Withy King Directors’ Briefing

March 11, 2014

Swindon and Marlborough-based law firm Withy King has prepared a round-up of the latest legal developments and other issues which may affect directors in business as well as in their personal lives.

Appeal case highlights perils of personal guarantees

It is now common practice for directors to enter into personal guarantees when securing funding for their company, but a recent appeal case serves as an important reminder that doing so should not be taken lightly. The director involved was held to be responsible for a loan nearly seven years after he had resigned and, worse, the guarantee allowed for the credit limit to be increased without the director’s permission, resulting in the company going on to almost double the debt owed to the lender after he had left. On resigning from a role directors should always seek an effective release from their responsibilities.

For advice on any contractual matter or dispute, please contact Philip Banks-Welsh at philip.banks-welsh@withyking.co.uk

Shake-up of divorce and financial settlements due

The Government’s Law Reform Commission is due to publish proposals for a radical overhaul of English divorce law. Reforms are likely to give legal standing to pre-nuptial and other marital finance agreements so that pre-acquired assets, including inheritances, shares and businesses, can be ring-fenced and kept out of the ‘pot’ for division on divorce. There will also be a review of the law relating to spousal maintenance.

For family-related advice, please contact Trina Gibson at trina.gibson@withyking.co.uk

More than one person needed to handle the disciplinary process

When dealing with a disciplinary issue, the investigation and disciplinary stages should be kept separate. One person should oversee the investigation and a second person should deal with the disciplinary hearing. Ideally, any appeal should be dealt with by a third person, previously uninvolved with the matter.

However, SMEs will often have the same HR manager overseeing both. A recent case in the Supreme Court has highlighted the need to limit the remit of the HR role to advising only on procedural matters. A failure to do so could lead to the fairness of the procedure being challenged and any dismissal may be unfair.

For employment law advice, contact Lauren Harkin at lauren.harkin@withyking.co.uk

Reforms to Intellectual Property law could impact you

Significant reforms to the legislation governing our intellectual property rights could be announced later this year. Whether you are from a creative industry or not, you are likely to be affected. For example, the UK’s forthcoming Intellectual Property Bill aims to strengthen design protection by introducing criminal penalties for copying UK registered designs. Ultimately the reforms aim to encourage innovation and creativity in the UK and we will be interested to see if they have the desired, positive impact.

For advice on Intellectual Property matters, contact Jessica Bent at jessica.bent@withyking.co.uk

Three ways to get out of your lease

If you need to move out of your business premises earlier than expected, you will need to scrutinise the terms of your lease so you can weigh up your options. Here are three of the most common ways to exit: (i) Bring your lease to an end by using a break clause or, if there isn’t one, try to negotiate an early surrender with the landlord. (ii) Assign the lease if this is permissible. You will need the landlord’s prior consent and it is likely you will be responsible for the new tenant’s performance under the terms of the lease for as long as they remain the tenant. (iii) Sublet the whole or part of the premises to a third party, with the landlord’s prior consent. Although it will not allow you to get out of your lease, it will mean someone else is paying the rent and covering the bills.

For commercial property advice, please contact Greg Callard at greg.callard@withyking.co.uk

Choosing the best structure for your charity

Trustees of charities that are businesses, or employ staff, often want to limit their potential personal liabilities. Previously, charities were usually set up as companies but the compliance and administrative responsibilities accompanying company status could seem burdensome. Now it is possible to register as a Charitable Incorporated Organisation (CIO). This new form of charity, aimed at small to medium-sized organisations, is designed to be simple to administer. Some 500 CIOs have so far been registered, but, as the jury is still out over whether they confer benefits in practice, a company structure may still be preferable. 

For advice on charity structures, contact Samantha O’Sullivan at samantha.osullivan@withyking.co.uk  

To find out more about how Withy King can support you in your business or personal life, visit www.withyking.co.uk



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