The Adventures of Steve McDonald and his Shareholders Agreement

Recently, Steve has had to deal with the breakdown of his relationship with his ex wife and ‘business partner’, Becky, who is hell bent on selling what she believes is her share of the Street Cars taxi company.

However, things are about to get better for Steve thanks to his shareholders agreement.

Where two or more people own a company, it is important that they enter into a shareholders agreement.  A shareholders agreement should have provisions dealing with all of the following.

Lets’ hope Steve has remembered to put them all in.

1. The advancing of money to the company (sometimes called “cash calls”)

2. The role of each shareholder and the amount of time they must spend on company business

3. A prohibition against transferring shares without giving co-shareholders first option

4. “tag” and “drag” rights on shares

5. A procedure to follow if the relationship breaks down

6. Non-competition provisions while agreement carries on and after a shareholder leaves

7. The authority and responsibility of each shareholder including right to sign cheques

8. The business plan of the company

9. Voting arrangements on specified important  issues

10. Giving of personal guarantees

11. Forfeiture of shares – ie confiscation in certain circumstances

12. Retirement and good and bad leaver provisions

In the absence of a shareholder agreement a solicitor would have to rely on a very inadequate statutory and common law set of rules.

Leaked Tory Report Suggests Unfair Dismissal May Be Scrapped

This is sure to be a headline grabber, and without giving a thought to the full implications of this move, a crowd pleaser for business. The report claims that the current laws leave employees as “unknown quantities” who are allowed to “coast along” and this threatens the potential for business to expand.

However, the right to claim unfair dismissal is only currently available to those employees who have a year’s service with their employer, and if the Conservative proposals are approved, this qualifying time would increase to two years, one might say ample time to consider if an employee is indeed an ‘unknown quantity’ or a ‘coaster’.

Even so, what effect on the economy would it have if there was no job security for the workforce whatsoever? One day at work, next day no job, no pay, no warning, no explanation. It is not true to say that current unfair dismissal laws leaves the employer with no course of action when dealing with a troublesome employee.

It is perhaps more a question of ensuring that employers know exactly what they can do within the law fairly so that no claims can be brought against them. Surely it would be better to work towards a system that provides certainty and clarity for the employer and the employee and that, in turn, will bring a stable and more productive economy.

Do You Give A XXXX About Adult Domain Names?

This first stage from today to 28^th October 2011 is a sunrise period giving priority for trade mark owners in the adult industry to apply to register their word marks as XXX domains.

Alternatively, trade mark owners not in the adult industry can assert their word marks and apply to block a third party registering a XXX domain name which includes their own word mark with any “negative” results that may follow on.

Thereafter the second stage is a landrush period from 8^th November to 25^th November followed by a final stage of general availability from 6^th December.

If you are in the adult entertainment industry or another adult industry then clearly it’s in your interests to apply for registration but if not then what’s the issue? Well you don’t need to apply to register a XXX domain yourself as that may have “negative” results for you but the viable alternative of applying to block third party registration means the XXX domain is not available or “reserved for use” for life of the domain.

The commercial advantage of the application to block is that for a relatively small one off fee you do not then have the time and cost of having to bring litigation or invoking the domain dispute resolution procedure post third party registration.

If you need advice on XXX domain name registration or blocking or on protecting your intellectual property or if you have a claim you can contact David Potts, Partner and Head of Business Litigation, Phil Hitchen, Associate or Michael Forrester in the first instance to discuss the matter in confidence.

Online wills – spinning a web of problems?

The issue that worries me is quality.

There is a difference between good customer care and good legal advice.  If you are buying a product, the product is reasonably easy to evaluate and customer service is one of the attributes of the product that makes it attractive or not.

Price is also a key element.  I’m happy to fly Ryanair for short trips as it’s cheap and I know the core service is good (their planes are safety checked by various bodies) but I know their customer service (how can I put this in a non-defamatory way) is to a different standard.  If I am buying conveyancing I need to be reasonably sure I will own my house at the end.  The conveyancer is insured so I am reasonably safe buying on price.

Will writing is more complex.  There have been a number of cases recently of non-qualified will writers getting it horribly wrong.  The person’s wishes would then not be carried out after their death.  I acted for some clients who had bought a Limited Liability Partnership Agreement off the internet.  It was fine in many ways, but it did not cover the one area that they needed – what to do if they fell out.  They did fall out and the agreement was of no use.  A good solicitor would have known that and made sure there was a deadlock clause in the agreement.

The idea of having lawyers check documents downloaded is clever and may well be a good half way house.  A good algorithm may well work through a number of complex what-if scenarios to import the right clauses to a will or a partnership agreement, but an experienced lawyer may be able to get there quicker.

I think simple services will be commoditised.  Consumers need to be sure they are getting what they think they are getting.  A will is not a tin of beans.

Fox Speaks After The Riots

People know right from wrong but believing the rules shouldn’t apply to them also applies irrespective of one’s so called position in society. That said how can we expect lazy, selfish, arrogant, complaining parents who have no sense of ‘the family’ and who don’t put the education of the children above their own next pint, fag or fix to do any better than they are!

This does not just apply to the financially poorer parts of our society but to all those who seem totally devoid of decency and morality they just put themselves first all the time. The world is not about you or me it is about the next person in line!

All is not lost following the recent eruption of rioting in our Cities – UPDATE

Ultimately you may succeed with the insurance claim but if you do not and have not made a claim against the Police Authority you may be in difficulties.

The lesson: Protect your position; make a claim against the Police Authority; or at least intimate a claim and seek to reach agreement with the Police Authority that the 14 day deadline is extended pending resolution of the insurance claim.

You really do not want to discover your insurers are not going to pay out after the deadline for submitting a claim to the Police Authority.

For further information or should require assistance please contact Christopher MacCafferty on 0161 615 0677 or via e-mail to christopher.maccafferty@ralli.co.uk or Michael Forrester 0161 615 0670 or via e-mail to Michael.forrester@ralli.co.uk.

Greater Manchester Police Message To Businesses

Following the disorder and criminality witnessed earlier this week more than 60 people have been dealt with by the courts in Manchester, many of them jailed. This is a fantastic result and there is more to come

We will be publicising details of the court results throughout the day via various media channels

The criminals who attempted to destroy the spirit of Greater Manchester have failed with communities from every background including the business community standing against them in solidarity. The support shown to the police has been overwhelming.

You are encouraged to continue business as usual while considering the safety of yourself and your staff

You are reminded of the following precautionary measures:

1 Where possible retail premises should be suitably staffed with security guards during opening times
2 Ensure staff report any suspicious activity to security and/or police
3 Consider regular checks of the building and surrounding area
4 Identify areas that are vulnerable to forced entry
5 Make sure all service doors are kept locked and secure when not in use
6 Ensure your CCTV system is fully operational
7 In case of an emergency ensure there is a record of the names of key holders who can be contacted
8 Consider removing high value goods from display windows overnight
9 Consider keeping as little cash as possible on the premises
10 Ensure that your premises are secure and, if fitted, your alarm systems are fully operational
11 Ensure that staff are not alone when opening and closing premises
12 Police have released images of people suspected of carrying out criminal damage and disorder in Manchester and Salford earlier this week www.flickr.com/photos/gmpwanted
13 If you have information please email fib.communityintelligenceteam@gmp.pnn.police.uk or call 0161 872 5050.
14 In an emergency, where there is threat to life or a crime in progress, call 999
15 For specific advice regarding security arrangements around your premises please contact your local authority.

We are working on a specific Crimestoppers campaign to tap into the mood of the public details of which will be released tomorrow.

All Is Not Lost – Riot Compensation

Chris MacCafferty - Business Litigation & Professional Negligence Solicitor

It is fair to say that all civilised people are appalled by the recent trouble which has erupted in our Cities.

It is further troubling to see decent hardworking citizens and business people suffering physical damage to property and financial losses particularly given these difficult economic times we find ourselves in.

I am sure there are people and businesses out there that have suffered financially from the wanton vandalism and looting who unfortunately find they have no insurance to cover their losses.

Please do not despair. All is not lost.

If you find yourself being in this unfortunate position there is a little known act of parliament called the Riot (Damages) Act 1886 which provides that the Police Authorities must pay compensation for damages arising from riots.

Whilst there are differing views as to the performance of the Police Force I must stress that this is not a claim against the Police Force or indeed is to apportion any blame but it is a claim against the Police Authority to compensate those who have suffered loss and damage as a result of the riots.

For those who would be concerned to take such action in these difficult financial times please be aware that the Police Authorities should have insurance in place to cover any such claims for compensation under the act. Effectively therefore if you are without insurance to cover your losses you can seek compensation from the Police Authorities’ insurance company.

Those contemplating a claim are urged to contact Ralli quickly. The Regulations provide such claims must be delivered 14 clear days after the day when stealing, injury or destruction took place. If unsure, it is better to notify the Police Authority of a claim at this point than risk being out of time to claim.

I suspect the Police Authorities and/or their Insurers may seek to claim the recent events do not constitute a riot. Given the numbers involved this argument is unlikely to succeed.

For further information or should require assistance please contact Christopher MacCafferty on 0161 615 0677 or via e-mail to christopher.maccafferty@ralli.co.uk or Michael Forrester 0161 615 0670 or via e-mail to Michael.forrester@ralli.co.uk.

The future’s unknown for Alternative Business Structures

Eimear McCartan - Trainee Solicitor - Corporate

The topical issue of Alternative Business Structures (ABSs) came to the fore once again on the front page of this week’s issue of the Law Society Gazette.

The chief of law firm DLA Piper, Sir Nigel Knowles, has voiced warnings about the potential consequences the upcoming introduction of ABSs will have when introduced on the 6th October this year.

The introduction of ABSs means the entire system of ownership for legal services will undergo a potentially dramatic change as for the first time non-lawyers can invest in and own legal businesses. Up until now, lawyers have been the sole owners of legal businesses. Under the new regime introduced under the Legal Services Act 2007, ownership of legal services will open up to anyone deemed ‘fit and proper’ depending on their share of ownership of the business.

Some are in favour of the new system of ownership, welcoming the fact this will increase competition between existing legal firms and introduce new entrants to the market, thus benefiting the client and driving down prices. Supporters have also highlighted the fact it will open up new doors for solicitors themselves, increasing career options and broadening the scope of the profession.

However, those in opposition have strongly voiced their concerns over the impending introduction of the regime. Critics suggest that introducing non-lawyers into the market could undermine the quality of the entire legal profession. Some major supermarkets, banks and insurance companies have already expressed an interest in participating in the sector, which has led some to dub the introduction of ABSs as ‘Tesco law.’ In addition, some see the change as yet another front to be fought, with law firms already battling a depressed market, legal aid cuts and the Jackson reforms. Many predict that the introduction of ABSs will sound the death knell for small high street firms unable to compete with the giants of the retail sector. Read more »

Sensible Judgement As Expert Witnesses Lose 400-Year-Old Immunity

Chris MacCafferty - Business Litigation & Professional Negligence Solicitor

I recently read in the Law Gazette that expert witnesses have lost their immunity from being sued over matters arising in the course of proceedings, following a landmark ruling.

The full article can be read here.

In my view this is a sensible Judgement. I guess those in favour of maintaining immunity would argue it ensures that Experts are prepared to give evidence in litigation. That said I do not think it will deter good experts from giving evidence. In my experience good experts are fully aware of their paramount duty to the Court and furthermore would not stake their professional reputation at risk for a case.

Whilst this Judgement opens the possibility of bringing professional negligence claims against Expert Witnesses, I agree with the other commentators that this is very unlikely to open a floodgate of claims. There will be claims however for those Experts who dabble and therefore should either not be holding themselves out as an expert or decline the instructions, or are not strong enough to uphold their own professional integrity.

For those good Experts out there I do not think they need to worry. The usual test for professional negligence will still apply and therefore if they are maintaining the standards of the reasonable competent expert in their field they have nothing to fear. That said they may want to check the Professional Indemnity Insurance to ensure they are adequately covered.