Report on Authorised Dealer’s Entitlement to Compensation

Under certain circumstances, an authorised dealer may be entitled to claim compensation after termination of the contract with the company if the latter continues to be able to use its business contacts.

In our experience at the commercial law firm GRP Rainer Rechtsanwälte, it is common for an authorised dealer’s potential claims for compensation after termination of the contract with the company to lead to legal disputes. We note that because the German legislature has not explicitly regulated authorised dealers’ entitlement to compensation, it is possible for the provisions governing commercial agents’ right to compensation under sec. 89b of the Handelsgesetzbuch (HGB), Germany’s Commercial Code, to be applied analogously.

These state that the commercial agent is entitled to claim compensation after termination of the contractual relationship with the company if he or she has established new business contacts and the company continues to be able to benefit from these contacts after the contract has come to an end. This right to compensation cannot be contractually excluded.

The provisions can be applied analogously to an authorised dealer’s entitlement to compensation under certain circumstances. The conditions that need to be met for this to happen were set out by the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, in a ruling from 5 February 2015 (Az.: VII ZR 315/13). According to this ruling by Germany’s highest court of ordinary jurisdiction, the right to claim compensation only arises if the authorised dealer was integrated into the company’s sales force and committed to making his or her business contacts available to the company so that the latter can continue using them. The authorised dealer must have committed to transferring his or her client base to the company in such a way that the company is able to readily harness the benefits of this client information without any delay. Furthermore, the authorised dealer must by virtue of special contractual arrangements be integrated into the company’s sales force to such an extent that he or she from an economic per
spective has extensive duties to perform that would otherwise have to be met by a commercial agent.

In the case in question, the BGH denied the authorised dealer the right to claim compensation because the company had not been entitled to use the client information, having contractually committed to block the transferred data and delete it at the request of the authorised dealer.

The right to claim compensation is a controversial topic in the case of commercial agents and all the more so in relation to authorised dealers. Lawyers who are experienced in the field of commercial law can assist authorised dealers and businesses in drafting agreements as well as in the event of legal disputes.

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Experience in Business Succession

A large number of small and medium-sized businesses are going to have to make arrangements for business succession in the near future. There are various possible approaches to organizing succession.

According to a study conducted by KfW Research, approximately one in every six small and medium-sized businesses will be planning for business succession by the year 2018. The study states that around 620,000 businesses will be searching for a suitable successor. For a lot of businesses, a change at the management level represents a considerable challenge. We at the commercial law firm GRP Rainer Rechtsanwälte have the experience required for weighing up the various options and finding a suitable solution to a business’s transition.

Generational change is something many family-run businesses are set to be faced with in the coming years. Often the desired solution is for the business to remain family-owned and the next generation to carry on the business. Having said that, this is not automatically the ideal solution, as the children, for instance, might not have any interest in the company or be suited to continue the business. In these cases, other options such as the sale or partial sale of the company need to be considered. In doing so, it is also important to take taxation and family aspects into account in addition to economic factors.

Selling a business requires intensive preparation, which is why business succession ought not to be kicked into the long grass. The order situation, balance sheets and existing employment contracts play an important role. Another key aspect is, of course, the valuation of the business to ascertain an appropriate selling price. Depending on the corporate form, it might also be a good idea to sell one’s company shares to one of the other shareholders.

It is equally important to consider inheritance claims. The rules of intestate succession kick in in the absence of appropriate arrangements, and this can give rise to problems. For this reason, it Is advisable to prepare what is referred to in German as an “Unternehmertestament” (entrepreneur’s will). With this kind of will, the testator can prevent a community of heirs from pursuing different interests and thus avoid the business’ continuity being put at risk. It is possible to make arrangements in an entrepreneur’s will that already apply during the testator’s lifetime. Another possible option may be to set up a foundation.

Business succession should be planned in advance with due regard to all legal aspects as well as factors pertaining to taxation. Lawyers who are experienced in the field of company law can ensure that the handover of the business runs smoothly.


Key 2018 legal changes every SME should know about

Employers are being urged to ensure their businesses are prepared for forthcoming legal changes before the New Year kicks in – or risk falling foul of the law.

Employment law and corporate and commercial solicitors at Kirwans law firm have issued a warning prior to a raft of new legislation taking effect next year, reminding business owners of the dangers of ignoring the legal updates.

Lindsey Knowles, employment solicitor at Kirwans said:

“We know that 2018 is going to be a key year for businesses, and it’s vital that owner/managers are prepared.

“While large companies will have their own HR and legal teams which will have been planning for these changes for many months, smaller enterprises may not have had the opportunity to prepare.

“That’s why we’re calling for business owners to take stock now, and ensure that they’re well-equipped to deal with the new legislation and regulations that 2018 will bring.”

Here, Lindsey and her colleague, corporate and commercial solicitor James Pressley, run through the key changes expected in 2018.

Publication of gender pay reports

Under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, all private and voluntary sector employers in England, Wales and Scotland with at least 250 employees will be required to publish information about the differences in pay between men and women in their workforce by April 4, 2018. The information shared will be based on a pay bill ‘snapshot’ date of April 5, 2017.

It is believed that the Equality and Human Rights Commission could investigate employers who fail to publish the data.

The Government Equalities Office and ACAS have produced joint guidance on pay gap reporting and the Gender Pay Gap reporting website can be found here –

Changes in the Tax Treatment of Termination Payments

Under existing rules, the first £30,000 of a genuine termination payment for loss of employment can be paid free of income tax, with the balance being subject to income tax but free of employer and employee NICs.

From April 2018, a termination payment that falls within the income tax exemption will, after it hits the £30,000 limit, be liable for both income tax and employer NICs. There will, however, continue to be an unlimited employee NICs exemption for payments relating directly to the termination of employment.

All payments in lieu of notice (PILONs) will also be subject to income tax and employer and employee NICs from April 2018. The new rules will apply whether the payment is contractual or whether it is made on a purely compensatory basis due to an employer’s failure to serve proper notice.

The changes mean that any payments which would have been treated as earnings if the employee had worked their notice period, including other salary-related payments, benefits and expected bonuses, will also be subject to income tax and employer and employee NICs.

In addition, payments on termination for ‘injury to feelings’ in relation to death, disability or injury will, from next April, no longer be eligible for exemption from tax and NICs. The exemption will only apply where there is an injury or disability of a physical or psychological nature that is sufficient to cause the employee to be unable to perform his or her job properly.

A payment made for injury to feelings for discriminatory acts which take place prior to termination of employment remains outside these reforms and can continue to be paid free of income tax and NICs.

Restriction of employment allowance for illegal workers

Since April 2014, businesses have been able to claim a reduction of up to £3,000 a year on their employers’ NICs. From April 2018, however, employers will be excluded from claiming the allowance for one year if they have:

• Employed a worker who was subject to immigration control;
• Been penalised by the Home Office;
• Have exhausted all appeal rights against the penalty.

Tax- Free Childcare

Tax-Free Childcare was introduced on April 21 2017, and has been gradually rolled out this year, with parents of children aged under four (as of August 31 2017), and parents of disabled children aged under 17 able to enter the scheme first. The scheme is also available to eligible parents of all children under the age of 12.

Tax-Free Childcare doesn’t rely on employers offering the scheme, unlike the current scheme Employer-Supported Childcare, and any working family can use Tax-Free Childcare, provided they meet the eligibility requirements.

However, employees are not required to switch to Tax-Free Childcare if they don’t wish to. Employer-Supported Childcare will continue to accept new entrants until April 2018, and parents registered by this date can continue to order vouchers beyond 2018 for as long as their employer continues to run the scheme or until their child is 15-years-old, or 16 if disabled – whichever is sooner.

Changes to the National Living Wage

The recommendations of the Low Pay Commission have been accepted by the Government, which means that from April 2018 the National Living Wage will increase from £7.50 to £7.83 per hour. The National Minimum Wage, which applies at varying rates to employees aged under 25, will also rise as follows:

• Age 21 to 24 – from £7.05 to £7.38 per hour
• Age 18 to 20 – from £5.60 to £5.90 per hour
• Age 16 to 17 – from £4.05 to £4.20 per hour
• Apprentice rate – from £3.50 to £3.70 per hour

General Data Protection Regulation (GDPR)

The GDPR is an EU law which applies to the UK from May 25, 2018, and even though the UK is leaving the EU, the regulation will still be implemented.

The GDPR will supersede current legislation to protect people’s personal information, introducing tougher fines for non-compliance, and giving people more control over how companies use their data.

GDPR will provide individuals with easier access to their own data, as well as a right to know when high risk personal information has been hacked, such as information about health, religious belief or genetic data. It will also mean that people have a right to be forgotten.

The new rules will mean that, rather than simply ticking a box to opt out of receiving marketing information, individuals will have to give explicit consent for their data to be processed. This can be seen in the cases of website visitors being asked to check a box agreeing with a specific statement such as ‘I DO want to receive marketing information’ or, ‘I DO NOT want to receive marketing information’.

Data controllers must then keep a record of how and when that consent was given. The individual can also withdraw that consent at any point.

The new regulations mean that any business that has been running a soft opt-in system will be unable to use that database of customers from May 25, 2018.

Penalties for failure to comply, or for breach of regulations will be tough, with the amount of fines being handed down reaching as high as 4% of turnover, or €20 million, whichever is greater.

Primas Law’s Manchester office in flurry of new hires

Head of real estate says: “Our niche expertise in the development sector has seen exceptional growth.”

A boutique north west law firm has strengthened its Manchester-based real estate team with a flurry of new appointments.

Primas Law has taken on property lawyers Nataliya Healey, Awais Alam and Tim Dillon.

Lauren Steel and Sarah Fielding have been recruited as trainee solicitors, while Victoria Shaw has joined the executive support team.

Simon Baxter, head of real estate at Primas Law, said: “We’ve seen major growth across the real estate side of our business in the last 12-months.

“This increase is coming from a variety of sectors within the property market, but our niche expertise in the development sector has seen exceptional growth.

“Nataliya, Awais and Tim are experienced lawyers and their recruitment allows us to meet the demand we’re seeing now, whilst maintaining the firm’s commitment to quality. We’re also building for the future with our investment in new trainees.”

Nataliya joins Primas Law as a senior associate after working at Addleshaw Goddard, and latterly having spent more than three years with Croftons Solicitors in Manchester.

Solicitor Awais joins the firm after previous roles with Hill Dickinson, Squire Patton Boggs and DWF.

Tim also joins as a solicitor after a spell working for a major law firm in Vancouver, Canada.

There are now eight staff based full-time in the real estate team at Primas Law’s Manchester office. The firm also has offices in Cheshire and London. It focuses purely on real estate, corporate and commercial work.

The firm advises a wide range of clients in the property sector including landlords and tenants, developers, funders, property investors and housing associations.

Steinhoff rocked as CEO Jooste quits over Accounting wrongdoing

Steinhoff International Holdings NV plunged after its chief executive officer resigned amid accounting irregularities, in a reversal of fortune for a south African billionaire who upended the retail industry in Africa and Europe via a series of acquisitions.

The owner of the France-based Conforama furniture chain, Mattress Firm in the U.S. and Poundland in the U.K. said Tuesday that CEO Markus Jooste quit as it appointed auditor PwC to probe the matter. The stock slumped as much as 62 percent early Wednesday in Johannesburg.

The findings mark a striking turnabout for billionaire Christo Wiese, South Africa’s fourth-richest man and biggest shareholder in the company. He became an investor after selling his African clothing chain Pep to Steinhoff in 2014, and has since led an acquisition drive around the world alongside long-term ally Jooste, who has been with the company since 1988. In addition to acquisitions like Mattress Firm, the company has made plays for appliance chain Darty in France and retailer Argos in the U.K.

Wiese, 76, didn’t immediately respond to calls to his office and mobile phone. He has a net worth of $4.3 billion, according to the Bloomberg Billionaires Index.

The findings have implications for Africa’s two largest retailers, Steinhoff Africa Retail Ltd., which was spun off from its parent in September, and grocery chain Shoprite Holdings Ltd,. in which Wiese is also the biggest shareholder. STAR, as Steinhoff Africa Retail is known, slumped as much as 29 percent in Johannesburg and said CEO Ben la Grange resigned. He’s also the chief financial officer of Steinhoff International.

“The trust between Wiese and Jooste is broken, that is why Jooste is out,” Syd Vianello, an independent retail analyst in Johannesburg, said by phone. “Wiese has got a huge amount of money at stake and it’s in his best interest to ensure trust in the company is restored.”

The retailer said Monday it wasn’t able to release audited full-year financial results on Wednesday due to matters related to a criminal and tax investigation in Germany. That probe dates back to 2015, and the company said in August that “no evidence exists” that the company broke the country’s commercial laws. It also said a report in Manager-Magazin that Jooste is among employees being investigated by German prosecutors contained information that was “wrong or misleading.”