Hillyer McKeown Blog

Sweet & Maxwell the Legal Publisher has reported that there has been an 11% rise in the number of Pension Sharing Orders made by the Courts in the past year.

Possibly because more older couples divorce, pension funds are frequently the biggest source of wealth to be divided and the average age at divorce has risen by almost seven years in recent decades to reach 44.2 years old for men and 41.7 years for women.

Also due to the recession the former matrimonial home can be difficult to sell and interests in businesses are often difficult to realise, so there is less liquid cash available for settlement.

Financial settlement decided in Courts following divorce rose by 3% in 2010 to reach 82,290 and of those cases 10,205 involved Pension Sharing Orders, an increase from 9,218 in 2009.

There was a 5% rise in Property Adjustment Orders in which property and other non-cash assets are transferred from one partner to another, but by contrast, the number of Orders relating to lump sum payments rose by just 1%.

Understandably, when a Pension Sharing Order is made against one party, this has a drastic effect upon the value of their Pension Fund and the ultimate Pension that they will receive when they come to retire.

Wirral based Law Firm, Hillyer McKeown, are urging local small businesses to get involved with a new incentive which will help their businesses to grow. Launched by The Liverpool Echo, the £1million fund will help boost small business and create jobs across Merseyside.

The money has been made available as part of the Governments £2.4billion Regional Growth Fund which is designed to create jobs amid tough economic conditions. Working with the regeneration agency Liverpool Vision, The Liverpool Echo will offer funding to small and medium sized businesses across the Liverpool City Region.

The emphasis is on job creation and any money given by the fund must be matched by the business itself. So if the business plans a £10,000 investment in order to help it grow, it would need £5,000 of its own and would be eligible to apply for up to £5000 from the fund.

“This is great news for Merseyside” said Ian Millington, Partner at Hillyer McKeown. “This region is known for its inspiring entrepreneurial spirit, and this fund will help so many small and medium sized businesses to realise their potential, whilst also helping to create valuable job opportunities. Being so heavily involved in the local business community, we’re aware of many businesses that given just a little help would flourish. The opportunity to secure that help had has been presented with the launch of The Echos £1million fund and we hope that in helping to raise the profile of the fund more businesses will step forward to apply.”

To register your interest and find out more visit The Liverpool Echo website

Prime Minister David Cameron has promised to “kill off the health and safety culture” which he says has become “an albatross around the neck of British businesses”.

He says he wants to address “the fear from businesses of being sued for trivial or excessive claims”.

The Government is now planning to change the law on strict liability so that businesses will no longer be automatically at fault if something goes wrong.

It will also investigate the demands made by insurance companies which may force businesses to go far beyond what is required by law to secure insurance cover.

Mr Cameron made the announcement in a speech to small businesses and entrepreneurs. He said he wanted to free them from the stranglehold of red tape.

He then said: “And there is something else we are doing: waging war against the excessive health and safety culture that has become an albatross around the neck of British businesses.

“Talk of ‘health and safety’ can too often sound farcical or marginal. But for British businesses – especially the smaller ones that are so vital to the future of our economy – this is a massively important issue. Every day they battle against a tide of risk assessment forms and face the fear of being sued for massive sums. The financial cost of this culture runs into billions each year.

“So this coalition has a clear New Year’s resolution: to kill off the health and safety culture for good.”

Mr Cameron did not say when the proposed changes would come into effect.

Please contact us if you would like more information about the issues raised in this article or any aspect of health and safety regulations.

A sales manager has been found liable for breaches of contract and duty to his employer after setting up a rival business.

The manager was working for an information technology consultancy when he decided to set up a new company of his own.

While preparing his new venture, he downloaded some of his employer’s business contacts and copied invoices in order to use them for his own purposes. He also obtained contracts for his new company while still working for his employer.

His employer took legal action to protect its business.

The High Court held that an employee was entitled to set up a potential rival company and was not obliged to tell his employer that he planned to do so. He was also free to compete with his employer after resigning and setting up a new business.

However, he should always serve his employer’s best interests while still employed.

The manager in this case had breached his duty to his employer by obtaining contract work while still employed. It was also a breach of his duties to have transferred business contacts and to have copied invoices.

The court therefore ruled in favour of the employer and found the manager liable for breaches of contract.

Please contact us if you would like more information about the issues raised in this article.

Businesses can suffer irreparable damage when directors disagree over company policy.

This is particularly true for new or small businesses. For example, if two directors have equal shares in a joint venture, settling disputes can become very difficult.

At that point, just like many married couples, both sides may wish they had a business ‘pre-nup’ in place.

Such agreements should set out how disputes should be settled in a way that is fair to both sides and for the greater good of the business. It is obviously better to decide on such issues at the start of the relationship when there is still trust and goodwill, rather than wait until things turns sour.

One simple matter would be to decide a policy on the transfer of shares. If one director wants to sell some of his shares in the future, should the other be allowed first refusal to buy? Should partial disposal of shares be allowed, or should it be forbidden to avoid fragmentation?

Problems can arise when two directors have equal shares in a business and therefore equal control. It could lead to deadlock in the event of a disagreement. One way round this is to agree an arbitration system. This could be done by nominating an independent third party as an arbitrator. This should be someone who understands the business and is trusted by both sides.

The first task of the independent arbitrator would be to try to help the two sides reach agreement. If that proves impossible, the arbitrator could then make a decision on principles set down by the directors in the pre-nup.

However, if disputes are impossible to resolve, it may be necessary for the directors to end their business relationship.

This could be done in several ways. For example, the business could be sold to a third party, in which case the directors would need to decide in advance how the proceeds should be divided.

Alternatively, one director might buy the other’s shares.  In that case, it would sensible to set out in advance how the shares should be valued. The valuation could be based on the company’s assets, its profits or by some other method.

There could also be disputes as to which director buys out the other, assuming they both want to continue with the business. There are various ways to settle this, including one system which is sometimes rather dramatically referred to as a shoot-out.

This involves each side submitting sealed bids for the other’s shares, with the higher bid winning. The winner gets the business, while the ‘loser’ also wins because he gets a higher price for his shares than he was prepared to pay himself.

These are just some of the issues that could be covered in a business pre-nup. Other key factors would include what to do with future assets generated by the business, such as intellectual property, and covenants restricting a director’s right to leave and set up a rival business within a specified period.

Laying down some simple ground rules in advance can prevent long and complicated disputes further down the line.

Please contact us if you would like more information about the issues raised in this article.