46 legal focus Get your house in order
We all know that no-one lives forever and it is much better to have considered your untimely demise than to leave your partners in business and in family matters having to resolve complicated and difficult issues in the event of your death. Greg Humphreys, a partner in the commercial team at Newbury solicitors, Gardner Leader, is keen to ensure that his clients carefully consider the benefits of shareholder and cross option agreements
In a recent meeting with a client who is a director and shareholder of a limited company, we discussed company affairs and whether he had any arrangements for his shareholding in the event of his death. It quickly became apparent that he had made no arrangements. I explained that without taking further steps there would be no obligation on the other shareholder in the company, who survived my client, to buy out the shares in the company from my client’s beneficiaries. This may deprive my client’s beneficiaries of a significant source of funds following the death of my client. Additionally, there was no insurance in place to enable a pay out for purchasing my client’s shares from the beneficiaries in the event of my client’s death.
I suggested my client should put in place a cross option agreement supported by an insurance policy which would pay out in the event of my client’s death. The cross option agreement would grant rights to the surviving shareholder and to
the beneficiaries of my client’s estate to force a sale of the shares to the surviving shareholder. The surviving shareholder would benefit from the proceeds of the insurance policy taken out by my client, with the proceeds of the policy having been written in trust for the surviving shareholder.
Clients considering this form of arrangement need to decide on the specifics of the policy, including the value of the pay out, which should closely match the value of the shareholder’s interest in the company, and how the price to be paid on the death of the deceased shareholder should be set.
These suggestions can be incorporated into a shareholders’ agreement or in a standalone cross option agreement.
The benefits of ensuring a certain transfer of the deceased’s shares far outweigh the potential difficulties that could be experienced by the surviving shareholder or the deceased’s
Don’t fall foul of the Bribery Act
In less than two months time (July 1), the Bribery Act 2010 comes into force, impacting the way many companies do business, both at home and abroad
The move will see the UK having some of the toughest anti-corruption regulations in the world and it comes in amid concerns from the business community that the new rules will be expensive and difficult to implement.
Now though, after widespread consultation with business leaders delayed its original introduction, justice secretary Kenneth Clarke says newly- published guidance on the legislation will help companies adapt to the rules.
The Bribery Act makes it an offence, punishable with up to 10 years in jail and an unlimited fine, to fail to prevent bribery by anyone working on behalf of a business – something which applies both to UK companies in business at home and abroad, and to foreign companies conducting business in the UK.
A company can however, avoid conviction if it can show it has adequate procedures on place to prevent bribery, which is why David Pritchard, litigation partner at leading Buckinghamshire law firm B P Collins, says it is so crucial for companies to make sure they have their house in order.
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The event will also look at issues such as the importance of conducting proper risk assessments, implementing proportionate policies and procedures, understanding how facilitation payments fit in, dealing with staff training and reporting structures, as well as the territorial scope of the Act.
“The penalty for getting it wrong can be huge, which is why it’s so important for companies to understand and implement the government’s guidance and ensure they don’t unwittingly fall foul of the law,” added Pritchard.
“At the same time of course, it’s important that the measures they take don’t stifle their sales teams or impact on future business. The seminar will provide straightforward, commonsense advice, which is what really counts, and that’s why we want to encourage as many people as possible to come and talk to us on June 7.”
David Pritchard
“All organisations, whether big or small, will be affected by the Bribery Act and it’s really important that businesses review their anti- bribery policies now and start to put appropriate steps in place to reduce their risk of liability,” he says.
One of the key areas of concern has been how the new legislation will impact on corporate hospitality, and this is among the topics Pritchard will be focusing on at a free breakfast seminar on Tuesday, June 7, designed to give businesses an overview of the do’s and don’ts of the Act.
THE BUSINESS MAGAZINE – THAMES VALLEY – MAY 2011
To book your place visit the events page of the website or to speak with Pritchard about the Bribery Act call him, details below.
Details: David Pritchard 01753-279050
david.pritchard@
bpcollins.co.uk www.bpcollins.co.uk
beneficiaries, if for any reason a sale of the deceased’s shares cannot be agreed following his death.
To discuss any of these issues in more detail, contact Greg Humphreys.
Details: 01635-508080
g.humphreys@
gardner-leader.co.uk.
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