Corporate Services Blog
Corporate Services Blog

Corporate Services Blog

Information for Companies



Brexit – Companies Should Look Systematically At Every Aspect Of Commercial Operations


Rupert Wright, corporate lawyer with Charles Lucas & Marshall says companies will need to consider the wide ranging implications of Brexit for tax, employment, financial regulations, intellectual property and company law.

Rupert Wright - Corporate Services Specialist

Rupert Wright – Corporate Services Specialist

Until the UK formally leaves the EU, all existing legislation will remain but after Brexit, UK’s Parliament will face a substantial legislative review process.

In the short term, some businesses may pull out of contracts on property and commercial transactions.  There is going to be an extended period of uncertainty and all businesses will need to plan and assess what they need to do and cover all aspects of their operation from data to employment.

The environment in which businesses operate in the UK and Europe is going to fundamentally change as EU and UK law is unpicked and new patterns are established.  In particular, directors need to consider the following:-

Contracts

The Contracts most at risk are those supporting long term relationships, particularly with cross border elements.  Many contracts refer to a greater or lesser extent, to a raft of EU legislation.  Analysis of the clauses dealing with law, compliance with law and changes to law will be essential.  Also, the jurisdiction and payment terms will need to be considered.  The core value and bargain underpinning of a commercial contract may be impacted by foreign exchange and currency issues.  It is possible there might be wild swings in the currency markets following Brexit.

Whether Brexit provides grounds for termination will depend very much on particular terms and specific facts.  Parties could seek to rely on material change or force majeure clauses as grounds for termination.

Employment Law

A significant portion of the UK’s employment law comes from the EU including discrimination rights and collective consultation.  Disentangling the UK from its EU commitments will be a lengthy process.  It is highly likely that EU law will continue to exercise a significant influence even after Brexit since EU employment laws offer subsumed protections that were already provided by the UK, particularly relating to equal pay, race and disability discrimination.  Also, it is likely that the UK will continue to observe EU employment law as there is a need to stay in a close economic relationship with the EU.

Intellectual Property

The majority of registered trade-marks and designs which take effect in the UK are in fact EU registrations.  Following Brexit, certain European wide protections for companies such as European trade marks and design rights might no longer be available.

In summary, UK businesses which have proved very resilient in the past will need effective legal advice from their advisers in order to weather what will prove a fast moving process once Brexit occurs.  Companies will need to systematically look at every aspect of their commercial operations and the legal and financial risks they face after Brexit.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

Written by Rupert Wright

July 18th, 2016 at 2:31 pm

Business Team Completes Two Company Share Sales


Rupert Wright - Corporate Services Specialist

Rupert Wright – Corporate Services Specialist

Rupert Wright, a lawyer in Charles Lucas & Marshall’s business services team, has completed two share sales on behalf of corporate clients.

He acted for Reading based Lens Foundry Limited in the sale of its business and assets to Flying Pictures Group Limited.  Lens Foundry is in the business of providing ground and aerial filming services and equipment.

The deal was completed at short notice and Adam Sculthorp, director of Lens Foundry, was delighted the sale was completed smoothly and in such a short time-frame.

Rupert Wright also acted for director, Nick Houghton and Michael Groenewald of Pegasus Childcare Ltd, Lincolnshire in the sale of shares in their childcare business to Asquith Nurseries Limited.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

Written by Rupert Wright

June 24th, 2016 at 1:49 pm

Consumer Rights – What Are Businesses Obliged To Do?


Paul Trincas

Paul Trincas

Consumer law has changed with the introduction of the Consumer Rights Act 2015. Paul Trincas, a litigation specialist with law firm, Charles Lucas & Marshall, explains why it is important businesses are aware of their responsibilities to consumers.

The purpose of the Consumer Rights Act is to provide consumers with enhanced and easier to understand rights – and to provide businesses with a clearer pathway as to what they are obliged to do, and what they are not obliged to do, should things go wrong.

The hope is that the updated rights contained in the Act will assist both businesses and consumers to better understand their rights and liabilities and help to avoid disagreements.

Here is a summary of the main rights and liabilities when defective goods are sold to consumers.

1) If a product is proven to be defective, then the consumer has the right, within 30 days of delivery, to reject the goods. This is known, under the Act, as the ‘short-term right to reject’ and the business is obliged to provide a refund.

2) Alternatively and running parallel to the short-term right to reject within 30 days, the consumer can elect, rather than to reject the goods, to have the goods ‘either repaired or replaced.’ The choice of repair or replacement is the consumer’s and the business will have to oblige. This is called the 1st tier remedy.

3) If however the consumer fails to reject the defective goods within 30 days, then the consumer still has the right to repair or replacement. If this right is exercised within six months, then the Act places a reverse burden of proof on the business in that if within six months the goods are found to be defective then it is ‘assumed’ that the goods were defective when sold, unless the business can prove otherwise.

4) If the goods cannot be repaired or the repairs carried out do not work or there is no replacement available, then the consumer has the ‘final right to reject’ the goods and demand a refund, or alternatively, can choose to seek a price reduction and keep the goods. This is known as the 2nd tier remedy.

5) The right to repair and replacement continues even after six months, but in this event, the consumer, in order to exercise this right, will then have the obligation and onus of proving that the goods were defective when delivered, which is not always an easy task to do.

For further information contact Paul Trincas on 01635 521212 or paul.trincas@clmlaw.co.uk

Written by Paul Trincas

June 24th, 2016 at 8:33 am

Personal Liability Risk for Directors


Rupert Wright - Corporate Services Specialist

Rupert Wright – Corporate Services Specialist

With pressure on politicians and regulators to be seen to be in charge of events and punishing wrongdoing, directors need to be aware of their duties and personal liability, says Rupert Wright, a corporate lawyer at Charles Lucas & Marshall.

The main duties of directors are to comply with their obligations, exercise reasonable care and skill in carrying out their duties and act in good faith.

However, directors are becoming increasingly concerned about the risk of being personally liable for acts undertaken for them – whether they are corporate acts, a major pollution incident or a corruption scandal.

The personal liabilities which can be imposed on individual directors are extremely wide.  They can arise both under the criminal and civil law.

The risks considered to be of greatest significance remain anti-corruption legislation and criminal and regulatory fines and penalties.

There are numerous sections of the Companies Act which render a director liable to a fine or in some cases to imprisonment and there is a trend towards making directors or other individuals in senior managerial positions personally liable under criminal law.

A director may be found guilty of fraudulent trading if he allows the company to trade with intent to defraud creditors.  In addition, a liquidator can apply to the court to make a director personally liable for company debts and to contribute towards the assets available to pay creditors.

Also, under the Insolvency Act 1986, the courts can impose personal liability for the company’s debts if it is shown that the director knew or ought to have realised that there was no reasonable hope of avoiding the company going into insolvent liquidation.

Directors should therefore consider the following protective measures:-

  1. Directors need to be aware of the exact nature of their responsibilities within their own company.
  1. Directors should be fully aware of the obligations and responsibilities imposed on directors. Professional advisers such as lawyers or accountants should be consulted on specific problems.
  1. Directors should always be satisfied that the duties delegated to others are being properly and competently carried out.
  1. Directors should ensure that they are kept fully informed of company affairs and are kept up-to-date. Directors’ meetings should be attended and directors should make sure decisions are properly recorded.
  1. Directors should take full and professional advice before giving any personal guarantees for business purposes. A guarantee may, for example, involve a charge being made on a private residence.
  1. Directors should ensure that full and regular accounting and management records are provided to them in a form that they fully understand. In this way they can identify problems at an early stage.
  1. Directors should take out personal liability insurance. This will provide an indemnity against costs incurred in successfully defending an action brought against them as a director.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

Recovering Business Debts -The Use Of Charging Orders


Paul Trincas

Paul Trincas

In a previous article in the Newbury Business News, Paul Trincas, a corporate lawyer with Charles Lucas & Marshall wrote about how businesses could secure payment of debts and the types of enforcement mechanisms available. Here, he turns his attention to what is probably the most effective and secure method of ensuring debts are paid – charging orders.

What is a ‘Charging Order’?

A Charging Order is an Order of the Court charging a person’s interest in a property or properties, for the amount of the debt owed. It is therefore a type of security, like a mortgage, for the sum owed.

Voluntary Charge

If a debtor ‘agrees’ to a charge over their interest in any property or properties they own, in respect of debts owed, then this can be achieved by lodging the relevant form with the Land Registry. However, this procedure is dependent upon the debtor agreeing to this being undertaken and in almost 99 per cent of cases, such agreement will not be forthcoming. In which event, a Charging Order will need to be applied for through the courts.

Who can apply for a Charging Order?

Anyone owed money can apply to the court for a Charging Order. However, a Charging Order cannot be applied for unless a judgment for the sum owed is first obtained against the debtor. Further the debt owed must be £1,000 or more.

Therefore, the person owed money must first go through the court system and obtain a judgment, and then, on the back of the judgment being obtained, a Charging Order can be applied for.

What is charged?

Only the debtor’s ‘interest’ in the property or properties can be charged. So, for example, if a husband and wife jointly own property in equal shares, then it is only the debtor’s 50 per cent interest in the property that can be charged.

When is payment made under a Charging Order?

Although a Charging Order on a property secures the amount owed, this does not mean that the monies owed will be paid immediately.

Generally, there are three trigger points when the sum secured by way of Charging Order, will be paid. They are:

  • If the debtor dies, provided he/she is the sole owner.
  • When the property is sold.
  • If the person who has the benefit of a Charging Order applies to the court for an Order for Sale of the property.

Under the first two, it may be years before these trigger points are reached. However, the person owed money will be entitled to interest on the initial sum charged, currently, at 8 per cent per annum, from the date the Charging Order is made.

Under the final trigger point, the courts will generally only order a sale of the property if the amount of the debt is large.

For more information please contact Paul Trincas on 01635 521212 or paul.trincas@clmlaw.co.uk.

Written by Paul Trincas

February 17th, 2016 at 12:12 pm

Clarity for Commercial Contracts


Disputes relating to commercial contracts can be expensive and time consuming for both parties. Rupert Wright, a commercial lawyer at Charles Lucas & Marshall, explains why lawyers should be involved at each stage to resolve ambiguities and ensure the contract contains all the main terms.

Rupert Wright

Rupert Wright

A recent Supreme Court decision has made it all the more important that commercial contracts should be unambiguous and be set out in clear terms.

Under the recent Supreme Court decision, a term would only be implied into a detailed commercial contract if it was necessary to give business efficacy to the contract or was so obvious that its implications went without saying.

The decision related to a commercial lease but has wide implications for other commercial contracts.

In most, possibly all, disputes about whether a term should be implied into a contract, it was only after the process of construing the express words was complete that the issue of an implied term fell to be considered.

In the Marks & Spencer plc case there was a powerful case for contending that it was necessary for business efficacy that the term contended for by the tenant should be implied into the contract.

In general, all contracts should be clear and unambiguous and should contain all the necessary terms including sums payable, term of contract, interest provisions, obligations of either party and confidentiality provisions.

An entire agreement provision should also be considered to prevent the matter or documents being included in the contract. In long term contracts, it is often vitally important to have a break provision allowing one or both parties to terminate the contract upon giving notice.

It is also very important that prior to a contract being negotiated, a non-disclosure agreement should be entered into which can ensure that confidential information cannot be leaked to other parties, particularly competitors who might use this information for their own purposes and undermine the current business.

Also, when negotiating a contract, an exclusivity provision should be agreed ensuring that the seller cannot deal with other third parties in connection with the contract being negotiated during the exclusivity period.

In summary, it has become all the more important that commercial contracts should have clarity and certainty to avoid disputes in the future. The Marks & Spencer case makes it all the more important that a contract should contain all the main terms and should not be ambiguous since importing clauses into an agreement can cause difficulties since it is wrong, save in very clear cases, to attribute a particular clause into a commercial agreement.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

Update on Consumer Rights Law


  • Sale of Goods Act 1979
  • Unfair Terms in Consumer Regulations 1999
  • Supply of Goods and Services Act 1982

The aim of the new Act is to update all the previous legal rulings into one Act for customers to refer to if they run into trouble. These are the key changes:

  1. Terms and conditions have to be in clear English and in a form easily understood by consumers. Therefore, microscopic small print is banned. If certain conditions are hidden away or couched in impenetrable language, the business cannot rely on it if the product fails.
  2. Any attempt to limit liability needs to be carefully considered. Therefore traders cannot generally aim to exclude liability for unforeseeable losses such as indirect and consequential loss.
  3. Any rate used to calculate interest payable on late payments cannot be excessive. The rate to be used should be ideally set at base rate.
  4. Rules dealing with the provision of digital content have been introduced. Paper or digital content have not been addressed in the past. Paper or digital content must now be of satisfactory quality, fit for purpose and as described.
  5. Consumers’ rights for any late deliveries have changed significantly as have the legal rights available for defective goods. Therefore if consumers buy an item which turns out to be faulty, the consumers generally get an automatic refund if it is returned within 30 days.

This is a brief overview of some of the key changes. Generally, companies who deal with consumers do now need to check their terms and conditions to ensure they are fully compliant.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

 

Written by Rupert Wright

December 1st, 2015 at 12:10 pm

New Procedures to End Assured Shorthold Tenancy


“From 1 October 2015, Landlords, and indeed, their agents, will need to comply with new procedures for ending an Assured Shorthold Tenancy. If Landlords fail to comply with the new procedures, then this will prevent them from obtaining a possession order for possession of such premises. Changes are introduced, via the Deregulation Act 2015, to the “requirements” necessary before a Section 21 Notice to end such tenancies is valid,  the introduction of a new “prescribed” Form of Section 21 Notice, as well as to time limits within which possession proceedings must be commenced.

Paul Trincas

Paul Trincas

From 1 October 2015, Landlords will be unable to serve a Section 21 Notice within the first 4 months of the grant of such tenancy. Further, any claim for possession must be started within 6 months of service of the section 21 Notice. If possession proceedings are not started within this period, then a fresh Section 21 Notice will be required to be served before a possession order can be made.

A Section 21 Notice will now be invalid unless, when granting an Assured Shorthold Tenancy, in addition to complying with the existing requirements relating to registering deposits under the Tenancy Deposit Scheme and serving detailed information about such scheme, the tenant is now also provided with an Energy Performance Ceritificate and a Gas Safety Certificate. In addition, the tenant must also be served with “prescribed information”, in the form of a document entitled “How to rent: a checklist for renting in England” which is published by the Department for Communities and Local Government, and which must be the edition current at the time. It would be best practice to ensure that such “prescribed information”, energy performance certificate and gas certificate are all provided at the start of such tenancy.

Landlords will be relieved to know that the changes will only apply to Assured Shorthold Tenancies granted on or after 1 October 2015. They will not apply to such existing fixed term tenancies  granted before 1 October 2015, even if, after that date, the fixed term becomes a statutory periodic tenancy.However, Landlords need to be aware that from 1 October 2018, the new rules and changes will apply to any Assured Shorthold Tenancy, irrespective of when tenancy was created.

These new changes will certainly be food for thought by Landlords and their agents, as failure to comply will be fatal to obtaining a “no-fault” Possession Order at the end of the term. Equally, tenants faced with possible eviction, will undoubtedly take advantage of the new requirements imposed upon Landlords, in finding ways to invalidate a Section 21 Notice.

For further information please contact Paul Trincas on 01635 521212 or paul.trincas@clmlaw.co.uk.

Written by Paul Trincas

October 1st, 2015 at 1:32 pm

Commercial Contracts – Try to Keep It Simple


In many legal jurisdictions there is an overriding duty of good faith between contracting parties. However, the English Courts have consistently refused to adopt such a vague and subjective concept: there is no implied duty of good faith between contracting parties. The starting point is that each is free to take advantage of the other unless, for instance, there is a fiduciary duty.

Rupert Wright

Rupert Wright

The general rule when drafting contracts is to keep it simple if possible and conventional. Over- elaborate deal structures are fraught with difficulty. It is important to agree the main elements of the contract before drafting a written contract and to involve lawyers at an early stage.

Lawyers should also be managed and should be discouraged from agreeing the points in too fine a detail since commercial decisions are best left to the client not the lawyer. It is also important to plan ahead and allow time and space to negotiate the final contract.

As regards fiduciary duty in commercial contracts, an exception seems to exist for ‘relational contracts’ which can exist where the parties have a long term relationship and in such a situation, good faith, co-operation and loyalty are more likely to be implied.

This is probably easiest to prove in an employment context where the Supreme Court has recently confirmed that employers should be subject to a more objective stand of reasonableness when making decisions that affect their workers. In essence, employers must avoid capriciousness, perversity or irrationality. As was stated recently in the Supreme Court, the existence of an employment relationship may justify a more intense scrutiny of the employer’s decision-making process than would be appropriate in some commercial contracts.

This approach can be implied into more straightforward commercial contracts. A recent High Court decision has caused some comment by deciding that a commercial contract involved a ‘relational contract’ and that there was therefore an implied term to act with integrity and honesty although that seems to be a narrower concept than good faith.

The case involved a contract between a Police Authority and a vehicle recovery company and the important factor was the number of transactions between the parties and the length of their contractual relationship which led the Judge to describe it as a relational contract par excellence.   This High Court decision has raised concerns in the legal community because it does potentially open up a wider duty of care where there is a long established relationship between the contracting parties even if integrity and honesty is not as wide as good faith. This could well lead to judgements by the English Courts towards a more generalised duty of good faith between contracting parties.

For further information contact Rupert Wright on 01635 521212 or rupert.wright@clmlaw.co.uk

 

IR35 CONSULTATION


HMRC are looking at new ways to improve the efficiency of the IR35 legislation and to reduce the tax advantage for individuals hired through a personal service company (PSC) rather than as hired directly as employees. Current suggestions are for administrative changes and increasing the involvement of engagers to ensuring the correct amount of tax is paid. 

For further information please visit:

http://www.gov.uk/government/consultations/intermediaries-legislation-ir35-discussion-document

COMPANY PENSIONS REMINDER

Auto-enrolment. From the 1st June 2015 we have now reached the staging dates for automatic pension enrolment for employers with fewer than 50 employees. The overall staging period for this group runs until the 1st April 2017. If you have not already checked the staging date for your business and have a staff pension plan in place for implementation, you need to do so now.

You can check your date on the on the Pensions Regulator’s website:

http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx

TAX TREATMENT OF TERMINATION PAYMENTS

The government has announced a consultation to review the income tax and National Insurance contributions on Termination Payments with the intention of making this easier and fairer. The consultation is seeking views on such matters as whether to remove the different treatment for contractual and non-contractual payments, which exemptions should remain, and whether any new exemptions should be introduced.

You can find out more here:

https://www.gov.uk/government/consultations/simplification-of-the-tax-and-national-insurance-treatment-of-termination-payments

GUIDANCE: ACAS has issued a new guide for small employers covering the basics of employment law regarding pay and wages. It includes summaries of different types of pay systems, wage slips, dealing with absences, overpayments and managing deductions.

You can see the guidance here:

http://www.acas.org.uk/index.aspx?articleid=1366

For further information please contact Andrew Egan on 01635 521212 or andrew.egan@clmlaw.co.uk

Written by Andrew Egan

August 11th, 2015 at 9:06 pm