August 2016
Issue number 34
Doing business with consumers
over the internet?
2
What is a process agent?
4
EU Market Abuse Regulation
(MAR)
7
The new PSC regime
8
August 2016
Issue number 34
Doing business with
consumers over the internet?
Do you still need to be
up-to-date with all the new
laws in light of the Brexit?
Over the last two years or so, the law
relating to how business deals with
consumers over the internet (including
through mobile phones) has changed
significantly. If you haven’t made
changes to your website for over two
years then you are unlikely to be
operating in accordance with the law.
This could have serious consequences.
These range from customers
unexpectedly being entitled to a refund,
even if there is nothing wrong with
your goods or services, to enforcement
action by Trading Standards. Moreover
the popular consumers’ champion,
moneysavingexpert.com, has taken to
naming and shaming websites that do
not comply with the new laws so there
is a clear risk of severe brand damage.
However in light of the Brexit
and given that much of the UK’s consumer
laws have their origins in the EU, is it still
necessary to comply with the new laws?
Defective goods or services
A completely new tiered set of remedies
for defective goods was introduced by
the Consumer Rights Act 2015 (CRA).
This is very much a domestic UK piece of
legislation and so will not be affected by
the Brexit. Under the CRA:
• consumers have a right to reject
defective goods within 30 days of
purchase and get their money back.
This means that, where goods prove
defective during this 30 day period,
a business cannot simply offer a
replacement or a credit note/gift
voucher in return; and
• after this 30 day period, consumers
continue to have a right to a repair or
a replacement. If the business fails to
repair or replace, the consumer can
reject and get their money back or
keep the goods and get a reduction
in the price paid.
Under the CRA, contracts with
consumers must be fair. The CRA contains
a revised list of potentially unfair terms.
The question of fairness will now also
extend to price where the price is not
transparent and prominent. Businesses
Page 2
must therefore ensure that their terms
and their websites do not include any
potentially unfair terms. Clever or hidden
legal wording is therefore unlikely to help
a business avoid its legal obligations for
defective goods or services.
Dispute resolution
Businesses now have two new
information requirements relating to
disputes with consumers.
Under the Alternative Dispute
Resolution for Consumer Disputes
(Competent Authorities and Information)
Regulations 2015 (the ADR Regulations)
businesses must provide consumers who
wish to pursue a complaint beyond the
business’s internal procedures with:
•a
statement saying that the
consumer’s complaint is unable to
be solved internally;
• the name and website address of an
alternative dispute resolution (ADR)
scheme (basically an approved process
for the resolution of a dispute outside of
court proceedings) which the consumer
can use to solve the complaint; and
• a statement saying whether the business
is legally compelled to or, if not, prepared
to submit to the ADR scheme.
Bizarrely this means that a business
must give the consumer details of an
ADR scheme but the business does not
have to agree to use that scheme!
The ADR Regulations implement an EU
Directive. As such the ADR Regulations
are part of UK law and, as such, will
remain UK law even following exit from
the EU unless the UK decides to repeal
the ADR Regulations.
Under what is known as the EU ODR
Regulation a business must provide a link
from its website to the European Online
Dispute Resolution platform website.
This platform is intended to speed up
disputes between consumers in one EU
member state with a business in another.
Use of the platform is not compulsory for
a business. Nevertheless the business is
legally obliged to provide the link even if
it only trades in the UK and has no
intention of seeking to resolve disputes
through the platform.
As this requirement to provide a link
comes from an EU Regulation as opposed
to an EU Directive, it is therefore directly
applicable EU law. As such it will cease to
be UK law upon the UK leaving the EU.
In the meantime it continues to be
applicable law in the UK. There is unlikely
to be much appetite for UK authorities
to enforce a provision that will cease to
be legally effective in the UK once the
UK leaves the EU. That said this lack of
appetite cannot be guaranteed and, as it
is such an easy provision to comply with,
the sensible and safest course of action is
to provide the relevant link.
New website information and
cancellation rights
The Consumer Contracts (Information,
Cancellations and Additional Charges)
Regulations 2013 (Consumer Contracts
Regulations), which came into force in
June 2014, impose many obligations on
businesses selling to consumers through
websites. These include:
•g
ranting consumers a period of 14
calendar days from receipt of a purchase
in which to change their minds and
cancel that purchase;
•a
n obligation to make available to
consumers a model cancellation form;
•a
n obligation to provide certain
information to consumers both before
and after making a sale. There are over
20 possible items of information that
need to be provided; and
•a
n obligation to label any on-line order
button with the words “order with an
obligation to pay” or similar wording;
•a
prohibition on certain practices
such as the use of pre-tick boxes for
payment of additional services and
the use of premium rate customer
telephone helplines.
As the Consumer Contracts Regulations
implement an EU Directive, again the
Consumer Contracts Regulations will remain
part of UK law following exit from the EU
unless the UK decides to repeal them.
Conclusion
With the exception of providing a link to
the European Online Dispute Resolution
platform website, we see absolutely no
reason to believe for one moment that the
UK will have any wish to change any of
the current and relatively new consumer
laws relating to on-line trading with
consumers. Accordingly businesses cannot
use the Brexit decision as an excuse for
non-compliance. Those businesses who
have not already updated their websites,
terms of business and procedures should
therefore take steps to comply with these
new consumer laws as soon as possible.
At Jordans Corporate Law we can
provide you with all the necessary detailed
legal advice to ensure your compliance
and/or, for a fixed price, audit your website
and procedures to check your compliance.
For further information, contact
Simon Bates on 0117 918 1210
or [email protected]
Page 3
August 2016
Issue number 34
What is a process agent?
Frequently asked questions
As an expert Process Agent provider we are often asked about how
our service works. Here are the most frequently asked questions:
How long does it take to establish
a facility? Our standard turnaround time
is two to three working days, although
many facilities are established faster than
this. If there’s an urgent requirement for
a Process Agent we offer a guaranteed
same day service for an additional fee.
Completed order forms need to be
received before 2pm UK time to ensure
the same day service. Even after the
deadline it’s a good idea to contact us
as we operate a flexible service and
may be able to assist, depending on
the complexity of the appointment.
A Process Agent is an address on
which court papers can be served.
If two or more parties enter into a
legal agreement under the jurisdiction
of the UK courts, and one or more of
those parties has no address within
the UK – for example in the case
of an English law contract entered
into by an offshore company – a
Process Agent may be appointed.
Page 4
The Process Agent's job is to accept
delivery of any documents referring to
court proceedings and see that they are
forwarded quickly to the relevant party
so that delays do not occur and the
recipient has maximum time to respond.
Often a Process Agent is required quickly
at the conclusion of a mergers and
acquisition transaction.
An important part of the transaction
is the Process Agent letter. This is a
document which confirms the relationship
between the appointing party and the
Process Agent.
The letter is also evidence that can be
provided to the other contracting parties,
which stipulates the names of the Process
Agent and appointing party, the address
to which notices can be served and the
legal documents to which the Process
Agent has agreed to act upon. The Process
Agent appointment letter is therefore
an essential document that is often
required prior to the execution of legal
documents, and can either be an
electronic or hard copy.
When you are searching for a Process
Agent it is vital that you choose a provider
that appreciates the importance of this
service. The Process Agent service is much
more than just a mail forwarding facility.
If an agent fails to pass on notices it can
have significant legal implications for
everyone concerned.
What happens when a legal notice is
received? It’s part of our service to let the
Process Agent appointee know that we’ve
received a notice. There are a number of
ways that the appointee can receive and
view the notice, including a scanned copy
via email, fax, post or via courier delivery of
the document.
How do I make payment? Once a facility
is established, an invoice is issued including
all the necessary payment details.
When do I need to make payment?
An period of 30 days of the invoice is
the usual payment term.
Can I have a discount? Discounts are
offered from time to time on facilities
that are exceptional in terms of the
numbers of documents or length of term.
Such discounts are discretionary and
decided on a case by case basis.
What else do you need in order
to establish a facility? There is a
straightforward order form to complete
and sign. No other documentation
is necessary so it’s a relatively
uncomplicated procedure
What happens when the facility
is set up? Once the facility is established
we send out a signed confirmation letter,
a counter­signed order form (this forms
the contract between both parties) and
our invoice.
Will there be any other fees once
the facility is established? For a
fixed term appointment, usually not.
An annual facility is invoiced each year
until cancellation. There may be additional
fees in the event that extra services are
necessary, such as an amendment to an
existing facility or an extension to one
which is expiring.
My fixed term facility is expiring but
I still need it. What can I do? It’s possible
to arrange an extension for a fixed term
facility by simply letting us know that it’s
still needed. We do the rest.
I no longer need my annual facility.
How do I cancel? Cancellation in writing
by email, letter or fax with an instruction to
cancel is normally required.
I have more questions. Who can I
talk to? Call us on + 44 (0) 117 989 1407
or email
[email protected].
Paul Bentley,
Agent for Services of
Legal Process Co-ordinator
Page 5
August 2016
Issue number 34
EU Market Abuse
Regulation (MAR)
Appointments
Jordans Corporate Law has recently
promoted Jayne Meacham to a new
position of Head of Listed Corporate
Governance. A qualified Chartered
Secretary and Fellow of the ICSA,
Jayne will lead a growing team of
Chartered Secretaries and corporate
governance experts in delivering
professional company secretarial
solutions to the firm’s listed company
clients as well as those operating
within strictly governed sectors.
“Corporate governance has underpinned
our offering since we launched the
firm nearly 3 years ago” says Debbie
Farman, Director of Legal Practice.
“Jayne’s promotion reflects the fantastic
growth we’ve seen, particularly in this
highly regulated sector where clients
are looking for professional support
in complying with a raft of statutory
and regulatory obligations”.
The Corporate Governance team is
further boosted by 3 new appointments.
Chloe Hancock, Krystyna Stec, and
Jessica Toghill all of whom join Head of
Corporate Governance, Angela Cotton in
providing compliance and governance
support to a varied and expanding
portfolio of client companies.
Page 6
1
2
3
4
1 Jayne Meacham
Head of Listed Corporate
Governance
2 Chloe Hancock
Corporate Governance
3 Krystyna Stec
Corporate Governance
4 Jessica Toghill
Corporate Governance
MAR came into force on 3 August 2016
and brought a number of changes for
main market listed and AIM quoted
companies. Key changes include the
expansion of the scope of MAR to cover
a wider range of instruments traded on
a wider range of exchanges (including
AIM – see below), more detailed
requirements and procedures regarding
the control of inside information,
delaying disclosure, insider lists, share
dealing restrictions, notification
requirements for directors and senior
managers (replacing the Model Code)
and market soundings.
As regards the format for insider lists,
companies are required by MAR to
compile and maintain insider lists.
The "Insider List Implementing
Regulation" specifies the content and
current requirements. The mandatory
template for the insider list is very
specific and must be kept updated.
MAR will apply directly to AIM
companies and the London Stock
Exchange has confirmed the changes
to be made to the AIM rules to reflect
MAR. The updated AIM rules are now
available on the London Stock Exchange
website. The main changes for AIM
companies relate to the disclosure of
inside information and there is some
overlap between the obligations to
disclose under the AIM rules and MAR.
However, the requirements are not
identical and companies should be
aware of the additional requirements
that apply under MAR. AIM companies
should also note new requirements
around delaying disclosure, insider
lists, dealings by persons discharging
managerial responsibilities (PDMRs) and
persons closely associated with them
(PCAs) and new restrictions on PDMR
dealings during closed periods. It is also
a new requirement of AIM Rule 21 for
AIM companies to have a share dealing
code in place.
The ICSA has published a useful suite
of documents for companies, including
a specimen dealing policy, dealing code
and dealing procedures manual.
Companies should be aware that
under FSMA the officers of a company,
including Company Secretaries, can
be liable for market abuse if the
FCA is satisfied that the individual
knowingly participated in the decision
to deal. This is an unusual concept
for Company Secretaries given that
the Secretary does not share liability
with the directors for breaches of the
listing rules, including those considered
to be administrative breaches.
Companies should have already
begun to implement the provisions of
MAR including: reviewing and updating
Inside Information and share dealing
policies and procedures; including a
section on delaying disclosure (and
setting up notifications to the FCA in the
new prescribed form); expanding Insider
Lists to include all details prescribed
and considering the impact on external
suppliers; considering training on seeking
market soundings and on the regime
generally; considering any changes
necessary to the administration of long
term incentive schemes; updating RNS
announcement templates to contain
the relevant statements; and updating
company websites to ensure that they
contain RNS announcements.
If you need help to navigate the new
regime or support in bringing policies
and procedures up- to- date and ensuring
that the practical arrangements are in
place to comply, or perhaps a review
of your existing arrangements, please
contact us.
Page 7
August 2016
Issue number 34
The new PSC regime
From 30 June 2016
• certain elements of a company’s
PSC Register becomes available to
the public; and
• as part of the application for
registration at Companies House,
newly formed companies must now
file a statement of initial significant
control at Companies House, identifying
any subscribers who qualify as a
“registrable” PSC, as well as providing
the company with a PSC register.
So do all UK companies now need to
send the content of PSC Registers to
Companies House?
No. Companies that were incorporated
prior to 30 June 2016, are not required to
include details of their PSCs at Companies
House until submission of their next
confirmation statement (which could
be as late as June 2017).
Who can be a PSC?
The PSC regime is aimed at individuals.
For example, if John owns 100% of the
issued share capital of John Limited, John
is a PSC for John Limited.
Under the legislation a legal entity
may be a PSC if it is “relevant and
registrable”. A legal entity is “relevant” if
it meets any one or more of Conditions 1
to 4 of the specified conditions contained
in Schedule 1A of the Companies Act
2006, and:
Debbie Farman looks at the practical
application of the new regulations
requiring companies to keep a register
of People of Significant Control.
Page 8
30 June 2016 saw another significant
milestone in the latest UK company law
changes. It was the day that details of
people with significant control (“PSCs”)
over UK companies became available
to the public; the day the annual return
became defunct (replaced by a new
confirmation statement regime); and,
the day when UK companies could elect
to hold their registers centrally, with
Companies House. It is very early days
in the legislative interpretation, with
commentators already noting differences
between the legislation and various
guidance. This article aims to provide
practical help on the PSC regime and
how it is currently being applied.
PSC Regime – the Relevant Dates
From 6 April 2016, all UK companies
(save for those UK companies that are
subject to Chapter 5 of the Disclosure and
Transparency Rules (“DTRs”) which form
part of the UK Listing Rules), Societates
Europaeae (SEs) and Limited Liability
Partnerships (LLPs), are required to create
and maintain a PSC Register.
• holds its own PSC Register; or
•is subject to Disclosure and
Transparency Rules; or
•has voting shares admitted to trading
on a regulated market in the UK or
EEA or certain international markets
which have substantially similar
transparency rules.
A legal entity is “registrable” if it is the
first relevant legal entity in the company’s
ownership chain. So if John owns all
of the shares in John Holdings Limited
(a UK company) and John Limited is a
wholly owned subsidiary of John Holdings
Limited, this would mean John Holdings
Limited is the PSC for John Limited, as it is
a registrable relevant legal entity. John is
the PSC for John Holdings Limited.
Register of Persons with Significant
Control Regulations 2016.
What information goes into the
PSC Register?
A company’s PSC Register must not be
empty. A company and its officers are
under a duty to populate the PSC Register
from 6 April 2016, but details of the
The information needed on the
PSC includes:
•
for individuals: name, service address,
country of residence, nationality,
date of birth, usual residential address,
date on which individuals became a
registrable person, nature of control,
details of any restrictions on disclosure
•
for Registrable Legal Entities(RLEs):
name, registered office, legal form,
registry and governing law, registration
details, date it became an RLE, nature
of control
The company has
identified a registrable
person in relation to the
company, but all of the
required particulars of
that person have not
been confirmed
PSC must not be entered into the register
until such time as those officers have all
of the details required and, if an individual
PSC, those details have been “confirmed”
by the PSC themselves. Until then, the
PSC Register must state “The company
has identified a registrable person in
relation to the company, but all of the
required particulars of that person have
not been confirmed”.
If a company has not identified a
PSC as at 6 April 2016, it must say so.
The statement to use is “The company
knows or has reasonable cause to believe
that there is a registrable person in
relation to the company but it has not
identified the registrable person”.
There are various other statements
a company may use – which one depends
upon the status of any investigations.
These statements are set out in the
How does a company identify its PSCs?
In order to identify any PSCs, the
company must look at its current register
of members and its articles of association,
together with any other documents which
confirm its decision making processes
(e.g. any shareholders agreements). If it
can identify PSCs, it must then contact
those PSCs to obtain confirmation that
they agree they are a PSC and all the
details required for the PSC Register are
complete and correct. Only then can the
company complete the PSC Register.
The legislation states that a company
and its officers must take reasonable
steps to identify any PSCs. So if a
company is taking such steps, for a period
of time a PSC Register may contain the
statement: “The company has not yet
completed taking reasonable steps to find
out if there is anyone who is a registrable
person or a registrable relevant legal
entity in relation to the company”.
To identify a PSC a company must
refer to the five specified conditions set
out in Part 21A of the Companies Act
2006. Conditions 1 to 3 relate to direct
or indirect share ownership, voting rights
and the right to appoint and remove
the majority of the board respectively.
Condition 4 looks to identify the
individual who has significant influence
or control (with the help of separately
drafted statutory guidance). Condition 5
is relevant if the structure includes a trust
or firm and has its own specific test.
Page 9
August 2016
Issue number 34
The Register must describe the extent
and nature of all the conditions that the
PSC satisfies, save that if a PSC satisfies one
of the first three, there is no requirement to
also refer to the fourth condition.
By way of example, if a company has
one shareholder, who is an individual
holding 100% of the issued share
capital, then that person satisfies at
least Condition 1 and 2. The relevant
statements to include in the company’s
PSC Register (once the PSC has confirmed
his/her details) are “The person holds,
directly or indirectly 75% or more of the
shares in the company” and “The person
holds, directly or indirectly, more than
75% of the voting rights in the company”.
Can there be more than one PSC?
What if there isn’t one?
Yes, a company may have more than
one PSC. For example, if a company has
two individual shareholders, both holding
50% of the issued share capital, both
shareholders will satisfy at least specified
condition 1.
In contrast, a company may have
no PSC. An example of this may be
where a company has five shareholders,
each holding 20% of the issued share
capital, with each shareholder having an
equal right to vote and no shareholder
exercising significant influence or control.
The register can then state “The company
knows or has reasonable cause to believe
that there is no registrable person or
registrable relevant legal entity in relation
to the company”.
When would Condition 4 be relevant?
An example of when specified Condition
4 may be relevant might be where
there are, for example, four individual
shareholders, all holding 25% of the
issued share capital, all holding the same
voting rights. But one shareholder tends
to influence the voting of the others,
which is evidenced through meetings,
or, perhaps in a shareholders agreement.
This shareholder may be entered on
the PSC Register with the statement
“The person has the right to exercise,
or actually exercises, significant influence
or control over the company”.
What if the company and its officers do
not comply? Or the PSC refuses
to comply?
The legislation makes it clear that a
company and its officers will be subject
to criminal offences for non-compliance.
This can include fines and/or imprisonment
of up to 2 years. If a company identifies a
PSC and contacts the PSC for details and
confirmation, the PSC also has a duty to
respond and/or identify themselves to the
company. Again, criminal sanctions are
available against a PSC. However, possibly
a more influential sanction is that the
legislation provides the company with
powers to disenfranchise the shares or
interest held by the PSC until such time as
the PSC provides the details. A company
and its officers will need to be certain the
information they hold is correct before
taking these steps.
In practice, a company will serve
notice on the PSC they have identified.
The PSC then has 40 days in which to
comply. If the PSC fails to respond, the
company may serve a warning notice
which has a similar time period. Thereafter
the company may look to impose its own
sanctions. Throughout each stage, the
company should update its PSC Register
with the relevant statement, for example:
“The company has given notice under
section 790D of the Act which has not
been complied with”.
Does the PSC Register have to be made
available for public inspection?
From 6 April 2016, a company’s PSC
Register must be available for inspection
at its registered office. A company must
comply with any reasonable requests for
inspection and/or copies – and is entitled
to charge for copies, albeit a capped
nominal charge.
A PSC may be able to protect certain
information from disclosure, but in very
limited circumstances.
The person has the right
to exercise, or actually
exercises, significant
influence or control
over the company
If a PSC wants to, can they request that
their details do not go onto the register
for reasons of confidentiality?
Reasons of confidentiality are not
sufficient to provide a PSC with the ability
to keep their details off a company’s
PSC Register. However, a PSC or the
company on its behalf can apply for
a PSCs residential address and day of
birth to be withheld from the register
– the details must still be supplied
to Companies House, but will not be
available on the public register.
A PSC may apply, under what is
known as the Protection from Disclosure
regime, for all of their details to be held
from the public register. However, the
sole reason that such application may
be granted would be if disclosure of such
details would expose the PSC or their
close relatives to serious risk of violence
or intimidation. This is a very narrow test.
Each application will fall on its own facts.
Page 10
Election to hold registers at
Companies House
A company may elect to keep its PSC
information on a central register at
Companies House, instead of keeping
its own PSC register. If it does so, it must
record that fact in its PSC register held
with its company books. From that date,
the company is not required to update
information in its historic register but it
must retain it for future inspection, and be
able to produce the information should it
receive a relevant request.
Are there any difficult issues with
the legislation at the moment?
It is currently difficult to see how the
various elements of the legislation will be
policed. For example, for how long will the
company be allowed to take “reasonable
steps”? When will the criminal sanctions
be applied?
It is also unclear at the moment how
trusts will be dealt with. The guidance
provided by the Department of Business
Innovation and Skills appears to say that
where a trust is involved, the trustees of
a trust should be named on the register.
However, Condition 5 of the specified
conditions requires two limbs to be
confirmed in order to identify a PSC and
this does not necessarily mean one or all
of the trustees will satisfy each of those
two limbs. Any structures involving a
trust and Condition 5 should be closely
scrutinised and confirmed before any
details are entered on the PSC Register.
If you are having trouble identifying
a PSC, you are a PSC who is unsure
whether you are complying with your
obligations, or you are a practitioner
wanting to provide your client with a
structure that works for them, we will
be happy to help.
Email:
[email protected]
Flexible,
competitively
priced advice
from our
qualified
legal experts
www.jordanscorporatelaw.com
Page 11
August 2016
Issue number 34
More information from
the Jordans Group
Companies
House fee
changes
Jordans Limited supporting
businesses and their advisers with
incorporation services, and ongoing
insight and information.
www.jordans.co.uk
Company formations contact:
Karen Bowley
+44 (0) 117 918 1393
[email protected]
On 9th June Companies House announced
changes to their registration and search fees
with effect from 30th June 2016, as follows:
Corporate Governance contact:
Adrian Brown
+44(0)207 400 3304
[email protected]
Registration fees:
Product
Current fee
New fee
Software incorporation service
£13
£10
Web incorporation service
£15
£12
Registration of a charge by paper
£13
£23
Registration of a charge digitally
£10
£15
Product
Current fee
New fee
Certified copy of a document
(standard)
£20
£15
Certified copies of documents
(same day)
£60
£50
Copy of certificate of
incorporation (standard)
£20
£15
Copy of certificate of
incorporation (same day)
£60
£50
Search fees:
With the exception of our standard company
formation packages, we will pass on the
reduction to our clients.
Information checked and correct to the best of our knowledge
at the time of going to press.
Page 12
Business information contact:
Amanda Barnes
+44(0)117 918 1466
[email protected]
Registered office 21 St Thomas Street,
Bristol, BS1 6JS. Registered in England
and Wales No. 8143064
Authorised and regulated by the
Solicitors Regulation Authority
Jordans Trust Company experts
in trust and corporate planning services
to help you protect your wealth and
grow your assets.
www.jordanstrustcompany.com
Contact:
Jason Reader
44(0)117 918 1387
[email protected]
Registered office 21 St Thomas Street,
Bristol BS1 6JS. Registered in England
and Wales No. 6364800
Jordans Scotland Limited
(incorporating Oswalds)
All the corporate support you need,
every step of the way – in Scotland
and wherever business takes you
www.oswalds.co.uk
Registered Office 21 St Thomas St,
Bristol BS1 6JS. Registered in England
and Wales No. 865285
Jordans Corporate Law Limited
for comprehensive corporate and
commercial legal services.
www.jordanscorporatelaw.com
Contact
Andrew Cockburn
+44(0)131 557 6966
[email protected]
Registered office 4th Floor, 115 George
Street, Edinburgh, EH2 4JN. Registered
in Scotland No. SC57796
Corporate law contact:
Debbie Farman
+44(0)117 918 1221
[email protected]
Commercial law contact:
Simon Bates
+44(0)117 918 1210
[email protected]