Welcome to the Summer edition of our In Counsel publication
In this update we will outline the most recent legal developments affecting your business, in particular, the implications of the UK’s decision to leave the European Union for UK wealth and alternative investment firms, and the implications of Brexit for employers of EU citizens.
Other than Brexit, corporate governance is still high on the UK government’s agenda and our Corporate team, among others, looks at the proposed Wates Corporate Governance Principles for Large Private Companies which were published by the FRC for consultation, and the new reporting requirements, in particular the section 172 statement, that will apply to financial years starting on or after 1 January 2019. Our Employment team analyses the implications of the recent Supreme Court decision in Pimlico Plumbers Ltd and Mullins v Smith for the engagement of self-employed contractors, and how employers can deal with the government’s cap on immigration, and our IP & Commercial team highlights the lessons that can be learned from the recent High Court case of Blade Motor Group Limited v Reynolds & Reynolds Limited.
Our Pensions & Employee Benefits team looks at the implications for employers who take it into their own hands to opt their members out of their auto-enrolment compliant scheme, and following the theme of auto-enrolment considers inducements to opt-out, and also analyses the Dixons Carphone saga.
Finally, our Property team explains, among others, the implications of creditor voluntary arrangements on commercial leases and Adam Colenso of our Property Litigation team is quoted in an article on the Supreme Court decision on NOM clauses (no oral modification) in licence agreements.
We will keep you updated on these and other English law developments as and when they happen. If you would like to know more about any of the topics covered in this update please get in touch.
Wedlake Bell News
We have further strengthened our Corporate and Capital Markets practice and welcome Nigel Taylor and Martin Thomas as partners and Alex Green as a solicitor in our Corporate & Financial Services Team.
Nigel Taylor and Martin Thomas joined Wedlake Bell from Watson Farley & Williams. Nigel Taylor has a wealth of experience on domestic and cross-border private equity transactions, mergers and acquisitions, joint ventures and corporate structuring. He advises private equity funds, listed and unlisted UK companies and multinationals in a wide-range of sectors from financial services and technology through to transport and logistics, with a particular specialism in insurance and rail.
Martin Thomas specialises in advising on IPOs and secondary offerings of equity and debt on the London capital markets, corporate finance and M&A work, including cross-border and domestic acquisitions and disposals, joint ventures and private equity transactions. He advises clients operating in a variety of sectors including oil and gas, renewable energy, natural resources and mining, financial services, real estate and early stage technology.
CONTENTS
Brexit
Brexit: Challenges and choices for UK wealth, alternative investment firms
The opportunities and problems thrown up by Brexit for wealth managers are many. This article considers the terrain.
Frequently Asked Questions on Brexit for employers of EU citizens
In this article Julia Jackson explores some of the key issues employers of EU citizens face now, during the transition phase following the EU departure date, and thereafter.
Contract
No oral modification clause case will have ‘wide ramifications for all types of contracts’
The Supreme Court has unanimously held that licence fee payments under a licence agreement containing a ‘no oral modification’ clause could not be varied by oral agreement between representatives of the licensor and the licensee, in Rock Advertising v MWB Business. Lawyers at Bird and Bird, Clifford Chance, Charles Russell Speechlys, Herbert Smith Freehills, Howard Kennedy, Stewarts, and Wedlake Bell discuss the impact of this decision which has been described as giving ‘real meaning and support to NOM clauses within contracts’.
Corporate
Revised thresholds for Prospectus Exemptions
The new UK prospectus regulations (UK statutory instrument) were published on 29 June 2018. Confusingly, these raise one of the thresholds for public offers that are exempt from the obligation to publish a prospectus and lower one of the thresholds for excluded securities.
New narrative reporting requirements
In June 2018 the UK government laid The Companies (Miscellaneous Reporting) Regulations 2018 (the new reporting regulations) before parliament and also published Q&A guidance. Upon being approved under the affirmative procedure, the new reporting regulations will apply to company reporting on financial years starting on or after 1 January 2019.
New Corporate Governance standard for Private Companies
Corporate governance is a good thing. Well governed companies have been demonstrated to make better decisions and are less risky than poorly-governed companies. However, there is a broad spectrum of behaviours and views as to what is good governance. The UK Corporate Governance Code, as published by the Financial Reporting Council is focussed on large public companies with listed equity securities. Its principles are generally sound and make good business sense, but it is rather prescriptive and inflexible in its approach.
When may an intra-group loan or guarantee become a distribution?
The Law Society of England and Wales and the City of London Law Society have recently published two joint papers analysing the circumstances in which an intra-group loan or cross guarantee may constitute a distribution. The notes were prompted by a significant shift of position in the updated Guidance on Realised and Distributed Profits under the Companies Act 2006 (TECH 02/17) produced last year by the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland (ICAS) (TECH 02/17) from the prior technical guidance (TECH 02/10).
Employment
Self-employment – going out of vogue
A number of legal developments are combining to make the engagement of self-employed contractors increasingly difficult.
Recruitment blocked by immigration bottleneck
Recruitment costs wasted, employers left with unfilled vacancies, and highly skilled prospective employees left in limbo overseas – these are the regrettable consequences of the current Home Office policy to limit the number of skilled workers that UK employers may recruit from overseas.
IP & Commercial
How not to get locked out of your data – Read Blade v Reynolds
The judgement of Mr David Stone earlier this year in the High Court case of Blade Motor Group Limited v Reynolds & Reynolds Limited has received relatively limited publicity. Yet it has much to teach us, from both the contentious and the non-contentious standpoints. In this article we review the facts and judgement, and discuss some of the lessons that may be extracted from them.
Pensions & Employee Benefits
The Pensions Regulator investigates recruitment firm, Workchain Ltd, impersonating its staff to opt-out of auto-enrolment
A recent investigation by TPR has found managers and directors at Workchain Ltd, a national recruitment company based in the Midlands, impersonating staff by opting them out of the auto-enrolment compliant pension scheme in order to save the company money. The senior staff were asked to log onto Workchain’s temporary staff’s online National Employment Savings Trust system and were then able to opt-out these members of staff.
Auto-enrolment inducements – The sole or main purpose test
In Kostal UK Ltd v Mr D Dunkley and Others the Employment Appeal Tribunal has upheld an employment tribunal’s decision that an employer had unlawfully induced workers to vary the terms of their employment contract to avoid collective bargaining. Employment legislation protects collective bargaining by penalising employers who induce workers (who are members of a recognised trade union) to vary the terms of their employment in order to exclude a collective bargaining process.
Dixons Carphone in the spotlight
Geoffrey Budd, Chairman of the trustee of the Dixons Carphone defined benefit pension scheme, was the recipient of a letter from Frank Field dated 1 June this year. The letter followed Dixons Carphone’s most recent trading update announcing the closure of 92 Carphone Warehouse stores and a drop in projected pre-tax profits (estimated at £382m, down from £501m in 2016/17) and comes hot on the heels of the Business, Energy and Industrial Strategy and the Work and Pensions Committees’ joint report on Carillion.
Property & Construction
Tenant insolvency on the high street and the effect of company voluntary arrangements
High Street retailers are under pressure from the internet, squeezed incomes, rising overheads, too many outlets and too much debt.
The assignment clause in a commercial lease – Where are we now?
Most commercial leases allow the tenant to assign the lease subject to first obtaining landlord’s consent. The assignment clauses commonly seen today are a far cry from the assignment clauses encountered 10 or so years ago. What has driven the changes in the way we approach the assignment clause in a modern commercial lease? It has been a combination of statute, industry intervention and case law.