Shared ownership of a wood

[Woody]

I am planning to purchase a wood with some friends. I've been adviced that the best ownership vehicle will be to have the wood owned by a limited company with all friends owning a share of the limited company. Adding & removing members, sharing maintenance and insurance costs, etc. need to be considered.

I wonder if any other member has experience with this and could share a template articles and memorandum of association?

Thanks.

[James M]

You've asked in the right place - existing owners will always have a better grasp of the issues than legal advisors.

You have to ask what you are hoping to achieve - or more importantly, avoid, then decide the way forward. As a shareholder you do not necesarily have rights you think you have in relation to the assets of the company. You will all need to be directors, and one of you a company secretary, then you can decide who can do what. A limited company, apart from being expensive and fiddly to run, is a great way for one group of shareholders to muscle another one out.

The Articles would need some serious expert legal input to ensure everyone's wishes were satisfied. Looking at what other's have done won't answer your specific and unique problems.

A company limited by guarantee may be a better bet - that way you have members rather than shareholders.

But it's awfully convoluted. Why not become joint owners, or a partnership ? Then you all have full and equal rights. If you don't trust each other enough, then a limited company is just a vehicle for making things messy. I own one, not a messy one I might add, but that's becasue I'm the only shareholder!

If you think there are pitfalls serious enough to warrant using a company, then you should ask whether any form of joint ownership is a good idea?

[steve rollnick]

Dear Woody,

my arrangement was a simple one, but no doubt with pitfalls I have not seen yet (fee free to comment, I'd appreciate that).

I wanted to buy most of the woodland, and found a friend who agreed to pay for a 20% share. The only complication we then dealt with was what happens if and when someone wants to sell, from my side, because if my share was inherited by my children, I wanted them protected if my friend or his kids wanted to sell their share. We agreed that should this happen, my kids would get 18 months to buy his share before he offered it to someone else...... there were other clauses in the agreement about what would happen if I wanted to seell up, but I think you get the drift.

Its working out very well, and i am pleased I didnt get other folk involved because, for example, right now in August, we are there a lot and I wouldnt want to have to create a dam roster, if you know what I mean.

If there's a group of you..... uhmmmm..... I'll hold back from commenting, because others might be in a better position than me to tell their story... about the legalities and the realty of sharing....... I just hope you find a wood with plenty flat space for camping so you can spread out a bit if its peace you go for...

Kind regards, Steve

[tracy]

From Phil Tidey, SWA

Dear Marcel,

This is a really complex issue and one that is receiving more interest as

more and more people are purchasing woodlands jointly. I think you are

correct in that going down the route of a limited company is the best option

for you, given that the woodland is not being purchased through even shares.

You would allocate shares according to the level of investment. You would

need to incorporate provision for a number of scenarios-for example-

A requirement that if a partner wanted to sell their shares the other

partners had to be offered first refusal

A requirement that any prospective purchaser had to be approved by the other

partners (approval to be not unreasonably withheld)

You would also be best advised to come up with a written agreement covering

share of expenses and/or income (in proportion to investment/shareholding?),

permitted type of activity (if one member developed an interest in

moto-cross this would not necessarily go down well with the other members!),

amount/frequency of use, management decision making etc. If you want to

agree a management plan with the Forestry Commission and receive grant

funding you would need a legal structure to receive any grants and enter

agreements, otherwise one partner only would be responsible.

You would be best advised to consult a solicitor (preferably one experienced

in rural issues) and ask him or her to draft an agreement for you.

Do have a look at our website (www.smallwoods.org.uk) where there is a lot

of useful information, and if you were to choose to join us you would

receive a Small Woods Information Pack (currently being revised) which has a

lot of useful information for those new to woodland management.