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LEGAL UPDATE

LEGAL UPDATE. Felicity Banks May 2011. Topics. Anti money laundering Business structures Companies Act 2006 Charities Employment Pensions Powers of attorney Bribery Privilege Legal reform. Example of supporting information . Enlightened shareholder value – what does it mean?

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LEGAL UPDATE

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  1. LEGAL UPDATE Felicity Banks May 2011

  2. Topics • Anti money laundering • Business structures • Companies Act 2006 • Charities • Employment • Pensions • Powers of attorney • Bribery • Privilege • Legal reform

  3. Example of supporting information • Enlightened shareholder value – what does it mean? • Codifying the common law requirement to act in the company’s best interest. Directors must act in a way that promotes company success for the benefit of shareholders as a whole, and in doing so must have regard where appropriate to: • long-term factors • interest of other stakeholders (eg, employees, suppliers and customers) • community and environment • company reputation. • Government guidance is available at www.berr.gov.uk/files/file40139.pdf • Other useful links are http://www.berr.gov.uk/whatwedo/businesslaw/co%2Dact%2D2006/ and • http://www.companieshouse.gov.uk/companiesAct/companiesAct.shtml • And some ICAEW links are: www.icaew.com/companylaw • CA06 and major accounting changes: www.icaew.com/index.cfm/route/156108/ • FFM CA06 Summary: www.icaew.com/index.cfm/route/148125/ • There is a useful and short leaflet summarising the changes for private companies available at www.berr.gov.uk/files/file42262.pdf • There is also a more detailed one at www.berr.gov.uk/files/file42261.pdf and • www.companieshouse.gov.uk/companiesAct/pdf/berrUpdatingYourClients.pdf • And finally • BERR is now BIS - Department for Business Innovation and Skills – as of June 2009

  4. AML - Two Sources • Tech Release 04/08 – AML Guidance for the Accountancy Sector • Tech Release 04/08 – Appendix A -Supplementary Guidance for the Tax Practitioner

  5. The Offences • General Offences • Proceeds of Crime Act 2002 • Terrorism Act 2000 • Procedures and controls • Money Laundering Regulations 2007

  6. Procedural Offences • Failure to apply CDD or EDD • apply on going monitoring • keep required records • provide required training • appoint an MLRO or have reporting system • Continuing with business where unable to apply CDD/EDD

  7. CDD/EDD • Do you know what it is? • Remember three principles…..

  8. First Principle • Normally complete CDD/EDD before entering into a business transaction, even if it is an occasional transaction

  9. Second Principle • Can only carry out CDD/EDD during establishment of a business relationship in certain circumstances …….

  10. Third Principle • Firms should not ‘complete’ an assignment or transfer funds, until CDD/EDD is completed

  11. What are the procedures? • Appoint an MLRO or have a reporting system • Conduct CDD/EDD in accordance with a risk assessment policy • Identify beneficial owner • Monitor on ongoing basis

  12. Other guidance • Remember that other regulated sectors, financial services, estate agency, high value dealers, casinos, have own guidance

  13. So • Will you be responsible personally for picking this up? • If not, who is?

  14. What am I? • Principal/Sole trader • Company • Partnership • LLP • LP • CIC • CIO

  15. Limited Liability Partnership • Established in 2001 • Limited liability partnership • To the world it’s a company, amongst its members it’s a partnership • Exists independently of members

  16. Limited Partnerships.. (..as opposed to LLPs!) • Established in 1907 • Not a legal entity • Frequently transaction specific (eg funds) • ‘Registration’ conclusive since 1 October 09 • Get the forms right ! • Watch this space…

  17. Community Interest Company • Established in 2005 and cannot be a charity • Separate regulator who oversees an asset lock • Has flexibility of corporate structure with community interest features

  18. Charitable Incorporated Organisation • Register with Charity Commission only • Annual report only, no directors report • Remember to distinguish from CIC which is not charitable

  19. Companies Act 2006 • Final changes now in force • All companies must have at least one director who is a “natural person” from 1 October 2010

  20. Operational flexibility • AGM and Company secretary are optional (not PLCs) • Simplified internal procedures • Share capital can be reduced without the need for court approval (not PLCs) • Financial assistance is permitted (not PLCs)

  21. Charities Act 2006 • Changes to audit requirements and eased internal administration • Introduction of CIOs – Charitable Incorporated Organisations

  22. Changes in more detail • Most charities with annual income below £500k need not be audited (unless constitution stipulates) • Enhanced whistleblower protection for accountants • Simplified administration, for activities such as changes of purpose or transferring assets

  23. Employment • Research carefully and take advice • Availability of good resources

  24. Status • Employee • Worker • Self employed

  25. Types of work • Part time • Fixed term • Flexible working

  26. Pinch points • Give a statement of employment within 2 months • Plan early on business sales and restructuring and assess position

  27. More changes • Equality Act 2010 • Consolidation • Protected characteristics • Default retirement age • New consultation to phase it out • April 2011 • Clarkson case

  28. Pensions • Felicity’s test……. • Pensions Protection Fund • Moral hazards regime • Notifiable events • Contribution notices and FSDs • Clearance • ‘Material detriment’ test

  29. The Basics • October 2012 – largest employers first, steep scale and affecting those with less than 50 employees - August 2014 to February 2016 • Automatic staging dates dependent on PAYE reference • Auto-enrolment with compulsory employer contributions • Includes permanent, temporary and agency workers

  30. Specifics • Age 22 upwards ( but younger can elect ) • Administration hurdles • Investment in systems • Review of existing schemes • Prepare for self certification • Guidance for trustees

  31. Arrangements • Choose Qualifying Scheme(s) • Is existing scheme compliant ? • Two tier arrangements needed ? • Feeder schemes ? • NEST scheme

  32. Powers of Attorney Gone: enduring powers of attorney Now: lasting powers of attorney • Ordinary powers of attorney • Personal Welfare LPA • Property and Affairs LPA

  33. Practicalities • LPA introduced in 2007 • New ‘Office of Public Guardian’ • Registration is key, else LPA is invalid • Complex and time delays

  34. Bribery Act 2010 • Four main offences • Paying bribes • Receiving bribes • Bribery of foreign officials • Corporate offence - failure of commercial organisations to prevent bribery • Onus on corporates to ensure anti corruption procedures are robust

  35. Bribery continued • Formal guidance • Problematic for • Overseas business activities • Facilitation payments • Hospitality • Don’t wait – start thinking now

  36. Legal Professional Privilege (LPP) • Two elements • Litigation privilege • Protects a confidential communication between a client or its legal advisor and a third party, where the dominant purpose is in connection with actual or contemplated litigation • Advice privilege • Protects confidential and qualifying communications between a client and a legal advisor, which are made for the purpose of seeking or giving legal advice or legal assistance.

  37. The Prudential case • Why did the ICAEW intervene ? • What do we hope for ?

  38. Akzo Nobel case • Ruling in September 2010 • Does NOT affect the scope of privilege under English law • In EU competition law investigations, communications with in house lawyers are still not privileged

  39. Legal services reform • Why? • Legal Services Act 2007 • Legal Services Board - LSB • External ownership and investment • Alternative business structures - ABS • First true MDPs involving lawyers and other professionals • The key is a reserved legal service somewhere in the mix

  40. Institute concerns • The process ……. • Divergent views on nature of firms and “legal advice” • Timing - first ABS operational in October 2011

  41. Considerations • You could be a • Participant • Manager • Investor • Appetite depends on business model, size, niche • Consider MDPs to save costs • Tax services • Forensic and insolvency specialists • Novel structures and relationships for service delivery

  42. The future • Legal competitors will be looking at you and your business offering • Innovate – you may want to add specialised services or enter into collaborative arrangements • Remember its professional services reform

  43. Press save, NOT open • Go to View button on toolbar and open Notes Page

  44. Any questions..?

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