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Archive for the ‘Legislation Changes’ Category

Personal Liability Risk for Directors

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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

Written by Rupert Wright

March 16th, 2016 at 3:40 pm

New Procedures to End Assured Shorthold Tenancy

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“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

IR35 CONSULTATION

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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

Corporate Hospitality – Making Clients Offers They Might Refuse

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The usual summer season of corporate hospitality sporting events is in full swing. Rupert Wright, a corporate services lawyer with Charles Lucas & Marshall, explains why legislation may be prompting some companies to think twice about accepting an invitation.

Rupert Wright

Rupert Wright

As well as Ascot, Wimbledon and Henley, the season of corporate entertainment has a major addition this year with the London Olympics. For companies looking to build relations with clients and suppliers in an effort to retain or secure new business, these events can present useful opportunities.

However, the introduction of the Bribery Act 2010 (the ‘Act’) in July last year has meant that companies which offer corporate entertainment to their clients now have additional factors to consider.

The Act contains an offence which is relevant to provision of corporate hospitality by companies, namely that of offering a bribe to an individual in the private sector, or to a UK public official.

The bribery offence applies in two cases: first, where a person intends the advantage to bring about improper performance by another or to reward such improper performance. Second, where a person knows or believes that the acceptance of the advantage offered or promised, itself, constitutes the improper performance of a relevant function or activity.

The law refers to the provision of a ‘financial or other advantage’; a gift or an invitation to a sporting event could, potentially, be caught by both of these categories.

The Ministry of Justice has provided a guidance note on the Act. It recognises the important role that hospitality plays in business and states that there is no wish to criminalise such behaviour.

The difference between legitimate corporate hospitality which is lawful and an unlawful attempt to bribe someone lies in the intention of the provider/giver to influence and secure a business advantage. The intention of a person is judged by what a reasonable person in the UK thought.

The guidance note states that the ‘more lavish the hospitality or the higher the expenditure…the greater the inference that is intended to influence a business advantage in return’. In its view, an invitation to foreign clients to attend a Six Nations fixture at Twickenham as part of a company’s PR programme and targeting its clients would be extremely unlikely to constitute an offence under the Act. This is because there is unlikely to be the required evidence of an intention to induce ‘improper performance’.

So, hospitality which is reasonable and proportionate to what is generally accepted as normal by an industry sector and achieves a ‘legitimate business purpose’ is therefore unlikely to fall foul of the Act.

New laws often bring uncertainty for those affected by them – notwithstanding the comforting words of the Ministry’s guidance note. It might therefore not surprise you to hear that some companies have erred on the side of caution by trimming hospitality packages – and have found some clients who are now reluctant to accept offers of hospitality they would previously have taken up without further thought.

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

Written by Rupert Wright

June 26th, 2012 at 10:16 am