Juggling corporate law responsibilities in a growing business is no easy feat. With many legal duties competing for attention, it’s easy to overlook risks that could cause serious issues down the line. This article is designed for in-house lawyers who operate solo or within lean legal teams, offering a clear plan to identify and manage core corporate risks effectively.
If corporate law isn’t your main focus area or you simply want confirmation you’re ticking the right boxes, we’ll highlight the key risks you need to stay on top of and provide practical steps to manage them effectively. After all, your legal function is about more than just compliance, it’s about safeguarding the business and demonstrating the true value you bring.
And remember, if you need an extra pair of hands for overflow or complex transactions, our team of corporate solicitors can tackle the heavy lifting, giving you space to focus on more strategic work. Whether you need ongoing support or guidance on a high-stakes deal, we’ll work in tandem with your existing processes and priorities, so you stay in control without getting bogged down.
Contents:
- Board structure: keeping it compliant and effective
- Company secretarial: staying on top of the admin tasks
- Directors’ duties: understanding liabilities and responsibilities
- Shareholder agreements & articles of association: preventing disputes and ensuring alignment
- Cap table management: keeping ownership records clean
- Legal due diligence: key considerations
- When to call in specialist support
Board structure: keeping it compliant and effective
The way your board is set up isn’t just a formality, it directly impacts governance, decision-making, and regulatory compliance.
In smaller businesses, boards often evolve informally, with founders and execs wearing multiple hats. But as the company grows, this can create governance gaps, conflicts of interest, and compliance risks.
Key risks:
- Lack of independent voices. Without non-executive directors (NEDs), governance and accountability, as well as decision-making, can suffer.
- Shadow & de facto directors. Unofficial decision-makers (investors, senior advisors) can face director liabilities without realising it.
- Regulatory blind spots. Boards without governance expertise among their members may fall short on compliance (financial reporting, ESG, etc.).
Here’s what you can do:
- Review the make-up of the board. Ensure it supports good decision-making and consider adding NEDs.
- Identify shadow and de-facto directors. Review the minutes. If someone exerts influence without a formal role, clarify their position.
- Document everything. Well-maintained board minutes and policies reduce legal exposure. Make sure that minutes, resolutions and policies are in place and up to date.
- Plan for the future. Set term limits and succession plans to keep the board fresh.
- Stay on top of governance. Ensure the board is ready for evolving legal and regulatory obligations by encouraging the business to think ahead.
Company secretarial: staying on top of the admin tasks
Admin tasks like statutory filings may not be exciting, but they’re critical. In small and rapidly growing businesses, where legal teams are stretched thin, these often fall through the cracks, sometimes leading to fines, governance issues, and reputational damage.
Key risks:
- Messy statutory records. Missing registers (directors, shareholders, PSCs) cause compliance headaches.
- Companies House discrepancies. Mismatches between internal records and public filings create legal issues.
- Late filings. Forgetting annual confirmation statements can lead to penalties or even company dissolution.
- Unreported changes. Shareholder or director changes need prompt updates to stay compliant.
Here’s what you can do:
- Audit statutory records. Conduct a review and make sure everything is accurate and up to date.
- Keep Companies House aligned. Regularly cross-check filings with internal records.
- Set reminders for key deadlines. A simple compliance calendar can prevent costly mistakes.
- Track shareholder and director changes. Ensure all appointments, resignations, and transfers are documented properly.
- Prepare for scrutiny. Well-kept records make investor due diligence and transactions smoother.
If you need support navigating these issues, we offer company secretarial support, handling essential filings, maintaining statutory registers, and ensuring your business stays compliant with Companies House requirements. We can take the administrative burden off your shoulders so you can focus on running and growing your business.
Directors’ duties: understanding liabilities and responsibilities
Directors have legal responsibilities that go beyond making strategic decisions. If they fall short, whether through conflicts of interest, poor governance, or financial mismanagement, they can be held personally liable, fined, or even disqualified.
Key risks:
- Breach of statutory duties. Failing to act in the company’s best interests or making conflicted decisions can lead to legal action
- Personal liability. Directors can be personally sued for misconduct or regulatory breaches.
- Wrongful trading risks. Continuing to trade while insolvent can expose directors to serious legal trouble.
Here’s what you can do:
- Provide training and refresher sessions. Directors should know their responsibilities under the Companies Act 2006.
- Implement a conflicts policy. Ensure conflicts of interest are declared and managed properly by way of a register of interests.
- Monitor financial health. Work closely with financial colleagues to keep an eye on solvency risks and avoid wrongful trading claims.
- Check D&O insurance. Make sure directors are protected from personal liability.
- Document decisions properly. Well-recorded board discussions help demonstrate compliance. Encourage your directors to seek external legal or financial guidance in the case of high-risk decisions.
Shareholder agreements & articles of association: preventing disputes and ensuring alignment
A well-structured shareholders’ agreement and articles of association are crucial for governance, decision-making, and preventing disputes. However, inconsistencies, outdated provisions, or unclear voting rights can create operational roadblocks or legal challenges.
Key risks:
- Unclear voting rights & approval thresholds. Ambiguities in governance documents can stall decisions or create shareholder conflicts.
- Deadlocks & decision-making delays. High thresholds or unclear processes can hinder business operations.
- Minority shareholder influence & protections. Undefined consent thresholds may give disproportionate power to minorities or fail to safeguard minority interests.
- Share transfer & exit mechanisms. Without clear pre-emption rights or valuation methods, disputes can arise over share sales.
- Conflicts between governance documents. Inconsistencies between the articles and shareholders’ agreement can lead to legal uncertainty.
- Restrictions on share issuance & transfers. Poorly structured provisions can obstruct fundraising or ownership changes.
- Failure to align with business growth. Outdated documents may not reflect
- Ensure compliance with the Companies Act 2006. Confirm that the articles meet all legal requirements and reflect best practices in corporate governance.
Here’s what you can do:
- Review and update governance documents. Ensure both the shareholders’ agreement and articles of association align with current company operations and best practices.
- Identify and resolve conflicts between the articles and shareholders’ agreements. Where necessary, align both documents to prevent inconsistencies
- Clarify voting rights & decision-making thresholds. Define clear approval mechanisms to prevent deadlocks and protect shareholder interests.
- Strengthen shareholder dispute resolution. Introduce mediation or arbitration clauses to mitigate conflicts before they escalate.
- Establish structured approval processes. Formalise procedures for obtaining shareholder consents, circulating resolutions, and recording votes.
- Ensure flexibility for future growth. Update governance documents to accommodate new investors, leadership changes, and business expansion.
- Align with legal requirements. Ensure compliance with the Companies Act 2006 and corporate governance best practices.
Cap table management: keeping ownership records clean
Messy cap tables can lead to disputes over ownership, difficulties in securing investment, or challenges in executing share transfers. They can also make legal due diligence more complex, slowing down transactions such as fundraising or acquisitions.
Key risks:
- Inaccurate shareholder records. Poor record-keeping can lead to legal challenges.
- Undefined share classes. Share rights (voting, dividends) need to be clearly documented.
- Messy share transfers. Untracked transactions cause confusion over who owns what.
Here’s what you can do:
- Conduct a full audit of the cap table. Review and reconcile all records to ensure accuracy and completeness.
- Ensure share classes and rights are clearly defined. Confirm that any special rights (e.g., preference shares) are properly documented.
- Verify that all share issuances and transfers are properly recorded. Ensure compliance with company records and Companies House filings.
- Implement a structured cap table management system. Consider using digital cap table management tools to maintain real-time accuracy.
- Prepare for due diligence. Ensure the cap table is transaction-ready for future investment rounds, exits, or M&A activity.
- Educate stakeholders on cap table transparency. Ensure directors and shareholders understand the importance of maintaining an accurate record of ownership.
Legal due diligence: key considerations
Recognising the importance of legal due diligence, it’s crucial to ensure it's well-structured and carefully planned; whether for investment, acquisition, or internal risk management. Without a clear approach, key risks can be missed, and transactions may face unnecessary hurdles.
Key risks:
- Poorly maintained corporate records. Gaps or inconsistencies in statutory filings, contracts, or governance documents can raise red flags.
- Employment and HR compliance risks. Missing contracts, unclear policies, or non-compliance with employment laws can lead to disputes and penalties.
- Intellectual property (IP) vulnerabilities. Unregistered trademarks, unclear ownership of IP, or weak protections can undermine business value.
- Regulatory and compliance gaps. Failure to comply with GDPR, health and safety laws, or industry-specific regulations can result in fines and reputational damage.
- Contractual liabilities. Unfavourable terms, expired contracts, or overlooked obligations can expose the business to financial or legal risk.
Here’s what you can do:
- Audit the corporate records. Ensure all company documents, filings, and governance records are up to date and accurate.
- Review employment contracts and policies. Confirm that contracts are legally compliant, and HR policies align with employment law requirements.
- Assess intellectual property protections. Ensure trademarks, patents, and copyrights are registered and properly documented.
- Identify regulatory compliance gaps. Conduct an internal compliance review to address any areas where the business may be exposed to legal risk.
- Review key contracts and obligations. Assess major supplier, customer, and partner agreements for risks, renewal deadlines, and compliance issues.
- Prepare for future due diligence requests. Ensure all legal documentation is well-organised and easily accessible for investors, acquirers, or regulatory bodies.
When to call in specialist support
Managing legal risk in business isn’t just about ticking compliance boxes, it’s about protecting the business and enabling growth. By focusing on key areas like governance, shareholder agreements, and director responsibilities, you can strengthen your company’s legal position and ensure smoother operations.
A proactive legal approach helps avoid disputes, attract investment, and build a solid foundation for long-term success. Keeping on top of these priorities will not only safeguard the business but also demonstrate the value of the legal function in a commercial, strategic way.
When you need additional legal support, our corporate law team is here to ease the burden. With expertise across all areas of corporate law, we can offer an extra pair of hands to help ensure your success. Get in touch with us through the contact form below to explore how we can support you.
