6 minute read
SBT Legal
from SBT issue 441
BY CHARLIE PATTIHIS, SOLICITOR – HEALYS CORPORATE & COMMERCIAL
CONGRATULATIONS TO LUCY TARRANT, MANAGING DIRECTOR OF COGNITIVE LAW
SBT LEGAL SPONSORED BY:
The global pandemic and its all-consuming
Legal impact on businesses, not only in the UK but across the world, means that many business owners have been forced to pivot and/or innovate just to survive.
This is a huge opportunity for business owners to reflect on their current processes and to take steps to strengthen and adapt to the evolving ‘new normal’. If you’re changing the way you do things, you need to make sure that any practical changes also work from a legal perspective and complement your long term strategy.
Here are a couple of things to think about.
Constitutional documents and ownership arrangements: don’t have the rug pulled out from beneath you…
Have a look at your constitutional documents (your articles of association and/or shareholders’ agreement). Chances are these have not been looked at in some time but they are in fact extremely important documents. Remember that these arrangements are not static – as your business develops they too should be refreshed to reflect changes in your underlying structure or practices. Covid 19 has created one obvious need for a review – the new way of working means that many businesses have adapted to holding virtual team, management, board and/or member meetings. Platforms such as ‘Zoom’, ‘Skype’ or ‘Microsoft Teams’ have been extremely successful during this time and appear to have provided a solution to some of the legal obstacles facing businesses in the decision making processes.
Unfortunately, as is so often the case, the law can be a few steps behind innovation and there can be issues if your constitutional documents do not allow for meetings to be held virtually.
If your articles require that notice of a meeting should state the time, date and “place” for the meeting, this has been interpreted that a meeting would have to be held in a physical place.
What does this actually mean for your business I hear you ask? Well, the bottom line is that there is a risk that any decisions taken at a virtual meeting will be invalid. So, a decision to enter into a finance agreement or new commercial arrangement could ultimately be unlawful. This could potentially cause significant contractual and financial problems for the business. It is also possible that the directors themselves could become personally liable for a breach of their director’s duties.
The current conservative approach is to make sure your constitution expressly allows for virtual meetings. We also recommend including additional wording to make it clear that participants can attend, speak and vote at a virtual meeting.
A different kind of exit: If your ship doesn’t come in, swim out and meet it!
Has the pandemic scuppered a potential sale of your business or, perhaps just given you pause for thought about the way in which you run your business now and how to plan for the future? Traditional sales are very much still an option. But have you thought about Employee Ownership instead?
Employee Ownership structures allow businesses to implement arrangements (usually tax efficient) so that they are either wholly or majority owned by their employees (John Lewis is a great example of this) with the employees either holding shares in the company directly, via an Employee Ownership Trust company or a combination of both. They are the fastest growing form of business ownership structure in the UK at the moment with more and more business owners recognising the opportunity to improve performance and create a stronger business for the future.
So, why might
Charlie Pattihis
you think about an Employee Ownership structure for your business?
Legacy: Transferring ownership of the business to your employees instead of selling to a third party can allow for a more holistic exit. The transfer process can be implemented at a pace which suits your business allowing you to continue to be involved and help the business grow more remotely whilst bringing through the next generation of leaders to take the business on and continue the culture and ethos you have created.
Empower and incentivise your
employees: Employees that think more like business owners are more likely to fully engage with that business and work together to improve performance; and research has shown that employee-owned businesses perform more strongly as a result of a more collaborative culture. On top of this, Employee Ownership can be a powerful recruitment tool you can use to attract and nurture and inspire talented employees.
Flexibility: We have already mentioned the benefits of a tailored
implementation of the transfer but, perhaps more importantly for business owners, switching to an Employee Ownership structure allows for an exit without the need to find a third party buyer. On top of this the transfer itself can be funded by a mixture of traditional bank financing and capital as well as by the business itself.
Tax: There are very attractive tax incentives available when you switch to certain Employee Ownership structures. Given the question mark over the future of Entrepreneurs Relief this has to be a consideration that shouldn’t be ignored.
If you’d like to speak in a bit more detail about any of the above points, Healys’ experienced Corporate Commercial team are here to help. Our lawyers can advise and assist you in all contractual and corporate restructure matters. For more information or advice, please contact us on 020 7822 4000 or email
corporate@healys.com
Sussex Law Society
On 15th October 2020 Lucy Tarrant, Managing Director of Cognitive Law was appointed President of The Sussex Law Society.
The election took place at the first
Legal ever on-line Annual General Meeting attended by the General Committee, which each year appoints the positions of President, Vice-President, Honorary Treasurer and Honorary Secretary.
Lucy Tarrant will hold that role for 1 year, and takes over the mantle from the outgoing president, Jacqueline Hardaway, Managing Partner of Dawson Lewis solicitors in Uckfield.
Founded in 1860, The Sussex Law Society is a professional organisation representing solicitors practising in the central Sussex area. It provides invaluable benefits to its members, including local training as well as a platform to share news and local legal updates. In this much-coveted role Lucy Tarrant will continue to lead and support The Sussex Law Society’s members during the next 12 months.
As the owner of boutique consultancy law firm Cognitive Law, Lucy Tarrant has a passion for creating a true work life balance for solicitors. Lucy’s fresh approach to how legal services can be delivered will be invaluable in supporting members at this tough time. Lucy has grand plans for the year and will be dedicating her time as President to supporting the members in adapting to change; as well as bringing awareness of solicitors’ wellbeing and mental health to the forefront.
Having been appointed President, Lucy Tarrant says: “I am excited and
Lucy Tarrant
honoured to accept this role, during what are uncertain and potentially difficult times for law firms. I will be drawing on my experience of flexible and remote working to help fellow professionals adapt and thrive whilst maintaining a supportive and collegiate environment in which to practice.”
The Sussex Law Society Chief Operating Officer, Jeanette Lacy-Scott said of the AGM: “Congratulations Lucy Tarrant - I was so uplifted by your talk of camaraderie in the profession and your vision of how the Sussex Law Society can support its members in these difficult times, particularly
our Junior Lawyers. And thanks to Jacqueline Hardaway who has been an amazing President over the past 18 months and an absolute joy to work with. It was a fun first virtual AGM and set a positive tone for the year ahead in spite of everything!”
To find out more about The Sussex Law Society visit www.sussex-law.co.uk
