Commercial Litigation and Arbitration in the UK: Sterling Stamp’s Expertise

Sterling Stamp: Expert Legal Services in Commercial Litigation and Arbitration

Sterling Stamp is a top-tier law firm specialising in commercial litigation and arbitration in the UK. We provide expert legal services to businesses dealing with contract disputes, breach of contract, partnership disputes, and intellectual property disputes.

Commercial Litigation in the UK

Commercial litigation refers to resolving business disputes through the UK’s court system. Whether it’s a breach of contract, dispute resolution, or corporate litigation, Sterling Stamp delivers effective legal strategies to protect your business interests.

Specialised Courts:

The UK has dedicated courts like the Commercial Court that handle complex disputes. We have extensive experience representing clients here.

Precedent-Based System:

The UK’s common law system relies on past rulings (precedents) for guidance. We utilise relevant case law to build strong arguments.

Thorough Disclosure:

In litigation, parties must exchange crucial documents during disclosure. We ensure thorough case preparation while safeguarding sensitive information.

Arbitration in the UK

Arbitration is a private and flexible alternative to litigation. It offers a faster resolution for business disputes and is often preferred due to its confidentiality.

Confidentiality:

Arbitration is private, unlike court litigation, making it ideal for protecting your company’s reputation.

International Enforcement:

Arbitration awards are recognised globally under the New York Convention, ensuring easier cross-border dispute resolution.

Finality and Cost-Effectiveness:

Arbitration offers final decisions with limited appeal options, leading to quicker and more cost-efficient outcomes.

Litigation vs. Arbitration

Choosing between litigation and arbitration depends on your specific business needs:

  • Confidentiality: Choose arbitration if privacy is a priority.
  • Speed and Finality: Arbitration is generally faster and offers fewer appeal opportunities, while litigation provides more extensive appeal rights.
  • Global Enforcement: Both arbitration awards and UK court judgments are enforceable internationally, but arbitration may be simpler to enforce in some jurisdictions.

Why Choose Sterling Stamp?

Sterling Stamp provides expert legal support for both domestic and cross-border commercial disputes. We offer services in Arabic, French, and English to meet the needs of global clients. For more information, contact us at info@sterlingstamp.com.

Unlocking Investment Opportunities in Morocco with AMDIE: How Our Law Firm Can Help You Establish a Business

The Moroccan Investment and Export Development Agency (AMDIE)

The Moroccan Investment and Export Development Agency (AMDIE) serves as a key driver in promoting investment and export growth in Morocco, working to enhance the nation’s economic development. AMDIE offers a range of services designed to support investors and businesses, focusing on sustainable and inclusive growth. With Morocco’s growing reputation as a hub for renewable energy, technology, and industrial development, AMDIE is instrumental in helping businesses establish a strong foothold in the country.

If you’re considering entering the Moroccan market, our law firm is here to assist you every step of the way. From navigating legal complexities to capitalising on AMDIE’s support, we will guide you through the entire process of establishing and growing your business in Morocco. So don’t hesitate to reach out to us via email.

How AMDIE Supports Business Investment in Morocco

AMDIE provides comprehensive support to foreign investors and local businesses alike, with a specific focus on three main areas: investment promotion, export development, and sustainability initiatives.

Investment Promotion and Support

AMDIE plays a pivotal role in promoting Morocco as a prime destination for investment. Its services range from facilitating access to key information to guiding businesses through regulatory procedures. The agency helps investors by:

  • Market Research and Feasibility Studies: AMDIE provides detailed insights into Morocco’s economic landscape, including market trends, sector-specific opportunities, and the legal framework for investment. By working with AMDIE, businesses can access accurate data to inform strategic decision-making.
  • Site Selection and Infrastructure Support: AMDIE assists companies in choosing optimal locations for their operations, taking advantage of Morocco’s advanced infrastructure, industrial parks, and special economic zones.
  • Investment Incentives: Morocco offers a range of fiscal incentives for investors, including tax exemptions, duty reductions, and financial grants for businesses in sectors such as renewable energy, automotive manufacturing, and information technology. AMDIE acts as a facilitator in securing these incentives.

Export Development

Morocco’s strategic location as a gateway between Europe, Africa, and the Middle East makes it an attractive hub for export activities. AMDIE has launched several initiatives to promote Moroccan exports and support businesses looking to enter global markets. One key program is Export Morocco Now, which aims to support companies with export potential through services like:

  • Market Access and Networking: AMDIE provides export training, facilitates participation in international trade fairs and B2B events, and helps businesses connect with global buyers and distributors.
  • Product Referencing and Certification: For businesses looking to export goods, AMDIE offers assistance in product certification and compliance with international standards, helping ensure smooth entry into foreign markets.
  • Sustainability Focus: Export initiatives are often linked to sustainable development goals, with an emphasis on promoting businesses that contribute to job creation, gender equality, and environmental sustainability.

Focus on Sustainability and Green Investment

AMDIE places a strong emphasis on sustainable investment in Morocco. The country is positioning itself as a leader in green energy, with renewable energy projects like the Noor Solar Power Plant and ambitious goals to generate over 50% of its energy from renewable sources by 2030. AMDIE supports businesses in sustainable sectors by:

  • Facilitating Green Projects: For investors in renewable energy, energy efficiency, or eco-friendly manufacturing, AMDIE helps streamline the process, offering support in navigating the regulatory framework for green investments.
  • Promoting Corporate Social Responsibility (CSR): Businesses with a focus on sustainability can take advantage of AMDIE’s programs that encourage CSR practices and promote eco-friendly business operations.

How Our Law Firm Assists Businesses in Morocco

While AMDIE provides excellent support for businesses and investors, navigating the legal and regulatory environment in Morocco can be complex. Our law firm specialises in helping businesses set up and grow in the Moroccan market, ensuring compliance with local laws and maximising the benefits offered by agencies like AMDIE.

Company Formation and Regulatory Compliance

Establishing a business in Morocco requires navigating local regulations, obtaining permits, and complying with industry-specific laws. Our team of legal experts will handle all aspects of company formation, ensuring that your business is registered correctly and meets all regulatory requirements. We will also assist with:

  • Business Licenses: Ensuring that all necessary licenses and permits are obtained, from operational licenses to environmental approvals for green projects.
  • Legal Structuring: Helping you choose the appropriate legal structure for your business, whether it be a limited company, joint venture, or branch office, based on your investment strategy.

Drafting and Reviewing Contracts

Our law firm can assist in drafting and reviewing contracts to ensure they protect your interests. This includes investment agreements, partnership contracts, and export agreements. We ensure that all contracts are compliant with Moroccan law and aligned with your business goals.

Securing Investment Incentives

While AMDIE provides access to fiscal incentives, our firm ensures that you fully benefit from these opportunities by managing the legal process of applying for incentives such as tax breaks, duty exemptions, and financial grants. We will:

  • Ensure that your application for incentives is compliant with the legal requirements set by Moroccan authorities.
  • Provide strategic advice on how to maximise the benefits of Morocco’s free trade zones and investment laws.

Dispute Resolution and Legal Representation

Should any disputes arise, our law firm offers robust legal representation. Whether the issue involves commercial contracts, regulatory challenges, or partnership disputes, we provide dispute resolution services, including mediation, arbitration, and litigation in Moroccan courts.

Sustainability and Compliance with ESG Standards

If your business operates in sustainable sectors, we will ensure full compliance with Morocco’s environmental, social, and governance (ESG) standards. From renewable energy investments to eco-friendly manufacturing, our legal expertise will help you navigate the legal framework for green projects and meet sustainability criteria.

Conclusion

Partnering with AMDIE and our law firm provides a comprehensive solution for businesses looking to invest or expand in Morocco. AMDIE’s vast network, industry expertise, and focus on sustainability make it a valuable ally in entering the Moroccan market. Meanwhile, our law firm ensures that all legal and regulatory aspects of your business are meticulously handled, allowing you to focus on growing your business and capitalising on the opportunities Morocco has to offer.

Let us help you take advantage of Morocco’s dynamic investment environment, leveraging the support of AMDIE to establish a successful and sustainable business. Reach out to us today to begin your journey in Morocco.

Common Pitfalls to Avoid in Franchise Agreements: A Legal Guide for Franchisors and Franchisees

Franchise agreements are critical documents that set the foundation for the relationship between a franchisor and a franchisee. These agreements govern how the franchise operates, what each party’s obligations are, and the rights and remedies available in case of disputes. While they offer a solid framework for business success, poorly drafted or negotiated franchise agreements can lead to significant legal and financial issues.
Here, we take a closer look at the most frequent mistakes that parties make when drafting and negotiating franchise agreements, and how to avoid these pitfalls.

1. Lack of Clarity in Roles and Responsibilities

One of the most common pitfalls is the failure to clearly define the roles and responsibilities of both the franchisor and the franchisee. A vague or overly broad description of obligations can lead to misunderstandings or disputes down the road.
How to Avoid:
Ensure that the franchise agreement explicitly outlines the responsibilities of both parties. This includes the franchisor’s duty to provide training and marketing support, and the franchisee’s obligations regarding operations, payments, and maintaining brand standards.

2. Unclear Financial Terms

Franchise agreements often include complex financial arrangements, such as initial franchise fees, royalties, and advertising contributions. If these are not clearly defined, it can lead to disagreements and financial strain.
How to Avoid:
The agreement should clearly state the amount and due dates of all payments, including initial fees, ongoing royalties, and any additional contributions, such as marketing or advertising funds. Clarity in financial terms will ensure that both parties are on the same page regarding monetary expectations.

3. Inadequate Territorial Rights

Another frequent mistake is the lack of specificity around territorial rights. Franchisees need to know exactly what geographic area they have the exclusive right to operate in, while franchisors must protect their ability to expand.

How to Avoid:
Define the franchise territory in clear, specific terms. Ensure the agreement addresses exclusivity within that territory, and whether the franchisor retains the right to operate or license additional franchises in nearby areas.

4. Failure to Address Termination Conditions

Poorly drafted termination clauses can leave franchisees vulnerable to abrupt termination or leave franchisors unable to enforce termination in cases of breach. Disputes often arise if the franchise agreement doesn’t specify when and how a franchise can be terminated.
How to Avoid:
Include detailed termination conditions in the agreement, specifying what constitutes a breach, how breaches are handled, and under what circumstances the franchise agreement can be terminated. Both parties should be aware of their rights and the process involved in terminating the relationship.

5. Overlooking Dispute Resolution Mechanisms

Disputes between franchisors and franchisees are inevitable, but many agreements fail to include robust dispute resolution mechanisms. Without a pre-determined process, disputes can escalate into costly legal battles.
How to Avoid:
Incorporate clear dispute resolution mechanisms in the agreement, such as mediation, arbitration, or litigation. Define the process, timeframes, and jurisdiction for resolving disputes to avoid unnecessary delays and costs.

6. Neglecting Intellectual Property Protection

The franchisor’s brand and intellectual property (IP) are central to the success of the franchise. Failing to adequately protect trademarks, trade secrets, or other IP can lead to brand dilution or even loss of proprietary information.
How to Avoid:
Ensure that the franchise agreement has robust IP protection clauses. The agreement should explicitly state how the franchisee can use the franchisor’s intellectual property, and any restrictions on its use. It should also detail the consequences of IP misuse.

7. Inadequate Post-Termination Restrictions

When a franchise relationship ends, the franchisor must protect its business interests. Failing to include enforceable post-termination restrictions, such as non-compete clauses, can leave the franchisor vulnerable to competition from former franchisees.
How to Avoid:
Include post-termination restrictive covenants, such as non-compete and non-solicitation clauses. These should be reasonable in terms of duration and geographic scope to ensure they are enforceable under UK law. Clear restrictions will help protect the franchisor’s business from unfair competition.
8. Insufficient Renewal and Exit Strategies
Many franchise agreements fail to address what happens at the end of the franchise term. Without clear renewal or exit strategies, both parties may be left in limbo.
How to Avoid:
Specify renewal conditions, such as performance standards or payment of additional fees. Likewise, include an exit strategy detailing what happens if either party decides not to renew the franchise agreement. This will provide both franchisor and franchisee with a clear path forward at the end of the term.

9. Failing to Comply with Regulatory Requirements

In the UK, franchise agreements are largely governed by contract law. However, they can also intersect with other legal areas, such as competition law, data protection, and consumer protection regulations. Failing to comply with these can lead to costly legal penalties.
How to Avoid:
Work with legal experts to ensure that the franchise agreement complies with all applicable regulations. This includes ensuring that the agreement does not contain anti-competitive clauses and is in line with data protection laws. You can contact our legal experts at contact@sterlingstamp.com.

10. Overly Restrictive Operational Standards

Franchisors often impose strict operational standards to maintain brand consistency, but overly restrictive requirements can stifle the franchisee’s ability to run the business efficiently.

How to Avoid:
Strike a balance between maintaining brand standards and giving the franchisee operational flexibility. Clearly define what is required in terms of day-to-day operations, but avoid micromanaging every aspect of the business.
Conclusion
Franchise agreements are complex legal documents, and avoiding the common pitfalls mentioned above is crucial to building a successful and long-lasting franchise relationship. Whether you’re a franchisor or a franchisee, working with experienced legal professionals is essential to ensure that the agreement is tailored to your needs, clearly outlines each party’s obligations, and complies with all relevant laws.
By addressing these key areas, you can mitigate the risks associated with franchise agreements.
Contact us for your Franchise agreement Matters on this email: contact@sterlingstamp.com

 

A Quick Guide to Buying a Commercial Property in the UK

Purchasing a commercial property in the UK can be a significant investment, whether for business use or as an income-generating asset. Commercial properties include office buildings, shops, warehouses, and industrial units. The process involves more complexities compared to residential properties, making it crucial to understand the key steps. Here’s a simplified guide to help you navigate the process.

Key Steps in Buying a Commercial Property:

Property Searches and Surveys: Conduct necessary searches and surveys to identify any planning restrictions, legal issues, or structural problems that may affect the property.
Financing the Purchase: Commercial mortgages are often required, and lenders will consider factors such as the property’s condition, location, and potential income before approving finance.
Legal Due Diligence: A solicitor will handle the legal checks, including reviewing the title deeds, planning permissions, and any restrictions on the use of the property.
VAT and Stamp Duty: Be aware that purchasing a commercial property may attract VAT and stamp duty, depending on the property value and its VAT status.
Finalizing the Purchase: Once all due diligence is complete, contracts are exchanged, and the property becomes yours on the agreed completion date.
Why Invest in Commercial Property?
Higher Rental Yields: Commercial properties typically offer higher rental yields compared to residential properties, making them attractive for investors.
Longer Lease Terms: Commercial leases tend to be longer, providing more security in terms of income.
Potential for Business Use: Purchasing a property for your own business use offers long-term cost savings and control over the premises.
Sterling Stamp’s Expertise in Commercial Property Purchases
At Sterling Stamp Law, we specialise in helping clients purchase commercial properties, providing expert guidance at every stage. Our multilingual team, fluent in Arabic, English, and French, ensures effective communication with both local and international clients. We offer comprehensive legal advice on all aspects of commercial property transactions, from searches to completion.
For professional advice on buying commercial property, contact us at info@sterlingstamp.com

Incorporating a Company in Ireland: A Step-by-Step Legal Guide

Why Incorporate a Business in Ireland?
Ireland has become a hub for global business thanks to its favourable tax regime, skilled workforce, and strong regulatory framework. The country’s strategic position in the European market, coupled with a business-friendly environment, makes it an ideal place to establish a company. Entrepreneurs and established firms alike are attracted to Ireland’s thriving technology sector, innovative culture, and access to international markets. Here’s a guide to help you through the process of incorporating a company in Ireland.

Choose the Right Business Structure

The first step is selecting the appropriate business structure. You can choose from various options such as a private limited company (LTD), sole trader, partnership, or designated activity company (DAC). Each structure has different legal and financial implications, so it’s important to choose the one that best suits your business needs.

Company Name and Address

Select a unique company name that complies with Irish company law. You will also need a registered office address in Ireland for official correspondence.

Foreign Directors

Ireland allows non-resident or foreign directors to incorporate and manage companies. However, it is important to note that in the absence of at least one EEA-resident director, you will be required to obtain a Section 137 bond to ensure legal compliance. This bond acts as a form of insurance.

Prepare the Required Documents

To register your company, you’ll need to submit key documents, including a constitution for the company and details of the directors, shareholders, and company secretary.

Register with the Companies Registration Office (CRO)

File your application with the Companies Registration Office (CRO). This process includes submitting Form A1, which contains details about the company’s directors, shareholders, and registered address.

Tax Registration

Register your company with the Revenue Commissioners for corporation tax, VAT, and payroll taxes if applicable. This is an essential step to ensure your company meets its tax obligations.

Compliance with Irish Law

Once your company is registered, it will need to comply with ongoing legal requirements such as annual returns, financial reporting, and filing of tax returns.
Incorporating a company in Ireland is a streamlined process if you follow the legal guidelines. By choosing the right structure and ensuring compliance with all regulations, you can successfully establish your business in one of Europe’s most attractive business environments.
For any queries or further assistance, feel free to reach us at contact@sterlingstamp.com.

Incorporating a Business in England and Wales: A Step-by-Step Legal Guide

The UK remains a prime destination for entrepreneurs and businesses looking to make their mark on the global stage. With its robust legal framework, strategic location, and vibrant market, opening a business here offers numerous advantages.
The UK boasts a well-established infrastructure, a supportive environment for innovation, and access to a diverse talent pool. Its commitment to fostering economic growth and sustainability makes it an attractive location for startups and established companies alike. Whether you’re drawn by the UK’s reputation for business excellence or its favourable regulatory environment, incorporating a company here is a strategic move that can pave the way for your success.
Therefore Incorporating a business in England and Wales can be an exciting yet complex process. Here’s a concise guide to help you navigate the key steps:

Choose the Right Business Structure

Before you begin, select the appropriate structure, such as a sole trader, limited company, or partnership. Each has its own legal and financial implications.

Register Your Company with Companies House

Once the structure is chosen, the next step is registering your business with Companies House. You’ll need a unique company name, a registered office address, and details of directors and shareholders.

Memorandum and Articles of Association

These are essential legal documents that outline how your company will operate. They must be submitted during the registration process.

Compliance with Companies House Requirements

Post-registration, your company will need to comply with annual filing requirements, including financial accounts and a confirmation statement to Companies House.

Consider Legal and Financial Obligations

Ensure your company complies with tax regulations by registering with HMRC for corporation tax, VAT, and payroll, if applicable.
Incorporating a business in England and Wales is a straightforward process when you understand the legal requirements. By following these steps, you can ensure your company is properly registered and compliant, setting a solid foundation for future success in the UK’s thriving business environment.
If you need further assistance or have any questions about incorporating your business, feel free to contact us today for expert advice. You can reach us at contact@sterlingstamp.com .

Starting construction works in the UK? Get familiar now with the payments’ provisions under UK legislative framework!

Starting construction works in the UK? Get familiar with the payments’ provisions under UK legislative framework!

Lord Denning: ‘There must be a cash flow in the building trade.

It is the very lifeblood of the enterprise’[1].

This article summarises the payment provisions under Part II of the Housing Grants, Construction and Regeneration Act 1996 (‘Act‘), as amended by the Local Democracy, Economic Development and Construction Act 2009 (‘LDEDC’).

For the past 22 years, the overall impact of the Act on the construction industry has been remarkable. As Sir Jackson highlighted ‘The payment regime and adjudication regime which that legislation introduced now play a critical role in the functioning of the construction industry… Overall the payment regime and the adjudication regime have been successful’[2].

The Act applies to most construction contracts, although some contracts such as the ones with residential occupier or where the works relate to mineral extraction or power generation are excluded.

In a construction contract, one party usually undertakes to carry out a defined work (referred in the Act as (‘Payee’)) while the other party undertakes to make payment (referred to as (‘Payer’)). Whilst the Act gives the parties to a construction contract the freedom to agree the sum to be paid, when to be paid, and any procedure to facilitate payment, it introduces changes of some importance to the construction industry.

  • It imposes a statutory set of contractual provisions which in default take effect as implied terms of the contract concerned.

Section 114 states that where a construction contract does not comply with the requirements of the Act in relation to adjudication and payment, the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649), as amended in respect of construction contracts entered into after 1 October 2011 statutory scheme (‘Scheme’) will apply.

  • It gives an entitlement to stage payments.

A party to construction contract which is more, or agreed to be estimated at more, than 45 days is entitled, by virtue of section 109 of the Act, to payment by instalments, stage payments or other periodic payments for any work under the contract. The parties are free to agree the amounts of the payments and the intervals or the circumstances in which they become due.

  • It makes provision for the date when payments under a construction contract became due.

Section 110 of the Act states that a construction contract (1) shall provide an adequate mechanism for determining what and when payments become due; and (2) and shall provide for a final date for payment in relation to any sum which becomes due.

  • It deals with the need to give various notices during the project life cycle with the aim of proactively highlighting any payment’s issue and allowing early measures to deal with them effectively.

Section 110A to section 111 state that the contract must provide for a notice, which specifies the amount due and the basis of the calculation, to be given by either party (or by the Payer’s representative) to the other. The notice should be clear and unambiguous that it is  a payment notice.

If the Payer, or its representative, fails to provide the notice then the Payee is entitled to submit its notice instead. In which case the final payment date will be pushed back by the amount of time taken by the Payee to submit its own notice.

In the absence of an agreement as to the time of the notice submission, the Scheme will apply and the notice shall be given within five days of the payment due date.

The Act allows the Payer to correct the calculated amount in the payment notice by issuing a pay less notice. The pay less notice should set out the sums deemed due, should clarify the basis of calculation and should be submitted within the agreed period of time. In the absence of an agreement, the Scheme will apply and the pay less notice should be submitted seven days before the final payment date.

  • It provides a right to suspend performance for non-payment.

Section 112 of the Act entitles the Payee to suspend performance if the Payer fails to pay the sum due.

  • It prohibits conditional payment provisions.

Section 113 prohibits conditional payment on the performance of another contracts, such as the commonly known “Pay when Paid” clauses.

Whilst the HGRCA benefits praised by Sir Jackson are undeniable, many in the industry still argue that poor payment practices are increasingly impacting the construction industry. The rate of insolvency is still peaking, and the number of payments’ litigations is increasing.

The construction industry is in need, now more than ever, of a legislative intervention to further improve the payments practices.

I have called upon my decade’s long international experience in the construction field and highlighted several improvements that I will be sharing with you in the next article.

[1] Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] A.C 689
[2] S & T (UK) v Grove Developments [2018] EWCA Civ. 2448

Author:

Construction Solicitor

Hamza Sekkar

Partner & Director of Legal Engineering

 If you have any queries, please contact me on h.sekkar@sterlingstamp.com

Interested in Public Private Partnerships Check our article about: Public-Private Partnerships

FAQ: Corporate Law in the UK

Doing Business in the UK? Here are some of your most asked question Regarding Corporate Law.

Do you have a legal question for our solicitors? Check out our Frequently asked questions for more information. It is possible that your question has already been answered!

Read the frequently asked questions and their answers regarding Corporate Law and other legal matters in the United Kingdom.

1. What are the main legislative regulatory and other sources regulating corporate practices?
Corporate governance in the UK is influenced by a number of legislative, regulatory and other sources:
  • The main legislation is set out in the Companies Act 2006 (the “Companies Act”), together with the Listing Rules and the Disclosure Guidance and Transparency Rules (the “DTRs”) made by the Financial Conduct Authority (the “FCA”).  
  • The main governance-focused regulations are the UK Corporate Governance Code (the “UKCG Code”) that came into force on 1 January 2019 for companies and the UK Stewardship Code for institutional investors that came on the 1st of January 2020, each of which is currently issued and administered by the Financial Reporting Council (the “FRC”), the FRC is soon to be replaced by a new regulator. 
  • The Takeover Code might also be relevant if the corporate is or may be the subject of a takeover or merger transaction.  
  • Companies should also consider the application of guidelines produced by investor protection groups, such as the Investment Association.
2. To what extent Brexit will affect Corporate Practices and their regulation?
The UK left the European Union (“EU”) on January 31, 2020, marking the beginning of the transition period, which is expected to last until December 31, 2020. During this period, most EU legislation (including any new or revised laws during the transition period) will continue to apply to the UK. The British government has stated that it will not extend this transition period, and the British Parliament has passed legislation for this purpose. The EU (Exit) Act 2018 (as amended by the EU (Exit Agreement) Act of 2020) stipulates that the main body of EU law (the so-called “reserved EU law”) will be directly incorporated into UK law from the end of 2007. Transition period. A series of auxiliary legislation was passed to address the shortcomings in retained EU law caused by the departure of the United Kingdom. The full impact of Brexit on corporate governance in the UK remains to be seen, but the impact on companies will be obvious in the 2019 reporting season. 37% of the companies in the (FTSE 350) with 37% of FTSE 350 companies referring to Brexit in the viability statements in their 2019 annual reports, compared with 14% in 2018.
3. What other main changes/challenges could Challenge Corporate governance during 2021?
These are some of the Challenges that corporates might encounter in 2021
  • Diversity of the board: In recent years, the public has paid more and more attention to the composition of the board of directors, especially in terms of the balance between skills and gender, ethnic and cultural diversity. This has led to several independent reports that set many diversification goals for the FTSE 350 company. The 2016 Hampton-Alexander Review report recommended that by 2020, all boards of FTSE 350 companies should have 33% female representatives. Although this goal has not yet been achieved. Progress in this area is relatively slow. By 2019, 37% of FTSE 100 companies and 69% of FTSE 250 companies have not reached the target. Although these goals are not legally mandatory, from the perspective of corporate governance, a growing number of boards lacking diversity is unacceptable. Investor Surveillance Service Voting Information Services (“IVIS”) is increasingly advertising companies that have failed to achieve board diversity goals.
  • Issues related to Stakeholders: The British board and management are paying more and more attention to the interaction with shareholders and other stakeholders. At the same time, they are also paying more and more attention to the company’s public reporting on matters other than financial indicators (including environmental, social and governance (ESG)). Companies must establish specific mechanisms for interaction with employees, and we will soon see the first “Article 172(1) Statement” 
  • The integrity of the Audit: The government has confirmed that the new regulatory agency, Reporting and Governance Agency (“ARGA”), will replace the FRC. On par with the recent scandals (including the collapse of Carillion and Thomas Cook), ARGA will have broader powers than FRC, and it is expected that auditors will be more rigorously scrutinized. The revised “Ethics Standard 2019” will be applied to auditors from March 15, 2020. It will prohibit auditors from contributing to the decision-making of client entities or providing them with recruitment or compensation services. 
And finally, the Covid-19 Outbreak and its effects seem to be significant and wide-ranging.
4. What Roles could shareholders have in the management or strategic direction of the entity they have invested in?
Active shareholders of listed companies in the UK usually influence the company’s operations through interaction with the company’s board of directors, or ultimately by exercising voting rights at a general meeting of shareholders. Various corporate matters require shareholder approval, which allows shareholders (especially major shareholders) to use leverage to exert pressure on the board. These matters include adopting new company articles of association (or revising them), re-electing all board members every year, approving directors’ remuneration policy (which must be reviewed and approved every three years), approving major company transactions, and granting the power to issue new shares, Cancel the statutory pre-emption right and approve related party transactions.
5. What responsibility does a shareholder have in regards to the entity he has invested in?
Generally, shareholders are not liable for the company or other shareholders related to corporate governance. Although the “Management Code” does impose obligations on the signatory, the compliance obligation is voluntary, and the obligation is applied on the basis of “compliance or interpretation.” The “Management Code” puts forward a series of general expectations on how the signatories supervise the invested company, are willing to act collectively with shareholders, disclose their voting policies and report voting activities. The latest version of the standard has been expanded from asset managers to asset owners and service providers and includes a new requirement that management results must be reported annually in a management report. Now, it also puts forward additional expectations, including the requirement that ESG factors must be considered when making investment decisions, to ensure that investment decisions are consistent with customer requirements, and to explain how to implement management principles in addition to other asset classes. Listed equity (such as private equity), and explain the culture and strategy of the signatory’s organization. The FRC believes that the Management Code and the UKCG Code are complementary.
6. Do Shareholders owe any duty to the entity or the other shareholders of the entity he has invested in?
  • A UK company is a legal person, not the same as a shareholder. Shareholders (also called “members”) have rights and obligations to the company and to each other. The relationship between the company and its members is based on its articles of association (mainly its articles of association), which constitutes a legal contract between the company and its members and between the members according to the “Company Law”.
  • Generally, the shareholders of a British company are not responsible for the company’s actions or omissions. British law recognizes the concept of a “corporate veil”, which separates the legal personality (and liability) of a company from the legal personality of shareholders. The limited exception to this principle is that shareholders abuse the company’s independent legal personality (to “shame” the company) for illegal purposes. Under normal circumstances, the liability of shareholders is limited to the amount (if any) that they have agreed to contribute capital to the company but have not yet contributed (for example, any unpaid amount that should be paid when subscribing for shares).
  • The “Management Code” defines “management” as “responsibly allocate, manage and supervise capital to create long-term value for customers and beneficiaries, thereby bringing sustainable benefits to the economy, environment and society.” The definition will involve activities including: conducting adequate analysis before investing; requiring the issuer to be responsible for major issues, and cooperating with others to influence the issuer.
7. Are indemnities, insurance permitted in relation to members of the management body?
The company can compensate its directors for the costs incurred in successfully defending the company’s claims and the liability to third parties (excluding fines and regulatory fines). Companies can also purchase and maintain director and senior management (D&O) insurance policies for their directors. However, the “Company Law” prohibits the company from compensating its directors for negligence, breach of contract, breach of duty or breach of fiduciary duty related to the company. Any provision in this clause aimed at granting such compensation will be invalid. The reason for this is that directors should not be able to effectively exempt themselves from their fiduciary responsibilities. (These restrictions do not apply to non-director employees.)
8. Under the UK jurisdiction, can shareholders seek enforcement against the entity he invests in and/ or members of the management?
According to the principle that the company is an independent legal person independent of the shareholders, the duties of the directors should be borne by the company rather than the shareholders. Therefore, shareholders have no right to directly sue the directors for breach of the company’s obligations. The articles of association constitute a contract between the company and its members but do not constitute a contract between the company and its directors. However, in certain limited circumstances, shareholders can (often requiring court approval) take steps to perform the duties of a director or force the company to take certain steps. Shareholders can also take action against the company (in accordance with the common law) to prohibit conduct that may constitute a violation of the company’s articles of association and/or correct the director’s abuse of his trust power. Under the UK jurisdiction who manages a corporate/ business entity and how? The board of directors is ultimately responsible for the management of the company, and the daily operation of the company’s operations is usually taken care of by an executive management team led by the CEO (usually a director). The executive management team should report to the board of directors (and hold it accountable).
9. How are the management and its members appointed and removed in a business entity under the UK legislation?
Directors are appointed or removed through “ordinary resolutions”: “ordinary resolutions” are resolutions passed by a simple majority of shareholders attending and voting at the general meeting of shareholders. The UKCG Code and the usual articles of association stipulate that every director must retire immediately before each annual general meeting in order to seek re-election at the annual general meeting. The board of directors can temporarily appoint other directors, but these directors are usually required to retire with other directors immediately before the next annual general meeting and be re-elected by shareholders. board.
10. What are the main responsibilities of the management body in corporate governance?
The main challenges faced by management agencies include determining effective methods for companies seeking to solve current key issues in corporate governance. According to the “Company Law”, directors must prepare a salary report for each financial year of the company. This report is a retrospective summary of directors’ compensation for the previous fiscal year. It requires an advisory (non-binding) vote from shareholders. Directors must also submit a forward-looking compensation policy (which forms part of the compensation report) to shareholders every three years. This policy stipulates the framework and restrictions on future directors’ remuneration. Subject to a binding vote of shareholders. Both votes were passed by ordinary resolutions.
11. Are employees concerned by Corporate governance under the UK legislation? If so, what are their responsibilities?
The latest amendments to the UKCG Code require that the board of directors adopt one of the following three methods of employee participation: directors appointed by employees, formal staff advisory groups or designated non-executive directors. Or, if the board does not choose any of the above three methods, the board can adopt other alternative methods for employee engagement and explain why these methods are considered effective. The UKCG specification specifically uses the term “workforce” instead of the term “employee” in order to include not only full-time employees but also part-time employees and flexible agency employees. In addition, the UKCG guidelines recommend that companies establish adequate procedures to enable employees to confidently ask questions and investigate these issues in an appropriate manner.
12. Is there any law or regulation concerning corporate’s social responsibility under Uk Legislation? If so, what is it?
Stakeholders are putting increasing pressure on companies to improve the accessibility and accuracy of data that can be used to assess compliance with ESG requirements. Listed companies have been required to disclose their global greenhouse gas emissions and energy use. In addition, at the time of writing this article, the FCA is negotiating with the Financial Stability Board’s Climate Change Financial Disclosure Task Force on the disclosure of financial risks related to climate change by requiring high-quality listed commercial companies to make disclosures. Explain any failure to do so. Directors are increasingly expected to consider the impact of company operations on the wider community. Therefore, it has become a common practice for companies to produce annual corporate social responsibility (“CSR”) reports that outline annual considerations. The company must also include certain CSR information in the annual report.
13. Who is responsible for disclosure and Transparency in the corporate under the UK jurisdiction?
The board of directors is responsible for regular disclosure in the form of annual reports and semi-annual reports and releases relevant announcements to the market when necessary. Although the entire board of directors is responsible for this, if the necessary disclosures are not made, enforcement actions may be taken against individual directors “knowingly concerned”.
14. What is the role of audits and auditors in such disclosures?
Auditors must review the reports generated with the audited financial statements and any separate corporate governance statements, and present their own reports to confirm the adequacy of the disclosure, whether it meets relevant legal requirements, and whether the disclosure contains any material misstatements.

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