Whatever grouping structure is decided upon it is preferable for any
agreements to be evidenced in writing.
For Chambers the most important agreement would relate to the property
and how it is valued on the introduction of a new property owning consultant
and upon retirement.
In respect of Partnerships it is preferable that a Partnership Deed
is drawn up. If there are any deficiencies in the Deed then reference
can be made to the Partnership Act of 1890.
Limited Companies have two important documents. The first is known
as the Memorandum of Association and basically lists the activities
that the company can undertake. This can range literally to production
of pots and pans!
The second important document is known as The Articles of Association
and sets out the rules dictating how directors and shareholders will
conduct their affairs with each other. Companies can adopt standard
Articles known as Table A or Table B or use these as the basis for their
own bespoke Articles.
Limited Companies and Limited Liability Partnership are bound by law
to disclose certain details to Companies House, which can be accessed
by the general public for a nominal fee.
The Office of Fair Trading has recently enquired into certain groups
of Anaesthetists affairs under the provisions of the Competition Act.
Depending on the structure of the group and the activities to be undertaken
it may be advisable for legal advise to be sought. Potential penalties
for infringement can be high and the new Enterprise Act, which will
be implemented sometime later this year, provides in addition custodial
sentences.
The General Medical Council publish ethical guidelines relating to
declaring financial interests which naively could be infringed by cross
referral to a colleague who in some way shares income. The GMC should
be informed of the group and guidance sought to ensure that there is
no infringement in the future.
Financial Considerations
The type of professional entity chosen by a group of consultants will
depend on the level of commitment that each can give and the objective/goal
of the group.
The type of entity chosen need not mean that it can’t be changed
or evolve as the group members’ commitment change.
What ever entity is chosen the following important points need to be
considered:
- How income is to be shared
- How expenses are to dealt with
- Do existing private practices continue outside of the group
Banking facilities
- Ownership of property
- Ownership of equipment
- Goodwill
- Responsibility for staff
- Exit route from group
Most consultants will set the ground rules for joining a group but
ignore rules relating to someone’s departure. In addition, since
a group has a greater financial life span than an individual consultant
then goodwill may become a valued asset as it is for other professionals
including dentists.
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