Slides from a presentation to the ReCreate course at the Eastern Enterprise Hub on 4th April 2014. Overview of possible legal structures and legal issues throughout the business life-cycle.

1. Eastern Enterprise Hub – 4 April 2014
Start-up structures and growing pains
Jon Bloor
Partner – Corporate Services
jbloor@prettys.co.uk
01473 298219

2. Company limited by Shares
–Articles of Association
–Companies Act 2006
–Companies House
–NOT suitable for charities
–Limited liability
–Dividends
–Directors duties

3. Company limited by guarantee
–No shares
–Members' guarantee
–Limited liability
–Suitable for charitable status
–Can have "asset lock"

4. Company limited by guarantee
–Shares or guarantee
–CIC regulation
–Limited liability
–Can't be a charity
–Asset lock
–Community interest test

5. Sole trader
–No constitution
–Unlimited liability
–No specific regulation
–Income tax?

6. Partnership
–Partnership Agreement??
–Partnership Act 1890
–View to a profit
–Joint & several liability
–No registration
–Tax transparent

7. Limited liability partnership
–Members Agreement??
–LLP Act 2000
–Limited liability
–No charitable status
–Companies House administer
–Taxed like a partnership

8. And the rest…
–Charitable Trust
–Charitable Incorporated Organisation (CIO)
–Industrial & Provident Society (Comm. Ben. or Coop)
–Unincorporated association
–Limited Partnership
–Hybrid structures (tax planning)

9. Legal Growing Pains

10. Employees
• Employment Rights Act statement
• Employment contracts?
• Policies?
• TUPE
• Help?!

11. Premises
• Freehold
• Leasehold
• Licence
• Pop-up?
• The garage

12. Supplier contracts
• Payment terms
• Distribution (exclusive, sole etc.)
• Likely to be stuck with standard terms
• But… don’t overlook smaller suppliers

13. Customer contracts
• Standard terms for sales of products and services
• Payment terms
• Passage of ownership and risk
• Limitations of liability

14. Shareholders Agreements
• Granting shares to promising new employee
• Transfer restrictions
• “Leaver” provisions
• Management and disputes?

15. Employee incentives and ownership
• Share Options
• Enterprise Management Incentive
• Employee Shareholder status
• Mutualisation

16. Moving into e-commerce
• New website
• Distance Selling Regulations
• Payment processing
• Fulfilment and delivery
• More contracts?!

17. Outsourcing
• Warehousing
• Fulfilment
• Contractual protection
• Service Level Agreements
• TUPE

18. Funding – banks
• Overdrafts
• Term loans
• Invoice financing
• Personal guarantees
• Debentures and security

19. Funding – private equity
• Equity stake
• IRR
• Exit focussed
• Value driven
• Sell your business the day you take on PE funding?

20. Funding – the crowd?
• Kickstarter
• Peer to peer lending
• Crowd sourced lending
• Equity crowd funding
• Is this the future?

21. Intellectual Property
• Trade marks?
• Website IPR
• Audit of IPR portfolio
• Registrations and maintenance
• Debentures and security

22. Data Protection
• Notification
• Fair processing
• Security
• ICO fines - £200k!

23. Growing by acquisition
• Horizontal (competitors)
• Vertical (supply chain)
• Diversification
• Due diligence and legal documents

24. Corporate governance
• Banks and investors
• Management team
• Non-exec directors
• Corporate governance code (listed companies)

25. Exit routes (1)
• Sale
• Winding up
• Management buyout
• Initial Public Offering

26. Exit routes (2)
• Due diligence (again)
• Sustainable without founders?
• Legal documentation
• Impact on value
• Succession planning (not just an “exit” issue)

27. Questions?