KaurMaxwell. London. International. https://kaurmaxwell.com/ KaurMaxwell is an independent law firm with offices in London Thu, 15 Jul 2021 11:25:00 +0000 en-GB hourly 1 https://wordpress.org/?v=5.9.3 https://kaurmaxwell.com/wp-content/uploads/2020/06/cropped-KaurMaxwell-Favicon-2-32x32.png KaurMaxwell. London. International. https://kaurmaxwell.com/ 32 32 Divorce and Marriage Impact on Wills https://kaurmaxwell.com/divorce-and-marriage-impact-on-wills/ Mon, 22 Feb 2021 09:00:06 +0000 https://kaurmaxwell.com/?p=2807 When thinking of getting married or entering a civil partnership, alongside the hectic preparations and daydreaming about the honeymoon getaway that will follow, writing a Will would be the last thing on your mind. However, it is not commonly known that a valid Will that you have in place will be revoked automatically upon marriage …

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When thinking of getting married or entering a civil partnership, alongside the hectic preparations and daydreaming about the honeymoon getaway that will follow, writing a Will would be the last thing on your mind.

However, it is not commonly known that a valid Will that you have in place will be revoked automatically upon marriage and a civil partnership.

When parties bring wealth into a marriage or civil partnership, unless they enter into a pre-nuptial agreement or have some other form of arrangement in place, your assets may not be protected on death or separation.

By default, if you do not prepare a new Will or make a Will in contemplation of your marriage or civil partnership, the Rules of Intestacy will determine what happens to your assets on death.

Rules of Intestacy

If you do not have children, your entire estate would pass to your spouse or civil partner.

In the event you do have children, then:

  1. The first £250,000 of your estate will automatically pass to your spouse or civil partner; and
  2. The remainder will be split equally between any children you have and your spouse or civil partner.

Your spouse or civil partner will therefore be entitled to the first £250,000 and half the remainder estate.

If you have children from a previous relationship, marriage or civil partnership and are going into a new marriage or civil partnership, then they may lose their entitlement to your estate.

Should I also think about making a new Will if I am divorced or my civil partnership has dissolved?


Divorce

If you are considering getting a divorce or ending your civil partnership, the rules will be different. You should make a new Will as soon as you separate as, until a Decree Absolute or Dissolution Order has been ordered, you will still be legally married or in a civil partnership. This means any previous Will you have made will remain valid.

If you die prior to the Decree Absolute or Dissolution Order being made, your spouse or partner may end up automatically inheriting your assets, subject to the Will (if any) which was previously made. Your Will would not be rendered invalid or void once your divorce has been finalised. Instead, when the Decree Absolute or Dissolution Order is made, any mention of your former spouse or partner in an existing valid Will would be considered as if they had predeceased you. In this situation, any gift to them would fall back into residue for the benefit of your beneficiaries.

Other eventualities which are important to consider:

  • If you had left everything to your former spouse or civil partner and do not have any children, or a valid Will in place, then on death, the Rules of Intestacy would dictate who receives the assets. This could be your parents, siblings and may not be in accordance with your wishes, so it is important you safeguard your interests as soon as possible.
  • If your former spouse or civil partner had been named as an Executor or Trustee, then once the Decree Absolute or Dissolution Order is made, the Will would treat them as if they had predeceased you.
  • If you have named your former spouse or civil partner as a Trustee of a trust for the benefit of you or any child(ren) or as the guardian of a child or children, then the trust will fail.
  • If they do not have parental responsibility and you do not have a substitute guardian named in your Will, this would also be a good reason to have it revised.
  • If you are divorced or your civil partnership has dissolved, then you should consider making a Will or updating your current one.

As divorce does not invalidate a lawful Will, you do not have to wait until the Decree Absolute or Dissolution Order is made to prepare a new one.

The above does not prohibit your spouse, civil partner or any children you have in making a claim under The Inheritance Provision for Family and Dependants Act 1975, however, they will need to satisfy the Court they are entitled to make such claim.

If you would like further information on making or updating a Will, or currently going or been through a divorce or dissolution of a civil partnership, or unsure what your current position is then please do not hesitate to get in touch with our specialist team by telephone on 0207 052 3545 or by email at info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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UK Supreme Court rules Uber drivers must be classified as workers https://kaurmaxwell.com/uk-supreme-court-rules-uber-drivers-must-be-classified-as-workers/ Mon, 22 Feb 2021 09:00:00 +0000 https://kaurmaxwell.com/?p=2826 The online taxi firm, Uber has lost its appeal in the Supreme Court on driver’s rights in a gig economy test. The UK’s highest Court in England and Wales made a landmark ruling on Friday 19 February 2021, that drivers should be classed as workers and not ‘independent third-party contractors’, making them entitled to employment benefits. …

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The online taxi firm, Uber has lost its appeal in the Supreme Court on driver’s rights in a gig economy test. The UK’s highest Court in England and Wales made a landmark ruling on Friday 19 February 2021, that drivers should be classed as workers and not ‘independent third-party contractors’, making them entitled to employment benefits.

The ruling means that as workers, Uber drivers will now be protected by basic employment rights which allows them to receive minimum wage and even holiday pay. This decision could leave Uber facing a hefty compensation bill running into thousands of pounds and generally could have far reaching repercussions for millions of people in the gig economy or for companies, such as food delivery businesses and other competitor online taxi businesses, that use a similar business model.

The gig economy, where individuals tend to work for more than one company on a job-by-job basis has faced criticisms from unions who argue such businesses are exploitative whilst firms hail the arrangement as advantageous due to its flexibility.

After a four-year legal battle and losing at every juncture to include Employment Tribunal, the Employment Appeal Tribunal and the High Court, Uber’s final chance of an appeal was thwarted by the Supreme Court which also upheld the decision of the lower courts/tribunals, which all ruled in favour of the Uber drivers deeming them entitled to workers’ rights.

Although there is no contractual relationship between the Uber drivers and their passengers, it has been held that there is a contractual relationship between the drivers and Uber as Uber exercises a level of control over the way in which the drivers operate. Uber’s argument that it is an agent and has no contractual relationship with the drivers, has been denied by the Courts. 

A key point in the Supreme Court’s judgement is that drivers are to be deemed “workers” from the time they log on to the app until they log off. Uber’s position that if drivers were found to be workers, it should only  be for the duration of when journeys were made and a passenger was in the car was rejected by the Court.

As fares have seen a reduction by 80% due to the pandemic, many drivers have been struggling financially to make ends meet. Without the employment status which would guarantee an income, they have felt “trapped” in the Uber system. The schemes of the Government covering only 80% of a driver’s profits has not been enough to pay for their costs. The new ruling will look to change this situation.

A spokesperson for Uber held that in light of the Supreme Court’s judgment, the company have made changes to the app and are providing protections such as “free insurance in case of sickness or injury” to their drivers.

If you are affected by anything in this article and require further information then please do not hesitate to get in touch with our expert team today by telephone on 020 7052 3545 or by email at info@kaurmaxwell.com 

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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‘Framing Britney Spears’ – the US’s Conservatorship, the UK’s Deputyship and when it applies https://kaurmaxwell.com/framing-britney-spears-the-us-conservatorship-the-uk-deputyship-and-when-it-applies/ Fri, 19 Feb 2021 09:00:00 +0000 https://kaurmaxwell.com/?p=2779 When questions were raised on Britney Spears’ mental capacity after she shaved her head and attacked a paparazzi car with an umbrella in 2007, she was not long after placed under a Court sanctioned conservatorship in favour of her father, Jamie Spears. Mr Spears has since been authorised to manage Britney’s personal affairs, including her …

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When questions were raised on Britney Spears’ mental capacity after she shaved her head and attacked a paparazzi car with an umbrella in 2007, she was not long after placed under a Court sanctioned conservatorship in favour of her father, Jamie Spears. Mr Spears has since been authorised to manage Britney’s personal affairs, including her career, property and medical treatment and general welfare. Although it was meant to be a temporary arrangement, he has been acting as her ‘conservator’ for the last thirteen years. 

Questions have been raised on this arrangement because of the age of the popstar and she has been able to record new songs as well as perform on stage during this time.  It is queried therefore how she can be unable to make ‘basic decisions’ and whether the conservatorship is necessary. However, given the heavy duty of this role, the Court must take many considerations into account when authorising a conservatorship (known as a ‘Deputyship’ in England and Wales) and we discuss these further below.

There is an assumption that you either have mental capacity or not, however this is not the case. Even where there is a diagnosis of a condition, for example dementia, this does not automatically mean that someone lacks capacity. Some individuals can make basic decisions for example, what do they want to eat, what do they want to wear, do they want to go out etc. It is when matters are complicated, such as making financial investments, where they may have difficulty in making decisions.

In England and Wales, the Mental Capacity Act 2005 (MCA) confirms the basic position is every adult has the right to make his or her own decisions, even unwise ones. It must be assumed that they have capacity unless it is proved otherwise. The starting point therefore is presumption of capacity.

A person must be supported to make their own decisions and appropriate help should be provided before a determination is made; they do not have the capacity to make a particular decision. Information could be explained or presented in a way that is easier to understand, for example, using simple language, visual aids or maybe asking a third party to help with communication, such as a family member or carer, or even considering particular locations where a person feels more at ease.  

You can never assume someone lacks capacity based on their age, appearance, behaviour or assumptions about any medical condition they may have.

Guidance from the MCA provides that a person who lacks capacity cannot do one of more of the following:

  1. Understand the information relevant to a decision;
  2. Retain that information;
  3. Weigh up or use that information as part of the process of making a decision; and
  4. Communicate their decision (it does not have to be verbally).

We can help you with queries relating to mental capacity, such as determining whether an individual can provide instructions to create a Lasting Power of Attorney (LPA) or whether an application for Deputyship through the Court of Protection is more suitable.

What is an Attorney?

If you are an attorney, you are required to ascertain whether a person you are acting for has the capacity to make a particular decision. If not, any decision you make always has to be in the best interests of the person who is unable to do so for themselves.

An LPA allows an individual to choose their attorney. If no such attorney is appointed as an LPA has not been entered into, the Court can grant a Deputyship order. A Deputy will be appointed to manage the affairs of an individual who is unable to make decisions for themselves.

The key difference between an LPA and a Deputyship, is an LPA is made by the individual before he or she loses capacity. In comparison to a Deputyship application, this is made when individual has lost capacity and does not have an LPA or an Enduring Power of Attorney in place.

An LPA allows a person to have more control and choice. This is more suitable to reflect their wishes before capacity is lost.

What is a Deputy?

Where a person lacks the mental capacity to manage their affair themselves, a Deputy is a person appointed by the Court of Protection.

The Deputy will manage property and affairs and, less frequently the health and welfare of that individual. A Deputy can only act if the Court of Protection makes a Deputyship order. This order will set out the powers and duties of the Deputy.

Once granted, the Deputyship order will enable the individual’s affairs to be managed, such as transferring money to be used to pay care fees.

This can be a complicated process, and if you need help with all or even part of the process, we can assist you.

Who can be a Deputy?

Anyone over the age of 18 years can be a Deputy.

Deputies are usually close relatives, such as a spouse, partner or even friends of the person who needs help making decision. In cases where there is no one willing or able to take on the role, a local authority (in low value estates) or a professional Deputy can be appointed, for example, a solicitor.

It is important to note that a prospective Deputy must declare any bankruptcy arrangements or criminal convictions when making the application to the Court. This could lead to the application being refused.

Types of Deputyship

There are two types of Deputyship and a Court-appointed Deputy can act as:

  1. A Property and Affairs Deputy – making decisions about property and financial affairs, for example, the sale and purchase of a property; or
  1. A Personal Welfare Deputy – making decisions about health and personal welfare, including options for treatment. Please note that the Deputy cannot consent to or refuse life sustaining treatment.

What are the Powers and Duties of a Deputy?

The powers of a Deputy are derived from the order sealed by the Court of Protection; an appointed Deputy cannot exceed these powers. The Court of Protection has discretion on the powers which will be appointed, and they can only impose restrictions, for example providing that large values of expenditure must only be carried out with further permission of the court.

The Deputy’s duties are established by the Mental Capacity Act and in particular follow the general principles:

  • A presumption of capacity is always assumed for an individual unless it is shown otherwise;
  • A person cannot be treated as unable to make a decision until all practicable steps have been taken to help him or her, without success;
  • Any decisions made on behalf of a person must always be made in the person’s best interests; and
  • Before making a decision, consideration must be given as to whether its purpose can be achieved in a way that is less restrictive of the person’s rights and freedom.

Given the nature of the responsibility, the Court of Protection places numerous obligations on the Deputy as a safeguard to the person who needs decisions to be made for them. These include filling annual reports and accounts, complying with supervision by the court and obtaining a security bond. The Court of Protection will also check there are no objections to the prospective Deputy’s appointment. 

Supervision and Termination of Deputyships

The Office of the Public Guardian supervises Deputyship orders.

There may be different levels of supervision. For example, new orders which are sanctioned usually have close supervision for one or two years. This may be later reduced to a ‘minimal’ approach once patterns are established. The level of supervision required will determine the Deputy’s reporting obligations to the Office of the Public Guardian.

A Deputyship order is terminated if the order is time-limited and expires, or if the individual lacking capacity dies or recovers capacity.

It can also be terminated by an order of the Court of Protection or by an application made by the Deputy themselves, if he or she wishes to retire or resign, enabling a new Deputy to be appointed.

Lawyers for Britney Spears have filed for Mr Spears to be removed as a conservator arguing that Britney would not resume her career whilst Mr Spears controlled it. Days after the documentary ‘Framing Britney’ was aired, a Los Angeles judge at hearing on 11 February 2021 denied Mr Spears request to retain some rights over Britney’s estate. The judge concluded that Mr Spears and Bessemer Trust (a corporate fiduciary) would remain co-conservators having equal authority. The next hearing is scheduled for 17 March 2021.

If you require further information, wish to have a Lasting Power of Attorney or an application for Deputyship to be made with the Court of Protection then please do not hesitate to get in touch with our specialist team by telephone on 020 7052 3545 or by email at info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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Back to Basics: How to call an effective Board Meeting https://kaurmaxwell.com/back-to-basics-how-to-call-an-effective-board-meeting/ Tue, 09 Feb 2021 09:00:38 +0000 https://kaurmaxwell.com/?p=2765 Unlike calling a shareholder’s general meeting or annual general meeting, calling a board meeting is not governed by the Companies Act 2006 (“CA 2006”). A directors’ first port of call must therefore always be to read their company’s articles of association, which usually sets out the rules by which directors of that company can call …

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Unlike calling a shareholder’s general meeting or annual general meeting, calling a board meeting is not governed by the Companies Act 2006 (“CA 2006”).

A directors’ first port of call must therefore always be to read their company’s articles of association, which usually sets out the rules by which directors of that company can call and conduct board meetings.

1. Notice

 

You must give the other directors notice that you intend to call a board meeting. This must include the proposed date, time and place of the meeting, as well as the means of communication if all the directors are not going to be in same place, or indeed if you are facing a global pandemic and must work from home.

Often, it is at this stage where the chair or company secretary puts together the relevant documents relating to the business of the meeting for the other directors to peruse. Whilst it is not essential at this stage, the other directors should be provided with sufficient time to examine the papers, or at least time must be set aside in the board meeting for this purpose.

Depending on your company’s articles of association, notice can be given either verbally or in writing. Some articles may not set out any notice provisions, so the fallback provision is to provide ‘reasonable’ notice.

‘Reasonable’ notice means that a director should act in accordance with their company’s usual practice and have regard to the surrounding circumstances. For example, an urgent issue may arise and so it may be ‘reasonable’ to provide relatively short notice to deal with it. In small private companies where all the directors are present, a few minutes’ notice might be enough.

Usually, we recommend providing the other directors with at least one week’s notice and doing so via e-mail, so that it is in writing to avoid any confusion.

2. Quorum

 

‘Quorum’ means the minimum number of directors that need to be present to make the board meeting valid.

Again, it is very important to check your company’s articles of association to see what the minimum number is stated in there. Generally, the minimum number is two. Without sufficient quorum, the company’s business may not be validly transacted.

3. Elect a Chair

 

The chair will usually have the casting vote, and this may have been decided before the board meeting or during the board meeting.

Practically, there will always need to be a chair at a board meeting who not only has the casting vote, but has to ensure that the company’s notice, quorum and voting requirements have been fully complied with.

4. Declaration of Interests

 

Once the directors are present at the board meeting and a chair has been elected, the directors should then make a declaration to the company of their interests in the transactions/arrangements that are to be considered at the meeting.

A company’s articles of association may state that a director may vote to any contract or arrangement in which he is interested and shall be part of the quorum. Other articles may list specific transactions in which a director cannot vote on if they have an interest in it.

Do ensure that you are familiar with your company’s articles in this respect, as this declaration of interest must be complied with in accordance with sections 177 and 182 of the CA 2006.

5. Voting / Business of the Meeting

 

The next step is to vote on the topics/transactions raised at the board meeting. Depending on the business of the meeting, debates and discussions should be encouraged to avoid one director taking control.

A company’s articles will usually set out the voting guidelines and, unless they provide otherwise, the general position is that one director has one vote which is given by a show of hands and the majority vote wins. 

6. Administration

 

Minutes should be written up following the board meeting to accurately record the decisions made. It is prudent for the chair/secretary to circulate the draft minutes to obtain the approval of all the directors who attended the meeting before it is signed. This avoids any potential disputes later arising.

The minutes will then form part of the company’s records and, under section 247 of CA 2006, they must be kept for 10 years from the date of the meeting either electronically or in hard copy.

Any relevant filings at Companies House or updates of the company’s registers, depending on what the business of the meeting was, must then be made within the relevant deadlines.

Should you require any further information or have specific questions relating to procedures and filings your company must undertake, please do not hesitate to get in touch with our expert team by telephone on 020 7052 3545 or email info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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Eviction bans in England and Wales further extended https://kaurmaxwell.com/eviction-bans-in-england-and-wales-further-extended/ Fri, 15 Jan 2021 15:53:00 +0000 https://kaurmaxwell.com/?p=2754 Since our last article on 17 December 2020 regarding the government’s decision to extend the ban on eviction of commercial tenants, further developments have been made. The pandemic has continued into the new year and with new lockdown measures in place until at least 21 February 2021, the government has been reviewing and updating the …

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Since our last article on 17 December 2020 regarding the government’s decision to extend the ban on eviction of commercial tenants, further developments have been made.

The pandemic has continued into the new year and with new lockdown measures in place until at least 21 February 2021, the government has been reviewing and updating the restrictions in place in relation to the recovery of both residential and commercial property.

As previously reported, the moratorium on commercial landlords exercising forfeiture rights, statutory demands, winding up petitions and Commercial Rent Arrears Recovery proceedings which was due to end on 31 December 2020 were all extended to 31 March 2021.

Although the stay on bringing possession proceedings was lifted in September 2020, on 17 November 2020 the Government introduced a ban on the execution of writs/warrants of possession and the delivery of notices of eviction until 11 January 2021. Although eviction notices could have been served from 11 January 2021, charities and opposition parties called for more financial support for tenants in light of the revised lockdown restrictions. As a result, on Friday 8 January 2021, the Public Health (Coronavirus) (Protection from Eviction) (England) Regulations 2021/15 were put before parliament and are due to come in force on Monday 11 January 2021. Pursuant to this legislation, an extension of the eviction ban until 21 February 2021 will be introduced. In the event an order of possession proceedings is made, this will not be enforceable before 21 February 2021.

There is however, some positive news which will no doubt be welcomed by Landlords. With the new regulations, there is a crucial change which has been made to the exception to the ban where substantial rent arrears are concerned. Under the previous regulations, this was defined as arrears of at least 9 months’ rent on the date an order for possession was granted and rent that had accrued during the first lockdown, specifically after 23 March 2020, had to be disregarded for the purposes of this exception to apply.

The new regulations have retrained the exception for substantial rent arrears, the definition has been amended to being a minimum of 6 months’ unpaid rent and the prohibition on including arrears arising since the pandemic has been struck out completely.

Other important exceptions to the eviction ban, include:

  1. Trespass claims under CPR Part 55.5 (regulation (2)(2)(a); and
  2. Possession claims based on anti-social behaviour and domestic abuse grounds (regulations 2(2)(b) – (d).

Tenants are to note that under Practice Direction 55C, the impact of the pandemic on defendants of possession proceedings will nonetheless be brought to the attention of the court.

Robert Jenrick MP has stated that the date of 21 February 2021 is subject to further review. There is a likelihood that the nationwide lockdown will extend beyond this date and therefore the eviction ban will need to be kept under scrutiny to coincide with these measures.

If you are a commercial tenant or landlord requiring legal advice, please contact our expert team today.

If you are seeking further advice then please do not hesitate to get in touch with our expert team by telephone on 020 7052 3545 or by email at info@kaurmaxwell.com

The contents of this article are intended as a guidance for readers and does not constitute legal advice. KaurMaxwell do not accept responsibility for this information or matters affected by changes in the law or otherwise. 

 

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New Year, New Resolutions….how to have a healthy approach to remote working https://kaurmaxwell.com/new-year-new-resolutions-how-to-have-a-healthy-approach-to-remote-working/ https://kaurmaxwell.com/new-year-new-resolutions-how-to-have-a-healthy-approach-to-remote-working/#respond Thu, 14 Jan 2021 17:13:40 +0000 https://kaurmaxwell.com/?p=2739 Every year, we all make those famous New Year resolutions, but do we actually stick to them and does it really matter? 2020 was a year like no other and one that will always be remembered when the UK (and the world) entered into unknown territory. All of a sudden, our lives were disrupted like …

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Every year, we all make those famous New Year resolutions, but do we actually stick to them and does it really matter?

2020 was a year like no other and one that will always be remembered when the UK (and the world) entered into unknown territory. All of a sudden, our lives were disrupted like never before against a virus that we are still learning about nearly 12 months on. For many people, our eyes became wide open, new feelings and thoughts were being felt and that urge of wanting to achieve and conquer those goals and dreams that you had put off for so long were now a top priority.

So here we are in the second week of January 2021…have you stuck to those resolutions or feeling like what is the point? Do not beat yourself up if you have not stuck to them, we are still living in difficult and trying times and remember, it is ok to not be ok!

Your personal achievements are just as important as your career achievements so always believe in yourself.

  • Is there a dream job out there but you have been scared to go for it…GO FOR IT AND APPLY!
  • Do you feel you should be promoted at work but have been holding back…GO FOR IT!
  • Is there a weight you wish to reach…GO FOR IT, YOU WILL ACHIEVE IT!
  • Want to go back to college or university to achieve that qualification but feel you are too old…GO FOR IT, YOUR NEVER TOO OLD!

Are you still having to work from home? Are you missing those 5-minute catch ups with the team whilst making coffee? Are you missing colleague interaction and missing that office banter? Here are some top tips for a healthier approach to remote working:

  • Get dressed as if you were about to start your normal commute (but remember you now have the pleasure of having an extra hour in bed not to mention those £’s you are saving!). This will set you up for the day ahead.
  • Have that designated workspace so when your there, its time to work but when it is time to take a break you can step away.
  • ALWAYS take a break. If you have to, force yourself to take a break and switch off. Go for a walk, get some fresh air, have a healthy lunch (or that fast food you have been craving!).
  • Do not just switch off from work related matters but switch off from all social media. Are you one of them people who step away from the laptop/desktop but continue to browse LinkedIn and emails from your mobile? DON’T, you deserve that break!!
  • Stay connected to your work colleagues and if you are struggling, reach out to your team or management. When we are not physically connected to our colleagues, it is harder to read body language or the tone to get a sense of what people are thinking and feeling. Don’t ever feel like you’re alone and always communicate your feelings and be as transparent as possible. You will feel less stressed knowing you have that support around you.
  • Never feel like you cannot express yourself through your voice and appearance. ALWAYS have confidence in yourself and build a great network of people around you.

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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Commercial Leases: Ban on eviction of tenants extended until 31 March 2021 https://kaurmaxwell.com/commercial-leases-ban-on-eviction-of-tenants-extended/ Thu, 17 Dec 2020 12:40:47 +0000 https://kaurmaxwell.com/?p=2625 On 9 December 2020, the government announced that the ban on eviction of commercial property tenants will be extended until the 31 March 2021. The moratorium on commercial landlords exercising forfeiture rights for non-payment of rent was due to end on 31 December 2020, meaning the ban will have lasted just over a year since …

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On 9 December 2020, the government announced that the ban on eviction of commercial property tenants will be extended until the 31 March 2021. The moratorium on commercial landlords exercising forfeiture rights for non-payment of rent was due to end on 31 December 2020, meaning the ban will have lasted just over a year since the relevant section of the Coronavirus Act 2020 was enforced on 25 March this year.

Therefore, commercial tenants are currently benefitting from COVID-19 specific protections such as:

  1. a temporary prohibition on landlords exercising forfeiture provisions as a rest of tenant’s failure to pay rent;
  2. restrictions on the use of statutory demands and winding up petitions to encourage tenants to pay rent; and
  3. a requirement that before Commercial Rent Arrears Recovery proceedings can be exercised, rent arrears of at least 256 days’ or 366 day’s should be outstanding, depending on whether it is exercised before or after the December 2020 quarter’s rent becomes due.

The government has also declared it will be extending these restrictions for the same period, which were all going to expire on 31 December 2020. This is said to be a “final extension” which “will give landlords and tenants 3 months to come to an agreement on unpaid rent” and “allows businesses sufficient breathing space to pay rent owed”.

This year has been shambolic for the economy and businesses have been at the centre with otherwise viable shops, restaurants and even theatres facing the threat of insolvency.

With many businesses facing uncertainty over trading and staying open, paying their rent is just one of the numerous concerns that has come out of this year. It should not be forgotten, however, that property owners are businesses too and by removing the means by which they can ensure compliance by their tenants of the lease covenants, they are also at risk with reports claiming a £4.5 billion rent shortfall by the end of the year.  The extension of the moratorium will provide little comfort to commercial landlords who have witnessed tenants refusing to pay rent when they are able to do so. There is also no way of determining whether these tenants will also proactively engage in negotiations to ensure they can pay rent that they can afford.

Further guidance to support negotiations between landlords and tenants is due to be publishes shortly, according to the government. This is in addition to the existing Code of Practice available for commercial property relationships during the COVID-19 pandemic (you can access the Code here). Given the voluntary nature of the Code, it has therefore had minimal impact and it is also unclear what, if any, benefit further guidance from the government will provide.

Although these measures seek to help tenants recover from the impact of the pandemic and provide a window of opportunity for struggling tenants to consider new arrangements with landlords and assess the success of Christmas trading, Landlords should also bear in mind the options available to them where a tenant is simply refusing to pay rent.

Landlords can still pursue a debt claim in the County or High Court and seek a monetary judgement for non-payment of rent. Although it should be noted that a debt action may incur time and cost consequences and might not result in payment quickly or at all.

Furthermore, as the automatic stay on possession proceedings ended on 20 September 2020, possession claims not based on forfeiture for non-payment of rent can be brought and/or reactivated. Procedural steps will need to be followed to reactivate proceedings that were previously stayed, and procedural changes will also need to be followed for existing and new claims. Given the risk of negative public relations which could arise for taking action against a struggling tenant during a crisis, in the first instance, landlords may wish to engage with tenant’s as the best option going forward.

If you are a commercial tenant or landlord requiring legal advice, please contact our expert team today.

If you are seeking further advice on any of the above then please do not hesitate to get in touch with our specialist team by telephone on 020 7052 3545 or by email at info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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What are the Government’s new Coronavirus Act Regulations 2020 and what impact do they have on Notices seeking Possession served before 29 August 2020? https://kaurmaxwell.com/what-are-the-governments-new-coronavirus-act-regulations-2020/ https://kaurmaxwell.com/what-are-the-governments-new-coronavirus-act-regulations-2020/#respond Mon, 30 Nov 2020 14:56:44 +0000 https://kaurmaxwell.com/?p=2608 The Coronavirus Act 2020 has been amended by the Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Amendment)(England) Regulations 2020 (“the Regulations”). The Regulations, introduced by the Government on 29 August 2020, add further restrictions to the termination of residential tenancies in England.   Section 21 Notices for Assured Shorthold Tenancies (ASTs)   To issue …

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The Coronavirus Act 2020 has been amended by the Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Amendment)(England) Regulations 2020 (“the Regulations”). The Regulations, introduced by the Government on 29 August 2020, add further restrictions to the termination of residential tenancies in England.

 

Section 21 Notices for Assured Shorthold Tenancies (ASTs)

 

To issue a section 21 Notice under the Housing Act 1988 (also known as a Notice of Possession), a Landlord must give 6 months’ notice to terminate an AST for any notices served on or after 29 August 2020. ASTs are used typically for short term lets, such as 6 months, but can be for longer fixed terms or periodic, rolling on a weekly or monthly basis. The prescribed form Section 21 Notice has been amended to reflect the changes, so it is crucial that landlords and agents use the correct version when serving it on tenants.

These changes will be imposed until at least 31 March 2021. Should possession proceedings be necessary, these must be issued within 10 months of the date of service of the Section 21 Notice. Please note, this is subject to the current stay on possession proceedings which is in force until 20 September 2020.

 

Section 8 Notices for ASTs and Assured Tenancies (AT)

 

When serving a Section 8 Notice (also known as a Notice to Quit), a landlord may serve a notice on a tenant of an AT or an AST where the tenant has breached their contract and therefore the landlord has grounds for possession. The ground most often used is the tenant falling into rent arrears, but of course there are other ways the contract can be breached.

For the majority of the statutory grounds for possession, the Regulations have been uniformed and extended the notice period to 6 months. For other grounds under a Section 8 Notice, the notices periods are as follows:

  • For grounds 8 10 and/or 11 (rent arrears), where there is more than 6 months’ rent outstanding, at least 4 weeks’ notice must be given.
  • For grounds 7 (death of tenant) or 7B (no right to rent), at least 3 months’ notice must be given.
  • For grounds 14A (domestic violence and social landlord), 14ZA (riot conviction) or 17 (false statement by the tenant) at least 2 weeks’ notice must be given.
  • For ground 7A (conviction, breach of injunction or closure order), one months’ notice must be given; and
  • For ground 14 (nuisance, annoyance, immoral or illegal user) possession proceedings should not be started earlier than the date of service of the Section 8 Notice.

The prescribed form for Section 8 Notices has also been changed and landlords and agents should check it is in the correct format before serving it on the tenant.

Notices issued before 29 August 2020

 

Before the Regulations were introduced, the original notice period of 2 calendar months was increased to 3 months under the Coronavirus Act 2020. Landlords who have already served notices under the Act in this way will therefore be relieved to know that the new restrictions will not affect them provided that the notices were received by a tenant on or before 28 August 2020. The Regulations will therefore apply to all notices served from 29 August 2020 and the correct notice must be given to avoid the validity of the notice being challenged.

Possession Proceedings 

 

The stay on procession proceedings expired on 21 September 2020. This means landlords can issue proceedings and existing proceedings will resume in accordance with Practice Direction 55C of the Civil Procedure Rules 1998. The wording in Practice Direction 55C has also been updated considering the changes.

 

If you are seeking further advice then please do not hesitate to get in touch with our specialist team by telephone on 020 7052 3545 or by email at info@kaurmaxwell.com 

 

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

Written by Nishtha Misra

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What you need to know: Return of the Crown Preference https://kaurmaxwell.com/what-you-need-to-know-return-of-the-crown-preference/ https://kaurmaxwell.com/what-you-need-to-know-return-of-the-crown-preference/#respond Fri, 27 Nov 2020 17:30:00 +0000 https://kaurmaxwell.com/?p=2591 What is Crown Preference?   In insolvency procedures, creditors are repaid according to a strict statutory hierarchy which sets out the order of priority of creditors. The money realised from the assets of an insolvent company is applied to meet claims of creditors in a set order of priority. The lower down the hierarchy a …

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What is Crown Preference?

 

In insolvency procedures, creditors are repaid according to a strict statutory hierarchy which sets out the order of priority of creditors. The money realised from the assets of an insolvent company is applied to meet claims of creditors in a set order of priority. The lower down the hierarchy a creditor is, the less money they are likely to recover.

What is changing?

 

From 1 December 2020, UK tax authorities will move up the creditor hierarchy in English insolvency proceedings in respect of certain tax liabilities. HMRC will become a secondary preferential creditor in insolvencies (corporate and personal), ranking ahead of floating charge realisations and unsecured claims.

 

Order of Priority before 1 December 2020

 

Fixed charge holders

 


Preferential creditors

(primarily limited to certain employee claims)

 


Floating charge holders

 

Unsecured creditors

(including HMRC in respect of all taxes due to it)

 


Shareholders

 

Order of Priority from 1 December 2020

 

Fixed charge holders

 

 

Preferential Creditors

 

Ordinary preferential debts

(primarily limited to certain employee claims)

 

Secondary preferential debts

(primarily sums due to HMRC by way of PAYE, employee NICs and VAT)

 

Floating charge holders

 

Unsecured creditors

(including sums due to HMRC in respect of other taxes)

 

How will this change affect you?

 

As a result of the reform the additional sums recovered by HMRC will be coming from what would otherwise be repaid to the other creditors who have been leap-frogged in preference of repayment. This may result in long-term damage to the UK economy and to the business rescue culture, and could end up costing the public more in lost income and higher expenses than it will likely save in extra taxes returned after corporate insolvencies.

Call to action?

 

Lenders with the benefit of a floating charge should take what steps it can to monitor the borrower/charger’s fluctuating liabilities to HMRC in respect of the taxes affected by the reform in order to understand the impact of HMRC’s preferential claim upon the level of its floating charge recoveries in the event of an insolvency after 1 December 2020.

The provisions can be found within the Finance Act 2020 at page 79, Part 4, Miscellaneous and Final, Insolvency, HMRC debts: priority on Insolvency.

If you would like further information on the reform then please do not hesitate to get in touch with our specialist team by telephone on 020 7052 3545  or by email at info@kaurmaxwell.com 

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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Cancelling Shares – Different Options for Private Companies https://kaurmaxwell.com/cancelling-shares-different-options-for-private-companies/ https://kaurmaxwell.com/cancelling-shares-different-options-for-private-companies/#respond Tue, 10 Nov 2020 20:59:04 +0000 https://kaurmaxwell.com/?p=2565 Can a Company cancel its own shares?   Following incorporation, private companies might find that as the business has grown and developed, they have a complex capitalisation structure in place involving various classes of shares, both equity and deferred, and employee incentives and loan instruments. A simple solution may be for the company to reorganise …

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Can a Company cancel its own shares?

 

Following incorporation, private companies might find that as the business has grown and developed, they have a complex capitalisation structure in place involving various classes of shares, both equity and deferred, and employee incentives and loan instruments. A simple solution may be for the company to reorganise the share capital as an investment or as part of a restructuring. Private companies may wish to strike out the original shares, however, the shares cannot simply disappear. More will need to be done to cancel these shares and a few options are considered below.

Re-classify the shares under a different class

 

The company could re-classify the shares as a different class, for example B shares, which may then have the following rights and restrictions:

  • No voting rights
  • No dividend rights
  • Reduced value

The company will need to comply with legislation to successfully re-classify the shares and complete:

  1. A special resolution to vary the class rights;
  2. Form SH02, confirming the variation of share rights, and file this at Companies House; and
  3. Form SH08, confirming the re-designation of the shares, and file this at Companies House.

Gift shares to the company

 

Another option is for the shareholders to gift their shares back to the company without any payment or consideration being made. As these shares will constitute a gift, the company will not need to comply with any formalities required to purchase its own shares. The only requirements will be to complete a stock transfer form so that the legal title can be transferred. As no consideration is being made, there will be no need to pay stamp duty.

As the Companies Act 2006 is silent on the matter, it appears that gifted shares will continue to exist with the register of members confirming that the company will now be listed as the holder of those shares. The provisions relating to treasury shares under Section724 will not apply to these gifted shares.

Should the company wish to cancel these gifted shares, the following steps will need to be carried out to reduce its share capital:

  1. Since the enactment of the Companies Act 2006, the articles of association must expressly prevent the company from reducing the capital; therefore, check there is no such provision which prohibits the company from cancelling these shares;
  2. The directors need to sign a solvency agreement; and
  3. The shareholders will need to provide approval by special resolution.

If the company does reduce its capital, a Form SH19 will need to be filed at Companies House.

Although Section 659(1) confirms that a limited company can acquire its own shares than otherwise for a valuable consideration, there is no authority to clarify what happens to those shares (as opposed to a buy-back situation which is covered below). As a gift to a company of its own shares does not result in a decrease in share capital, it is not contrary to the general maintenance of capital principles. Therefore, what the directors do to these, such as cancelling, holding (and exercising voting rights) or re-selling will be governed by the general principles of capital maintenance, accounting standards, protection of minorities and the director’s duties.

Company Buy Back

 

A company buy back procedure is only successful if the company has sufficient distributable profits.

  • Sufficient distributable profits:
  1. As above, the articles of association must expressly limit or prohibit buy backs so you will need to check there is no such provision included in the articles;
  2. The shareholders will need to provide approval by an ordinary resolution for the contract; and
  3. The company can then make an off-market purchase of its own shares.
  • Insufficient distributable profits:

Issuing new shares can often finance a buy-back in which case the company can use up to £15,000 or 5% of the share capital, whichever is lower. If so:

  1. The directors will need to provide a director’s statement in the prescribed form; and
  2. A Notice will be published in the Gazette, which will circulate news of the proposed buy-back, including any interested parties.

Company buy backs are subject to The Companies Act 2006 (Amendments of Part 18) Regulations 2013 which allows a company buy back of its own shares even where the company does not have sufficient distributable reserves. This procedure is particularly useful for buying-back employee shares.

Again, the articles will need to be reviewed to confirm there is no provision which expressly prohibits the company buy backs. Unless the restriction is entrenched, which means it can only be appealed or amended if certain conditions are met, the articles can be amended by passing a special resolution of 75% of the shareholder’s votes.

In addition, the company’s shareholder agreements should be checked for any pre-emption rights. The inclusion of such rights means that the company will need to first offer shares to the current shareholders before shares can be transferred to any party, including the company itself.

In this case, the company would probably only be able to purchase the shares at their nominal value. Where a private limited company buys back any of its own shares as part of an off-market purchase:

  • These shares must be cancelled where they are purchased using the proceeds of a new issue of shares from capital as authorised by:
  • Chapter 5 of the Companies Act 2006; or,
  • The de minimis exemption under section 706(b) of the Act (shares bought prior to 6 April 2015, however, can be held in the treasury).

Or:

  • The shares may be cancelled or held in treasury, where they are purchased out of distributable profits as per section 724 Companies Act 2006.

What happens to the shares if a shareholder becomes bankrupt or loses mental capacity?

 

Bankruptcy

 

The bankrupt shareholder’s shares will form part of their bankruptcy estate and vest in the Trustee in Bankruptcy on appointment.

The company’s articles should confirm the rights of a trustee in bankruptcy as being a ‘Transmittee’ of the shares of the bankrupt. Usually, the Transmittee will have a right to be registered as a member but until then, will not have any entitlement to attend and/or vote at any meeting of the company.

A Trustee in Bankruptcy’s objective will be to realise as much value as possible from the bankrupt’s shares. However, the market for shares in a private limited company is likely to be restricted especially if the articles (or any relevant shareholder’s agreement) sets out what happens in the event of a bankruptcy.

As part of their role, the Trustee in Bankruptcy must ensure a fair and proper value is achieved for the shares on a sale or transfer and the relevant provisions in the articles (and any shareholder’s agreement) will be reviewed to check that they are valid. During this process, the following issues are likely to be considered:

  1. Transfer restrictions – these are usually included and relate to a restriction on the transfer of shares or the application resulting from the shareholder’s bankruptcy;
  1. Pre-emption rights – as above, the articles may provide a right of first refusal to existing shareholders. However, private companies may exclude the application of the statutory pre-emption right, either generally or in relation to particular allotments, by making this provision in their articles. If the Trustee in Bankruptcy concludes that the shares have little or value, of if there would be substantial costs associated with a sale, they may consider disclaiming the shares or simply accepting a nominal payment from a third party (e.g. from another shareholder); and
  1. Refusal to register – the articles may give the company’s directors express powers to refuse to register a transfer of shares, however, they must exercise this power in good faith and in the best interests of the company.

Mental Incapacity

 

In a situation where a shareholder loses mental capacity, the key issue will be to consider who has the authority to deal with the shares in the absence of the shareholder’s ability to do so. The test for mental capacity is specific to the decision being made so it would be possible for the shareholder to have the capacity to make some decisions but not others.

The shareholder may have provided someone with the authority to act under an Enduring Power of Attorney (EPA) or a Lasting Power of Attorney (LPA) in respect of their property and financial affairs. If no such power exists, then it becomes necessary to apply to the Court of Protection to either appoint a Deputy to make decisions on the shareholder’s behalf or to make specific orders about decisions that need to be made.

The authority, either in the form of an EPA, LPA or Deputyship Order, will determine what powers the Attorney will have, including whether the Attorney can sell the shares or vote in respect of them (this will be subject to any relevant provisions in the company’s articles which should also be reviewed). If the Attorney does not have the power to act, they can apply to the Court of Protection for authority or directions.

A company’s articles may also provide that a member in respect of whom an order has been made relating to mental disorder, may vote by their Receiver, Curator Bonis or other person authorised in that capacity as appointed by the Court. Such provisions are included in Table A but there is no such equivalent in the model articles.

It is worth noting that if transpires that a bankruptcy order was made against an individual with mental health issues then there may be ground for annulling the bankruptcy in certain circumstances.

If you would like further information then please do not hesitate to get in touch with our specialist team by telephone on 020 7052 3545 or by email at info@kaurmaxwell.com

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact KaurMaxwell for advice before taking any action in reliance on it. 

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