Prism March 2019

03 Welcome

Managing Partner, John Davison introduces us to the very first edition of our news publication, Prism.

04-05 Ask the Expert

Martyn Tennant explains what MBOs, MBIs and BIMBOs could mean for you.

06 Success for Private Client Team

Our team scoop award at the 2018 Northern Law Awards.

07 Three Questions

Head of the Family team, Kath Hill shares a taste of her vast experience and greatest achievement at Swinburne Maddison.

08-09 What a Refreshing Change!

Insight into Swinburne Maddison offices interior transformation.

10-11 Celebrating 21 Amazing Years of Swinburne Maddison

A trip down memory lane as Swinburne Maddison celebrate 21 years this year. 12-13 The Elephant in the Room

Take a look at our re-branding and re-positioning, the helping hand to our growth and great success.

14-15 Welcome to the Future!

Meet the next generation of lawyers and talented support staff to join our firm.

16-17

In Conversation with John Adamson

A truly intriguing discussion with the owner of flourishing leisure company Ramside Estates. 18

Brexit Action Plan

With uncertainty ahead, our experts give advice to ensure that you are prepared for any eventuality.

19 Brexit and Commercial Contracts: the Devil will be in the Detail

As Brexit approaches, Mike Ward gives an insight in to what this could mean for business owners.

20 Corporate Governance ReformsCEO Pay Ratio Disclosure

Jonathan Moreland takes an informative look at Theresa May’s planned CEO Pay Ratio Disclosure bill reform.

21 Shareholders in the dark as solicitors begin Patisserie Valerie investigations

Abigail Zuk looks at the implications of the high-street dessert chain falling into administration.

22-23

Durham, the Place to do Business!

Brian Archer, Business Durham’s Managing Director, explains why now is a great time to invest in Durham.

Welcome to

It gives me great pleasure to welcome you to the first edition of Prism, Swinburne Maddison’s very own publication, created to raise awareness of the organisations we work with, the connections we have with our beloved city and the latest news from our team.

Over the years we have been fortunate enough to work alongside some of the region’s leading businesses and institutions and to represent a vibrant range of private individuals, many of whom have entrusted our firm to handle their legal requirements time and time again. This year marks the 21st anniversary of Swinburne Maddison. It gives me a great sense of pride in our people that we have attained such a raised profile whilst maintaining an unchanged ethos in holding our client’s interests at the forefront of everything we do.

In this issue of Prism, we take stock of an incredible and transformative year for the firm, from award wins to mass recruitment, internal promotions, a full brand refresh and a brand new website. To have simultaneously completed our much-anticipated £500k office refurbishment, 2018 was a phenomenal year.

We also reflect on the growth of Swinburne Maddison since its formation 21 years ago and talk to a man who has been there with us since the beginning; John Adamson, Managing Director of Ramside Estates and owner of the prestigious Ramside Hall Hotel in Durham.

Looking forward to 2019, we have exciting new projects and developments taking place right here on our doorstep in Durham City. Read on to find out more from Brian Archer,

Business Durham’s Managing Director, about why now is a great time to invest in Durham, notwithstanding any Brexit uncertainty or macroeconomic factors affecting the country.

As a firm, we will be looking to build on the hard work and achievements of last year and to take some time to fully appreciate the formidable team we have here at Swinburne Maddison. Following last year’s successful recruitment drive which resulted in eight new employees and three internal promotions, we have already made two appointments so far in 2019 and look to make a further appointment in the coming month. I really can’t think of a more exciting time to join the firm.

Ask the Expert:

MBOs, MBIs and BIMBOs

MBOs, MBIs and BIMBOs: what do they mean and what could it mean for you? Partner and Head of the Corporate and Commercial Team, Martyn Tennant, explains.

Corporate finance is not short on the use of acronyms and the above terms are often floated around in discussion without much explanation to those that are involved in the operation of an owner managed business.

Management buyouts (MBOs), management buy-ins (MBIs) and buy-in management buyouts (BIMBOs) are all forms of exit from a business which result in management taking over ownership of the business in some form.

MBO

This is the most common form of exit of those referred to above when it comes to small to medium sized enterprises. This is a process that results in the acquisition of a business by the existing management team.

MBI

This is similar to an MBO but, in the case of an MBI, the succeeding management team will be external to the existing business. This would be appropriate where the necessary skill set to succeed current owner managers is missing.

BIMBO

Not surprisingly a BIMBO is a mixture of the two routes to exit referenced above and involves participation in the acquisition by a mix of existing managers and external skills to support that team.

What could it mean for you?

Establishing an opportunity to undertake a transaction of this nature is useful as it removes the need for dependence on a third party taking an interest in the business and, in many scenarios, is something that can be planned over many preceding years. Transactions of this nature are also generally viewed as being quicker to process, the business benefits from trusted and experienced staff being retained and there is generally a lower risk that the transaction does not proceed.

If, however, a decision to proceed down one of these routes is taken, there are some important points to note and to consider as part of any advanced planning.

In order to progress with any of the above forms of transaction, funding will be critical. Ensuring that the appropriate finance can be put in place often requires careful planning and the appropriate external advice. Funding for such transactions can take numerous forms to include bank debt, private equity, venture capital or angel finance. The approach of third party funders will often be determined by the perceived risk, the experience and knowledge of the succeeding management team and the security available. Development of the management team and exposure to the operation of the business in the lead up to the sale will be of critical importance alongside careful financial planning.

The sellers can also often be required to support the deal by deferring consideration, sometimes beyond that of third party investors. The risk associated with this should be reviewed as part of any prior planning, particularly where it is likely that any security taken will rank behind that of third party investors.

Whilst transactions of this nature are generally viewed to be quicker, it is a common misconception that the business will be purchased with the buying management team undertaking ‘light touch’ due diligence on every occasion. Whilst the information required by the management team in an MBO would certainly be less than that required in connection with a trade sale to an entirely unrelated third party, it is rare that the management team will have knowledge of the full legal, commercial, accounting and taxation affairs of the business. In many instances, their roles may have been limited to specific disciplines such as finance, sales and operations and so working knowledge will be restricted to

such areas. The requirements of any funder will also significantly influence the scope of work associated with due diligence. Taking a sensible and realistic approach to what is going to be required in advance and preparing well for this will certainly assist in streamlining the legal process later down the line.

Considering matters from a buyer’s perspective, funders will look to the management team to invest and contribute towards the purchase price and the costs of the acquisition resulting in the need for the use of personal resources. Again, with careful planning with the current owners, there are often ways in which such requirements can be facilitated.

The buyers will also need to give some thought as to how to regulate their relationship through the appropriate corporate governance structures post-completion and, depending on the nature of the finance being raised, this is likely to be heavily influenced by the requirements of third party investors and funders.

MBOs, MBIs and BIMBOs are a useful way of facilitating an exit. Whilst an MBI would be very similar in scope to a trade sale to a third party, MBOs ad BIMBOs do present an opportunity for business owners to ensure succession whilst also looking to preserve a culture and core values associated with the business, which can often be as important as financial considerations. Whilst structures of this nature are not necessarily the means of securing best value, for anyone who takes pride in preserving the approach of a business built up over many years, they can be a very attractive option.

Planning for a transaction of the type discussed above and early discussion with professional advisors, including your lawyer, can assist in identifying any obstacles to be overcome or issues to be addressed as part of such planning. This assists in avoiding delays later down the line.

Success for Private Client Team

2018 was another year of success for Swinburne Maddison, with our Private Client Team scooping Private Client Team of the Year at the Northern Law Awards in June.

The black-tie event, held at the Hilton Hotel, was attended by hundreds of the region’s leading legal firms and business leaders; celebrating the very best legal talent the North East has to offer.

Headed up by Managing Partner, John Davison, the team was praised by the judges for their strong team ethic, investment in staff training and development and their determination to ensure that every matter they deal with is handled with the utmost care and attention, irrespective of value.

“Our Private Client team is one of the largest in the region and we were overjoyed to have won this prestigious award. This year has been our 20th anniversary of business and winning Private Client Team of the Year is a testament to the hard work we do for our clients” explains John.

The combination of expert knowledge and up-to-the-minute training gives Swinburne Maddison’s Private Client team the professional edge to deal with any complex instructions that might come their way.

“We are very proud that three of our lawyers are members of the Society of Trust and Estate Practitioners, providing the team with an extra level of specialism to advise on complex tax planning arrangements, the administration of business interests and will trusts.”

The Private Client team prides itself on providing a trusted and personal service; being a team that our clients can turn to at a very difficult time in their lives and approaching every matter with compassion and care.

Three Questions

Question 1:

Where did you study law and why did you want to become a lawyer?

I took the CILEx route and “earned while I learned”, studying via distance-learning through the CILEx Law School. At the time this suited me better than a local college as it gave me the flexibility to fit my studies around life and work. I came to the law a little bit later than some, after one of the Partners at Swinburne Maddison – who I already knew professionally – suggested I might be suited to a career in this field.

I have always been very motivated to explore new opportunities when they arise and to challenge myself as much as possible, so I took the leap and never looked back! I have been a qualified Chartered Legal Executive for over 20 years now and can’t imagine ever doing anything else.

Question 2:

Why did you want to specialise in Family law?

After studying and practising different areas of law early on in my career, I soon realised that I was a “people person” and wanted to focus on work which would help people as directly as possible. Being a family lawyer requires a unique and extensive skill set; above all else the ability to balance empathy and compassion with professionalism and tenacity. Again, this was a challenge I was keen to embrace and I now consider it a real privilege to be there for my clients at what is often a very difficult (and for many, the worst) time in their lives.

Question 3:

What has been your greatest achievement at Swinburne Maddison?

A qualified Mediator and Collaborative Lawyer, my focus has always been to achieve a fair and reasonable resolution in relation to family breakdown and, wherever possible, to offer an alternative path to dispute resolution. When I look back over my career so far at Swinburne Maddison, I think my greatest achievement has been the volume of collaborative and mediation cases which I have been able to deal with via the collaborative process, encouraging couples to work with their lawyers in order to achieve a settlement which best meets the needs of both parties and their children without the threat of court proceedings.

What a Refreshing Change!

Located a short walk away from Durham City, the Swinburne Maddison offices underwent a dramatic £500,000 transformation in 2018, highlighting the firms continued growth within the region.

Fit-out specialist, AMH Workspace, delivered the five-month refurbishment project of our 10,000sqft office at Aykley Heads Business Centre, creating a bespoke, modern working environment, which includes a new workspace, high end meeting rooms and client lounge area, as well as new office furniture solutions and upgraded IT functionality.

Heather Baxter, Business Development Manager at AMH Workspace said, Corporate occupiers are placing greater emphasis on ensuring that their office space is aligned with their brand and company values, as well as the comfort and well-being of employees. This is very much reflected in the Swinburne Maddison project, with their new offices complementing their growth strategy and the high-quality service they deliver to clients.

The refurbishment was carried out in a live working environment, with a phased programme of works enabling us to remain fully operational throughout.

The significant investment has already had a positive impact across the whole firm. David Low, Partner at Swinburne Maddison said, “AMH Workspace has helped us to transform our working environment and we have already seen the effect on staff productivity and received lots of fantastic client feedback.

We now have a vibrant open plan office space, staff and client lounge area, serviced meeting rooms and superb new reception area. Our new offices provide us with an excellent platform to help us retain and recruit high-quality staff to grow the business.

The newly refurbished office underpins the firm’s expansion strategy as our team continues to grow.

Partner, Jonathan Moreland, believes the refurbishment marks a turning point in the development of the firm, enabling greater collaboration and understanding between departments. He said, “With the office redevelopment now complete, we can offer existing and future staff one of the best working environments around and a great location on the fringes of the city.

We have always enjoyed a great team spirit at Swinburne Maddison, but our new working arrangements have led to a renewed sense of purpose and a focus on reaching the highest standards for all our clients. We are truly excited about what the future holds for us.

”

2006 1998

New beginnings

It was announced in the July that neighbours, Swinburne Jackson & Moreland and Wilson Maddison, were merging to form one of Durham City’s largest law firms. By August, the firm began to operate as Swinburne Maddison with 15 lawyers and 25 support staff.

The big move

Our original offices at 3/5 North Bailey were, quite simply, unforgettable: a listed building in the heart of Durham City, complete with wonky staircases, creaky floorboards and gas fires in every room. We think the word is “character.” In the summer of 2006, due to growth (and a desire for office-wide central heating!), the Partners took the decision to relocate the firm to modern purpose built offices in Venture House at Aykley Heads Business Centre. A pivotal moment for Swinburne Maddison, the move created an immediate synergy throughout the firm whilst also offering the practical benefits of on-site parking and better transport links for staff and clients.

2012

Out with the old, in with the new

It’s important to be bold and stand out against the competition. Once well-established in our new modern offices at Venture House, the Partners decided to complete the transition by embarking on a full re-brand. Goodbye blue and gold branding, hello vibrant green!

2011

New structure

Swinburne Maddison becomes a Limited Liability Partnership (LLP).

Celebrating 21 Amazing Years of Swinburne Maddison

Swinburne Maddison LLP is officially coming of age! This July, the firm will be celebrating its 21st birthday. Some of us have been here long enough to remember the very first birthday, and some pre-date even that…

Join us as we take a trip down memory lane and reflect on a remarkable couple of decades.

2017 2018

Future-proofing the firm

In February, an opportunity arose which enabled us to take occupation of the ground floor of Venture House. This expansion would provide space for additional recruitment.

Stylish office space

Intended to reflect the firm that we have become and the quality of the work that we handle, January 2018 saw the completion of our much-anticipated office transformation. The £500k refurbishment delivers on every level, providing us with a bespoke, modern working environment as well as new office furniture solutions and upgraded IT functionality.

2018 2018 2017

Getting digital

Having an online presence is fundamental to the success of any business and for communicating services to clients. In August the website underwent a full redesign, with mobile optimisation and a simplistic structure for ease of use. We also launched our new Swinburne Maddison elephant campaign across all social media platforms, advertising and marketing collateral.

FUTURE

The future

Award success!

Recognising staff with new positions

Alongside the many CPD initiatives the firm offers employees, the firm also wanted to recognise the hard work and commitment of existing employees. In May the firm introduced the role of Managing Associates, promoting three of their rising stars.

The firm begins 2019 by growing its talented team with two new appointments. Whilst we continue to grow rapidly in size, the core values of Swinburne Maddison remain unchanged from where we started nearly 21 years ago. With personal service and client relationships at the centre of everything we do, we look forward to delivering truly outstanding legal services for many more years to come.

The Elephant in the Room

Our successful re-brand and re-positioning in 2012 have helped us achieve our goal of becoming the pre-eminent Law Firm in the Durham area.

As a result, Swinburne Maddison has grown significantly, so much so that we needed more space. Expansion and refurbishment of our Venture House offices were completed in January 2018. We believe that our office space is now the physical embodiment of how we see our brand. Contemporary, professional and forward thinking. It creates the perfect backdrop for the next phase of our journey.

It is our aim to take Swinburne Maddison to the next level, to become a law firm of region-wide standing and stature. Competing with the very best the North East has to offer.

To compete in the wider market we need to get our message out in the public arena. How we do this can be a very tricky business, it can be easy to get it wrong and waste a substantial amount of money in the process.

We asked Hedley McEwan, a marketing and branding agency, who had managed our 2012 re-brand to help us get it right.

Firstly they advised us what not to do.

You cannot disturb the status quo by being the same as everyone else. It is tempting to do things in the same vein as other businesses in the legal sector. The problem with this approach is that it is those with the deepest pockets who are able to shout the loudest that stand out above the crowd.

We did not want to take this approach to our marketing activity. We wanted

to stand out by being different not by throwing money at it.

Secondly, how do you get the message across that Swinburne Maddison is a large, successful Law Firm without coming across as arrogant or boastful?

The answer, of course, turn the ’S’ and ‘M’ of Swinburne Maddison into an Elephant!

Unusual, different yet simple and powerful.

Elephants are not only large, which reflects our new found scale, but they also have many endearing characteristics such as loyalty, dedication to their community and care for their young, and of course, they never forget, quite useful when it comes to the law!

Hedley McEwan, were able to demonstrate to us that the Elephant was no ‘one-trick-pony’, being extremely flexible and able to accommodate the wide variety of messages we require both internally and externally.

You’ve got to zig while the rest zag.

It is so important to be different in a crowded marketplace, and the legal services is a crowded market place. It can be very hard to convey what is better or different about your offer, but first, you have to gain attention. After all, you cannot talk to someone if they’re not listening.

A note of caution though. You cannot be different just for the sake of it. Whatever you do to stand out must be relevant and truthful otherwise all your efforts may be seen as mere ’spin’.

The truth is that Swinburne Maddison has been really successful over recent years and as a result has grown quite considerably in size. It is, by any measure, a well-respected ‘heavyweight’ law firm. Therefore our ‘elephant’ icon, though an unusual image for a law firm to use, is in fact totally relevant.

Couple relevancy with the ability to convey any message you care to think of regarding expertise and service and you have a campaign that cannot be ignored and certainly will not be forgotten.

Welcome to the Future!

New Appointments and Promotions

As part of the firms expansion strategy, Swinburne Maddison recently took sole occupancy of its office at Aykley Heads, investing over half a million pounds in transforming the space to make room for the next generation of lawyers and talented support staff.

Throughout 2018, a total of five new solicitors joined Swinburne Maddison and three internal promotions were made across the firm. Due to a steady growth of work over the years, the firm has invested in the appointment of some fantastic solicitors all at varying stages of their careers, each dedicated to making a real difference to our clients.

Behind our formidable army of solicitors, we have a fantastic team of support staff working across a variety of business functions. Last year we created three new additional support roles and appointed, Julie Rushton (Legal Secretary), Vicky Allerston (Legal Accounts) and Sara Stammers (Marketing Executive).

Gillian Moir and Chris Ross, both Commercial Property Solicitors and Anna Stephenson, a Private Client Solicitor, were appointed as Managing Associates.

All three of our new Managing Associates joined the firm in 2014 and their new role recognises their seniority and experience and will involve the trio in matters of compliance, staff training, policy development and mentoring junior staff. Each is imperative to the implementation of business development initiatives as well as the fostering and development of client relationships.

2019: The Year of Progression

Swinburne Maddison have already kick-started the recruitment drive for 2019, with the addition of Nicola Allport (Legal Secretary) and Sophie Allerton (Corporate and Commercial Solicitor), who both joined us on 2nd January 2019.

This brings our total head count to 56 employees and partners. We look to continue our growth strategy with plans to recruit a new residential conveyancing lawyer in the very near future.

Staff development is a huge focus for the firm in 2019, whether that is routes on progression or improved employee benefits. Our Partners have recently formed a ‘HR sub-committee’ who’s role will be to develop a HR Policy which will cover a ‘road map’ of your expected career here and progression, as well as details of employee benefits, staff policies, training plans and other related HR matters.

Meet the New Solicitors

Sharney Randhawa, Employment

Sharney is a Solicitor in the Dispute Resolution team of Swinburne Maddison LLP, specialising in employment law and professional discipline. Prior to joining the firm she trained and practiced at a leading human rights law firm in London. Sharney was ranked in The Legal 500 United Kingdom 2017 edition as a recommended lawyer in professional discipline.

Rory Ogden, Dispute Resolution

Rory is a Trainee Solicitor in the firm’s Dispute Resolution team, where he manages a varied caseload consisting of matters relating to debt recovery, professional negligence, property litigation and commercial disputes.

Abigail Zuk, Dispute Resolution

Qualifying as a solicitor in 2014, Abigail began to build her legal career at a regional North East firm before joining Swinburne Maddison LLP in the summer. Abigail practices in all aspects of dispute resolution, with a particular specialism in commercial litigation.

Charlotte Excell, Commercial Property

Charlotte joined the firm’s Commercial Property team as a newly qualified solicitor. Her role requires her to act on behalf of a broad client base including landlords, tenants and banks, whilst also supporting the Partners with some of the team’s major development projects.

Lauren Frisby, Commercial Property

Newly qualified solicitor Lauren joined the firm having gained previous experience working as a conveyancing assistant and later as a trainee solicitor at another North East firm. Lauren’s role involves acting on a wide range of matters including land disposals and acquisitions and a variety of landlord and tenant matters.

In Conversation with John Adamson

Ramside Hall Hotel and Spa is the jewel in Durham’s burgeoning hotel and leisure sector and is just one of the stylish hotels owned and operated by family firm Ramside Estates. Prism recently had the great pleasure of spending time with John Adamson, the third generation of the Adamson family to take the helm of one of the region’s most flourishing leisure companies.

How did you get into the hotel business?

In 1963, my Grandfather bought Ramside Hall from the Pemberton family and using his great vision he converted it in to a hotel. My father followed in his footsteps and so I think you can say hotels and pubs are in my blood.

When I first started my career, I wanted to study at the Glion Institute of Higher Education, a prestigious Swiss hotel school specialising in degrees in hospitality, luxury and event management. However, to attend Glion, students must speak French and so I spent a year chefing in France to learn the language. I was the only Englishman studying at Glion at the time.

I’m pleased to say I still have links with the school and each year Ramside Hall provides placements for some of Glion’s students.

Having spent time in Geneva and Paris for Trust House Forte while on its international management graduate scheme, I gained a breadth of experience that would stand me in good stead when, at the age of 26 (too soon in my opinion) I returned to the North East to help my father run the business.

At that time, the portfolio was growing and included the Dun Cow and Hardwick Hall and, spotting an opportunity to take the offering to a wider audience, we launched the event catering business,

which was extremely well received!

Despite growing competition from national and international operators such as Sodexo, catering for outside events, particularly weddings, still accounts for a large chunk of our business.

How has the hotel business and particularly your hotels changed in recent years?

Customer expectations are much higher. Guests who travel to countries such as the Middle East and the USA are experiencing extremely high levels of service and high-quality stylish interiors and therefore, they want to experience that when they stay with us.

We are also facing growing competition from international operators choosing to locate in Durham including brands like Raddison and Marriott.

In order to not only compete with these brands but exceed their offering, in the past three years we have invested £16million at Ramside Hall alone to create the Spa, a second golf course and additional bedrooms. As a result of this investment we enjoy a higher than average 90% occupancy rate.

It is our intention to continue to invest and reinvest and we are currently constructing innovative and quirky tree houses in the grounds of Ramside Hall and have plans in place to add more rooms and a spa at Hardwick Hall and extending the function room at Bowburn Hall as well as introducing lodges in the hotel’s woodlands.

Do you have other business interests?

Yes, under JA Properties, with legal advice from Kate Stephenson and the team, I have recently invested £3million in freehold properties in Durham city centre, adding retail units and student accommodation to the portfolio. I like to be able to see and feel my investments, so I keep it local.

There is a buzz about Durham, and I think the county council is doing a great job at supporting ambitious projects such as the redevelopment of Milburn Gate. This will inevitably support Ramside Hall Estates’ and JA Properties continued success, as well as the county’s wider economy.

What do you consider to be your greatest achievement to date?

Increasing annual turnover from £10m to £30m in the last 10 years. Also, providing stable and rewarding jobs for our 650 staff is extremely satisfying. We have an amazing team and are the backbone of what we do, many of whom have worked in the business for a long time. Our longest serving employee is John Brewster. John’s our decorator and he’s been at Ramside Hall for 54 years!

Brexit Action Plan

It will have escaped no one’s attention that the UK is undergoing a seismic, once-in-a-generation transition in exiting the European Union. With the leaving date set at March 2019, businesses need to ensure that they are prepared for any eventuality - whether it’s a good deal, a bad deal or no deal.

Our expert lawyers can assist your business in navigating through these uncertain times with the maximum of protection and the minimum of uncertainty. There are a number of areas where we can assist:

Contracts and Trading

• Are you comfortable that you have robust arrangements in place with your customers and suppliers?

• Have you assessed any exposure you may have in respect of price and non-price obstacles to trade?

• Is your business positioned to apply any customs procedures which may be introduced?

As well as general considerations regarding the strength of the currency, inflation and interest rates, your key contracts should be reviewed to ensure that they provide you with the desired balance of flexibility and certainty.

Read our article on page 19 for further information concerning contractual agreements made with businesses across the EU.

Human Resources

• Do you employ any EU or non-EU citizens?

• Do your recruitment needs envisage you recruiting from overseas post-Brexit?

It may be helpful to work with your nonBritish employees on assisting them in their understanding of the position, completing any necessary registration procedures and generally ensuring you have the appropriate steps in place to ensure that your key skill requirements continue to be satisfied post-Brexit.

Corporate Structure

• Might it be advisable to run an element of the business through a standalone legal entity with ring fenced-liability?

• Is it appropriate to protect fixed assets from any current or increased trading risk?

➢• Does Brexit present an opportunity to capitalise on new opportunities?

Reviewing the structure of your business is a continual process which needs to take into account legal, tax and estate planning considerations. It may be the case that Brexit is the appropriate trigger to assess whether your business is structured as favourably as possible.

Intellectual Property, Data Protection and Regulatory Requirements

• Will your data protection and transfer procedures be appropriate if the UK is no longer an EU territory?

• Have you considered whether your intellectual property rights will need to be re-registered after March 2019?

• Will Brexit impact upon your regulatory considerations?

It may be the case that registrations and procedures which cover the EU no longer apply to the UK post-Brexit. Additional steps may need to be taken to ensure you are fully protected and compliant.

Our expert team are here to provide you with practical guidance and support for the issues you face. If we can assist in any way, please contact Alex Wilby on aw@swinburnemaddison.co.uk

or 0191 384 2441

Brexit and Commercial Contracts: the Devil will be in the Detail

As the clock winds down towards exit day on 29 March, many commentators are seeking to provide businesses with one-sizefits-all plans for managing the fall out of the UK ceasing to be a Member State of the European Union. Anyone seeking positivity in the present uncertain situation is to be applauded but, in reality, the number of Brexit possibilities still up in the air makes trying to find broad brush solutions a thankless task.

It may be unpalatable to many, but over the next few months most business owners are going to have to review their operations in great detail. Some have already started the process and, as a contracts lawyer, I am seeing increasing numbers of queries concerning agreements made with businesses across the EU. One of these raised an interesting point that demonstrates the level of scrutiny that may be required.

My client supplies to businesses in other Member States using contract terms that provide for English law to be the governing law and the English courts to have jurisdiction over disputes. So, if a dispute arises after the UK has left the EU that will still be the case, right? Wrong.

The choice of courts in commercial contracts is subject to an international treaty called The Hague Convention on Choice of Court Agreements 2005. The UK has membership only by virtue of its membership of the EU. If we leave without a withdrawal agreement, a so-called Hard Brexit, we will immediately cease to be a member of the club meaning that EU contractors could seek to enforce their contractual rights in their own courts. Fighting such a case could use up significant management time never mind the legal costs.

Fortunately, the problem has been addressed. Legislation has been tabled so that the UK will accede to the Hague Convention in its own right when it ceases to be a Member State so that contractual choice of courts will continue to be enforceable across the EU. Problem solved? Not quite.

For technical reasons UK accession to the Hague Convention will not take effect until 01 April 2019. The new regulations provide that the rules will continue to apply after the UK ceases to be a Member State and before accession to the Hague Convention but there is no guarantee that other EU Member States and their courts will see it that way. What to do?

Best advice is not to enter into contracts with overseas parties containing an exclusive jurisdiction clause in favour of the UK courts on either 30 March 2019 or 31 March 2019. A peculiar outcome perhaps but there it is.

Of course, if the withdrawal agreement comes into force, the UK will continue to be a member of the Hague Convention at least until the end of the transition period.

The moral of the story? Brexit will affect every part of every contract, even those parts we don’t usually have to consider. Problem is, the effect will depend on the kind of Brexit we have. Interesting times indeed.

Corporate Governance Reforms - CEO Pay Ratio Disclosure

In 2016 Theresa May announced the Government’s intention of requiring companies to disclose the ratio of CEO pay to that of employees. The intention has now become a reality and first disclosures will become mandatory for Financial Years which commence on or after 1st January 2019.

The new Rules can be found in the Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/806), which amend the current directors’ remuneration report requirements. Going forward, new disclosures will form part of companies’ Remuneration Reports in the Annual Report on pay.

The Rules are far from straightforward, but in summary, the ratios of total CEO pay must be calculated against the 25th, median, and 75th percentile of UK employees’ pay. Companies may choose one of three methods of calculating employees’ pay, named Options A, B and C. Further guidance on the options is available from the Department for Business Energy

The ratios must be disclosed in a prescribed table, building up to a ten-year period, and this period must include previous years in which the companies were outside scope for reporting. Beyond ten years it is unnecessary to disclose pay ratios, but companies can opt to do so if they wish.

To complicate matters further, there is a prescribed narrative which companies must follow in order to explain their figures.

Good news for smaller companies

These regulations only apply to UK incorporated companies, whose shares are quoted on the main list of the London Stock Exchange, New York Stock Exchange, NASDAQ or a recognised Stock Exchange in the European Economic area, and who have more than 250 UK employees. Consequently, the majority of UK companies will be exempt from the new regime, as is AIM.

It is a matter for the individual company to determine whether they should include zero hours workers, agency workers and contractors when calculating whether they have over 250 UK employees or not. It is important to ensure companies apply general employment law principles when making these decisions.

Summary

It has been recommended that companies should consider a dry run for the Financial Year which commenced in 2018 but ends in 2019, to ensure the appropriate mechanisms for disclosure are in place.

Whether these new regulations have the desired effect of promoting fairness in matters of pay is entirely another matter. Since 2013, companies have been obligated to disclose percentage changes in CEO pay and group employees’ pay, but it is fair to say that transparency has often been lacking. What is clear is that these reforms are a further burden on companies, which they will have to start planning for in the very near future.

Shareholders Left in the Dark as Solicitors Begin Patisserie Valerie Investigations.

There will be no sweet victory for Patisserie Valerie or its shareholders as the high-street dessert chain has fallen into administration.

In October 2018, it was reported that large irregularities had been uncovered in the company’s accounts, drawing attention to an alleged fraud resulting in a deficit of £40m. Issues run deeper as thousands of false ledger entries appear to have been made; and consequentially the Serious Fraud Office is now investigating who is thought to be one of the individuals involved in Patisserie Valerie’s financial operations.

In recent months, urgent efforts have been made to secure funding as the chain’s numerous creditors agreed to not take action to recover their debts for a certain period of time. Discussions with the banks have failed and they have refused to continue providing facilities due to the company’s financial position. KPMG are now appointed as administrators as the company is unable to pay its debts.

Shareholders have expressed their concern at the lack of information provided by the company. They have described their current position as being in the dark as to the value and limited knowledge of the future of their investments.

It is not entirely clear where fault lies due to the lack of information provided by Patisserie Valerie. In order to discover this, KPMG are reported to have appointed solicitors to investigate potentially bringing legal action on behalf of the shareholders for the likely loss of their investments. This could see an investigation and claims being brought against Chairman Luke Johnson for potential fraud and misconduct within the company.

This showcases that directors cannot always hide behind the protection of their company’s limited status, as they may still find themselves with some personal liability for their actions. Directors therefore must comply with their statutory duties, if not the consequences can be significant.

The Swinburne Maddison Dispute Resolution team regularly act on behalf of investors and creditors who may require guidance in the event of company insolvency. Our team of specialist lawyers are also able to offer their expertise to directors who may be subject to proceedings, where a company has fallen into a state of insolvency.

Durham, the Place to do Business!

There has never been a better time to do business in Durham. From the redevelopment of Aykley Heads to create 6,000 jobs, to the £12.6m expansion of the county’s flagship science and technology park, Durham is buzzing with investment and opportunity.

Brian

We have a main railway line, easy access to the A1, world-class universities on our doorstep and we’re close to a World Heritage site. Durham really has it all. It’s a fantastic place to locate, grow and thrive. New developments such as Aykley Heads and the expansion of the North East Technology Park (NETPark) only add to our reputation as a great place to do business. And the team at Business Durham is here to help - whether it’s connecting businesses with finance opportunities or finding the right property.

As one of the largest commercial property landlords in the region, Business Durham has links to a wide range of industrial units, office spaces and laboratories to support growth plans. Says Brian: There really is the right property for everyone, whether they’re small start-ups or bigger firms looking to scale up. For us, it’s all about the individual business, it’s the most important thing. If it’s good for the company, it’s good for us.

One place offering businesses the chance to shine is NETPark, in Sedgefield – home to internationally recognised science and technology companies. It’s uniquely placed to offer a dynamic and supportive environment to accelerate growth into global markets. It brings a like-minded community together in an exceptional environment, with links to a readymade manufacturing supply chain and a talented workforce.

Other commercial sites in County Durham offering scale up support include the award-winning Salvus House, Durham County Council’s flagship 30,000 sq ft office space and business incubator unit at Aykley Heads, which has already attracted several industry leading businesses to its accommodation.

Says Brian:

Salvus is a flagship office space which has hot desks and smaller offices in the incubation centre and larger officers for bigger companies. Aykley Heads, and Durham City in general, is a place where companies can have their HQs or their local offices and Salvus is a showpiece in the county’s crown. But we also have a range of offices and factory units for all requirements across the county.

Global leaders in sectors such as technology, finance and manufacturing are turning to Durham as the base for their HQs, research arms and manufacturing facilities. From the UK’s first app-based bank, Atom, to train giant Hitachi, companies have found that the support of innovative Business Durham has been one of the major benefits of moving to the area. But the organisation is more than just a landlord.

Business Durham recently launched its own innovative investment fund, Finance Durham, to support the growth of high-potential businesses located in, or looking to locate to, the county. The fund, which is managed by Maven Capital Partners, has already invested more than £2m in County Durham businesses over the last year

Says Brian:

The fund has worked really well, and the businesses supported so far have excellent growth potential.

The fund can invest between £200,000 to £700,000 per business with 10 per cent available to invest up to £40,000 per company in start-ups. Recent investments include Durham Gin, which is set for rapid growth thanks to an injection of £250,000, and NETPark-based G20 Water Technologies.

Brian added: With competitive rents, access to finance, great transport connections and a wide mixture of premises in the county, there is no better place to do business than Durham.