Blake Lapthorn Corporate seminar: SME's: planning today for tomorrow - 22 April 2013
A ‘living Will’ for your business:preparing for changeMichelle Harte, AssociateCorporate Finance email@example.com
Why bother? It makes good business sense. If you don’t – bigger legal fees!
Types of ‘living Wills’ for businesses Shareholders’ agreement Partnership agreement Limited liability partnership agreement Family charters
Shareholders’ Agreement (SHA) Overlap with Articles of Association. Different types of SHA and when you needthem. What they cover:– Management and operation of company.– Regulates relationship between theshareholders and company.– Provides a framework for managing expectations
Main areas: Board composition. Decision-making at board and shareholder level. Minority protection. Deadlock and dispute resolution. Distribution of profits. Issue and transfer of shares. Commitment of management team and shareholders. Incentives to management. Mission statement / exit strategy. Restrictive covenants.
Partnership Agreements No legal requirement to have one but…STRONGLY ADVISABLE! Reasons why
Main areas: Capital. Partnership property. Profits and losses. Decision-making. Internal governance. Commitment of partners.– duties, powers, restrictions, annual and other leave Retirement, death, suspension and expulsion. New partners. Dissolution.
Limited Liability Partnership Agreements Again, no legal requirement but…– STRONGLY ADVISED! Reasons why Main areas covered
Family Charters Family mission statement. Not just for the business owners. Use in conjunction with other businessagreements / ‘living Wills’.
Main areas: Family goals. Ethical considerations. Governance. Succession. Ownership of and sale of family shares. Employment of family. Communication between management and family. Dispute resolution. Support to other family members.
What you can take away from this Good business reasons to put a business ‘Will’ inplace. Watch out for businesses growing, converting to adifferent form, looking for investors, thinking aboutentering a joint venture. Client benefits– Reason for regular client contact.– 360° service to clients.– Local and readily available expert legal advice onhand.
EMI SchemeKathy Hills, SolicitorCorporate Tax firstname.lastname@example.org
Qualifying CompaniesThe company must: be independent; have gross assets less than £30m; have a UK presence; be trading; and have less than 250 employees.The aggregate limit of unexercised options in thecompany must not be more than £3m.
Qualifying EmployeeThe employee must: meet the working time requirement; and not have a material interest in the company.The maximum value of options for each employee is£250,000 in any 3 year period (only the excess over£250k is disqualified from EMI status).
The OptionsThe options: must be exercised within a 10 year period from thedate of grant; must not be over shares which are redeemable orconvertible; the exercise price should be fixed at the date of grant;and the grant must be notified to HMRC within 92 days ofthe grant.
Tax There is no charge to income tax/NICs on the grantof an option. No tax/NICs charge on exercise if exercise price isthe same as the market value (on grant). Once exercised, the exercise price becomes CGTbase cost. No minimum holding required to qualify forEntrepreneurs Relief on a sale. The ownership period now starts to be counted fromthe date of grant of the option and not the acquisitionof the shares.
Disqualifying Events Events relating to the company. Events relating to the employee. Other disqualifying events.
Exercise ‘Exit only Immediate Exercise Single Vesting Vesting in Stages Vesting Subject to Performance Conditions
Points to Remember Shares must be issued in the Topco. A sub-division of shares may be necessary. Options must be notified within 92 days of the date ofgrant – otherwise the option scheme does not qualifyunder EMI. For exit-only options – there should be flexibility for acashless exercise within the scheme rules. Some changes amount to the grant of a new optionthus triggering a new valuation date.
LLP Conversion – is it for you?Michelle Harte, AssociateCorporate Finance email@example.com
What is a LLP? New (ish) form of corporate entity. More like a ltd co than a partnership? Formal incorporation process.
Limited Liability Partnership Agreement Strongly advised! Reasons why– Avoid default provisions.– Regulate your business and the relationshipbetween the business owners (members).
Converting to a LLP First steps– Liaise with advisors re: suitability for conversion.– Live an overview of the conversion process.– Advise on change in status.– Review existing terms of business.
The legal process Incorporate a LLP Transfer business and assets– third party consents– TUPE– property– tax considerations Draft the LLPA
Non-legal considerations Notification to third parties Insurance Annuitants Update website / marketing materials / engagementletters Pre-order new stationary / signage Timing and timetable
Why use Blake Lapthorn? Fixed fee package for conversion. Transparent pricing for ‘extras’. Meet with your clients to have initial talk aboutconversion process for free. Locally based and readily available legal expertise inthis area. We have acted for some of you already!