We appreciate that businesses may not always be aware of all the legal requirements and best practice with which they should comply.

We have therefore put together an easy-to-use interactive guide aimed at new start-ups, infant businesses and SMEs to identify areas that should be addressed.

Compass is an interactive guide to lead you in the right direction in identifying legal and compliance requirements, and best practice, in relation to running a business.

Simply click on relevant questions / sections for helpful information and details of how we can help.

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Protection against liability

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Compliance with Companies Act legislation

If you are a company, do you…

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Ownership

Are your rights of ownership clear?

Whether you are a partner in a partnership or a shareholder of a company, you should always ensure that your rights of ownership are set out clearly.

Setting out a clear framework of rules, responsibilities and procedures, will not only enable you to run an efficient and effective business, but it will also help to minimise the potential for disputes.

Do you have a shareholders agreement (if you are a company) or partnership agreement (if you are a partnership)?

Shareholders Agreements

The law doesn’t offer a solution for every potential issue or conflict that arises between shareholders, which is why it is so important to put a Shareholders’ Agreement in place at the earliest opportunity.

Shareholders’ Agreements can help the owners of a company take control over the way in which it is run. They can also help provide certainty and consistency within the business by setting out a clear framework of rules, responsibilities and procedures. Then, if there is a dispute or uncertainty on how to proceed in a particular situation, you can look to the Shareholders' Agreement for guidance.

If you would like us to prepare a Shareholders Agreement for your company, please contact us at corporate@berrysmith.com.  Our team will use their specialist knowledge and expertise to prepare a bespoke agreement that suits the needs of your business.

There may be circumstances where you will not require such an extensive and personal service; in which case you may wish to purchase a template Shareholders Agreement.

Partnership Agreements

A partnership automatically comes into existence when two or more people carry on a business with a view to making a profit.  

Without a partnership agreement, the legal terms of the partnership will be governed by the Partnership Act 1890. This is not recommended.

As with shareholders agreements, having a well drafted partnership agreement in place can reduce the scope for disputes. Where a dispute cannot be avoided, having a clear partnership agreement in place can often help save time, expense and frustration.  

If you would like us to prepare a Partnership Agreement contact us at corporate@berrysmith.com.

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Rights to Name

Do you have the rights to your company’s name?

A company’s name is an important asset. However, the name must be chosen carefully to avoid infringing third party rights, and to ensure that it meets all of the statutory requirements.

You may also want to register your company name as a trade mark since this will offer greater protection against unauthorised use.

Whether you are setting up a business for the first time or are contemplating changing your company’s name, our Corporate and Commercial teams can help you avoid the potential pitfalls that are inherent in choosing a company name.

Contact us at commercial@berrysmith.com for further assistance.

Are there any similar or confusing names that are used outside your business?

Issues may arise where two or more businesses (whether sole trader, partnership or company) have very similar or confusing names.

Where a business uses a name which is very similar to that of an existing business, the other business may be able to sue for damages for the tort of passing off. Passing off essentially involves making a representation that is likely to encourage another to believe that goods or services are those of another. In other words then, it prevents the unauthorised use of another’s goodwill. 

When setting up a new company or changing an existing company’s name, it is essential that you take the appropriate measures to minimise the risk of passing off.

Damages may be available if infringement persists and there is, of course, the risk of legal costs.

Our Company Set-up Team would be happy to assist you with this, so if you require their help please contact corporate@berrysmith.com
 

Have you protected your name against unauthorised use by others?

Registering your business name as a trade mark can be a smart move.

While registering your business name at Companies House prevents someone else from registering the exact same business name with Companies House, it does not give you the exclusive right to use the name as a business name.

If you want to ensure that your business name cannot be taken or used by anybody else, you will need to register your business name as a trade mark as this will offer the greatest form of protection against third party use.

If you are interested in registering your business name as a trade mark, please contact our Intellectual Property team at commercial@berrysmith.com who are experienced in providing advice and assistance in relation to the application process.

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Intellectual Property

Do your employees handle confidential information or trade secrets?

Every business will have confidential information and trade secrets which require protection. Examples of such information can include: client lists; strategic plans; confidential price or discount lists; budgets; designs or formulas. The disclosure of such information could cause real damage to the business and/ or put competitors at an unfair advantage.

If your employees have access to sensitive business information, you should ensure that there are appropriate measures in place to prevent unauthorised use and disclosure.

Our experienced lawyers can provide assistance with this process by:

  • preparing robust employment contracts to minimize the risk of disclosure of sensitive business information by employees and ex- employees
  • drafting clear policies to prevent unauthorised access to, and disclosure of sensitive business information
  • providing bespoke practical advice and information on how best to protect your business.

If you would like further information in relation to any of the issues raised above, please contact our employment team on employment@berrysmith.com.

Alternatively, if you already think that there has been unauthorised use of such information please contact our dispute team on dispute@berrysmith.com.  

Do you release confidential information or trade secrets to other third parties from time to time?  

The disclosure of sensitive business information to third parties could potentially cause real damage to your business if it made its way into the wrong hands.

However, where it is necessary for disclosure to take place, we would always advise you to enter into a non- disclosure agreement with the relevant third party.

The presence of a well drafted non-disclosure agreement serves as a preventative measure; to discourage the disclosure of information in the first place. It also offers a form of recourse (i.e. a claim for damages for breach of contract) in the event that the agreement is breached.

Furthermore, a non-disclosure agreement may be drafted in such a way as to make it easier to obtain an injunction against the third party in the event of impending unauthorised disclosure.

Please contact us on commercial@berrysmith.com for assistance.

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Employment

Have you collected appropriate information from your employees to ensure their legal status?

Every employer in the UK must carry out certain checks to ensure that their employees have the legal right to work here, and keep records of the checks that they have carried out.  Failure to do so could lead to significant sanctions for the employer including a fine of up to £10,000 for each illegal worker employed, and in some circumstances, imprisonment.  

If you want to ensure that your procedures comply with the relevant legislation, please contact our Employment Team on employment@berrysmith.com.

Do you have an employee handbook with policies to protect and guide you and your employees?

A staff handbook is a non-contractual document which sets out an employer’s policies and procedures. It is a useful business resource which (if drafted well) can help ensure clarify and reduce confusion in the work place by setting out the employers position in relation to certain issues in a clear and concise manner.

Many employment contracts include a clause which provides that employees must comply with the provisions of the staff handbook as amended from time to time. The inclusion of such a provision places a contractual obligation on the employee to adhere to the terms of the staff handbook, which helps strengthen the employers’ position. 

Our employment team has vast experience in the preparation of policies, procedures and staff handbooks for businesses of all sizes.

If you would like our team to prepare bespoke documents to fit your particular business requirements, please contact us at employment@berrysmith.com.

Alternatively, in straightforward cases, we can provide a standard template employee staff handbook.

Do you have well drafted non-competition and employee confidentiality agreements?

Well drafted restrictive covenants and non- disclosure agreements are valuable tools for any business that wants to prevent commercially sensitive information from falling into the wrong hands.

As an employer, there are a number of different types of restrictions that you can place on an employee, including:

Non- Disclosure Obligations

Your staff handle sensitive commercial information every day, whether this be client contact details, price lists, billing information, strategy reports, budgets, designs or formulas. Such information is vital to the success of your business, and unauthorised disclosure could potentially cause you and your business real problems further down the line.   

The inclusion of a well drafted confidentiality provision in an employment contract or other contractual document is an excellent way of minimizing the risk of unauthorised disclosure.

The benefits of this are twofold: First, the clause acts as a deterrent against the disclosure of commercially sensitive information. Second, it will offer the employer a form of recourse in the event that the employee breaches the agreement. In addition, the inclusion of a carefully worded confidentiality clause will make it easier for an employer to obtain an injunction to prevent the disclosure of information where it has reason to believe that disclosure is likely.

Post- Termination Restrictions

Non- compete restrictions can be used to limit current and former employees from working for a competitor or setting up a competing business.

Non- solicitation provisions can be used to prevent former employees from soliciting staff or clients of the business
 
Non- dealing provisions can be used to prohibit former employees from dealing with clients of the business

Our experienced lawyers can help ensure that your business is protected by drafting robust employment contracts with the appropriate restrictions and provisions.

Contact us at  employment@berrysmith.com.

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Premises

Are you aware of key terms of leasehold property you occupy?

Your lease will outline what your contractual rights and responsibilities are in relation to the leasehold property. For example, it may contain details of:

  • How much you are required to pay to maintain the property
  • Whether permission is required to make alterations to the property
  • Who is responsible for repairs to the property and common areas

If you fail to comply with the conditions of the lease, your landlord could take legal action against you with a view to recovering damages or removing the lease from you altogether. As such, it is vital that you fully understand the implications of the contract that you are entering into.

Our residential and commerical property departments represent landlords and tenants of all types of property. Both teams have vast experience preparing and advising on leases. If you require their assistance (whether this be for advice on your current lease or the preparation of a new lease), please contact us at property@berrysmith.com.

Have you provided ways to get out of long-term leases if circumstances change?

There are a number of reasons that a business may choose to enter into a long- term commercial lease; a lease of this kind is ideal for stable businesses that are looking to establish themselves in a specific location. They can also work out cheaper than comparable short term leases.

However, the flip side of a long- term lease is that it restricts a business’s ability to move if required.

It is often a useful tool to include a break clause within a long term commercial property agreement. Many such agreements now include break options at natural phases, giving parties a get-out clause for a set fee, as well as continued stability if they choose to remain in the property. This is particularly useful for a business that changes significantly over a short period of time, resulting in a need for larger or smaller premises.

Whilst having the option to walk away from a lease is good news for the tenant, it may be less appealing for the landlord. As such, there is a balance to be struck between allowing the tenant enough flexibility to address its changing business needs, whilst at the same time providing the landlord with adequate protection and stability.

One way of helping to protect the landlord’s position is to attach conditions to an option for early termination. Such conditions may include a requirement to pay all of the rent and other sums due under the lease; to perform all of the tenant's covenants and to provide vacant possession.

Contact us at property@berrysmith.com for further information

Are you aware of obligations to reinstate premises at the end of the lease term?

Under a standard lease, there is an obligation on a tenant to maintain the premises in the same state as it was in at the outset of the lease. Even where the written contract is silent on this point, a term to this effect will be implied by the Property Law Act 1952 or the Property Law Act 2007, depending upon when the lease was entered into.

During the course of a lease, a tenant may wish to make improvements or alternations to the commercial premises. In doing so, the tenant should bear in mind the legal obligation for it to reinstate the premises to its original condition at the tenant’s own cost.

Both parties should carefully consider the issue of reinstatement before entering into any lease. If the tenant plans to making improvements to the property (for example by installing toilets or partitioning), then negotiations could involve waiving the right of reinstatement and/ or the provision of compensation to the tenant in respect of the expenditure incurred in effecting the alterations.

Contact us at property@berrysmith.com for further information.

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Compliance

Do you have an up to date Bribery Policy, and are your staff trained on anti-bribery?

The Bribery Act 2010 came into force on 1 July 2011 and represents a significant change in the law in this area. Under this Act, bribery and corruption is punishable by up to ten year’s imprisonment; and the Act also introduces a new offence of “failure to prevent” bribery.

The introduction of this offence means that companies could find themselves exposed to hefty fines if they are unable to demonstrate that they have implemented “adequate procedures” to prevent bribery and corruption within their business, or by third parties (such as agents) on the company’s behalf.

While the introduction of this legislation has undoubtedly had the most impact on businesses that trade abroad, we encourage all companies familiarise themselves with the key provisions of the Act, and to review their policies to ensure compliance. Companies should also make sure that their workforce is made fully aware of exactly what is expected of them under this Act.

Contact us at commercial@berrysmith.com for further assistance.

Are you compliant with current Data Protection legislation – do you have the appropriate policy for your employees and customers?

The Data Protection Act 1998 aims to promote the careful handling of personal information and to protect the individual’s right to privacy. The Act applies to firms that hold information about living individuals in electronic format (and in some cases, in paper format). Where the Act applies, there are eight data protection principles which must be followed.  

The DPA requires the Information Commissioner to maintain a register of:

  • certain data controllers (broadly speaking, firms and others who are responsible for processing information)
  • the purposes for which they use personal information.

If you hold and process information about individuals who are customers, employees, suppliers, clients or other members of the public, you may need to record that on the register. This is called ‘notification’.

Contact us at commercial@berrysmith.com.

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Websites

What governs a visitor’s use of your website?

Businesses often overlook the need to protect their websites and their website content. As a business’ most useful marketing tool, it’s important for a business to ensure that its website is used as intended and protected from copying or corruption. In addition, it is also important to ensure that the information contained on a business’ website does not mislead visitors or expose the business to undue risk.

In order to address the matters above, all businesses should have a correctly drafted set of terms and conditions governing the use and content of their website. The provisions contained in the Terms and Conditions of Website Use, should be specifically tailored to address the nature of the business and the purposes of the website.

If you would like advice regarding your website please contact our Commercial and IP team on commercial@berrysmith.com.

Is your website compliant with data protection legislation?

In the technological age it has become increasingly important for businesses to comply with data protection legislation. In this regard, business websites are often overlooked leaving a business exposed to potentially significant enforcement action and financial penalties from the Information Commissioner’s Office.

As well as having the correct procedures in place for the management of personal data, businesses should also have policy documents on their website regarding the personal date the business gathers through its internet based activities. The two key policy documents that a business should have in this regard are a Privacy Policy and a Cookie Policy.

In every case, these key policy documents should be specifically tailored to the way in which the business uses personal data and how a business’ website is set up to do this.

If you would like advice regarding your website please contact our Commercial and IP team on commercial@berrysmith.com.

Do you sell products or services via your website?

If your business sells products or services via its website it is imperative that you have a correctly drafted set of terms and conditions establishing the legal basis on which this is to be done. Website Terms & Conditions of Sale should be specifically tailored to accommodate the precise needs of a business, ensuring that day to day matters are adequately dealt with.

It is also very important that the Website Terms and Conditions of Sale are correctly incorporated into the transactions between the business and the website visitor to avoid any future arguments as to whether they apply.

If you would like advice regarding your website please contact our Commercial and IP team on commercial@berrysmith.com.