Legal: Include pets in your will

Insolvency rules extended

The extension of temporary measures to protect businesses and their directors during the coronavirus pandemic has been welcomed by corporate lawyer Sam Pedley.

Mr Pedley, a partner at Midlands law firm Mfg Solicitors, said businesses had been given vital ‘breathing space’, thanks to the extension of two insolvency measures until the end of June.

Measures brought in last summer as part of the UK Corporate Insolvency and Governance Act 2020 provided temporary protections during the coronavirus crisis.

One measure was the suspension of personal liability for ‘wrongful trading’, which has protected directors from being prosecuted if they fail to act in the best interests of their company’s creditors, once the business becomes insolvent.

That was meant to have ended on 30 April 2021, but has now been extended.

The other measure prohibits creditors filing winding-up petitions on the basis of statutory demands or where Covid-19 has had a financial effect on a company. That measure was meant to have expired at the end of March 2021 but has also been extended.

Mr Pedley, from Mfg’s commercial litigation department, said: “The extension of these temporary provisions provides ongoing breathing space to companies whilst coronavirus-related restrictions remain in place, ensuring that an immediate cliff edge is avoided.

“Both measures go hand-inhand when it comes to protecting commercial tenants who might otherwise have been confronted with a raft of statutory demands this spring.

“The extension until 30 June covers businesses until the planned end of legal limits on social contact, currently set at 21 June 2021. Whether this is the final extension remains to be seen, but for now this is a much needed lifeline for businesses who find their ability to trade severely hampered by things that are completely beyond their control.”

It is crucial for all charities to have an official delegated authority in place so that their trustees are legally protected, according to Thursfields Solicitors.

The warning is part of new advice that the Midlands law firm is issuing to the third sector on legacy income and protecting charity trustees.

Katherine Ellis, a senior associate solicitor in the charities and communities sector team at Thursfields, said it was important for all charities to have an official delegated authority in place to avoid possible personal liabilities.

Ms Ellis said: “A delegated authority confirms which charity employees may carry out which specific tasks or make certain decisions on behalf of the charity’s trustees.

“Without this, even simple tasks such as approving estate accounts, acknowledging receipt of legacy income, or making decisions about an estate and any arising issues should not be undertaken by anyone other than the trustees.

“To do otherwise presents risks for not only the trustees but also the employees involved as, even if they were acting in good faith, both could find themselves personally liable if an issue were to arise later down the line.”

Ms Ellis explained that it was unlikely to be feasible or practical for charity trustees to oversee every action that might arise.

She said this is why it was imperative that an official delegated authority document existed for the protection of the charity’s trustees, employees, and the whole charity.

Ms Ellis said: “This document clearly sets out which charity employee or employees are permitted to undertake which tasks, and how far their powers of decision-making extend.

“It is also essential that existing forms of delegated authority are reviewed and updated periodically.

“Also, trustees may wish to bring certain aspects of the legacy management role under their control, or to rely more heavily on specialist staff to oversee additional aspects of the legacy management process, allowing them greater decision-making scope.”

Include pets in your will

A staggering 3.2 million of UK households have acquired a pet during lockdown, and lawyers are now encouraging owners to update their wills to cover the new member of the family.

The surge in pet-owning homes takes the national total to 17 million, according to the Pet Food Manufacturers’ Association, and lawyers say owners should make sure these animals are provided for after their death.

Private capital expert Paul Davies from national law firm Clarke Willmott says adding a pet to your will is simple, and can save a lot of stress later down the line.

He said: “Everyone knows that a pet is not just for Christmas and it’s not just for lockdown either. Taking ownership of a pet is a big decision and part of that is considering what would happen to your pet when you die.

“A pet can be left under the terms of your will and there are various options available. The most formal is a trust in the owner’s will with trustees given a sum of money to provide for the pet’s care and asked to find a home for them. This needs to be carefully drafted by a legal expert.

“Another option is to give the pet to an individual in the will with a request that they provide a home for the pet.

“The request would not be legally binding so thought would have to be given as to what happens if the person can’t or won’t look after the pet.

“The least formal option is a letter of wishes accompanying the will setting out how you would like the executors to deal with your pet. This can be updated without changing the will but is not legally binding, although it would have moral force.

“It might also be possible to ask a charity to rehome your pet. For example, the Dogs’ Trust operates a scheme whereby the owner completes a canine care card. Someone is chosen by the owner as the Dog Guardian who can pass over ownership of the dog to the Dogs’ Trust who will then attempt to find a new home. “One of your executors may be the best choice of Dog Guardian and it would be a good idea to include these instructions in your will. The owner might like to leave a legacy to the charity rehoming the pet. “A similar service for cats is offered by Cats’ Protection and both charities pledge never to put down an animal because a new home can’t be found.” Clarke Willmott recently developed a free, online tool called ‘Which Will?’ to assist people looking into making or updating a will. The tool prompts the user to think about what is important to them when making a will and recommends which will best meets their needs.

Paul Davies: Don’t forget about your pets when you shuffle off this mortal coil

Charities must delegate authority

Katherine Ellis: Trustees should have written agreement about their obligations

Consider the legal requirements of new workplace practices

Employers looking to update working practices and businesses are starting to implement new ways of associated policies could be taken to the cleaners, if working, including increased remote working. they are not careful. “If place of work is contractual in nature, then

Employment law specialists Pinsent Masons have consultation will likely be required before changes can warned that legal action might follow if employers do be made. Unlike non-contractual polices, any not consult their workforce and carry out risk contractual term can only be changed if there is an assessments. existing contractual right to do so, by agreement, or by

A number of organisations have already revealed terminating the existing contract and offering reintentions for permanent changes to these policies, as engagement on the new contractual terms. firms begin to drift back to work after lockdown. “A refocus on health and safety obligations will also

Among them is working from home – but Pinsent become more important, especially where employers lawyers say that there are a number of legal encourage staff to work from home on an requirements employers must ensure they follow ongoing basis. before implementing new working “Employers have a duty of care for the arrangements. health and safety of their workforce,

Workplace policies and ‘place of work’ in regardless of whether staff are officeparticular, may be a contractual term and if based or working remotely. It is so, employers are likely to have to consult important to carry out work station employees before making permanent assessments and consider changes. safeguarding the mental health of

Additionally, organisations must ensure they home workers in good time before continue to meet their health and safety policies are implemented. obligations, which is challenging with “At the same time, employers more people working from should not rush into making home. permanent decisions without

Amy Hextell, an employment having gauged staff law specialist at Pinsent, said: preferences and properly “The last 12 months have thinking through the steps allowed companies to see the needed to ensure health benefits of working from and safety of those home, and a number of Amy Hextell: Employers shouldn’t rush into making changes working from home.”

Lawyers advise on housing deal

Law firm Bevan Brittan, led by a partner from its Birmingham office, has advised housing association Catalyst Housing Group on its link-up with Rosebery Housing Association.

The link-up – described as a ‘partnership’ - means Rosebery will operate as a subsidiary of Catalyst, but with its own board and management team, operating within a defined geographic area.

Catalyst owns and manages 34,000 homes in London and the South East and Rosebery has around 2,700 in Epsom and the surrounding areas.

The partnership will deliver 2,000 new homes in Rosebery’s area of operation within 10 years.

Bevan Brittan partner and social housing specialist Sarah Greenhalgh, who is based in the firm’s Birmingham office, led the 20-strong team that advised Catalyst on the partnership.

She said: “ It is enormously satisfying to play a part in a deal like this which will help to improve communities and provide much needed homes.”

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Checking whether ‘The Price Is Right’ when buying or selling a business

‘The Price Is Right’ might be a clichéd game show title, but it’s a fundamental point to get clear from the outset of negotiations for anyone buying or selling a business.

As deals activity has bucked the Covid crisis and continued to flourish, with many potential buyers and sellers considering their options.

When businesses are being bought and sold, everyone’s focus is ultimately on achieving the best deal for them but agreeing terms to buy or sell a business is not always as clear cut as it may at first appear.

Often negotiating parties will agree a headline price with very little detail as to what this includes or what it is based on, and this is particularly an issue if you are buying or selling a limited company.

Our experience shows that flushing out the detail of the deal terms as early as possible will ultimately save our clients time, costs and avoid misunderstandings as the deal progresses.

Is the deal price fixed?

Often the deal price first stated is a headline starting point and not the actual cash price the seller ultimately receives, the headline price is often accompanied by the phrase “cash free/debt free”.

This can mean that the buyer will require various deductions to be made, such as bank loans or overdrafts outstanding at completion.

Or a seller may have large cash reserves in the business and will expect this cash in addition to the headline deal price.

To avoid misunderstandings, state explicitly what you consider to be included and excluded from the deal price quoted so that expectations are clear from the outset. net asset position of the business will be no worse than set out in the last set of full accounts provided to the buyer prior to it making its offer?

Or, does the buyer require a specific minimum net asset target to be achieved at completion? If so, make that target amount clear and state also whether there is an expectation of a minimum amount of cash being left in the company.

What are ‘completion accounts’?

The practicalities of how a final adjusted price is established should be discussed at the same time as agreeing the price.

It can often be a requirement that ‘completion accounts’ are drawn up to establish any price adjustments to be required to reflect apportioning of precompletion income and expenditure. These are accounts drawn up to the date of completion as though that date were the business year end.

They seek to be as accurate as possible about apportioning income and expenditure to the period pre-completion, and enable a level of accuracy to be achieved in finalising the price payable.

A deal will always progress more smoothly if all the above issues on are the table from the outset of negotiations.

We will guide you through the entire process of buying or selling your business, from the point of initial negotiations to final completion and always look to ensure that as far as possible the deal you agreed is the deal you get.

For further advice contact Fiona Boxwell, Corporate Associate Director on 0345 20 73 72 8 or fboxwell@thursfields.co.uk.