Terms and conditions

Confirmation of agreement for services between: [practice.name] and [client.name] *

This is to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide.

Purpose, Scope and Output of the Engagement

[practice.name] will provide professional services at your request. The details of the services provided in this agreement are detailed below:

[proposal.price_summary]

Period of Engagement

This engagement starts on [proposal.commencement_date] and is valid until further notice. We will not deal with earlier periods unless you specifically ask us to do so and we agree.

Why do we offer a fixed price agreement for ongoing services?

The standard method of billing in professional services has traditionally had an emphasis on providing services in exchange for an hourly rate. [practice.name] has come to the realisation that this method is an archaic method of pricing. It is also a conflict of interest because what it means is (as an industry) we are directly rewarded for how inefficient we are. The longer we take to do the job the more we get. Hourly billing does not promote an emphasis on customer service or an incentive to complete jobs quickly.

The biggest issue with hourly billing you will have no idea how much the job will be until the bill is received. We don't think that is fair on you. As a courtesy to you, we think you deserve to know in advance how much the job will cost and what it entails. As a modern & progressive firm we have moved all of our engagements to a fixed price agreement model. What does this mean for you?

You will always know how much you will pay for services in advance, and will always have the opportunity to discuss the agreement before we get started on any work. If new work is required outside of the scope of our existing agreement, we will issue a written proposal for you to accept (or discuss) before we commence new services.

  • It places the risk back on us, the practice. You don’t have to worry about paying for more hours than you thought it would take. We have to focus on being more efficient to ensure our relationship is mutually profitable. This means we can leverage the best in breed technology to constantly improve the quality of the services we deliver to you.
  • It opens the lines of communication. You don’t have to be afraid to contact us with questions and be worried about receiving a bill for your time. All of our fixed price agreements include support and regularly scheduled review sessions. In fact, we encourage constant communication between [client.name] and [practice.name]. Becoming your trusted advisor is our mission and open communication is the key.

Hourly Billing for Services with an Undefined Scope

While [practice.name] will try to always provide a fixed price agreement, particularly in the instance where services are ongoing. However, there are some services that we offer where an estimate based on an hourly rate is the only method of billing that applies. We’ll quote an hourly rate in cases of project work where it is difficult to define the scope of the service required. In the case where you have been quoted an estimate based on an hourly rate, [practice.name] will inform [client.name] of the amount of time used before we issue the final bill and collect payment.

If possible, [practice.name] will convert any hourly services into a fixed price agreement, if or when, the scope of the service becomes more apparent.

Unanticipated Services

While your fixed price agreement entitles you to unlimited communication, if your question or issue requires additional research and analysis beyond the services agreed in this contract, any additional work will be quoted to you before the commencement of said additional work. Once the scope of the additional work is agreed upon, we will issue a Change of Service Request via our online proposal system, and will ask you to sign the new agreement before we commence the new work.

Furthermore, [client.name] will agree that if an unanticipated need arises (such as an audit, an amended tax return or a personal financial statement required as part of a loan agreement), this additional work will be performed only after arriving at a mutually agreed-upon price and a Change of Service Request is accepted with a digital signature.

Service and Price Guarantee

[practice.name] will always stand behind the quality and professional nature of the services that we offer. If at any point you are not completely satisfied with the services we have performed, we encourage you to bring this to our attention immediately. We’d love the opportunity to correctly address your concerns and allow us a chance to win your trust back and prevent similar problems from happening in the future.

If you are still not satisfied with the outcome of our services, we will work towards a mutual agreement regarding the payment for services completed. As an example, we may agree to either forgive the related payment or accept a portion of the originally agreed price that reflects your level of satisfaction.

Ownership of Documents

All original documents obtained from the client arising from the engagement shall remain the property of the client. However, we reserve the right to make a reasonable number of copies of the original documents for our records.

Client Responsibilities

In conducting this engagement, information acquired by us in the course of the engagement is subject to strict confidentiality requirements. That information will not be disclosed by us to other parties except as required or allowed for by law, or with your express written consent.

The Client is responsible for the reliability, accuracy and completeness of the accounting records, particulars and information provided and disclosure of all material and relevant information. Clients are required to arrange for reasonable access by us to relevant individuals and documents, and shall be responsible for both the completeness and accuracy of the information supplied to us. Any advice given to the Client is only an opinion based on our knowledge of the Client's particular circumstances.

Confirmation of Terms

Please review and digitally sign this letter below to indicate that it is in accordance with your understanding of the arrangements. This letter will be effective for future years unless we advise you of any change and if there aren’t balances pending or fees of transfer charged as a client you do have the right to cancel at any time without any penalties or extra charges.


Appendix C:

STANDARD TERMS AND CONDITIONS OF PRACTICING ACCOUNTING BUSINESS

[Singletree Accountants]

STANDARD TERMS AND CONDITIONS OF PRACTICING ACCOUNTING BUSINESS

These terms and conditions should be read alongside the privacy notice: Link to privacy notice: https://www.singletreeaccountants.com/privacy

  1. Applicable law

Our engagement letter, the schedule of services and our standard terms and conditions of business are governed by, and should be construed in accordance with, the law and practice of UK. Each party agrees that the courts of UK will have exclusive jurisdiction in relation to any claim, dispute or difference concerning this engagement letter and any matter arising from it. Each party irrevocably waives any right to object to any action being brought in those courts, to claim that the action has been brought in an inappropriate forum, or to claim that those courts do not have jurisdiction.

  1. Client identification and verification

As with other professional services firms, we are required to identify and verify our clients for the purposes of the UK anti-money laundering legislation. Save in exceptional circumstances we cannot start work until this requirement has been met. We may request from you, and retain, such information and documentation as we require for these purposes and/or make searches of appropriate databases including ID verification software.

  1. Client money

If we hold money on your behalf, such money will be held in trust in a client bank account, which is segregated from the firm’s funds. The account will be operated and all funds dealt with in accordance with [(AAT Accountants for the real world) - Association of Accounting Technicians] rules.

  1. Commissions and other benefits

In some circumstances we may receive commissions and/or other benefits for introductions to other professionals or in respect of transactions that we arrange for you. Where this happens, we will notify you in writing of the amount and terms of payment and receipt of any such commissions or benefits. The same will apply where the payment is made to or the transactions are arranged by a person or business connected with ours. The fees you would otherwise pay will [not] be reduced by the amount of the commissions or benefits. When we reduce the fees that we would otherwise charge by the amount of commission retained, we will apply the HMRC concession, which allows VAT to be calculated on the net fee after deduction of the commission.

  1. Complaints

We are committed to providing you with a high-quality service that is both efficient and effective. However, should there be any cause for complaint in relation to any aspect of our service, please contact [info@singletreeaccountants.com]. [Where your complaint relates to that person, you should instead please contact [ali@singletreeaccountants.com]. We agree to look into any complaint carefully and promptly and do everything reasonable to try and resolve it. If you are still not satisfied you can refer your complaint to our professional body, [(AAT Accountants for the real world) - Association of Accounting Technicians].

  1. Confidentiality

Communication between us is confidential. We shall take all reasonable steps not to disclose your information except where we are required to and as set out in our privacy notice. Unless we are authorised by you to disclose information on your behalf, this undertaking will apply during and after this engagement.

We may, on occasions, subcontract work on your affairs to other tax or accounting professionals. The subcontractors will be bound by our client confidentiality and security terms.

  1. Conflicts of interest

If there is a conflict of interest in our relationship with you or in our relationship with you and another client that is capable of being addressed successfully by the adoption of suitable safeguards to protect your interests, then we will adopt those safeguards.

Where conflicts are identified that cannot be managed in a way that protects your interests then we regret that we will be unable to provide further services. If this arises, we will inform you promptly. We reserve the right to act for other clients whose interests are not the same as or are adverse to yours, subject, of course, to the obligations of confidentiality referred to above.

  1. Data protection

You acknowledge that we will act in accordance with the privacy notice we have supplied to you on our website and the which can be found via this link: https://www.singletreeaccountants.com/privacy.

  1. Disengagement

Should we resign or be requested to resign we will normally issue a disengagement letter to ensure that our respective responsibilities are clear.

Should we have no contact with you for a period of [3 months] or more, we may issue to your last known address a disengagement letter and thereafter cease to act.

We reserve the right following termination for any reason to destroy any of your documents that we have not been able to return to you after a period of six months unless other laws or regulations require otherwise.

  1. Electronic and other communication

As instructed, we will communicate with you and with any third parties you instruct us to as set out in our covering letter and privacy notice via email or by other electronic means. The recipient is responsible for virus-checking emails and any attachments.

With electronic communication there is a risk of non-receipt, delayed receipt, inadvertent misdirection or interception by third parties. We use virus-scanning software to reduce the risk of viruses and similar damaging items being transmitted through emails or electronic storage devices. However, electronic communication is not totally secure and we cannot be held responsible for damage or loss caused by viruses, nor for communications that are corrupted or altered after despatch. Nor can we accept any liability for problems or accidental errors relating to this means of communication, especially in relation to commercially sensitive material. These are risks you must accept in return for greater efficiency and lower costs. If you do not wish to accept these risks, please let us know and we will communicate by hard copy, other than where electronic submission is mandatory.

Any communication by us with you sent through the post or DX system is deemed to arrive at your postal address two working days after the day that the document was sent.

When accessing information held electronically by HMRC, we may have access to more information than we need and will only access records reasonably required to carry out the contract.

You are required to keep us up to date with accurate contact details at all times. This is important to ensure that communications and papers are not sent to the incorrect address.

  1. Fees and payment terms

Our fees may depend not only upon the time spent on your affairs but also on the level of skill and responsibility, and the importance and value of the advice that we provide, as well as the level of risk.

If we provide you with an estimate of our fees for any specific work, then the estimate will not be contractually binding unless we explicitly state that that will be the case.

Where requested, we may indicate a fixed fee for the provision of specific services or an indicative range of fees for a particular assignment. It is not our practice to identify fixed fees for more than a year ahead as such fee quotes need to be reviewed in the light of events. If it becomes apparent to us, due to unforeseen circumstances, that a fee quote is inadequate, we reserve the right to notify you of a revised figure or range and to seek your agreement thereto.

In some cases, you may be entitled to assistance with your professional fees, particularly in relation to any investigation into your tax affairs by HMRC. Assistance may be provided through insurance policies you hold or via membership of a professional or trade body. Other than where such insurance was arranged through us, you will need to advise us of any such insurance cover that you have. You will remain liable for our fees regardless of whether all or part are liable to be paid by your insurers.

We will bill [monthly]/[quarterly]/[half-yearly and yearly but we will request you to pay us on a monthly basis for fixed compliance work and if it’s a project or one off work] our invoices are due for payment upon presentation of issue]. Our fees are exclusive of VAT, which will be added where it is chargeable. Any disbursements we incur on your behalf and expenses incurred in the course of carrying out our work for you will be added to our invoices where appropriate.

Unless otherwise agreed to the contrary, our fees do not include the costs of any third party, counsel or other professional fees.

[It is our normal practice to issue applications for payment when dealing with continuous or recurring work. The payment terms for applications for payment are the same as for invoiced fees. A VAT invoice will be issued to you upon receipt of your payment.]

[It is our normal practice to ask clients to pay by monthly standing order or direct debit and to periodically adjust the monthly payment by reference to actual billings.]

[You authorise us to settle our agreed fees from any money held on your behalf in the client account if applicable or the bank account you have chosen and provided us.]

Where this contract exists between us and a purchaser acting in the course of a business, we reserve the right to charge interest on late-paid invoices at the rate of 8% above the Bank of England base rate under the Late Payment of Commercial Debts (Interest) Act 1998. We also reserve the right to suspend our services or to cease to act for you on giving written notice if payment of any fees is unduly delayed. We intend to exercise these rights only where it is fair and reasonable to do so.

If you do not accept that an invoiced fee is fair and reasonable you must notify us within 21 days of receipt, failing which you will be deemed to have accepted that payment is due.

On termination of the engagement, you may appoint a new adviser. Where a new adviser requests professional clearance and handover information we reserve the right to charge you a reasonable fee for the provision of handover information.

  1. Implementation

We will only assist with implementation of our advice if specifically instructed and agreed in writing.

  1. Intellectual property rights

We will retain all copyright in any document prepared by us during the course of carrying out the engagement save where the law specifically provides otherwise.

  1. Interpretation

If any provision of this engagement letter, schedules of services or standard terms and conditions is held to be void, then that provision will be deemed not to form part of this contract and the remainder of this agreement shall be interpreted as if such provision had never been inserted.

In the event of any conflict between these standard terms and conditions and the engagement letter or schedules of services, the relevant provision in the engagement letter or schedules will take precedence.

  1. Internal disputes within a client

If we become aware of a dispute between the parties who own or are in some way involved in the ownership and management of a business client, it should be noted that where our client is the business, we would not provide information or services to one party without the express knowledge and permission of all parties. Unless otherwise agreed by all parties we will continue to supply information to the [registered office/normal place of business] for the attention of the [directors/proprietors]. If conflicting advice, information or instructions are received from different directors/principals in the business, we will refer the matter back to the board of directors/the partnership/the LLP and take no further action until the board/partnership/LLP has agreed the action to be taken.

  1. Investment advice (including insurance mediation services)

Investment business is regulated under the Financial Services and Markets Act 2000.

If, during the provision of taxation services to you, you need advice on investments, we may have to refer you to someone who is authorised by the Financial Conduct Authority. Who is our partners called MB Capital Limited is authorised MB Capital Limited is authorised and regulated by the Financial Conduct Authority (FCA) FRN 504272.

  1. Lien

Insofar as we are permitted to do so by law or professional guidelines, we reserve the right to exercise a lien over all funds, documents and records in our possession relating to all engagements for you until all outstanding fees and disbursements are paid in full.

  1. Limitation of liability

We will provide our services with reasonable care and skill. Our liability to you is limited to losses, damages, costs and expenses directly caused by our negligence, fraud or wilful default.

Exclusion of liability for loss caused by others

We will not be liable if such losses, penalties, interest or additional tax liabilities are caused by the acts or omissions of any other person or due to the provision to us of incomplete, misleading or false information, or if they are caused by a failure to act on our advice or a failure to provide us with relevant information.

In particular, where we refer you to another firm whom you engage with directly, we accept no responsibility in relation to their work and will not be liable for any loss caused by them.

Exclusion of liability in relation to circumstances beyond our control

We will not be liable to you for any delay or failure to perform our obligations under this engagement letter if the delay or failure is caused by circumstances outside our reasonable control.

Exclusion of liability relating to non-disclosure or misrepresentation

We will not be responsible or liable for any loss, damage or expense incurred or sustained if information material to the service we are providing is withheld or concealed from us or misrepresented to us.

This exclusion shall not apply where such misrepresentation, withholding or concealment is or should (in carrying out the procedures that we have agreed to perform with reasonable care and skill) have been evident to us without further enquiry beyond that which it would have been reasonable for us to have carried out in the circumstances.

Indemnity for unauthorised disclosure

You agree to indemnify us and our agents in respect of any claim (including any claim for negligence) arising out of any unauthorised disclosure by you or by any person for whom you are responsible of our advice and opinions, whether in writing or otherwise. This indemnity will extend to the cost of defending any such claim, including payment at our usual rates for the time that we spend in defending it.

[Limitation of aggregate liability

Where the engagement letter specifies an aggregate limit of liability, then that sum shall be the maximum aggregate liability of this [Singletree Accountants Ltd], its [Ali Tekagac] agents and employees to all persons to whom the engagement letter is addressed and also any other person that we have agreed with you may rely on our work.]

You have agreed that you will not bring any claim of a kind that is included within the subject of the limit against any of our [principals] [partners] [directors] [members] or [employees]; on a personal basis.]

  1. Limitation of third-party rights

The advice and information we provide to you as part of our service is for your sole use and not for any third party to whom you may communicate it unless we have expressly agreed in the engagement letter that a specified third party may rely on our work. We accept no responsibility to third parties, including any group company to whom the engagement letter is not addressed, for any advice, information or material produced as part of our work for you that you make available to them. A party to this agreement is the only person who has the right to enforce any of its terms and no rights or benefits are conferred on any third party under the Contracts (Rights of Third Parties) Act 1999.

  1. Period of engagement and termination

Unless otherwise agreed in the engagement letter our work will begin when we receive your implicit or explicit acceptance of that letter, except as stated in that letter we will not be responsible for periods before that date.

Each of us may terminate this agreement by giving not less than 21 days’ notice in writing to the other party, except where you fail to cooperate with us or we have reason to believe that you have provided us or HMRC with misleading information, in which case we may terminate this agreement immediately. Termination will be without prejudice to any rights that may have accrued to either of us prior to termination.

In the event of termination of this contract, we will endeavour to agree with you the arrangements for the completion of work in progress at that time, unless we are required for legal or regulatory reasons to cease work immediately. In that event, we shall not be required to carry out further work and shall not be responsible or liable for any consequences arising from termination.

If you engage us for a one-off piece of work (for example advice on a one-off transaction or preparation of a tax return for one year only) the engagement ceases as soon as that work is completed. The date of completion of the work is taken to be the termination date and we owe you no duties and we will not undertake further work beyond that date.

Where recurring work is provided (for example ongoing compliance work such as the completion of annual tax returns) the engagement ceases on the relevant date in relation to the termination as set out above. Unless immediate termination applies, in practice this means that the relevant termination date is:

  • 21 days after the date of notice of termination; or
  • A later agreed date

We owe you no duties beyond the date of termination and will not undertake any further work.

  1. Professional body rules

We will observe and act in accordance with the bye-laws, regulations and ethical guidelines of the [AAT Accountants for the real world) - Association of Accounting Technicians] and will accept instructions to act for you on this basis.

You are responsible for bringing to our attention any errors, omissions or inaccuracies in your returns that you become aware of after the returns have been submitted in order that we may assist you to make a voluntary disclosure.

In particular, you give us the authority to correct errors made by HMRC where we become aware of them. In addition, we will not undertake tax planning which breaches Professional Conduct in Relation to Taxation. We will therefore comply with the general anti-abuse rule and the targeted anti-avoidance rule. We will not be liable for any loss, damage or cost arising from our compliance with statutory or regulatory obligations. You can see copies of these requirements at our offices. The requirements are also available online at [https://www.aat.org.uk/].

The implications of professional body membership as it relates to GDPR are set out in the privacy notice, which should be read alongside these standard terms and conditions of business.

  1. Reliance on advice

We will endeavour to record all advice on important matters in writing. Advice given orally is not intended to be relied upon unless confirmed in writing. Therefore, if we provide oral advice (for example, during the course of a meeting or a telephone conversation) and you wish to be able to rely on that advice, you must ask for the advice to be confirmed by us in writing. However, bear in mind that advice is only valid at the date it is given.

  1. Retention of papers

You have a legal responsibility to retain documents and records relevant to your tax affairs. During the course of our work, we may collect information from you and others relevant to your tax affairs. We will return any original documents to you [if requested].

When we cease to act for you, we will seek to agree the position on access to cloud-accounting records to ensure continuity of service. This may require you to enter direct engagements with the software providers and pay for that service separately. Documents and records relevant to your tax affairs are required by law to be retained as follows:

Individuals, trustees and partnerships

  • with trading or rental income: five years and 10 months after the end of the tax year;
  • otherwise: 22 months after the end of the tax year.

Companies, LLPs and other corporate entities

  • six years from the end of the accounting period.

While certain documents may legally belong to you, we may destroy correspondence and other papers that we store, electronically or otherwise, which are more than seven years old. This includes your documents if they have not been reclaimed by you within the seven-year period. You must tell us if you require the return of any specific document or their retention for a longer period.

You should retain documents that are sent to you by us as set out in the privacy notice, which should be read alongside these terms and conditions.

  1. The Provision of Services Regulations 2009 (‘Services Directive’)

In accordance with our professional body rules, we are required to hold professional indemnity insurance. Details about the insurer and coverage can be found in our email signature, at our offices or by request from us.

  1. Continuity of Practice

As other professional members of a body we need to have a person or company to cover our duties in case of unforeseen circumstances. Our continuity of practice is covered by Mr. Parvez Zabier. He will be covering our duties when he we are not able to. He can be contacted via our office or at 007zab@gmail.com.

AAT Client Care Section 5 – Letter of Engagement Continued:

A licensed member must provide a letter of engagement to all clients before any professional work is undertaken by the member. That letter must include the following information as a minimum. 

  1. The nature of the assignment, the scope of the work to be undertaken and, the format and nature of any report which is to be delivered.
  2. The timing of the engagement, which is the date the work is expected to start (and whether any such date is contingent on the provision by the client or others of information), the duration of the work and the dates on which reports are to be made.
  3. Whether the assignment is monthly, annual, or not recurring and whether the engagement will continue unless specifically terminated by the client.
  4. The client’s responsibilities, for example, as to the production of information such as records and books and their format and timing. The client should be advised that, for example, in relation to tax compliance work the member will be acting only as an agent for the client and that the client is responsible for providing accurate information.
  5. A statement that the responsibility for the detection of irregularities and fraud rests with the client’s management and that this would normally be outside the scope of the engagement. Nevertheless, the engagement letter should make it clear that the client is obliged to provide full information to the licensed member.
  6. Any liability disclaimers in relation to acting on information supplied by the client or complying with legislation.
  7. The basis, frequency, and rate of charge for services rendered together with the treatment of expenses incurred in connection with the assignment. The member should provide an estimate of their fees including details of hourly charging rates in the absence of a fixed fee being agreed. Any taxes payable in addition to the agreed fee or hourly charging rate should also be specified.
  8. The ownership of books and records created in the engagement and whether the licensed member will exercise a lien over such items if fees remain unpaid or are disputed. The firm’s policy on retention, destruction and return of records should, if appropriate, be specified.
  9. The action that will be taken should a fee remain unpaid after presentation of the invoice, including the charging of interest and at what rate, the cessation of work and details of any other actions that will be taken to recover unpaid fees, for example, debt collection agencies, small claims court.
  10. The usage of the licensed member’s work by the client for a third party with suitable liability disclaimers.
  11. The fact that the licensed member’s AAT licence does not authorise them to conduct any aspect of investment work.
  12. The licensed member’s obligations under the Money Laundering Regulations including due diligence, risk assessments, record keeping and suspicious activity reporting.
  13. Whether the member is registered with the Information Commissioner under the Data Protection Act 2018 and details of the responsibilities and legal obligations the member has in respect of processing their data securely in accordance with the General Data Protection Regulations (GDPR).
  14. How the licensed member will deal with clients’ money and how they will account to the client for any commission or other benefits received for introductions to other professionals or suppliers, including whether fees will be reduced by amounts received in this connection and/or whether the member will retain the commission or benefit in accordance with the Code of Professional Ethics.
  15. How the licensed member will deal with complaints about any aspect of the engagement including details of the principal within the practice responsible for complaints management, and the fact that unresolved complaints can be referred to AAT.
  16. Confirmation there is a continuity arrangement in place for an alternate to deal with matters in the event of the licensed member’s permanent incapacity or illness, who will have access to the client’s information held in order to make initial contact with them and agree the work to be undertaken during incapacity (also making clear the client can choose to appoint another firm / accountant at that stage if they wish].

General duties of directors

Introductory

Link to check if there are any recent updates: https://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/2

Otherwise:

170 Scope and nature of general duties

(1) The general duties specified in sections 171 to 177 are owed by a director of a company to the company.

(2)A person who ceases to be a director continues to be subject—

(a)to the duty in section 175 (duty to avoid conflicts of interest) as regards the exploitation of any property, information or opportunity of which he became aware at a time when he was a director, and

(b)to the duty in section 176 (duty not to accept benefits from third parties) as regards things done or omitted by him before he ceased to be a director.

To that extent those duties apply to a former director as to a director, subject to any necessary adaptations.

(3) The general duties are based on certain common law rules and equitable principles as they apply in relation to directors and have effect in place of those rules and principles as regards the duties owed to a company by a director.

(4) The general duties shall be interpreted and applied in the same way as common law rules or equitable principles, and regard shall be had to the corresponding common law rules and equitable principles in interpreting and applying the general duties.

[F1(5)The general duties apply to a shadow director of a company where and to the extent that they are capable of so applying.]

Textual Amendments

F1S. 170(5) substituted (26.5.2015) by Small Business, Enterprise and Employment Act 2015 (c. 26)ss. 89(1)164(3)(g)(iii)

Modifications etc. (not altering text)

C1Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C2Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C3Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C4Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C6S. 170 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

Commencement Information

I1S. 170 wholly in force at 1.10.2007; s. 170 not in force at Royal Assent see s. 1300; s. 170 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

The general duties

171Duty to act within powers

A director of a company must—

(a)act in accordance with the company's constitution, and

(b)only exercise powers for the purposes for which they are conferred.

Modifications etc. (not altering text)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C7Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C8Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C9Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C10Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

C11S. 171 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

Commencement Information

I2S. 171 wholly in force at 1.10.2007; s. 171 not in force at Royal Assent see s. 1300; s. 171 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

172Duty to promote the success of the company

(1)A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to—

(a)the likely consequences of any decision in the long term,

(b)the interests of the company's employees,

(c)the need to foster the company's business relationships with suppliers, customers and others,

(d)the impact of the company's operations on the community and the environment,

(e)the desirability of the company maintaining a reputation for high standards of business conduct, and

(f)the need to act fairly as between members of the company.

(2) Where or to the extent that the purposes of the company consist of or include purposes other than the benefit of its members, subsection (1) has effect as if the reference to promoting the success of the company for the benefit of its members were to achieving those purposes.

(3) The duty imposed by this section has effect subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company.

Modifications etc. (not altering text)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C12Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C13Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C14Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C15Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

C16S. 172 applied (with modifications) (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

Commencement Information

I3S. 172 wholly in force at 1.10.2007; s. 172 not in force at Royal Assent see s. 1300; s. 172 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

173Duty to exercise independent judgment

(1)A director of a company must exercise independent judgment.

(2) This duty is not infringed by his acting—

(a)in accordance with an agreement duly entered into by the company that restricts the future exercise of discretion by its directors, or

(b)in a way authorised by the company's constitution.

Modifications etc. (not altering text)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C17Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C18Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C19Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C20Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

C21Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

Commencement Information

I4S. 173 wholly in force at 1.10.2007; s. 173 not in force at Royal Assent see s. 1300; s. 173 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

174Duty to exercise reasonable care, skill and diligence

(1)A director of a company must exercise reasonable care, skill and diligence.

(2) This means the care, skill and diligence that would be exercised by a reasonably diligent person with—

(a)the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company, and

(b)the general knowledge, skill and experience that the director has.

Modifications etc. (not altering text)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C21Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

C22Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C23Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C24Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C25Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

C26S. 174(2) applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(4) (with reg. 189)

Commencement Information

I5S. 174 wholly in force at 1.10.2007; s. 174 not in force at Royal Assent see s. 1300; s. 174 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

175Duty to avoid conflicts of interest

(1)A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.

(2) This applies in particular to the exploitation of any property, information or opportunity (and it is immaterial whether the company could take advantage of the property, information or opportunity).

(3) This duty does not apply to a conflict of interest arising in relation to a transaction or arrangement with the company.

(4) This duty is not infringed—

(a)if the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or

(b)if the matter has been authorised by the directors.

(5) Authorisation may be given by the directors—

(a)where the company is a private company and nothing in the company's constitution invalidates such authorisation, by the matter being proposed to and authorised by the directors; or

(b)where the company is a public company and its constitution includes provision enabling the directors to authorise the matter, by the matter being proposed to and authorised by them in accordance with the constitution.

(6) The authorisation is effective only if—

(a)any requirement as to the quorum at the meeting at which the matter is considered is met without counting the director in question or any other interested director, and

(b)the matter was agreed to without their voting or would have been agreed to if their votes had not been counted.

(7) Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties.

Modifications etc. (not altering text)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C21Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

C27Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C28Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C29Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C30Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

176Duty not to accept benefits from third parties

(1)A director of a company must not accept a benefit from a third party conferred by reason of—

(a)his being a director, or

(b)his doing (or not doing) anything as director.

(2)A “third party” means a person other than the company, an associated body corporate or a person acting on behalf of the company or an associated body corporate.

(3) Benefits received by a director from a person by whom his services (as a director or otherwise) are provided to the company are not regarded as conferred by a third party.

(4) This duty is not infringed if the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.

(5) Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties.

Modifications etc. (not altering text)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C21Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

C31Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C32Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C33Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C34Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

177Duty to declare interest in proposed transaction or arrangement

(1) If a director of a company is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, he must declare the nature and extent of that interest to the other directors.

(2) The declaration may (but need not) be made—

(a)at a meeting of the directors, or

(b)by notice to the directors in accordance with—

(i)section 184 (notice in writing), or

(ii)section 185 (general notice).

(3) If a declaration of interest under this section proves to be, or becomes, inaccurate or incomplete, a further declaration must be made.

(4) Any declaration required by this section must be made before the company enters into the transaction or arrangement.

(5) This section does not require a declaration of an interest of which the director is not aware or where the director is not aware of the transaction or arrangement in question.

For this purpose, a director is treated as being aware of matters of which he ought reasonably to be aware.

(6)A director need not declare an interest—

(a)if it cannot reasonably be regarded as likely to give rise to a conflict of interest;

(b)if, or to the extent that, the other directors are already aware of it (and for this purpose the other directors are treated as aware of anything of which they ought reasonably to be aware); or

(c)if, or to the extent that, it concerns terms of his service contract that have been or are to be considered—

(i)by a meeting of the directors, or

(ii)by a committee of the directors appointed for the purpose under the company's constitution.

Modifications etc. (not altering text)

C5Ss. 170-177 modified (1.3.2016) by The NRAM plc (formerly Northern Rock plc) Consequential and Supplementary Provisions Order 2016 (S.I. 2016/114)arts. 1(1)7(1)(3)Sch. para. 1(e)

C21Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

C35Ss. 170-177 modified (22.2.2008) by The Northern Rock plc Transfer Order 2008 (S.I. 2008/432)art. 17(1)Sch. para. 2(e)

C36Ss. 170-177 modified (8.00 a.m. on 29.9.2008) by the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546)art. 13(1)(3)Sch. 1 para. 2(e)

C37Ss. 170-177 modified (9.30 a.m. on 7.10.2008) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644)art. 26Sch. 2 para. 2(e)

C38Ss. 170-177 modified (retrospective to 30.3.2009 at 8.00 a.m.) by The Amendments to Law (Resolution of Dunfermline Building Society) Order 2009 (S.I. 2009/814)arts. 1(2)7Sch. para. 2(e)

Supplementary provisions

178Civil consequences of breach of general duties

(1) The consequences of breach (or threatened breach) of sections 171 to 177 are the same as would apply if the corresponding common law rule or equitable principle applied.

(2) The duties in those sections (with the exception of section 174 (duty to exercise reasonable care, skill and diligence)) are, accordingly, enforceable in the same way as any other fiduciary duty owed to a company by its directors.

Modifications etc. (not altering text)

C21Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

Commencement Information

I6S. 178 wholly in force at 1.10.2007; s. 178 not in force at Royal Assent see s. 1300; s. 178 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

179Cases within more than one of the general duties

Except as otherwise provided, more than one of the general duties may apply in any given case.

Modifications etc. (not altering text)

C21Ss. 173-179 applied (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212)regs. 1(2)83(1) (with reg. 189)

Commencement Information

I7S. 179 wholly in force at 1.10.2007; s. 179 not in force at Royal Assent see s. 1300; s. 179 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

180Consent, approval or authorisation by members

(1) In a case where—

(a)section 175 (duty to avoid conflicts of interest) is complied with by authorisation by the directors, or

(b)section 177 (duty to declare interest in proposed transaction or arrangement) is complied with,

the transaction or arrangement is not liable to be set aside by virtue of any common law rule or equitable principle requiring the consent or approval of the members of the company.

This is without prejudice to any enactment, or provision of the company's constitution, requiring such consent or approval.

(2)The application of the general duties is not affected by the fact that the case also falls within Chapter 4 (transactions requiring approval of members)[F2or 4A], except that where [F3either of those Chapters] applies and—

(a)approval is given under [F4the Chapter concerned], or

(b)the matter is one as to which it is provided that approval is not needed,

it is not necessary also to comply with section 175 (duty to avoid conflicts of interest) or section 176 (duty not to accept benefits from third parties).

(3)Compliance with the general duties does not remove the need for approval under any applicable provision of Chapter 4 (transactions requiring approval of members)[F5or 4A].

(4) The general duties—

(a)have effect subject to any rule of law enabling the company to give authority, specifically or generally, for anything to be done (or omitted) by the directors, or any of them, that would otherwise be a breach of duty, and

(b)where the company's articles contain provisions for dealing with conflicts of interest, are not infringed by anything done (or omitted) by the directors, or any of them, in accordance with those provisions.

(5) Otherwise, the general duties have effect (except as otherwise provided or the context otherwise requires) notwithstanding any enactment or rule of law.

Textual Amendments

F2Words ins. 180(2) substituted (1.10.2013) by Enterprise and Regulatory Reform Act 2013 (c. 24)ss. 81(2)(a)(i)103(3)S.I. 2013/2227art. 2(h)

F3Words ins. 180(2) substituted (1.10.2013) by Enterprise and Regulatory Reform Act 2013 (c. 24)ss. 81(2)(a)(ii)103(3)S.I. 2013/2227art. 2(h)

F4Words ins. 180(2)(a) substituted (1.10.2013) by Enterprise and Regulatory Reform Act 2013 (c. 24)ss. 81(2)(b)103(3)S.I. 2013/2227art. 2(h)

F5Words ins. 180(3) inserted (1.10.2013) by Enterprise and Regulatory Reform Act 2013 (c. 24)ss. 81(2)(c)103(3)S.I. 2013/2227art. 2(h)

Modifications etc. (not altering text)

C39S. 180(2) modified (1.10.2008) by The Companies Act 2006 (Commencement No. 5, Transitional Provisions and Savings) Order 2007 (S.I. 2007/3495)art. 9Sch. 4 para. 49 (with savings in arts. 712)

181Modification of provisions in relation to charitable companies

(1) In their application to a company that is a charity, the provisions of this Chapter have effect subject to this section.

(2) Section 175 (duty to avoid conflicts of interest) has effect as if—

(a)for subsection (3) (which disapplies the duty to avoid conflicts of interest in the case of a transaction or arrangement with the company) there were substituted—

“(3) This duty does not apply to a conflict of interest arising in relation to a transaction or arrangement with the company if or to the extent that the company's articles allow that duty to be so disapplied, which they may do only in relation to descriptions of transaction or arrangement specified in the company's articles.”;

(b)for subsection (5) (which specifies how directors of a company may give authority under that section for a transaction or arrangement) there were substituted—

“(5) Authorisation may be given by the directors where the company's constitution includes provision enabling them to authorise the matter, by the matter being proposed to and authorised by them in accordance with the constitution.”.

(3) Section 180(2)(b) (which disapplies certain duties under this Chapter in relation to cases excepted from requirement to obtain approval by members under Chapter 4) applies only if or to the extent that the company's articles allow those duties to be so disapplied, which they may do only in relation to descriptions of transaction or arrangement specified in the company's articles.

(4)F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) This section does not extend to Scotland.

Textual Amendments

F6S. 181(4) repealed (14.3.2012) by Charities Act 2011 (c. 25)ss. 354355Sch. 10 (with s. 20(2)Sch. 8)

Commencement Information

I8S. 181 wholly in force at 1.10.2007; s. 181 not in force at Royal Assent see s. 1300; s. 181 in force at 1.10.2007 by S.I. 2007/2194art. 2(1)(d) (with savings in art. 12 and subject to transitional adaptations specified in Sch. 1)

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