Buying a business is exhilarating. Hard work, to be sure - but undeniably exciting, and with a rich sense of the opportunities that lie ahead.
So perhaps understandably, once the deal has closed, there’s a temptation to get stuck in and focus on actually running the business, rather than thinking about protecting - and adding to - the value that you have acquired.
With effect from 25 May 2018—in other words, less than a year away—your business is exposed to a new regulatory regime backed by hefty fines. And by ‘hefty’, we’re talking fines of the higher of either €20 million, or 4% of annual worldwide sales revenues.
The regulatory regime in question? The new EU-wide General Data Protection Regulation (GDPR)— the biggest change to data protection law for a generation—which imposes even stricter data protection requirements on businesses, and a far tougher penalty regime.
It’s barely a year since the introduction of the PSC regime - and already, the compliance requirement has been tightened.
And at a time when many businesses are still grappling with the issues raised by the original PSC requirement, the result is a significant ratcheting-up of the associated compliance burden.
Every year, several hundred thousand new businesses are created. In 2015, according to the Office for National Statistics, the total was 383,000—the highest recorded since comparable records began in 2000.
Many are sole traders, of course. But a significant proportion comprises two or more individuals coming together in some form of partnership: either as a limited company, or as a formal limited liability partnership, or as a traditional partnership.
Is your business at risk from the Uber decision? Why your self-employed contractors could really be employees
Fuelled by companies such as ride-hailing business Uber and personal courier firm Deliveroo, the so-called ‘gig economy’ is on the rise. So much so, that at the end of November, the government announced an official review into its impact on workers’ rights. But could the impact on businesses—and employers—be even greater?
That’s certainly one of the conclusions to be drawn from the high-profile employment tribunal ruling at the end of October, which found that Uber’s self-employed drivers were in fact employees of the company, and were consequently due holiday pay, sick pay, and the National Minimum Wage.
Law firm The Legal Director (TLD) has been commended in the FT Innovative European Lawyers awards, which were announced at the beginning of this month.
TLD ranked highly on the total innovation score, which was broken down into three elements: originality, rationale and impact. For a fixed monthly fee, the company provides generalist lawyers to small and medium-sized enterprises that cannot afford to hire a full time in-house lawyer.
The need for additional finance is often the price of success for small to medium-sized enterprises (SMEs) that are looking to grow.
The question that faces the directors in such a situation is whether to go for debt financing, which will appear as a liability on the balance sheet – and possibly preclude further borrowing – or for equity funding, which will not. Securing equity finance may, however, entail giving away control of much of the business, leaving owner managers as little more than employees.
At the end of July, Prime Minister Theresa May launched a cabinet-level government taskforce to eradicate modern slavery in the UK.
It was, she said, “one of the great human rights issues of our times,” adding that modern slavery was a “barbaric evil”.
Outside the narrow realms of consumer technology, there’s often an inevitable trade-off between cost and quality. In other words, you can have something at lower cost, or better—but not both at the same time.
But here at The Legal Director, we’d like to highlight a recent development at the firm as an exception to that rule. Because following a waiver from the Solicitors Regulation Authority, we’ve become the first law firm to sign up to the Bar Council’s BARCO escrow account.
As we have written before, the Bribery Act 2010 is a law with undoubted teeth. Fines are potentially unlimited, and custodial sentences can be up to ten years.
And the liability is personal, not just corporate: in other words, the fines are paid by individual directors and company officers, and it is individual directors and company officers who must serve the jail time.
New rules on shareholder identification are now in force - and yet many businesses aren’t aware of them.
Does your business have corporate or nominee shareholders? Perhaps a family trust, or a corporate shareholding through a venture capital firm? Or one or more ‘business angels’, with veto powers over particular developments? Or perhaps a number of minority shareholders from the same family, who tend to vote in the same way?
PRESS RELEASE: The Legal Director has become the first law firm regulated by the Solicitors Regulation Authority (SRA) to sign up to the Bar Council’s escrow account BARCO.
The Legal Director, which provides in-house lawyers to businesses on a contract basis, has become the first SRA-regulated firm to secure a waiver from the regulator to sign up to BARCO. This new service allows the firm’s clients to pay for legal services safely without their money needing to be held in a dedicated client account. Client funds are pooled into a ring-fenced Barclays account and not released to lawyers from the BARCO account until they have completed the work for their client. All interest on the funds is returned to the client.
Wander around a supermarket, or browse the advertisements in newspapers and magazines, and you’ll see trade marks everywhere. And it’s likely, too, that your own business will also possess trade marks, linked to either the business itself, or to the products or services that it provides.
You don’t have to look too far to see that traditional modes of employment are increasingly giving way to more flexible working arrangements.
Returnee mothers, for instance, can be found working school hours during term time. Retired former employees are spending two days a week in the office, working as part-time consultants. And specialists in particular areas of expertise can be found working part-time, or on fixed-term contracts, as contractors.
A recent ruling by an Employment Appeal Tribunal is set to cause many businesses a headache. Quite an expensive headache, at that.
Simply put, it means that certain businesses will find themselves paying their workers additional holiday pay. Moreover, if they’re not already paying that additional holiday pay right now, they’re leaving themselves open to claims for back pay—claims that will almost certainly be valid.
To see the difficulties that businesses can get into through bribery - or even allegations of bribery - look no further than the reputational damage suffered by international football association FIFA, aero-engine manufacturer Rolls-Royce and pharmaceutical giant GlaxoSmithKline in recent times. Not to mention, in Glaxo’s case, eye-watering fines.
Simply put, the world is getting tough on bribery, with country after country enacting legislation to make it a criminal offence. Here in the UK, for instance, the requisite piece of legislation is the Bribery Act 2010, which came into effect nearly four years ago.
Imagine, for a moment, that when faced with a serious illness, significant numbers of people took no action. And of those whodid take action, around two-thirds ‘self-medicated’, either using their own judgement, or seeking help from friends and family.
The remaining third? Around half sought formal medical advice from a medical practitioner. But the other half, while seeking advice, consulted a wide range of other advisors and practitioners—some relevant, others not.
Here at The Legal Director, we’ve recently come across a business where the two co-founders have fallen out -- one is now leaving, in order to set up on his own, in direct competition with his former co-director.
Under the circumstances, the company’s bank account has been frozen—it needed both co-directors as signatories—and the business has more or less stopped trading while the complications are sorted out.
Another week, and yet another critical item in the press on the cost of obtaining corporate legal advice. And to be sure, it’s certainly a fairly open goal at which to aim. For while ‘fat cat’ lawyers may not attract quite as much popular opprobrium as ‘fat cat’ bankers, to many the distinction is largely one of degree.
The trouble is, there’s actually a downside to all this. A downside, what’s more, that affects a vast array of businesses, even those far from the orbit of the City and the upper echelons of British industry.
As the credit crunch and ensuing recession of 2008 began to bite, lending to businesses dried up. To their shock, even long-established, profitable businesses with solid banking relationships and unblemished records suddenly found that they couldn't get finance.
Subsequently, lending conditions have improved somewhat. For one thing, the government has made help for businesses a condition of its own assistance to the country's banks. The Bank of England, meanwhile, has launched a Funding for Lending scheme, whereby it explicitly lends money to banks, for them to subsequently lend to their business customers.
Visit the website of the Information Commissioner’s Office, and there’s an interesting section entitled ‘Enforcement’. In it, the Commissioner details the various criminal prosecutions that the Office has undertaken in the last few months, together with the enforcement notices that it has issued, and the fines that it has levied.
A startling fact about many of these cases is that they involve very ordinary businesses. A leisure centre. A doctor’s surgery. A lettings agency. A ‘payday loan’ company. An estate agent. And so, and so on.
When we start working with a business we assess their existing legal arrangements to determine how these can be improved and aligned with commercial objectives.
We ask some basic questions, such as:
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