We advise on and negotiate a range of agreements for the supply of goods and services including client/agency agreements, software and other IP licences, web development agreements, distribution agreements, agency and franchising agreements, know-how and confidentiality agreements. Through our specialist media consultant we can also advise on a wide range of TV and film production contracts including production agreements, new media agreements, streaming agreements, ancillary rights agreements, talent agreements and joint venture agreements.

We can assist with the formation and ongoing management of all types of companies and business entities including public and private companies, partnerships and LLPs. We can also advise you in relation to your proposed trading and brand names, including a full trade mark clearance service, prosecution of worldwide trade mark applications through to registration and advice in relation to patents, copyright and designs. Using industry-leading software and a direct link to the Companies House database, our dedicated company secretarial unit offers a full range of company secretarial services. Let us take care of all your secretarial and compliance work, so that you can get on with running your business.

We advise on all aspects of company formation, administration and constitution, and on matters of general company law and governance. We also advise on commercial law issues, for example around advertising and marketing, electronic commerce, data protection and privacy. We advise on standard terms and conditions, including terms of sale, data protection and privacy policies and website terms and conditions.

We work with clients and their tax advisers on corporate reorganisations, schemes of arrangement and demergers.

We act for promoters, investors and investee companies on a range of investment transactions, including enterprise investment schemes (EIS), seed enterprise investment schemes (SEIS) and collective investment schemes. We also advise on the regulatory aspects of investment transactions and financial promotions.

We set up all forms of joint venture, including those involving contractual arrangements, joint venture companies, LLPs, limited partnerships and partnerships.

We act on bank loans and facilities, private lending arrangements as well as on the issue of debentures, bonds, loan notes and convertible securities. We also deal with security arrangements including guarantees and debentures.

We advise sellers, independent board committees, management teams and investors on MBO and MBI transactions, including those conducted by way of auction.

We advise individual and corporate shareholders on all matters affecting their investments, including shareholder exits, capital reductions and share buybacks, shareholders agreements, shareholder protection and cross-option arrangements.

We set-up and advise on a range of share incentive schemes, including enterprise management incentive (EMI) schemes, employee benefit trusts, phantom equity schemes, Share Incentive Plans and cash-based schemes.

We acted for a French digital advertising platform on its acquisition of a UK-based media, events and data management business 

We acted for a large privately-owned property investment group on a complex refinancing of its preference share and debt arrangements, including the creation of an innovative third party security structure to secure the rights of preference share holders.

We acted for the shareholders of a household-name publishing company on the sale of shares in the company and grant of options to incoming investors. 

We acted for a European venture capital firm on its investment into a UK workplace technology company

We acted for the shareholders of a well-known Soho-based digital agency on its repurchase from a listed marketing services group in conjunction with the takeover of that group by way of scheme of arrangement

We acted for the shareholders of a well-known TV commercial production company on the sale of a majority stake to a global production studio with offices across the UK, US and Europe.  

We acted for Groupe ECF, Europe’s leading distributor of smallwares to the catering and hospitality industries, on its acquisition of a significant shareholding in G&G Goodfellows, one of the UK’s premier smallware suppliers.  Headquartered in Paris, France, Groupe ECF has operations across the globe, including Europe, the Middle East, Latin America and the Asia Pacific region.  Its latest acquisition marks a significant strengthening of its presence in the UK.  

We acted for You & Mr Jones, the global brandtech group, on its acquisition of a majority stake in Inside Ideas Group Ltd (parent company of Oliver Marketing).

We acted for the world’s leading brand technology group on the acquisition of a controlling stake in an award-winning marketing & content business.

We acted for a multinational marketing services group on the acquisition of a controlling stake in an independent healthcare communications consultancy.

We acted for a global brand technology group on its acquisition of a majority stake in a London-based mobile marketing agency, with option arrangements in place to acquire the remaining shares in future. The consideration comprised a mixture of upfront and deferred elements.

We acted for a multinational marketing services group on its acquisition of a Londonbased healthcare communications agency. The transaction involved the acquisition of 100 per cent of the share capital of the target company on an earnout basis, with the earnout to be satisfied by a mixture of cash and loan notes.

We acted for a leading UK integrated marketing communications group on its acquisition of a majority stake in a London-based creative agency, with option arrangements in place to acquire the remaining shares in future. The consideration comprised a mixture of upfront and deferred elements, with the deferred elements to be satisfied by a mixture of cash and shares.

We acted for a fast-growing technology company on a second round fundraising by way of EIS investment.

We acted for the owners of a London-based private primary school on their sale of the business and assets of the school to a private equity-owned education group.

We acted for a restaurant group on an equity fundraising involving a mix of SEIS, EIS and non tax-qualifying elements and multiple closings.

We acted for a UK communications agency on its acquisition of 100 per cent of the share capital of a consumer PR business.

Just over a year since the Government announced its determination to require all UK companies to publicise details of their ultimate beneficial owners, new rules are close to being introduced.

The Small Business, Enterprise and Employment Bill had its second reading in the House of Lords on 2 December. It is expected to receive Royal Assent in March, and to be implemented in phases over the next 12 months or so.

It makes some important changes to UK company law, most notably the new requirement for companies to identify and disclose those individuals who exercise “significant control” over them.

The thinking is that increasing the transparency of who really owns and controls UK companies will help to deter crime, raise standards of corporate behaviour and improve confidence for everyone who deals with UK companies – ultimately making the UK a better place to do business.

This note explains how the new beneficial owner rules will work, and also contains a summary of some other company law changes that are contained in the Bill.

A new register of people with significant control

From January 2016 all unlisted UK companies will need to create and maintain a new register, known as the register of “People with Significant Control”, or PSC register.

The concept of PSCs is new, but the way a PSC is defined is not new. It is based on the existing “beneficial owner” concept in the anti-money laundering legislation, so will be familiar to all those operating in regulated sectors such as banks, solicitors and accountants, who are already required to gather this information on their clients.

A new Schedule 1A will be inserted into the Companies Act 2006 to determine who is a PSC in relation to a company. A PSC will be any individual who:

holds, directly or indirectly, more than 25% of a company’s shares or voting rights; or
holds, directly or indirectly, the right to appoint or remove a majority of its board of directors; or
has the right to exercise, or actually exercises, significant influence or control over the company.

On 31 October the Government announced that details of who really owns and controls UK companies are to be made public. This will be a major departure for UK companies, which for years have had to make public the legal (ie registered) owners of their shares but not their ultimate beneficial owners.

For many companies the legal and the beneficial owners are one and the same, and so the new rules will make little difference. However, for those who prefer for legitimate reasons to keep their financial interests private, the new rules may cause some concern.

This development was first trailed at the G8 summit in June, when the Government unveiled its latest action plan in the international effort to combat tax evasion, money laundering and terrorist financing. They said they would be requiring companies to obtain and hold information on their beneficial ownership and make this available to law enforcement and tax authorities through a new central registry maintained by the Registrar of Companies.

They said they would implement the reforms in parallel with the draft 4th EU Money Laundering Directive, which is being negotiated by member states and looks set to come into force some time next year. However the Directive says nothing about making such information public.

The Government has not yet decided how beneficial ownership will be defined but in the July consultation paper[1] which followed the G8 summit announcement the Government indicated that it is minded to follow the approach taken in the draft Money Laundering Directive, which is likely to count as a beneficial owner any individual who ultimately owns or controls (whether directly or indirectly) more than 25% of the shares or voting rights of a company or who otherwise exercises control over the way the company is run. It will catch ownership through chains of companies as well as interests held through trusts.

This appears to mean a company could have up to three beneficial owners. It could also have none, if no one individual or connected group owns or controls more than 25% of the shares.

New rules are also likely to be introduced to abolish bearer shares and impose a ban on corporate or “nominee” directors of companies.

The July discussion paper raised a number of key questions, and BIS plans to publish a formal response to it early in the new year, including details of what beneficial ownership information will be held by companies and Companies House and the process for gathering and updating that information. The current thinking is to model the process on the annual return regime, and at the same time to introduce other changes to simplify the filing requirements (such as combining the annual return with the annual accounts). Where people’s safety might be put at risk there are likely to be exemptions from disclosure, similar to the current system for directors of companies in sensitive sectors.

In the meantime, based on the Government’s announcement last week, it looks like the register will now be made public. It may well be extended to LLPs as well. The new rules are unlikely to extend to listed companies, where there is already a stringent disclosure regime under the Disclosure and Transparency Rules.

The new rules will not apply to overseas companies which operate in the UK. As a result, the use of overseas companies to conduct business in the UK is, in our view, likely to increase, notwithstanding the Government’s efforts to push for coordinated action at EU and global level.

Critics, including the Law Society, have denounced the move as a serious invasion of privacy. Others have expressed concern that the new rules will make the UK a less attractive place to do business.

Regardless of the rights or wrongs, companies, LLPs and their owners and members will need to be aware of the new rules and plan accordingly.

[1] Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business.

 

With effect from 30 April new regulations are expected to come into force to make the following changes:

Private and unquoted companies can now hold treasury shares

Up until now only quoted PLCs were allowed to hold their own shares in treasury. This is the process whereby a company buys back its own shares but, rather than cancelling them, continues to hold them in its own name with a view to recycling them in the future. Treasury shares are ineligible for dividends and have their voting rights suspended.

Allowing private companies to hold their shares in treasury will provide more flexibility in managing share schemes (including the shares for rights scheme) and in many cases will mean there is no longer a need to put in place an employee benefit trust to provide a warehouse for shares, with all the costs and trustee fees that involves.

There are other advantages too. When a share is bought back out of distributable profits and cancelled, the profits are gone forever. When a share is bought back into treasury, the initial P&L treatment is the same, but the distributable profits originally used up by the acquisition can be restored when the shares are sold back out of treasury. (Contrast a sale of treasury shares with an issue of new shares, where the issue price goes into capital rather than P&L).

For companies with a reasonably large number of employees participating in a share scheme, this should provide cost savings, accounting advantages and administrative convenience.

Companies to be able to pay for share buybacks in instalments

Currently a company buying back its own shares has to pay the full price on completion of the purchase. From 30 April, when shares are bought back in connection with an employee share scheme, that restriction will be disapplied, enabling companies to pay for shares by instalments.

This might allow for companies to make payment of instalments to a former employee conditional on the former employee not breaching a non-compete restriction for example.

Small buybacks no longer have to be out of distributable profits

Currently a company buying back its own shares generally has to do so either out of distributable profits or the proceeds of a fresh issue of shares made for the purpose.

From 30 April, if authorised by its articles, a private company will be able to buy back shares for cash not exceeding £15,000 in any financial year (or 5% of its share capital if less) without having to have distributable profits available.

Other changes

The Government also plans to change the rule whereby a share buyback has to be approved by a special resolution. From 30 April, an ordinary resolution will be sufficient to authorise a buyback contract.

Companies will also be able to “pre-authorise” multiple buybacks by a single resolution.

Finally, companies will be able to buy back shares much more easily out of capital (if authorised by a solvency statement) in connection with employee share schemes.

These changes may not lead to an explosion of employee ownership , but they are helpful and show the Government is focussed on removing the obstacles to the adoption of share schemes wherever possible.

Shares for Rights scheme – still on the table despite Lords rebellion

Numerous company law changes coming into force later this month to facilitate employee share ownership.

On Monday the House of Lords threw out the Government’s proposed new “shares for rights” scheme for a second time.

Despite this latest predictable setback, and the continuing opposition to the scheme amongst parts of the business community, the Government is determined to press ahead with it and has in the past 24 hours tabled further concessions to protect employees who sign up to the scheme.[1][1] The House of Commons has approved these latest amendments and the scheme will now go back to the Lords for approval.

So it is looking very likely that the employee and the worker will soon be joined in the statute book by a new recruit, the “employee shareholder”. The Government currently plans for the new status to come into effect from 1 September this year.

So what does the scheme look like now, and what has changed?

To recap, the scheme is designed to encourage a greater sense of entrepreneurialism and ownership amongst employees, especially those in smaller, high-growth, companies that the Government considers essential to economic recovery. The scheme is however open to all companies.

The essence of the scheme is that employees will contract out of certain employment rights, including unfair dismissal, redundancy, flexible working and time off for training, in return for shares in their employer with a value of not less than £2,000. Up to a value of £50,000 when issued, scheme shares will be exempt from capital gains tax on sale.

A key development since the scheme was first announced in October is that, up to a £2,000 limit, the shares can be given tax-free. If shares are given with a market value in excess of £2,000, the excess will be treated as taxable earnings and subject to income tax (and possibly NICs) in the usual way.

The latest tax concession is likely to make the scheme far more attractive to employers, although a number of key difficulties remain with the scheme, principally:

· The cost and complexity of the scheme (especially the need for regular valuations) could be off-putting to small businesses.

· Whether employers will want to be seen to be seeking to remove fundamental rights from their staff.

· Whether employees will be willing to forego their valuable employment rights for a modest allocation of shares with no ready market which may go down in value as well as up.

But the scheme could yet prove attractive to SMEs looking to give away equity tax efficiently, perhaps to senior management for whom the statutory employment rights are less important than their contractual rights. For these individuals the capital gains tax advantages could make the scheme attractive. (Note that there will be a material interest test, so people with a 25% or more interest in their employer will be ineligible for the capital gains tax exemptions).

The scheme has also been made more attractive by a number of company law amendments in the pipeline, all of which have been designed to encourage employee share ownership generally. These are summarised in our ‘Upcoming Company Law Developments’ post below.