Read this month’s key insights from our business law experts

Insights - 08/09/2016

Corporate Insights cuts through the noise to keep you up to date on current legal issues affecting your business. Below are September’s insights from our business law experts.

Why you need to be clear on corporate transparency

By Greg Vincent

By now all unlisted UK companies and LLPs should be complying with the new corporate transparency rules and maintain a register of persons who exercise significant control over them (known as a PSC).

Broadly speaking, a PSC is anyone who owns 25% or more of the shares and/or voting rights; has the power to appoint or remove a majority of the board, or who (otherwise) directly or indirectly exercises significant influence or control.

Small businesses with simple ownership structures have experienced minimal disruption since the new rules came into force but they must still take action and hold a PSC Register. For other companies, the new regime will require more careful thought. These include companies with trustee or nominee shareholders, companies with overseas corporate shareholders and companies with shareholders’ agreements conferring special voting rights.

It is important to get this right.  Directors have duties to identify PSCs and shareholders have obligations to respond to their enquiries. There are custodial criminal sanctions for non-compliance by either.  There are also self-help remedies for companies that are unable to obtain the information (i.e. companies can freeze the economic and voting rights on shares until shareholders provide the information).

Further, if your company has not done so already, it will shortly need to submit the current information on its PSC Register to Companies House via the new annual Confirmation Statement (which replaces the Annual Return). This will make the information a matter of public record.

Should you have any questions or require help or assistance in relation to these issues please feel free to contact Greg Vincent, Corporate & Commercial Senior Associate Solicitor by email [email protected] or telephone 0208 9711033, or visit www.morrlaw.com/team/greg-vincent/

Are costs recoverable… or are they just fantasy…

By Kellie Williams-Jauvel

In a recent case brought by the former Queen guitarist, Brian May, the court has, again, revealed its approach with respect to “proportionality” when considering the costs that are recoverable for successful parties engaged in litigation.  This case is particularly relevant for low value claims (£25,000 in this case).

Despite the relatively modest sum in issue, the costs incurred in bringing the claim amounted to £208,000.   After a detailed assessment, the Court substantially reduced this to just less than half this figure.

However, the Court was not done there.  Looking at the amount of the claim and the level of the costs incurred, the Court also applied a “proportionality test”, slashing the costs to £35,000 plus VAT.

The message for businesses here is to remain mindful that, when pursuing low value claims through the Courts, success may well lead to no more than a contribution to the costs incurred.

Case: May and another v Wavell Group plc and another [2016] EWHC (B16) Costs (16 June 2016).

Should you have any questions or require help or assistance in relation to these issues please feel free to contact Kellie Williams-Jauvel, Dispute Resolution Senior Associate Solicitor by email [email protected] or telephone 0208 9711031, or visit www.morrlaw.com/team/kellie-williams-jauvel/

Enigma in the Code is clarified

By Michael-Jon Andrews

A clash of personalities or breakdown in relations at work can cause disruption and employers will want to deal with these issues quickly.  In principle, a dismissal to restore workplace harmony will be fair and is legally classified as a dismissal for “some other substantial reason” (SOSR).

One question that employers have been grappling with is whether the ACAS Code (the Code), which sets out the minimum standard process for handling disciplinary and grievance situations in the workplace, applies to SOSR dismissals.  This is critical, as a failure to follow the Code may result in an uplift of up to 25% on any Employment Tribunal award but the process can be inflexible and lengthy.

Until very recently the Employment Appeal Tribunal had indicated that the Code does apply to SOSR dismissals involving a breakdown in relations.  However, in the very latest case, Phoenix House Ltd v Stockman and another, the Tribunal ruled that the Code will not apply even if a disciplinary process has been invoked.

While this provides some comfort to employers who want to act flexibly and expediently, a safe dismissal resulting from a personality clash or breakdown in relations will still be hard to achieve. Employers should first consider matters such as measures to redeploy one of the workers, changes to work patterns to keep them apart and/or mediation.

In the Stockman case, the employer made the mistake of dismissing an employee on sick leave on the assumption that she would not be able to return and successfully work with a particular colleague without giving her the opportunity to prove she could.

In each particular case, the issues to be resolved before safely dismissing can be subtle and complex. For example, employers will be in grave peril if they misinterpret bullying or discriminatory conduct for a genuine personality clash.

Should you require help or assistance where there is a personality clash or breakdown in relations please feel free to contact Michael-Jon Andrews, Employment Senior Associate Solicitor by email [email protected] or telephone 0208 9711024, or visit www.morrlaw.com/team/michael-jon-andrews/

Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.