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Increase in share capital (reserved to employees)

The French Supreme Court related to private matters (Cour de cassation) ruled as a ratio decidendi on 28 November 2018 that the single vote on the resolution related to an increase in share capital reserved to employees is considered satisfactory to regularize an increase in share capital not subject to a vote on a preceding general meeting. This allows the possibility for a general meeting to ratify an increase in share capital reserved to employees (due to the relativity of the nullity – nullité relative) and is in line with the spirit of company law to allow ratification as much as possible to ensure legal safety.

Up to date 28 November 2018

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Corporate law (exclusion of partners)

The current situation of partners of limited liability companies carrying on a civil professional purpose (SEL – Société d’Exercice Libéral) is protected by law and the constitutive documents. This is due to the fact that they have to be protected as they are running the business activity. This is particularly the case in the event of exclusion of partners, when a decision is made to exclude a partner from the company.

In this respect, Article R.4381-16 of the French public health Code (Code de la Santé publique) states that a partner practicing within the company can be excluded when (i) he is prohibited from practicing or providing care to covered parties for a period equal to three months or (ii) the said partner contravenes operating rules of the company.

Article R.4381-16 of the French public health Code gives guarantees as to the exclusion decision: no exclusion decision can be taken if the partner was not legally convened and if he has not been in the position to plead his case on specific facts for which he was charged.

However, as to the voting process, Article R.4381-16 of the French public health Code states that the decision of the partners to exclude a partner is taken on the reinforced majority calculated excluding not only the vote of (i) the partners having been sanctioned for the same facts or related facts but also (i) the concerned partner (unanimity of other partners practicing within the company and entitled to vote having as well to be obtained).

The fact that the concerned partner does not take part to the vote is not in line with the ratio decidendi of the Cour de cassation (i.e. com. 9 July 2013) and the challenged provision is deemed not to have been written. Such a provision may as well be considered in breach of the ECHR (European Convention on Human Rights), in this particular case of Article 6 (right of a fair trial) or of Article 13 (right of an effective remedy).

The business activity is also protected in the event of temporary prohibition from practicing or providing care to covered parties (Article R.4381-16). In this perspective, provided that the partner is not excluded, the person concerned keeps his partners’ rights and duties, to the exclusion of the remuneration linked to his professional activity (Article R.4381-17).

This protection is crucial to ensure management stability, legal safety and thus, to foster business activity.

Up to date 17 August 2018

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Frybergers Stephanie Ball Honored as an Attorney of the Year

Stephanie Ball of Fryberger, Buchanan, Smith & Frederick, P.A., has been named one of the 2017 Attorneys of the Year by the publication Minnesota Lawyer after winning a multi-million dollar jury verdict for a quadriplegic woman.

Nine years ago, Paige Anderson was a passenger in a car that collided with a school bus, paralyzing her. With Ball representing her, she was awarded $28.6 million in damages, including medical and caregiver expenses. According to an article by Minnesota Lawyer, “It may be one of the largest personal injury verdicts in Minnesota.”

“I am honored,” Ball said about the award, “but the real reward was giving Paige a voice and having her loss recognized.”

“Attorneys of the Year” is an annual list assembled by Minnesota Lawyer to honor the best and brightest attorneys across the state.

Law Firm Overview:

Fryberger, Buchanan, Smith & Frederick, P.A., is a 24-attorney practice providing a range of over 35 legal services that include business and corporate law, real estate transactions, employment and labor law, litigation, wills and trusts, finance and personal injury. The group holds licenses across an array of states: Minnesota, Wisconsin, North Dakota, Arizona, Colorado, Montana, and Michigan. For more information, call the Duluth office at 218.722.0861, the St. Paul office at 651.221.1044 or the Superior office at 715.392.7405.

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Exclusive: Linklaters opens fifth German office to chase banking work

Linklaters will open its fifth office in Hamburg in the first quarter of this year to capitalise on an increase in banking work for German clients.

The firm has made no lateral hires with the launch, instead transferring two existing partners from Frankfurt and Dusseldorf.

Linklaters LLP is a multinational law firm headquartered in London. Founded in 1838, it is a member of the “Magic Circle” of elite British law firms. It currently employs over 2,000 lawyers across 29 offices in 20 countries.

In 2016, Linklaters achieved revenues of £1.31 billion ($1.97 billion) and profits per equity partner of £1.45 million ($2.2 million), making it the world’s fourth highest-grossing law firm, and the most profitable member of the Magic Circle. In the UK, the firm has top-tier rankings across many practice areas, including corporate/M&A, capital markets, litigation, banking and finance, restructuring and insolvency, antitrust and tax. Linklaters counts more FTSE 100 companies among its clients than any other law firm. For direct deals by institutional investors in the first half of 2016, Linklaters tied for first place. In the 2012 Global Elite Brand Index, Linklaters was named the third strongest global law firm brand.

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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 – www.gov.uk/report-gender-pay-gap-data

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.