second guessing or over-engineering and overall likely saved costs for our client in the process.

How Moore Barlow can help

If you or your business need legal assistance and advice in this area or other corporate matters, please contact our expert team today.