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Developing a federated model of General Practice - The roles & responsibilities of a Shareholder

Shareholders provide the initial cash injection to set the company up, by purchasing shares°. This then provides the shareholder with certain rights. They also have certain duties and responsibilities, which are set out in the Companies Act 2006 (1) (or Companies Act relevant to the date that the company was formed).

"At BW Medical Accountants we have a way in which you can avoid locking this investment up in shares, and indeed, we view that as a fundamental error in the set up of the companies that form GP Federations. This is easily avoided with the right input and specialist advice."

Within the shareholders agreement for the company you will find a list of matters that have been reserved to the shareholders for a decision, within a general meeting. This list typically includes, borrowing money (in excess of agreed limits), selling the company, merging or amalgamating the company, appointing and removing directors.  There are other items; however, these will often vary from company to company, and are best developed as part of the set up of the company.

Additionally, there are two resolutions that can be voted on at a meeting:

1. an ordinary resolution, or
2. a special resolution.

An ordinary resolution can be passed if a simple majority of those entitled to vote votes in favour of the matter at a quorate meeting. All matters required to be decided by the members can be decided by ordinary resolution unless company law or the company's articles of association specify that a special resolution is needed.

A special resolution requires a 75% majority at a quorate meeting and must be filed at Companies House so that it appears on the public record.

For both types of resolution, the members can pass a resolution in writing provided the requisite majority signs the resolution to indicate their agreement.

The shareholders may in their shareholders' agreement vary the statutory decision making requirements provided that the minimum requirements of company law as described above are satisfied. For example, the shareholders' agreement may specify that certain matters must be decided by the members even where this is not a requirement of company law or the company's article's of association. The shareholders' agreement may also specify that a higher majority is required to decide certain matters than that set out in company law.

I know many of our readers will be surprised by how little is on the list; however, this is a very different way of working to being part of a Clinical Commissioning Group (CCG), or a Locality within a CCG. Additionally, as indicated in my previous blog, the Directors have overall control of the company and the decision making. This is often the reason that some practices remain outside of the federation; put simply they find it a way of working they cannot accommodate.  Having said that, my sense remains that there is little else on offer for those who remain outside of the federations being formed.  

I am commonly asked what the extent of any liabilities is for a shareholder in a company limited by shares? Put simply, the limit for a shareholder is the amount invested in the company, which also includes any unpaid loans they may have made to the company.

In our next issue, we will continue our look at corporate governance structures within a company, by exploring what the effective board look like.

For more information on how BW Medical Accountants can support you in forming a federation, or to arrange to speak to one of our experts please contact or call 0191 653 1022.

Additionally, if you should have questions for us please email and we will do our best to answer these within our blog and our LinkedIn Group 'GP Federations'. 

(Special thanks to specialist healthcare lawyer Alison Oliver at WardHadaway Law Firm for her assistance with this blog.)



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