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We’re always looking at ways we can help small businesses and start-ups save money on legal fees. We understand that budgets are tight and so fees for legal advice can often be last on the list, leaving your business unprotected and leaving you open to incredible risks.

You Are Invited

Now, along with our legal services, we’ve launched a new free webinar series where you can connect with real barristers and solicitors, barristers and solicitors who excel at business law and have the information you need to move your business forward.

You can get legal information and help for free as our legal experts will talk to you live and answer any questions you may have.

Our new webinars are monthly and guarantee to provide valuable information that you can use to help launch your business or enable it to grow without the legal risk. Every month we will cover a relevant legal topic, where you will learn valuable information before having the opportunity to chat live with our experts on your own legal concerns.

In Association with Start-up Direct

Hosted by the Legal Stop, the webinar is in association with Start-up Direct the delivery partner of the Start-up Loans scheme a government funded initiative that provides support in the form of business loans together with a business mentor to entrepreneurs. Start-up Direct enables hundreds of talented individuals to start their own businesses with their funding, mentoring and support. To date, Start-up Direct has invested over one million pounds in the future start-ups of today.

What We’ll Cover

This month we’ll be covering the top 5 legal considerations for start-up businesses. Our barrister, Kevin Harris specialised in employment and commercial law. He’ll be your speaker for the event and can advise on a number of legal matters as he has extensive experience in:

  • Employment Contracts
  • Directors’ Duties
  • Discrimination
  • Litigation
  • Workforce Restructuring
  • Tribunals

It’s this experience and his success in the legal field that allow him to give expert advice during this webinar on:

  • Company structures, limited liability, partnerships and directors
  • Goods and services, obligations when supplying goods and services, liability, exclusions
  •   Premises, leases and licences, tenants
  • Employing people, employees, workers, agency staff
  • Ideas, protecting ideas, inventions and competition

Each topic aims to save you time, money and repercussions as your business succeeds. You’ll learn incredible lessons on how to protect yourself and your business from unfavourable legal action.

At the end of the session you are invited to join the live Q & A where you can ask any questions and have our barrister answer them for free.

It is a completely FREE WEBINAR and everyone is invited, all you have to do is join us on Wednesday the 20th of November at 1pm (GMT) by logging in at:

https://meetings.webex.com/collabs/#/meetings/joinbynumber

  • Meeting number: 232 172 888 
  • Audio Connection (If not using a PC you can connect via phone): +44-203-478-5289 UK Domestic Toll
  • Access code: 232 172 888

When you arrive at the website, the onscreen instructions will show you how to join us in our webinar.

We look forward to seeing you there, The Legal Stop webinar in association with Start-up Direct!

  Fixed Fee Legal Services   Start-up Direct

Shareholders’ Agreement

A Shareholders’ Agreement is a legal contract that sets out the rights of a company’s shareholders and offers protection to each and all of these individuals. Once a company has more than one shareholder it is important to have an agreement like this in place because standard company law may not quite fit a company’s particular circumstances.

The key individuals in a company often rely on the Articles of Association, one of two constitutional documents, to protect their rights but in truth these do not cover shareholders’ rights completely or in every situation. In the absence of a shareholders’ agreement some potential issues that can arise are:

  • Removal of a director by half the shareholders passing an ordinary resolution;
  • Directors’ versus members’ rights in key areas such as pay, benefits and dividends;
  • Significant decisions being made by a majority of directors, overruling individual directors who may be majority shareholders;
  • Conflict over the direction of the business;
  • Disagreements about the shareholders’ exit strategy;
  • Amendment of the Articles of Association stripping away shareholders’ protections by a 75 percent majority of shareholders;
  • Deadlock resulting in a failure to resolve disputes that goes on to affect the smooth running of the company.

To avoid these and other issues, a Shareholders’ Agreement is usually put in place to protect all parties. The three most common agreements are:

Shareholders’ Agreement – Protection Minority Shareholders

Designed for companies with both minority and majority shareholders and where new shareholders are joining or the company wishes to change the terms of the existing relationship. These agreements protect the interest of shareholders with less than 50 percent of the company’s issued share capital. Generally, minority shareholders are in a weak position under company law as a simple majority will overrule them in most cases. This is not always appropriate. For example, in cases where an outside investor, such as an angel investor, is involved with the company, this party will often want more rights than standard company law allows. Having a Shareholders’ Agreement – Protection Minority Shareholders in place sets out the rights and duties of the shareholders and covers aspects such as the appointment of directors and how directors’ decisions are made. It also provides for shareholders to be directors, as this is not automatic under company law, and can cover other important aspects such as share transfers, confidentiality clauses, non-compete, non-solicitation and non-poaching clauses.

Shareholders’ Agreement – Protection Majority Shareholders

This legally binding contract protects those with more than 50 percent of the issued share capital in the company and is designed to cater for situations where new shareholders are joining the company or the relationship between shareholders is changing. The agreement covers the key aspects of shareholder rights including share transfers, a drag-along clause (ensuring minority shareholders cannot obstruct a sale of the company), confidentiality, non-compete, non-solicitation and non-poaching clauses.

Shareholders’ Agreement – Equal Shareholdings

This type of agreement is extremely useful in cases where two or more shareholders have an equal stake in the company, such as two shareholders each holding 50 percent of the company or three directors holding one-third each, common occurrences when firms are starting out. The Shareholders Agreement – Equal Shareholdings sets out the rights and obligations of all shareholders with respect to share transfers, how to deal with deadlock situations, along with confidentiality, non-compete, non-solicitation and non-poaching clauses.

Commercial Property Q&A

I’ve received a commercial tenant’s application to assign a lease. I don’t like the sound of the proposed assignee can I simply ignore the request?

Statute prescribes that where landlord’s consent for an assignment is required a landlord must give consent unless it is unreasonable to do so and this must be done within a reasonable time. Case law has for several years suggested that reasonable time would be about 28 days however following a judgment in 2003 this could be as little as a week (if it would be unreasonable  to refuse consent). A property litigator can advise you as to whether you can properly withhold consent by considering the case law in light of the facts and checking the lease for whether there are any conditions to which Landlord’s consent to assign is subject.

I have an assured short hold tenancy. How much notice does my landlord have to give me to terminate occupation before issuing proceedings?

To end a short hold tenancy at the end of a fixed term using a section 21 notice,  2 months’ notice must be given on or before the end of the contractual term. The landlord cannot issue proceedings under section 21 until the fixed term is over.  If the AST has expired and now operates as a periodic tenancy at least 2 months must be given expiring on the last day of the tenancy. If the landlord serves a section 8 notice then there could be as little as no notice period, 14 days or 2 months depending on the grounds for termination cited.

I want to rent my commercial premises out but do not wish to grant the tenant rights offered by the Landlord and Tenant Act 1954 to remain in the Premises upon termination of the Lease. What can I do?

You can serve on the proposed tenant a notice in the prescribed form containing a health warning which explains that the tenant will not have the benefit of security of tenure once the lease ends. Crucially the notice must be served before the lease is granted but also before the tenant becomes contractually bound to enter it e.g. agreement for lease (but after lease terms are agreed).

Depending on the notice period the tenant must either then sign a declaration or swear a statutory declaration in the prescribed form, confirming that the tenant understands the significance of what s/he is signing. The new lease must refer to the service of the Notice; the Declaration and the agreement to exclude the provisions of sections 24-28 of the Act.

Commission Agreement

A Commission Agreement is a legal agreement between two parties where an Introducer brings clients to a business. The relationship benefits both parties because the Introducer is paid a Commission for introducing clients and the business (Supplier) has the opportunity to increase sales. The agreement sets out how both parties will benefit from this arrangement.

A Commission Agreement is in some ways an agency agreement, where the Introducer is independent but acts on behalf of the Supplier. The Introducer cannot sign contracts on the Supplier’s behalf and does not sell their products or services. The relationship is purely about making the introduction and once this has happened the Supplier takes over the client relationship and makes the sale.

The Commission Agreement sets out the nature of the relationship between the Introducer and Supplier and clearly states the rights and obligations of both parties. Under this Commission Agreement the Introducer is only paid once the new client enters into a contract with the Supplier. It allows flexibility in how Commission will be calculated, which is generally based on the income that the Supplier receives from the new client during a specified period of time, known as the Introduction Period.

The Commission Agreement will cover introductions made when the agreement was in force even if the contract is later terminated. This means that Commission cannot be reneged on, which protects the Introducer. The Agreement also ensures that payments are only made to the Introducer on income that is actually received by the Supplier, which protects the Supplier in the event that they do not receive any or all of money due.

This Commission Agreement, written in plain English, provides for a complete statement of the limits of the Introducer’s authority and sets a boundary between the two parties so that the Supplier avoids any unexpected obligations under the arrangements. It also makes clear what the Introducer’s authority will be when marketing to potential clients, e.g. within a certain sector or geographical area. This avoids situations where the Introducer oversteps their authority and also prevents competition with the Supplier’s own sales or marketing initiatives.

The Commission Agreement contained in the business folder on our website protects Suppliers and ensures they are fully compliant with existing legislation, particularly with regards to non-competition, confidentiality and anti-bribery, all of which are essential these days in protecting Suppliers and ensuring compliance with the law, including the Bribery Act 2010.

Deed of Gift

If you have ever wondered how to transfer an asset legally to another person then this article will be of interest to you. People do this reasonably regularly and it is actually a very straightforward process, as long as you have the correct legal document in place. Known as a Deed of Gift it will allow you to transfer ownership of practically any asset; not just money but also shares, property or a range of other assets.

The key feature of a Deed of Gift is that no payment is given by the party who is receiving the asset. This is what distinguishes the legal agreement from a contract governing a sale or a loan agreement. In legal terms the person giving the gift is called the Donor and the person receiving it is called the Donee. Importantly, as the agreement does not involve a payment the signing of the contract must be witnessed and the witnesses must have no interest in the arrangement.

Gifts are currently exempt from Inheritance Tax if the Donor lives for at least seven years after the gift has been made, as long as the Donor does not retain an interest in the gift. However, if the Donor dies within seven years then Inheritance Tax will be payable on the value of the gift. Spouses or registered civil partners are generally exempt from Inheritance Tax, as long as they have a permanent home in the UK. In addition, gifts made to some organisations, such as charities, museums, universities and community amateur sports clubs are also exempt.

The following are the most common Deed of Gift agreements:

Deed of Gift Shares
This agreement allows a person to transfer shares or other securities in a company as a gift to another individual. It is important to note that ownership and interest will be transferred completely and the Donor will retain no rights after they are gifted, including to dividends. Before transferring shares the Donor should also check to ensure there are no restrictions in the company’s Articles of Association that would prevent shares from being transferred in this way.

Deed of Gift Property
This is a common agreement and is used to transfer property or land as a gift from one person to another. It should be noted that, as the gift is unconditional, the Donor will retain no rights or interest in the property or land, which would include rent.

Dead of Gift Object
This is a flexible agreement and covers many different types of asset including works of art, antiques, classic cars or wine collections. As with any other Deed of Gift, once the agreement has been signed the legal ownership will pass immediately to the Donee and the Donor cannot subsequently take ownership back if they change their mind.

Cash Deed of Gift
A Deed of Gift agreement can also be created to cover cash transfers. As with all Deed of Gift contracts the Donor will not retain any rights of ownership or repayment, differentiating these arrangements different from loan agreements.

New services including fixed fee court representation

At The Legal Stop our aim is to make the law and the provision of legal services both more affordable and more accessible to both individuals and businesses. To many people the whole legal field is opaque and those on the outside often find it intimidating and bewildering. We intend to change that and ensure that you can secure straightforward advice access to legal documents that will allow you to act with confidence.

The Legal Stop is proud to introduce several new services that will offer individuals and businesses affordable legal services. These are:

  • Fixed Fee Legal Advice
  • Fixed Fee Bespoke Document Drafting
  • Fixed Fee Court Representation

We have partnered with a select number of law firms and barristers’ chambers to provide access to legal services on a transparent and affordable fixed fee basis. Most legal firms charge on an hourly basis and this means that costs can quickly add up, making an already stressful situation worse. We have seen the need for providing quality, affordable advice and can ensure that qualified solicitors and barristers are on hand to provide the professional expertise that you need. This includes fixed fee court representation so that for a one-off fixed fee you can have a barrister representing you in the County Court to deal with matters such as possession hearings, charging orders or enforcement hearings. We can also help with case management conferences, applications to set aside default judgements and arbitration hearings. This means you will have peace of mind knowing that costs are transparent right from the start and you can proceed without the worry of how you will deal with a situation of rapidly escalating fees.

In addition to our newly launched offering The Legal Stop will continue to provide the same great professional service in the areas of:

  • Legal and Business Document Templates
  • Request a Template Service
  • Free Legal Documents and Information

We have a portfolio of over 300 legal document templates online and available for download. All of our document templates are professionally drafted, legally binding and subject to the jurisdiction of the courts of England and Wales. They are also regularly updated to comply with any changes to the law. Our templates are written in plain English and easily understandable, so you can avoid the jargon that is commonplace elsewhere. Our documents are also bespoke and tailored to your individual circumstances.

Because our templates are fully compliant with English law they avoid a lot of the uncertainty about creating the sort of contracts and agreements that everyday life requires us to draw up to protect ourselves and our businesses. We explain subjects in a straightforward way and ensure that you have the confidence to deal with other parties in a professional and legally compliant way.

At The Legal Stop we offer great value-for-money – all of our services are carried out on a fixed fee basis with no hidden extras. We also offer a 100% money-back guarantee so you can buy with confidence!

Zero Hours Employment Contracts – What are they?

Zero Hours Employment Contracts are a form of contract that enable employers to have workers on call to work when required but do not guarantee a set number or even a minimum number of hours. Employees are only paid for the time they work and therefore these types of contract are often seen as a cost effective solution for companies that need staff to be readily available but where hours of work vary widely from week to week. They are also often used by agencies that supply temporary workers. The employment agency is legally the worker’s employer but, as the agency cannot always guarantee work these types of contract allow them to have a pool of workers available from which they can supply client companies.

Notwithstanding the lack of guarantees in terms of hours, where employment rights are concerned, workers have the same statutory rights as any other worker, albeit on a pro rata basis. These include holiday and sick pay and equal pay after 12 weeks of working. Workers also have the usual protections in the areas of equality and unfair dismissal.

The exact number of workers in the UK on Zero Hours Employment Contracts is difficult to assess. The Office for National Statistics has put the figure at around 250,000 workers (0.84 percent of the workforce), but the Chartered Institute of Personnel Development (CIPD) estimates the prevalence to be far higher, with around 19 percent of employers having at least one person on a Zero Hours contract (equivalent to 4 percent of the workforce). The CIPD found that industries where Zero Hours Employment Contracts are common include hotels, catering and leisure, education and healthcare. In addition, larger organisations – those with 250 employees or more – are more likely to employ workers on this basis.

Zero Hours Employment Contracts have come in for criticism by opposition politicians and by unions. Labour leader Ed Miliband has called for a ban on any contracts that exploit workers and Donna Hutton, Unison regional organiser has said: ““Casual work should only be used in emergency situations as staff don’t know if they will be working the next week. For some people it works but it doesn’t for the majority.” For the government, Business Secretary Vince Cable, has promised a review of the area and said that he will consider legislating against situations of abuse.

Zero Hours Employment Contracts have raised some debate for a number of reasons. There are concerns that employees are left vulnerable to financial hardship due to the uncertainty of earnings and lack of security offered. Some have warned that managers may threaten to withhold hours of work as a way to control workers. Moreover, where employees cannot show a guarantee of earnings they may find it difficult to obtain credit in the form of mortgages, loans or even current accounts. Individuals may also have less freedom to take time off to go on holidays as they are required to be available under these types of contract.

However, some industry figures have pointed out the benefits of Zero Hours Contracts, particularly for those seeking an additional income that fits around other activities, such as students, carers and parents of young children. CIPD CEO Peter Cheese said:  ‘… the assumption that all zero hours contracts are “bad” and the suggestion from some quarters that they should be banned should be questioned… Zero hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities.”

WHAT CAN A COMMERCIAL SUB-TENANT DO IF A LIQUIDATOR DISCLAIMS THE HEADLEASE FROM WHICH THE SUB-LEASE WAS CREATED?

In recent times many sub tenants have found themselves in the anxiety inducing situation that a liquidator has disclaimed the superior tenant’s head-lease.  Once this happens, the insolvent tenant neither has any rights nor obligations to the disclaimed property. But where does this leave you? Will this mean you are thrown out on your ear simply because your immediate landlord has gone bust?

Thankfully most probably not; provided you can meet the terms of the head lease that is! Whilst your insolvent landlord is no longer your landlord, and your sublease does not technically continue, your interest in the disclaimed property survives and you may remain in occupation for the term of the sublease. This has been described as a collection of property rights in the disclaimed property. Furthermore you can probably even still sell your interest to another.

As stated above, the existence of these rights is on the proviso that you comply with the terms of the head lease and not the sub-tenancy. This could work to your favour if the head lease terms are friendlier than those under the sublease. Of course this could also work against you and you may need help from a solicitor to review, advise  and re-negotiate the position, certainly on the point of whether, it is sensible to apply for a vesting order which if granted means that the property will vest in you under the terms of the head lease. You should also seek advice if a Landlord has made an application requiring you to make an election to accept a vesting order or whether it would make more commercial sense to give up your rights in the Property e.g. possibly if there is a significant dilapidations claim under the head lease. Strictly speaking, the terms of the head lease are not directly enforceable between you and the head landlord but in practice this becomes a technicality as the landlord can re-enter the property for breach of the head lease terms despite the fact that the head lease has been disclaimed or that you have applied for a vesting order.

The landlord’s right to re-enter the property is also subject to your right to apply to court to get the property back (relief from forfeiture) but in order to succeed the terms are likely to be onerous and you will probably have to agree to honouring the terms of the head lease anyway including paying any outstanding rent due and remedying any breaches of covenant.

In conclusion it is wise to seek advice on your rights and liabilities under a sub-lease as soon as you become aware that a head lease is or is about to be disclaimed by a liquidator.

Settlement Agreements and Compromise Agreements – What you need to know

A Settlement Agreement can be used to end a worker’s employment amicably in a way that avoids disadvantaging either the employer or the employee. It was introduced in the UK in July 2013 and took the place of the old Compromise Agreement. The two are quite similar in that both are legally binding and usually entail the employee receiving a financial settlement and an agreed form of reference. From the employer’s perspective these agreements allow them to terminate the worker’s employment without worrying about facing a tribunal.

The key difference between a Settlement Agreement and a Compromise Agreement is that the latter provided a limited degree of protection in some respects. This was because, while the principle of “without prejudice” applied it only did so to pre-termination discussions relating to existing employment disputes. Without prejudice is a legal principle preventing discussions from being brought up in court. It helps to facilitate open discussion without either party worrying their words being used against them later in court. A weakness of the Compromise Agreement was that only existing disputes were covered, which tended either to hamper discussions between employers and employees or to cause issues later in tribunals.

The Settlement Agreement introduced the concept of “confidential” pre-termination discussions, which prevents talks from being used as evidence in unfair dismissal claims, even in cases where an existing dispute does not exist. However, it should be noted that confidentiality does not apply in all cases. If an employee is fired for an unfair reason, such as whistleblowing, trade union membership or asserting their statutory rights as a result of entering into a Settlement Agreement, then the circumstances can be brought up at tribunal. Also excluded are cases brought under discrimination, harassment, victimisation or breach of contract. In addition, if a tribunal considers that improper behaviour by one of the parties has taken place it might also allow the previous discussions to be heard at tribunal. Examples of improper behaviour would include bullying and intimidation, physical assault or putting undue pressure on a party, such as pressurising an employee to make a decision on an offer. ACAS, the employment conciliation body, recommends that employees be given 10 calendar days to consider offers, unless the parties mutually decide to fast-track discussions.

In order to be legally binding the Settlement Agreement must satisfy certain conditions. Details of the specific complaint or proceedings must be included and the document must state that applicable statutory conditions have been met. If all relevant parts are not included the agreement will not be valid – further information about the parts that must be included in the Settlement Agreement can be found here. Where an employee is a senior member of the company, such as a director, shareholder or office holder, a Settlement Agreement – Director should be used. This contains additional clauses dealing with directorships, shareholdings and bonus/commission payments together with confidentiality and restrictive covenants.

Loan Agreements & Debenture Agreements

Banks and payday lenders are far from the only organisations that offer loans these days. In the current climate of strict lending criteria people are turning to other avenues to obtain much credit when a need arises. If your business is in a position where it is considering giving a loan, perhaps to a member of staff or another party, it is incredibly important to ensure a Loan Agreement is drafted correctly and in place. This will help to avoid any misunderstandings over the terms of the loan and ensure your business is protected against both expected and unforeseen risks and is enforceable in the event of an issue.

If you are providing a loan to another party and want to make sure you are legally protected but would prefer to avoid the cost of having a solicitor draw up the agreement there are legal templates available that act as a cost effective solution. These are comprehensive, legally binding and completely up to date with current UK law. Costing as little as £13 they can be an economical alternative to costly legal representation.

A Loan Agreement needs to cover a number of different aspects in order to be fit for purpose. This includes the amount, purpose, rate of interest, repayment schedule, any applicable guarantees, costs and what happens in the event of a default. These are just a few of the clauses that need to be part of the agreement, but there are a number of others.

In addition to the Loan Agreement you will also need a Debenture Agreement. This is a document that will protect the sum your business is advancing by providing security. The security is provided by the borrower and the Debenture Agreement details the charge that will be taken as security for the sum that is being borrowed.

When a company takes security in the UK it comes with certain requirements. It has to be registered at Companies House and if land is involved it may also need to be registered at the Land Registry. Because the business that is acting as a lender has a hold or charge over the asset, their interest must be registered so that it cannot be sold without their knowledge or agreement. This is important as it protects the lender. Also, if the borrower was to be declared insolvent at some point the Debenture Agreement would ensure the lender had rights as a creditor. A copy of the Debenture Agreement needs to be sent to Companies House and the Land Registry within 21 days of the security being taken. In addition, Companies House will want to receive a copy of the Loan Agreement and the Form MR01.

Further information on both Loan Agreements and Debenture Agreements can be found at The Legal Stop – an online business providing high quality affordable legal and business document templates.