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Welcome to Fortune Law's Briefing Update 
Welcome to our briefing update for February 2010. This month we highlight some of the key issues from the 2009 Pre-Budget Report that are likely to have an impact on small businesses. We published these at the end of last year but note that some clients (probably due to the sheer breadth of coverage) require a recap in bite sized pieces.
We have also included 3 updates on decisions made by the court and also changes to the ABI Guidelines which we think may be of interest.
Our client of the month is Feeling Peaky a web and design agency based in West London.
A number of businesses have been "thinking smart" about the value of their assets. Whether this is to strengthen their balance sheet, avoid claims for IP infringement, prepare themselves for sale or investment or simply to stand out from their competition, we are currently acting on a number of trademark registrations. As a result please see our current offer on trademark searches at the bottom of this update.
If you have any questions in relation to any of the matters set out in this briefing update or wish to speak to us in respect of any other legal issues do call or email us on skassam@fortunelaw.com or 0207 440 2540. We are always happy to help. Shainul Kassam |
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Featured Client
 Chris Peak
Feelingpeaky Ltd.
www.feelingpeaky.com
"Fortune Law has been our commercial law firm for a number of years. We have completed a variety of projects including drafting our terms & conditions, supplier agreements, NDA, advice on image use and copyright and helping us to take out a lease on our new offices. I always find them easy to work with, providing professional prompt and insightful service that has helped to support and grow our business."
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Meaning of Subsidiary
A recent Court of Appeal case has raised questions over whether a company that is a subsidiary of another company (holding company) by virtue of the Companies Acts will remain a subsidiary of its holding company if the holding company charges its shares in the subsidiary by way of legal mortgage. Overturning a previous High Court decision (the Court of Appeal held that, as a result of the holding company's pledge of shares in its subsidiary and the registration of the shares in the name of the bank's nominee by way of security (the security in this case being governed by Scottish law), the subsidiary company was no longer a subsidiary of the holding company within the meaning of sections 736 and 736A of the Companies Act 1985.
A fuller update on this decision will follow in due course.
Case: Enviroco Ltd v Farstad Supply A/S [2009] EWCA Civ 1399. |
ABI Guideline Changes
The Association of British Insurers (ABI) has amended its guidelines on directors' powers to allot share capital and disapply shareholders' pre-emption rights (the directors' powers guidelines) and on own share purchases (the own share purchase guidelines) to reflect the implementation of the Companies Act 2006 (2006 Act).
ABI guidelines are not legally binding but are considered best practice for listed companies and form the basis of institutional shareholder voting decisions. The previous directors' powers guidelines were issued in December 2008 and included model shareholder resolutions. The own share purchase guidelines were last amended in June 1999.
The latest set of amendments updates both sets of guidelines to reflect the implementation of the 2006 Act. Amendments include the removal of a reference to authorised share capital and changes in terminology. No substantive changes have been made. The directors' powers guidelines include new model resolutions.
Both sets of guidelines will be reviewed after three years of operation.
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Budget Snapshots
Small companies' rate of corporation tax The increase in the small companies' rate of corporation tax will be deferred for a further year. The rate will remain at 21% for 2010-11 and will increase to 22% for 2011-12.
Employers' National Insurance Contributions
Employers' National Insurance Contributions will rise from their current level of 12.8% to 13.8% from April 2011. A 0.5% increase was announced in the 2008 Pre-Budget Report and a further increase of 0.5% was introduced in the 2009 Pre-Budget Report.
Research and development tax relief
The Government has announced that one of the conditions that a small or medium-sized enterprise (SME) had to satisfy in order to claim the enhanced tax relief for research and development will be abolished.The change will have effect for accounting periods ending on or after 9 December 2009.
Electric cars and vans
The Government announced that it will provide greater incentives for businesses to reduce emissions from their company car fleets by introducing a number of measures including exempting electric cars from company car tax (CCT) for five years from 2010.
Business rates: empty property relief
For the year 2010/11 empty commercial properties with rateable values of up to £18,000 will be exempt from business rates.
Business Payment Support Service
The Business Payment Support Service (BPSS) helps viable businesses facing temporary financial difficulties to spread tax payments over an agreed timetable. It was announced in the 2009 Pre-Budget Report that the time to pay facility will continue for as long as it is needed.
Changes to business rates reliefs from 1 April 2010Revaluation of business rates takes place every five years and the next revaluation will take effect from 1 April 2010. The Valuation Office Agency has provided details of various resources to help businesses with the revaluation process, including a dedicated website ( http://www.voa.gov.uk ). VAT rate increase reminderThe standard rate of VAT reverted to 17.5% from 1 January 2010.
If you would like further information on any of these snapshots, please call us.
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Is Your Brand Protected?
Many businesses are currently conscious of business spend at the moment and as a result are seeking to consolidate and focus on their existing asset base with a view to ensuring better protection and financial advantage from what they have already created. One relatively stand alone asset is their intellectual property or "IP" namely their brand name and/or logo.
Businesses with registered trademarks are more valuable than those without and businesses without registration may be open to challenge from competitors or at risk of breaching another's trademark which they may be unaware of.
What is a trade mark?
A trademark is any sign which can be represented graphically and which is capable of distinguishing the goods or services of one business from another. A mark may consist of:
Words (the "I Can't Believe It's Not Butter" spread);
Designs (the Guinness harp);
Numerals (5O1 jeans);
The shape of goods or their packaging (the triangular shape of Toblerone chocolate and the Coca Cola bottle registration);
A smell (Sumitomo Rubber Industries' registration of a rose fragrance for tyres);
A sound (Directline's registration of the trumpet jingle);
A gesture (a finger tapping a nose has been registered by Derbyshire Building Society).
Why carry out a search and why register?
Registration is voluntary but advisable and would give the owner the right to the exclusive use of the mark in connection with the goods or services for which it is registered.
Is my trademark available?
The most important step and where we can add most value is the trademark search. This will determine whether the trademark is available in the relevant class or classes you would consider registration in. We have waived our fee for carrying out a search until the 31st March 2010 (see offer below). If you would like to find out if your business logo or name is available for protection do contact us and we will deal with this straight away. If the mark is free and you want to proceed, we operate on a fixed fee basis. |
Unfair Bank Charges
The Supreme Court has held that the fairness of personal current account charges levied on unauthorised overdrafts cannot be challenged under the Unfair Terms in Consumer Contracts Regulations 1999 because such charges are the price or remuneration for the services provided by banks and as such, fall within the exemption in regulation 6(2) of the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR").
The UTCCR regulate the use of unfair terms in consumer contracts. A term that has not been negotiated will be regarded as unfair, if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights, to the detriment of the customer.
The Office of Fair Trading (OFT) commenced a formal investigation into the fairness of terms relating to overdraft and related charges (the relevant charges) following complaints from customers that bank levy charges were unfair.
The OFT sought a High Court declaration that regulation 6(2) did not apply to the relevant charges. The banks sought a declaration to the opposite effect, as well as declarations that the relevant charges did not amount to common law penalties and were not contrary to the good faith requirement in regulation 5(1). The OFT secured the declaration.
The banks appealed. The Court of Appeal dismissed the appeal on the basis that the relevant charges did not form part of the core bargain between customers and banks.
The banks appealed to the House of Lords (now the Supreme Court).
Decision. The court allowed the bank'sappeal, holding that:
The relevant charges were part of the core bargain for the purposes of the regulation 6(2) exemption, as they were monetary consideration for the package of banking services supplied to personal account customers and fell squarely within it. The court noted that the charges amounted to over 30% of the banks' revenue from personal account customers and held that it was irrelevant that the charges were contingent and the majority of customers did not incur them.
Comment. As the court acknowledged, despite the public interest in the case, the key issue of the applicability of regulation 6(2) was very limited in scope and the court was not being asked to decide on whether the relevant charges were in fact fair.
The court did note that it was possible that this was an area which Parliament might wish to consider further and that the relevant charges were still open to attack on the grounds that they were unfair for reasons other than the adequacy of the goods or services supplied in exchange for them. However, subsequently, the OFT has announced that it has decided not to continue an investigation into bank charges under the UTCCR, but will continue to work to achieve change in the market.
Case: The Office of Fair Trading (Respondents), Abbey National Plc (Applicants) [2009] UKSC6; Office of Fair Trading: Accounts - Unauthorised Overdraft Charges decision on an investigation under the UTCCR and next steps, December 2009,
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| Free Trademark Search Package |
During February and March, you can take advantage of our trademarking search service for free. Until March 31st 2010 we are waiving our usual search fee. Just quote Code FLNL1 when you call us. |
| Offer Expires March 31st, 2010 |
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Please note that information contained in this briefing update does not constitute legal advice. All statements of law are applicable to the laws of England and Wales only. Copyright Fortune Law 2010. All rights reserved. |
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