Partner, Edward Evans, recently wrote an article for Business Plus on the importance of keeping Company Records up to date. Read the original article here or below.
Keeping Company Records Up To Date
Good housekeeping is essential for all businesses, not just in preparation for sale. Having proper business records and policies in place empower a business to demonstrate its value effectively when negotiating the sale price, and also ensures the vendor can effect a ‘clean break’ from the business.
The following are essential checklist items to ensure your company records are in order.
Contracts
Ensure that your relationships with suppliers and customers are governed by an in-date contract that is signed by all parties, dated, and kept in a secure place. You should also create a schedule with the expiry and renewal dates listed. Any changes to the way you do business with a supplier or customer should be documented and kept with the original contract.
Assets
Carry out an audit of the company’s assets including real estate, equipment and, most importantly intellectual property (IP). Very often (not least with family businesses) assets used by the company and thought to belong to the company belong to the shareholders, or even former shareholders. Ensure that the assets used by the company either belong to it or are used by it under a properly documented lease or licence.
Employees
Make sure your employment contracts are fit for purpose, up-to-date and comply with the law. Ensure you have contractual protections to help safeguard confidential information and IP of the business. This will help to protect the company’s goodwill and business interests.
Policies and procedures are key employment documents and provide a framework within which issues and problems can be resolved.
Some employment policies and procedures are mandated by statute or regulation and are compulsory whilst others are desirable from a best practice point of view but are at the discretion of the employer.
Compulsory policies include disciplinary procedures, grievance procedures (records of all complaints should be maintained), dignity at work procedures, equality/equal opportunities policy and a safety statement. In addition, businesses should now have a Covid-19 Response Plan.
It is also important to think about policies to help protect the reputation of the organisation in terms of social media, internet usage and whistleblowing.
Data Protection
If you have not already done so, you should carry out a data protection audit. Document what personal data you hold (does it contain sensitive personal data?), where it came from, why was it originally gathered, how long will you retain it, how secure is it and who have you shared it with. You should identify and document the basis under law for your processing of personal data, and where appropriate, ensure you have appropriate data processing agreements in place?
At a minimum, each business should have:
- A data protection policy (which should include procedures for dealing with data breaches and data subject access requests)
- A data retention policy
- An employee privacy policy
- A website privacy policy and cookies notice.
- Additional policies/procedures may be required, depending on the nature of your business.
Statutory Books And Banking Records
Every company is required to keep certain registers including:
- Register of members
- Register of directors and secretaries
- Register of directors and secretaries’ interests
- Register of beneficial ownership.
In addition, companies should keep a record of board and shareholder meeting minutes. It is also good practice to compile all your banking records, including lease or hire purchase agreements, facility letters and mortgages or security documents.