My Creditors Can’t Take Assets From My Company
If you are Oil Tycoon Michael Prest, then the above is not in fact the case. In a recent case Seven Supreme Court Justices unanimously allowed his wife’s appeal resulting in property assets being transferred from companies wholly owned by Mr Prest to his wife in order to partially satisfy a £17.5 Million matrimonial order made against Mr Prest personally.
For decades (Salomon v A Salomon and Co Ltd  AC 22 to be precise) it has been believed that save for the most extreme of circumstances in which a company is being used as a vehicle for fraud, any assets of a company are shielded from the debts of the shareholders and vice versa. In Mr Prest’s case although there was no suggestion of fraud, and the court was quite explicit in confirming that the corporate veil had not been lifted, the court inventively left the old authorities in place but managed to circumvent them by finding that the properties in question were in fact held on trust by the companies for the benefit of Mr Prest. Readers should not panic too much at this stage as this case has more direct relevance to matrimonial rather than commercial matters, and may indeed going forward be interpreted restrictively confining it to its fairly specific circumstances. It is however something to be kept in mind when seeking to protect assets and may pave the way for further erosion of and challenges to the assumption that a company is for all purposes a separate and distinct legal entity. A trend that is further re-enforced by the developments currently being debated which might require private companies to maintain a register of beneficial owners at Companies House. It is not yet known how widely applicable this requirement will be and what access the public will have to such registers.
Unwelcome Clarity for Charity
A brief walk down Silver Street in Hull today on the way to the fish and chip shop revealed at least three retail premises completely empty but with posters promoting charitable activities displayed in the windows. It might just be that the owners have taken the view that as no tenants are on the horizon and they are paying a fortune in commercial rates on an empty property, at least charities may as well benefit from some free advertising. Maybe there is more than this to the outbreak of posters that have appeared. Following a recent case The Public Safety Charitable Trust is facing a multi-million-pound bill for business rates after losing a legal battle with several local authorities. The charity leased 2,000 properties for a peppercorn rent in 240 local authority areas and installed transmitters to send out public safety messages through Bluetooth. The rest of each property was typically left empty. The charity claimed that this activity constituted using the properties "wholly or mainly" for charitable purposes, which would entitle it to mandatory discounts of 80 per cent on business rates and a potential discretionary discount on the remaining 20 per cent. The charity was paid a premium by landlords who would otherwise have to pay full rates on their empty properties. But three councils – South Cambridgeshire, Milton Keynes and Cheshire West and Chester – have won a judgment at the High Court in May, which ruled that full rates were due on all properties, as the premises in question were not being substantially occupied for charitable purposes.