Excellent experience start to finish – always very responsive to any queries and the turnaround on the property I was buying was very quick, even in the busy time leading up to stamp duty deadline. Jenny was always very helpful and went above and beyond to close on a short timescale.
Welcome to our latest departmental newsletter. The focus this month is on our Corporate and Commercial team.
DeBrieF FACTS:
Andy McNish – a partner in our Corporate and Commercial department – discusses Transparency; Forthcoming Changes to Company Law.
The Small Business, Enterprise and Employment Bill is currently going through Parliament. It’s a bit of a ragbag of various small measures and covers miscellaneous areas of Business Law including Employment and Insolvency. It’s likely to come into force sometime in 2015.
Part 7 deals with Transparency and Part 8 with company filing requirements.
The headlines from these parts are:
• The annual return is replaced by an annual confirmation statement.
• Having a director who is a corporation or other non-natural person will be prohibited (and any existing corporate directors will be removed after a 12-month transitional period)).
• The Company must keep a register of anyone who is a ‘person with significant control’ – this means someone who ultimately controls more than 25% of a company’s shares or voting rights or otherwise exercises control over a company or its management. Details of any such person will appear on the annual confirmation statement. This will mean that an owner of more than 25% of a company will no longer be able to hide behind nominee shareholders to keep his or her name off the public record.
• Shadow directors (person who are not registered as directors but at whose directions the majority of the board are accustomed to act) will to a very large extent have placed on them the same directors’ duties and responsibilities as registered directors have.
Click here for more information on Andy and his work.
DeBrieF TEAM SPOTLIGHT:
Rosemary Reynolds, Trainee Solicitor…
What does your role at Davis Blank Furniss involve?
I am a trainee solicitor within the Corporate and Commercial department. I enjoy working with all members of the Commercial team obtaining a vast range of experience.
What is the best thing about your job?
The chance to learn about a wide range of legal matters with the independence to approach problems and manage clients in my own style.
What is the best case you have been involved in?
In the first week of my time at the firm, I was involved in the completion of an acquisition that had been months in the making. The day itself was very busy but came together seamlessly when it needed to. I have since enjoyed being involved in further M & A work from the very early stages and have had the chance to work on all aspects of the transaction as well as the completion.
Name the person who has been the biggest influence on your career.
My mother. She is a business owner who has always encouraged me to strive for independence and knowledge and to never turn down the opportunity of an adventure.
If you were not a lawyer, what would you be doing?
I would be an outdoor activities instructor kayaking and climbing around the Lake District.
DeBrieF OPINION:
Andrew Ryan – a partner in our Dispute Resolution department – discusses: Can you always hide behind a limited liability company?
It is a well-established principle in English law that a limited liability company has a separate legal personality to its shareholders (i.e. the “controllers” of the company). This principle was established in the case of Salomon v A Salomon and Co Limited more than 100 years ago and is the foundation of modern company law.
In the case of Prest v Petrodel Resources Limited [2013] 2 WLR 1 the Supreme Court was asked to decide whether there are circumstances in which the court will disregard the principle that a company is a legal entity distinct from its shareholders and ‘pierce the corporate veil’.
In divorce proceedings, the High Court had ordered that Mr Prest pay a lump sum of £17.5 million to Mrs Prest. By way of partial satisfaction of that payment, Mr Prest was directed to procure that seven properties in companies wholly-owned and controlled by him be transferred to Mrs Prest. Upon appeal, the Supreme Court found that the properties were held on trust for Mr Prest and ordered that they should be transferred to Mrs Prest. This being so, the Supreme Court did not, therefore, need to decide whether you could ‘pierce the corporate veil’ to decide the case. The Supreme Court, however, recognised that there was value in deciding whether and, if so when the corporate veil could be pierced. The Justices of the Supreme Court all held different views but the majority seemed to acknowledge that the corporate veil could be pierced.
In the leading judgement, Lord Sumption thought that it was necessary to recognise a limited power to pierce the corporate veil if the law was not to be “disarmed in the face of abuse”. He highlighted the difference between ‘concealment’ and ‘evasion’. Concealment refers to an attempt to disguise ownership of assets (e.g. through trusts), but does not change the fact that beneficial ownership is retained by the beneficiary. Evasion involves transferring ownership of the property to a third party so as to frustrate any attempt to enforce a claim to those assets. It will not apply where ownership is transferred for bona fide reasons.
The Court of Appeal considered the Prest case in R v Sale [2013] EWCA Crim 1306. Mr Sale had pleaded guilty to a criminal charge of corruption. In return for providing gifts and hospitality an employee of Network Rail had arranged for the award of several high-value contracts to a company in which Mr Sale was the sole shareholder. The court applied Lord Sumption’s evasion and concealment principles and found that the case did not come within the evasion principle as there was no legal obligation or liability which was evaded or frustrated by the interposition of the company. The company existed long before the corrupt conduct and existed for genuine trading purposes. The court did find the case fell within the concealment principle: given that Mr Sale was the sole controller of the company and there was a very close inter-relationship between the corrupt actions of Mr Sale and steps taken by the company in advancing those corrupt acts and intentions. It found the reality was that the activities of Mr Sale and the company were so interlinked as to be indivisible. Mr Sale and the company had acted together in the corruption and insofar as the company was involved, what it did serve to hide (or conceal) what Mr Sale was doing. In the light of this, the court found it could not pierce the corporate veil. You may be pleased to learn that the court did find a way to make an order against Mr Sale personally – by applying the criminal law.
Click here for more information on Andrew and his work.
DeBrieF News:
Davis Blank Furniss to Sponsor Next Business Introductions Event
Davis Blank Furniss is sponsoring a networking event on 28th January 2015 with Business Introductions.
It will be taking place at Neighbourhood in Spinningfields from 5.30pm to 8.30pm.
Tickets are £10.00 each and more information/ booking details can be found here.
If you have any queries or require any further information, please do not hesitate to contact our team of specialist solicitors on 0161 832 3304.
