Author: alistair.wells

1. What are you buying?

There are two main ways in which a purchase can be structured:

• a purchase of business and assets; or
• a purchase of shares.

How the deal is structured affects not only what you are buying but what liabilities you will be taking on as the new owner.

When buying the business and assets, the parties can cherry pick what is being sold. So, you will need to think about whether the deal includes everything that you will need to run the business yourself – are you getting all the equipment and machinery or are you just getting a customer list? Having conversations with the sellers at the outset, to ensure that you are getting everything that you think you are buying, will be an important step.

In contrast, if you buy the shares in a limited company, you get the whole of the business. The advantage of this is that you know you are getting everything that the business currently owns. However, you also inherit any liabilities that the company may have such as any debts and ongoing contracts. It is therefore important to make thorough enquiries before buying the shares so that you know what you are letting yourself in for.

2. Who do you need to instruct?

Obtaining legal advice on any proposed purchase is obviously important. But there are also other areas that you may need to seek advice on. For example, will you need specialist accountancy and tax advice? Accounting and Tax specialists will be able to talk you through the different tax implications of how a deal is being structured and help you to assess whether the business’ finances are in good order.

Will you need external funding to finance the purchase? If so, do you need to speak with your bank about taking out a mortgage or loan to fund the purchase? Making sure that you have the funding arrangements in place early on may help you avoid delays later in the purchase process.

3. What about the premises?

Whether or not you are intending on running the business from its existing premises, you will need to think about who owns those premises. Is it owned by the company or sellers, or is it leased?

If the property is being leased, you will need to obtain consent of the landlord if the lease needs to be transferred over to you, and you may have to cover the landlord’s costs in granting their consent.

It will also be important to consider the terms of the lease, such as how long it has left to run; what your obligations will be as tenant; and whether there are any restrictions on what you can and can’t do with the property.

Is the property even suitable for your needs? If not, then you may need to negotiate a surrender of an existing lease and you will need to consider what options are available in terms of alternative premises.

4. What are the payment arrangements?

If you are in the fortunate position of being able to pay the full purchase price on completion, you might not have to worry about any ongoing relationship with the sellers.

However, you may not have the funds to be able to pay the full price up front; or you may have arranged for a staged sale process in which the seller will remain involved for a while to allow you to learn the ropes from them. Either way, if you are going to be paying the purchase price in instalments over a period, you should think about what additional security the seller might want to ensure that they receive their payment. Will anyone need to provide a personal guarantee? Are they going to want a charge over the company’s assets? What other rights will the seller have if you default on payment?

5. What other contracts will you need?

If you are purchasing shares alongside other individuals, you may want to put a Shareholders’ Agreement in place which sets out any requirements in relation to key decision making, along with any additional rights of the shareholders surrounding the transfer of shares and how and when they can be sold. Even if you are going into business with someone you know and trust, it doesn’t hurt to have these arrangements set out in writing to give everyone peace of mind as to how the business is going to be run and what their rights will be as a shareholder if things don’t go to plan in the future.

Depending on who is involved in the business, you may need to consider people’s employment arrangements. Will you need a director’s service agreement setting out what your role in the business is and what the terms of your employment are? Is there anyone else who provides services to the business who needs a new employment contract or consultancy agreement to formalise their arrangement?

What terms is the business trading on? If the business doesn’t have formal terms and conditions in place, you may want to consider whether these are needed; or whether any existing terms might need updating. Having written terms and conditions will provide certainty as to the performance obligations of the business and its customers and any liabilities that you might have. This can be valuable in terms of saving time and money should a dispute ever arise.

You may also need to think about what other policies and procedures the business should have in place. Does it have an up-to-date data protection and privacy policy? Is there an employee handbook? If not, what disciplinary and grievance procedures does the business have in place? Will the business need an anti-bribery or anti-corruption policy? It’s important to think about whether there are any other procedures that you might want to document to ensure the smooth running of the business.

If you need any advice on buying a business or on any of the issues discussed in this article, please feel free to get in touch with us.

Tend Legal

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Key Considerations & Potential Pitfalls

Terms and Conditions should be reflective of the commercial arrangement between the parties involved and clearly set out the reality of their relationship.  When putting Terms and Conditions together you should consider:

• What does your business want to happen in this relationship?
• How is it envisaged that the relationship will work?
• What’s the intended duration of the agreement?
• How will the relationship be governed?
• Are there any Intellectual Property provisions to be considered?
• What are the payment terms?
• How will any disputes be dealt with if they arise?
• Termination rights in the event of any breaches, insolvency or non-payment
• Limitations on liability

It’s vital for Terms and Conditions to be as accurate and as detailed as possible. If there is any ambiguity, or if your Terms and Conditions do not reflect the true nature of the relationship, it’s far more likely to result in problems for your business further down the road.

It can, in some cases, be tempting to buy Standard Terms and Conditions off the shelf.  Yes, this would save the time and possibly the expense, of getting a tailored document drawn up.  However, such documents are often incomplete, or do not provide terms that are specific to your business. 

If your business is using Standard Terms and Conditions purchased off the shelf, it is advisable to get these checked by a legal professional to make sure they’re not missing any fundamental provisions and that they are protecting your business as far as possible.

Incorporating Terms & Conditions into a Contract

It’s all well and good having a set of Terms and Conditions, but unless they’re properly incorporated into your contract, they will be pointless!

There are a number of ways you can incorporate Terms and Conditions into a contract.  The best way to do this would be to get a signed copy at the outset of any agreement but this isn’t always practical. Alternatively, you can provide these to customers or suppliers in hard copy or by email.  In some cases you will be able to send a link to your Terms and Conditions online (but make sure the link works first!)

Battle of the Forms

“Battle of the Forms” is the term used when two contracting parties both seek to rely on their own Terms and Conditions. Generally, whoever provides their terms last (the last shot) is the person who will have the terms included as part of the contract.  In these scenarios, the Court will look at the point at which the contract is formed, and it will be the last set of Terms and Conditions provided at the time the contract is formed that will be relied upon.

Get Your Terms & Conditions in Early!

Terms and Conditions provided with an invoice are usually too late, it is best to get Terms and Conditions across to the contracting party as early as possible, if you are intending to update them, make sure the other party is provided with any changes frequently to provide your business with the best chance of protection.

Takeaway

Remember these key points to ensure you can rely on your Terms and Conditions:

1. Provide them to the customer/seller as early as possible;
2. Make sure they’re as detailed as possible and reflective of the commercial relationship;
3. Make sure they are the correct version; and
4. Make sure any links work.

If you need any assistance in putting together Terms and Conditions for your business, or if you have an existing set of Terms and Conditions that you’d like us to review, you can contact us on [email protected] or click the button below.

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1. Register Your Business

You’ve had your business idea and you’re ready to go for it.  The first step is to register your business.  You’ll need to decide on your business structure. The four main types are:

• Limited Company
• Sole trader
• Partnership
• Limited Liability Partnership

There are different registration processes and requirements for each type and each has its own pros and cons. When starting a business, it’s not always easy deciding on a business structure so it is advisable to research your options so you can work out which best suits your plans.

2. Company Structure and Issuing of Shares

If you’re going into business with others, you will need to consider the company structure.

• Will one party own a larger percentage of the company than another or will you own it equally?
• Who will be appointed as directors?
• Will there be multiple shareholders?

If you are setting up a limited company there will be a Memorandum of Association signed by the shareholders or guarantors of the company on incorporation, and Articles of Association which will outline rules on running the company – this can either be in a standard form or specific to your company.

If your company has multiple shareholders, it would also be beneficial to put in place a shareholders agreement which can provide further provisions to the articles of association and greater protection if things go wrong later down the line.  You can find further information on why it’s beneficial to put a shareholders agreement in place in our previous blog post here.

3. Insurance

While it’s not a legal requirement to take out business insurance, it is advisable to protect yourself in case things go wrong.  But it doesn’t end there, you may be required to take out specific types of insurance by your regulator in order to operate.

If your business is planning to take on any employees, it’s also a legal requirement to have employers liability insurance in place, although this isn’t necessary if your employees are members of your immediate family.

4. Licences

Depending what the business is, you may need to obtain specific licences before you can start trading.  Licences are required for a variety of industries, such as licences to sell alcohol, gambling services, importing or exporting goods or providing financial services.  These are just a few of the activities that businesses require licences for in order to operate legally. Make sure you know if your company is required to hold any specific licences before you begin trading, or your business could be at risk of a fine or criminal conviction.

5. Intellectual Property

Intellectual property includes intangible creations that may form a big part of your business. This may be a logo, a process, symbols, designs or images. If you have any intellectual property that’s important to your business, it’s worthwhile taking the time to protect it.  The main ways that this can be done are:

• Copyright
• Patents
• Trademarks
• Trade secrets

6. Taxation

Any new company will need to register with HMRC for Corporation Tax this can be done through the Government website.  You will need to file Company Tax Returns – you can either prepare these yourself or get an accountant to do it for you.

You will also need to register for VAT if your taxable turnover is more that £85,000.

7. Data protection

If your business is storing or using personal data in any way, you will need to make sure that your business is GDPR compliant. This can include data on staff or potential job candidates, customers, and suppliers.

Personal data includes any information by which the person (data subject) can be identified from. This is not just their name but will include things like their address or other personal details that they can be identified from. In order to be GDPR compliant, you will need to establish where your data comes from and how it’s handled. This should be properly documented in a Privacy Policy.

If your company will be processing personal data of any kind, you may also need to pay a fee to the Information Commissioner’s Office (ICO), unless the reason for processing the data falls into one of the ICO’s exemptions. If you’re not sure whether you need to pay the fee, you can take a short survey at: https://ico.org.uk/for-organisations/data-protection-fee/self-assessment/ to find out.

8. Employment

If your business intends to recruit employees, there are a few things you’ll need to put in place or be aware of. These include:

• Applicant checks
• Employment contracts
• Registering as an employer with HMRC
• Employee liability insurance
• Pension auto-enrolment
• Health and safety obligations
• Staff handbooks and policies

9. Customer contracts

If your business is intending to supply services to customers, you may want to put contracts in place which will make sure you’re all on the same page, ensure you’re protected if anything goes wrong later on down the line and minimise the chances of a dispute.

You may want to consider:

• Terms and Conditions
• Supply of goods/services agreements.

10. Contracts with suppliers

In addition to customer contracts, it is also worth putting in place similar contracts with any suppliers. Again, this will make sure the relationship between the parties is clearly defined and ensures both parties understand how their relationship will work. Similarly to customer contracts, it is useful to have Terms and Conditions in place with your suppliers.  Other commercial contracts that can be considered include:

• Distribution agreements
• Licencing agreements

Starting up a business is a big step, so we’re here to help however we can.  We can assist with:

• Start-up advice
• Shareholders agreements
• Employment contracts
• Employment advice
• Commercial contract

Click here to contact us and find out how we can help.

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Look at each employee individually

Each employee’s personal circumstances will be different.  It may not simply be the case that they don’t want to return to work. Some employees will rely on public transport to get to work, some may not have had their vaccine yet and feel unsafe, or others may be protecting vulnerable people at home. Employers should discuss the employee’s circumstances with them so they can understand their reasons for not wanting to return to the office.  This isn’t something employers should take a blanket approach to, everyone’s circumstances are different and it may not be reasonable to return all employees to the workplace at the same time.

Returning to work anxiety

It is widely know that the pandemic and lockdowns have had a huge impact on mental health. There will be many employees who will be anxious about returning to work and employers should consider the mental health of their employees.  Many of us have become complacent with our new home offices, only seeing colleagues over Zoom and having very little social interaction.  For some, the thought of sitting in an office full of colleagues again may seem daunting.

While some employees will crave the normality of returning to their workplace, it’s important to remember that no two people are the same and each employee will have different concerns.  Employers can help their employees transition back to the office by:

• Speaking to them about their concerns
• Giving them as much notice as possible
• Informing them of the steps being taken to make the workplace Covid-secure
• Keeping health and safety policies updated in line with government guidance.

Look at alternative options

If your employees are anxious about returning to work, discussing concerns with them may be all the reassurance they need.  However, if employees are still unsure, there are alternative options that can be considered and phased returns might be more beneficial to some employees.

By discussing any concerns your employees may have with them, you might also be able to find alternative solutions to allow them to return to the office more comfortably.  For example, employees who travel to work by public transport may be concerned about travelling during peak times, in which case a workable solution may be to temporarily change their working hours so they can avoid busy periods on public transport.

Agile working policies

In recent years, we’ve seen an increase in businesses implementing agile working policies allowing employees to work flexibly carrying out either all or a proportion of their work outside of the workplace.  This won’t be suitable for all businesses, but for some it might be a good way forward.

Agile working policies can have several benefits for businesses including:

• Staff retention (particularly those with young children who may be juggling childcare)
• Builds trust
• Can improve performance
• Reduced carbon footprint

If an employer decides to implement an agile working policy, it’s important to make sure they are acting consistently in how agile working requests are dealt with. 

Consider whistleblowing protection

If an employee is refusing to return to a workplace because it is unsafe, then legally, they do not need to attend.  Employers owe a duty of care to their employees and if an employee reports that it is unsafe, the law will protect them in relation to any health and safety disclosures that are in the public interest.  Employers can mitigate the chances of any health and safety complaints by carrying out a full risk assessment before staff return to the office.

Disciplinary action

If an employee refuses to return to work without a legitimate reason, disciplinary action can be considered.  In the current climate, employers will need to tread carefully in dealing with any disciplinaries.

If you are an employer or an employee and need further advice on this topic, why not book a no-fee discovery meeting with us to see if we can help?

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COVID-19 and GDPR

With the vaccination rollout for Covid-19 well under way, many employers will be eagerly awaiting their employees return to the office. We’ve seen in our previous article the debate on whether or not employers can require their workforce be vaccinated, but what happens when employers want employees to disclose their vaccine status?

Are businesses able to collect data on whether their staff have been vaccinated?

Private health information, such as vaccination status, falls into special category data and so it is important for employers to only collect this data where it is necessary and required for a specific purpose.

It is recognised that there is an imbalance of power between employers and employees and, as a result of this, consent cannot be relied upon by employers as a justifiable reason to process data.  For consent to be valid, it must be freely given which isn’t usually the case in employment relationships. 

The ICO have provided guidance on when employers are able to collect data on employee’s vaccination status which highlights that there must be a clear reason for collecting this data from employees. 

A clear reason may include where employees are working in health care settings or if vaccination passports are required for essential work-related travel. Employers will need to look at their businesses and the work being undertaken to establish if they have a compelling reason to collect vaccination data. It will also be necessary to identify a condition for processing under Article 9 of the GDPR.

Requirements for collecting the data

If your business can justify collecting information from staff on their vaccination status, you will need to ensure that your employees understand the reason you’re collecting this data and what it will be used for.  The data collected needs to accurate, kept confidential and securely stored.  Employers should only share the information where it is necessary and there is a legitimate reason to do so.

Requirements for retaining this information should be kept under review at regular periods to monitor whether it is still necessary to retain the data. 

What if an employee objects to disclosing their vaccination status?

The Covid-19 vaccination is not mandatory and so some employees may choose not to receive it. This could be for a number of reasons including religion, personal belief, pregnancy or an underlying health reason.  Employees may feel uncomfortable disclosing their vaccine status with their employer.  If this is the case, it is important to discuss this with them to be able to understand and address their concerns.  You can emphasise to the employee that the data will be held securely and only disclosed where it is necessary to do so.

It is clear that the pandemic has opened up a whole new array of potential issues for employers to consider. Further information about data protection relating to Covid-19 in general is available on the ICO website.

We are here to advise on any specific queries or issues you may have in relation to your business.

Click here for ways to contact us.

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What steps should employers be taking?

For many, the thought of returning to the workplace may seem daunting.  Over the past year a large number of employees have become accustomed to a commute-free life, comfy clothes and regular Zoom calls, so much so that the workplace and face-to-face interaction seem like a distant memory. 

Some workplaces have remained open during the pandemic and should already be operating in a COVID-secure way, but these measures will need to be readdressed where businesses are expecting an increase in the amount of staff attending the workplace. Employers have an obligation to ensure the workplace is safe for their employees and we’ve set out some key points below for business to consider when staff return to the workplace.

Risk Assessments

Whether your workplace has been operating with a reduced number of employees in the office, or whether it’s been closed for most of the pandemic, risk assessment should be carried out and kept under review to determine what the risks are in your workplace and how these can be minimised.  This may include things like reduced capacity in kitchens or breakout areas, installing partitions and increasing how often the workplace is cleaned.

Travel to Work

Consider how your employees get to work each day.  If large numbers of employees are using public transport for their commute this may put them and the rest of your workforce at risk.

Social Distancing

Make sure your employees are maintaining social distancing as far as possible.  This may mean reducing office capacity or making sure desks aren’t too close together. Screens and partitions can be useful where space is limited.

Reduced Numbers

Is it necessary to have your whole workforce in at once?  If the answer is no, it may be a good idea to alternate who is in the office at each time and continue to support working from home where this is possible.

Regular Screening and Testing

Employers can implement regular temperature checks for staff and may choose to conduct regular COVID testing for staff.

Training and Communication

For any COVID measures being introduced, it is vital that you make your employees aware of any adjustments or policies that the business will be implementing on return to the office. This will not only help with compliance, but also provides employees with reassurance that their employer is taking appropriate steps to protect their health and safety.

It is important for employers to make sure that they are following government guidance, otherwise, they could be at risk of whistleblowing claims being brought by their employees.

You can get further information on what measures you should be taking, what to include in your risk assessment and how to communicate with your employees on the HSE website. If you would like further advice on your obligations as an employer, click here for ways to get in touch.

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Influencer advertising or marketing is an increasing popular method used by companies to advertise their brand or products through the social media platforms of “influencers”.

Generally speaking, an influencer is someone who has a substantial following and is able to influence the purchasing decisions and lifestyle choices of their followers.

Benefits of using an influencer

Using an influencer to promote your products can be a great method of advertising when done correctly. Some of the benefits include:-

• Reaching a larger audience;
• Potentially reaching a more niche audience than other forms of advertising;
• It can be done across multiple social media channels including Instagram, YouTube and TikTok;
• Having a positive affiliation with influencers may encourage sales; and
• It can be cheaper than other methods of advertising.

Points to consider

If you’re considering working with influencers there are a few factors to consider first.  There are several methods of using influencers, some companies may send samples of their products in the hope that an influencer will give them a positive review, there is no obligation on the influencer to do this, however, in some circumstances, it can work as a method of free advertising.

The other option is to put a more formal agreement in place with the influencer. Either way, it’s worth considering the following points:-

Affiliation with the influencer

If you’re considering working with an influencer, it’s worth taking the time to research who they are, what they’re about and what their values are.  Making sure that you’re vision fits in with their image is crucial, not just for the success of the advertisement, but also to make sure you’re not working with anyone that’s going to be detrimental to your reputation.  You may want to consider if the influencer is somebody who is already known to your industry, and if so, what their reputation is or what they are known for.

Competitors

Influencers are often approached by multiple brands so you may want to restrict what other products they’re advertising. If you’re contracting with an influencer to promote your brand, you don’t want to see that they’re encouraging their followers to buy your competitors products the following week.  

Advertising rules

There have been many recent cases where influencers have found themselves in trouble with the Advertising Standard Agency (ASA) for failing to disclose that a post contains an advert or, where competitions haven’t been correctly administered.  Not only does this risk fines if the influencer is found to be in breach of the rules, but it can also lead to reputational damage for both the company and the influencer.

Implications of advertising without an agreement

Situations may arise where an influencer advertises products outside of a formal agreement. This may be items that were gifted, or where a post falls outside the scope of a formal agreement.

A recent complaint investigated by the ASA was that an influencer, Emily Canham, had entered into a contract with Jamella Ltd trading as GHD.  The agreement required the influencer to produce a TikTok, two Instagram posts and a YouTube video on particular dates.  The influencer posted a TikTok that was not approved by Jamella on a date which was different to the date agreed by the company.  Although the TikTok video fell outside of the agreement and no compensation was received for it, the ASA still found that it was in breach of CAP Code Rules as it had not indicated that it was an advert.

The ASA have also investigated several posts where influencers have breached advertising rules without having an agreement in place with the advertiser.  The company Skinny Tan recently fell under fire from the ASA when it re-posted content from influencers.  Although the posts in questions had indicated that they were adverts and that products were gifted, the issue in this circumstance was that the filters used by the influencers in their posts enhanced the look of the tanning product and was found to have given a misleading impression which, again, was a breach of CAP Code Rules.

Putting an agreement in place

As we’ve seen, promoting products through an influencer can be risky. However, these are all risks that can be mitigated by putting a formal agreement in place.  Putting an agreement in place can enable a company to have more control over the content that is posted and prevent ASA breaches by:-

• Detailing what posts are expected;
• Setting out any disclosures that should be included to satisfy the ASA;
• Restricting engagements with competing businesses;
• Allowing the company to review and agree any content before it is posted.

Inquiry into influencer culture

Following multiple reports to the ASA and the Competition and Market Authority finding that 75% of influencers buried the relevant disclosures within their posts, Parliament have launched an enquiry into influencer culture to determine whether there is a need for tighter regulations to be introduced. The inquiry considers influencer culture, its impact on popular culture, its association with advertising and consumerism and the arrangements between influencers and advertisers.

 The inquiry is open until 7^th May 2021 at: https://committees.parliament.uk/submission/#/evidence/428/preamble

If you need any advice and assistance in relation to influencer agreements, whether you’re a business looking to put an influencer agreement in place or an influencer looking to get an agreement reviewed, we’d be happy to discuss how we can help. Contact us here.

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Trademark disputes are something that we’ve been advising on recently and we’ve broken down the basics of what a trademark is and why they’re important.

What is a trademark?

A trademark is a piece of intellectual property which allows companies to protect their brand. It prevents other companies from using logos, slogans or signs that are the same as, or similar to your business or piggybacking off of your company’s success at a later date.

When starting a business, registering a trademark isn’t usually regarded as one of the most pressing or necessary things to do, but consider what would happen if you built up your business, only for someone else to trademark your name at a later date.  All of your hard work could be taken away from you if you find yourself on the receiving end of a cease and desist letter.

Reasons to register a trademark

• It protects ownership so no one can duplicate your brand.
• It’s an asset which adds value to your business.
• It’s easier to search for your company on social media if it’s been trademarked.

How to register a trademark

You can register a trademark yourself through the government website, or you can instruct a solicitor to do this for you.  A solicitor will be able to ensure the application is completed as fully as it can be and will make sure you’re not overlooking anything.

What happens if you don’t trademark your business?

If you launch a product or business without registering your trademark, you may find that either someone else has registered that trademark, or that someone else registers it at a later date either without knowledge of your brand or because they fancy a slice of your success. Either way, you could face having to rebrand your business entirely.

Imagine if the Colin and Cuthbert scenario was the other way around. If M&S hadn’t trademarked Colin the Caterpillar and Aldi subsequently trademarked Cuthbert the Caterpillar, this could potentially force M&S to forfeit their famous Colin the Caterpillar brand and all the hard work building up their product may have been a waste.

Trademark infringement

Trademark infringement occurs when:

• A party uses a mark identical to the registered trademark on identical goods or services; or
• A party uses a mark identical to the registered trademark on similar goods or services which creates a likelihood of confusion.

If your business does find that it is accused of trademark infringement, you’ll need to be able to show that your product is sufficiently different, or that there is no likelihood of confusion between the two products or brands.

One of the arguments that M&S may make is that there is likely to be confusion between Colin and Cuthbert.  For this to succeed, the court would need to find that there is a likelihood that consumers would mistake Cuthbert for Colin.  For example, if the packaging was removed and Cuthbert was placed out at a party, is it likely that guests would mistake Cuthbert for Colin and think that he had been purchased from M&S?

This argument may well be diluted by the fact that caterpillar cakes are seen in many other supermarkets and it may come down to the similarities in the prefixes and other distinctive elements, such as the product packaging.

Trademark infringement is something that will be assessed on a case-by-case scenario, but in any event, it can result in expensive litigation for both parties. This can often be avoided by registering your trademark from the outset which will put you in a much stronger position if another company later develops a similar product and will enable you to protect your intellectual property. Click here to get in touch and find out how we can help protect your business.

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