Welcome again to this November edition from Business Lawyers.
Directors have a number of issues to consider with the 1st October 2007 Companies Act 2006 innovations. Although these relate mostly to larger companies they are a sign of further amendments to come with the biggest shake up in company law since 1985. Be sure to keep abreast of updates through our Company Law legal updates and podcasts and of course if you do have any specific query please do not hesitate to get in touch.
Being offered a non executive directorship in such a company of course for many is the dream to aspire to but it can in fact be a "poisoned chalice" and prospective directors need to carry out proper due diligence prior to acceptance of any position as this case advises.
Non directors (i.e. sole trader owners and partners) nevertheless are caught by other legislation and in particular have to be alert to the new minimum wage levels and as this case shows business owners who flout the law with a casual disregard can look forward to a receiving a custodial sentence for their indifference and exploitation - a significant toughening up of the enforcement mechanism with respect to the minimum wage.
Handling personal data in this “Information Age” continues to be a big concern of enterprises of course but though the cry of “red tape” is often heard from the FSB and the like in fact this guidance note shows that it need not be overly complex, costly or onerous. The more balanced view arguably of The Institute of Chartered Secretaries and Administrators that the law is there to protect us all is surely the more reasonable one since to be compliant is in fact for the most part not especially trying.
Cases continue to arise meanwhile on the issue of employed vs. self-employed (especially in taxation) with the old test of “mutuality of obligations” continuing to be favoured by the courts and in this instance who provided the clothing and the equipment was held to be important but not a determining factor in the final decision of this tax court. Courts continue to view the relationship broadly seeking to "get behind" sham paper relationships by careful analysis of the true facts of each case.
Getting things right first time is sometimes thought less important in business broadly than in the law as by “trial and error” imperfect methodologies/processes for instance can be corrected, though this of course depends on the nature of the business concerned. Whether true or not, certainly with trials themselves it is important to be “right first time” - as this patent case shows. For businesses serious about winning litigation/patent cases it means commitment from senior management early on in terms of times and resources as “doing things by halves” will not work unfortunately with the law which is a hard and unremitting taskmaster with little room sometimes for human error, no matter how understandable it is..
In a similar way timing is always of importance in the law and even more so when mounting DIY defences without expert legal guidance as you do need to be aware of the consequences of getting this wrong. In this case a matter of seconds was held to be critical to a claim and though we may all have sympathy with the Claimant for internet and computer woes suffered here it does go to show that matters of such importance should not be left to the last minute and to chance.
Readers’ Queries
Q. I run an international design fashion house online and would like to turn some informal working relationships into brands to add value to the company over time. What is the best way to do this?
A. You would be advised to have a joint venture (JV) agreement formalised so that intellectual property rights (IPR) could be apportioned by agreement. The JV would cover profit share and allocation of goodwill and would determine what would happen in the event of termination of the agreement to future use of the brand(s), IPR and use of customer and supplier contacts and lists to avoid future disputes and uncertainty. Such an agreement could also give valuation to JV assets owned separately or jointly and could provide a formula and dispute resolution mechanism to allow “buy out” of one party of the other’s rights and/or shareholding for instance.
That’s all for now. Wishing you continued success with your enterprises and shall be in touch with you soon once more.
