Please activate JavaScript!
Please install Adobe Flash Player, click here for download

Dental Tribune United Kingdom Edition

January 16-22, 201212 Money Matters United Kingdom Edition then beware that if and when the law is clarified, the com- position of your Board may have to change accordingly. It is also worth noting that a practice can legally be owned by non-DCPs providing the majority directorship require- ment is met. It is important that you have a properly drafted legal agree- ment in place if you are chang- ing the business arrangements of the practice eg by incorpo- rating, even if the managers are the same people. Because a company counts as a legal entity in its own right, the as- sets and the contractual rela- tionships with third parties of the business need to be for- mally transferred from the in- dividual owners. These assets will invariably include equip- ment or services supplied by another company including utilities, insurance and leased office products. You will need to find out whether existing contracts can be simply reas- signed to the new company or whether there are early cancellation penalty clauses, or the whole process has to be started from scratch. Indi- vidual partners must ensure that they obtain a release from their obligations under con- tracts held by the partnership so that they no longer have any personal liability. Indeed, one of the advan- tages of incorporation is that the former partners, now shareholders, have limited li- ability. Banking arrangements will need to be revisited and banks may well take the op- portunity to re-negotiate the interest rate to a current rate rather than the low rate over base that you may have ob- tained a few years ago. However, the duties of company directors are strictly regulated and in fact, directors could be personally liable if they breach certain duties. Di- rectors are statutorily obliged to exercise independent judgement, reasonable care, skill and diligence in perform- ing their duties and to avoid situations in which there may be a conflict of interest. Com- panies are also bound by rules regarding financial returns, registration and records. The relationship between share- holders is often formalised in detail in the shareholders’ agreement that usually cov- ers work commitments and obligations, profit sharing, key decision-making, entitle- ments to leave, and provision for staff joining or leaving the company. There is no doubt that the company structure can be useful for a number of rea- sons, but there are also many downsides. It is important to get independent legal advice from specialists who know and understand the dental in- dustry in order to make sure that the way your company is structured will meet your practice requirements. It is also important that an expe- rienced dental lawyer is in- structed to prepare a suitably drafted agreement transfer- ring the assets to the company to avoid problems arising at a later date. DT page 11DTß About the author Nicola Chappell joined the Com- mercial Property Department in 2005 as a legal clerk. She quali- fied as a solicitor in 2008 and was appointed as a Director in 2011. She now specialises in the sale and purchase of Dental Practices deal- ing particularly with the property aspects of business acquisitions and the smooth progress of exchange of contracts and completion. An avid gardener and allotment owner, Nicola spends her weekends pulling outs weeds from her little patch of earth. Goodman Legal, Lawyers for Dentists are a specialist dental law firm oper- ating nationally For more information call Ray Goodman on 0151 707 0090 or email rng@goodmanlegal.co.uk www.goodmanlegal.co.uk ‘It is important that you have a properly drafted legal agreement in place if you are changing the busi- ness arrangements of the practice’