Exploring the latest trends and developments in property & corporate law. In our inaugural issue we explore a variety of international legal aspects, with particular focus on foreign investment in the UK and trading across borders.
LEGAL CORNER EXPLORING THE LATEST TRENDS AND DEVELOPMENTS IN PROPERTY & CORPORATE LAW
ACROSS BORDERS. ISSUE 001:
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CONTENTS
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In this Issue An introduction by Vijay Parikh, Managing Partner
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Setting up a new business in the UK James Oxley, Partner Corporate & Commercial provides advice for foreign investors Trends Bhavini Kalaria, Partner Dispute Resolution, International looks at the latest trends around Environment, Social & Governance Goals Practical tips for setting up a digital business Steve Zeitchik of digital agency Agency 8200 discusses practical tips for those looking to enter the digital space The Four Corners Legal Podcast Bhavini Kalaria (Harold Benjamin) & Steve Zeitchik (Agency 8200) discuss business growth, leadership and working across borders International Tax Aspects Yedidya Zaiden of accountancy firm Raffingers offers a tax overview for those wanting to invest in the UK Event Spotlight - International Association of Practising Lawyers Harold Benjamin were pleased to have hosted this year's annual IAPL conference, with the key-note discussion centering on block chain technology and crypto currency. Niten Chauhan, Partner Restructuring & Insolvency/ International and President of the IAPL reflects on an insightful few days HB Case Study John O’Donovan, Partner Banking & Finance looks back at HB's €70M cross-border refinance deal for Dublin hotel
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It is in this environment that more and more are looking for advice on trading across borders. Finally, as climate change and other global issues rise up the agenda, environmental and social concerns are increasingly being incorporated into business decision-making. We regularly help clients who are looking to invest in the UK, or need specialist litigation support during cross-border disputes. With a robust corporate team, and a growing reach through various affiliated organisations (such as the Geneva based International Alliance of Practising Lawyers), we are well placed to do so. Together with articles covering international trade, this year’s IAPL meeting hosted by Harold Benjamin in London and a recent €70m cross-border funding deal for a Dublin held asset, we’re also pleased to announce the launch of our new podcast series on business transformation and our international work. We welcome your feedback, and hope you enjoy engaging with this new initiative as much as we have enjoyed putting it together.
In this issue We’re so pleased to launch our new
magazine and podcast series. Our aim is to be informative, inviting of your views and aligned with our intention to be trusted advisors on complex matters. In this first edition, we will be covering the international aspects of our practice. With disruptions to supply chains, and the climate crisis playing out in real time with unheard of temperatures - this year has reminded us, once again, about the interconnectedness of the world we live in. Foreign investment into the UK is seen as a key driver for growth and more than ever, the changing way that people work and operate post-pandemic has meant foreign and local companies have had to rethink how they manage both people and trade, across borders.
VIJAY PARIKH Managing Partner
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SETTING UP A NEW BUSINESS IN THE UK Advice for foreign investors
BY JAMES OXLEY Partner, Corporate & Commercial
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The UK is an attractive place for foreign investment, driven by legal and administrative frameworks that make it easy for businesses to both set up and trade here. Most investors will be familiar with subsidiary structures that allow foreign companies to have a base in the UK, as well as alternative options such as branch companies or appointed agents and
distributors, all facilitating trade in the UK. Company set up is a straightforward process in our jurisdiction. Nevertheless, the key to setting up successfully is ensuring that the relationship documentation – which can range from outlining what the company does to service agreements for key individuals and employment contracts - is in place. These will help identify responsibilities, determine tax and other liabilities.
"...AS THE PANDEMIC HAS DEMONSTRATED, EMPLOYEES CAN WORK REMOTELY, FROM ANYWHERE. THIS RAISES PARTICULAR ISSUES
FOR THOSE COMPANIES THAT HAVE LOCAL AND FOREIGN STAFF. "
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business interests. The nature of the IP will determine how it should be registered and protected, but the most well-known methods are trademarks and copyright. Trademarks are often used to denote an identity, establish credibility and safeguard reputation – and prevent others from imitating your brand. Designs flowing from this, such as websites and products, may also be considered IP. Aside from people and IP, businesses looking to locate or set up a base in the UK also need to consider what happens in the event of a dispute. Depending on what the business does (we have worked with clients investing in property acquisition companies, manufacturing and other areas) there will need to be some consideration as to what happens when things go wrong. The normal rule is pretty straight forward if goods are sold and bought here, then the UK would be the correct place to deal with any problems. However, sometimes if there are disputes about goods in transit or where work is done abroad, there will need to be thought given as to where the problem should be litigated and what law should apply. These are just some of the many considerations when setting up in the UK, if you have any questions about anything in this article, you can contact James Oxley, partner in our corporate and commercial team.
For example, as the pandemic has demonstrated, employees can work remotely, from anywhere. This raises particular issues for those companies that have local and foreign staff. Some may be local but working abroad, some may need a visa to work in the UK or to be located here. In all these different circumstances, there are both business and legal issues which need to be grappled with. There are well established employment rights and it is best to ensure that these are stipulated in writing for UK based, local staff. Things might change where there are foreign staff working abroad especially when it comes to things like national insurance contributions and income tax. Significant issues which can arise do so out of restrictive covenants, data theft and poaching of clients – these should all be addressed in the employment contracts. Following on, the next big issue for businesses looking to invest in the UK might be what assets they are investing in. For instance, does the business have tangible property? Commercial leases are complex documents, and freehold purchases can be high value, big investments. It is always useful to have these documents reviewed and proper due diligence undertaken so that any potential pitfalls are identified at an early stage. Mistakes here could end up having knock on effects on the returns on any investments. Further, when setting up a new trading company in the UK, business owners will also want to ensure that their intellectual property (IP) is safeguarded. IP is like any other kind of property – it can be secured, stolen or sold. IP includes any tangible or intangible creation including inventions, artistic and literary works, and any symbols, names or images that distinguish goods or services and can create significant value for a business. Accordingly, businesses are advised to, and often do, spend huge sums of money on safeguarding their intellectual property and
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REGULAR FEATURE
BY BHAVINI KALARIA Partner, Dispute Resolution, International Environment, social & governance goals (ESG)
In the business world these goals, otherwise known as ESG (environment, social and governance), are now important for executives and decision-makers. Multiple stakeholders are increasingly demanding that business strategies and purposes are aligned with what McKinsey's term a "more balanced capitalism". The impact of long-term growth won’t be tolerated if it has harmful social and environmental impacts. Samsonite’s “responsible journey” strategy – launched on the back of demands for better end to end environmental accountability – is just such an example. Shareholders
COP26, the government’s own Net Zero Strategy and other green commitments have re-directed attention to sustainable development and environmental goals. Concurrently, public demands and investor interests also seem to have converged in one significant way over the last few years: both have pushed for greater environmental responsibility, more sustainable growth and social accountability.
are increasingly asking for serious action, such as a divestment from carbon-assets, to be taken.
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From a commercial and legal point of view, today’s business leaders have to engage properly with the new reality - that socially responsible and environmentally sustainable practices are a key driver for their business growth. In terms of international investment and longer term trends, we are likely to see increased consideration of ESG goals and safeguards in cross border transactions. If you would like to find out more about this topic, please contact Bhavini Kalaria, partner in our litigation team, and member of our business improvement team.
Often this is for commercial reasons: governments are asking for sustainability criteria to be met, companies with better ESG credentials can out-perform their competitors with correlating staff well-being and performance improvements as employers become more aligned with ESG values. From a legal point of view, reporting of ESG measures has been mainstreamed due to US and European guidelines. For example, the drive for net-zero has led to various measures to reduce emissions in the building sector. This has meant the emergence of energy performance certificates, green finance initiatives and moves aiming to reduce emissions from new builds by 75-80%.
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BY STEVE ZEITCHIK Founder, Agency 8200
As legal advisors to many businesses, we hope to provide guidance to those who are looking to start their own businesses. We asked Israel-based Steve Zeitchick, a serial entrepreneur since the late 1980s to provide some practical tips for those looking to enter the digital space in an international market. Steve co-founded a digital marketing company serving Fortune 500 clients, before selling it in 2019 and establishing Agency 8200 - digital and influencer marketing service to SMBs and SMEs. Here are his helpful recommendations. “The first 15 years of my career were focused solely on building a regional market – if I could drive to my clients, they were relevant and if I couldn’t, then they weren’t.
Back then, the need to see someone face to face, shake a hand, and take someone out were all critical to cultivating a relationship. However, as technology improved the network and pool of clients expanded through a range of diverse ventures, first nationally and then globally. Both the agencies I founded work with clients around the globe and have employees around the globe. Despite this, building rapport with clients remains as key a priority as it was back in the eighties - only now the methods have changed. The following tools and strategies have helped to expand the business aggressively, and can work for any business that has something of value to offer to a larger audience (whether that’s a product or a service).
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Invest in the right technology.
A high-def camera and a comfortable headset with a quality microphone and clear audio are essentials and are relatively inexpensive. They are critical to creating a relationship. A fast computer and a larger screen will also help with building relationships. By maximizing visibility during video calls you create a more immersive experience, and will find that your speech patterns and body language will follow.
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Stay professional when using remote working spaces.
People can/should know you are remote. That said, you don’t need to remind them each time you speak with them. If you are working out of your house, avoid having kids running in and out of your office, pets jumping into the frame, loud construction work, or washing dishes (yes, I’ve heard that on a few calls I was on). Distractions shift the potential client’s mindset, serve as a disruption, and could make them question your professionalism. Of course, this can happen to us all from time to time - but it should be an exception, not the rule. This also lends itself to another equally important item - just because you are speaking with clients remotely, does not mean that you should look like you just rolled out of bed in the morning. Dress appropriately, and make sure you appear no different than if you had been meeting with them in person, regardless of whether you are using video or not.
"...WE DON'T DEFINE SUCCESS AS A BINARY OUTCOME - WHETHER OR NOT WE CLOSED A SALE. INSTEAD WE LOOK TO OPEN AND DEVELOP A RELATIONSHIP."
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Prioritize relationships.
Assuming you have the right tools and environment, you still need to find and connect to potential customers in other locations around the globe. We have found that posting content and social media have been the best methods for generating traffic and leads. LinkedIn, in our case, has been an amazing tool for creating and initiating relationships. At Agency 8200, we don’t define success as a binary outcome – whether or not we closed a sale. Instead, we look to open and develop a relationship. Relationships breed relationships, momentum breeds momentum, and success breeds success. With each conversation, we also learn about cultural sensitivities, pain points that are unique to different audiences and potential opportunities. At the same time, we look to see how we can help everyone we speak with – regardless of whether they are appropriate for our agency. We are always happy to make unconditional introductions and referrals which provide us with the chance to generate value for all and strengthen our bond.
One last reminder. Today, global relationships are critically important in enabling businesses to reach greater levels of success. Always remain authentic and consistently provide value. These are values that aren’t defined by borders, and when all else fails, people appreciate integrity. Embrace that, and people will embrace you and your brand.” If you would like to find out more about Agency 8200 and what they do, you can contact Steve Zeitchik.
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THE FOUR CORNERS LEGAL PODCAST
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Our podcast series will reflect on different business and legal topics. In this first instalment, Bhavini Kalaria, partner in our litigation and international team, and a member of our business development group was kindly asked by Steve Zeitchik of Agency 8200 to discuss business growth, leadership and working across borders. In this podcast: business growth, leadership and working across borders
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Investing in UK property
INTERNATIONAL TAX ASPECTS
BY YEDIDYA ZAIDEN Partner at Raffingers Accountants
The prospect of investing in the UK is one which attracts businesses and entrepreneurs from around the world. The UK has a history of delivering stable returns and a reputation of being a pro-business environment with light touch regulation. Double tax treaties with other jurisdictions also enable profits to be realised without tax having to be paid in both countries. Investing in property has been a particularly popular choice and this article will focus on some of the tax and related points which should be considered when considering investing in property in the UK.
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Register of Overseas Entities
As a result of concern that foreign investors were using the UK to shelter the proceeds of crime, legislation has recently come into force which requires overseas entities who want to buy, sell or transfer property or land in the UK, to register with Companies House and provide details of who their registrable beneficial owners or managing officers are. Whilst this is a relatively new requirement, it is an area where HM Revenue and Customs (HMRC), the UK tax authorities have indicated that it is an area they will be enforcing, and strict penalties will apply for non compliance.
Corporation Tax
A vehicle often used for investing is a company limited by shares. Companies can be formed fairly easily and are listed on a central register at Companies House. Company directors and/or shareholders need not be based in the UK. Companies are then required to file annual accounts with Companies House as well as corporation tax returns with HMRC, no later than nine months after the end of their financial year. The current rate of corporation tax paid on taxable profits is 19%. A planned increase to the rate in 2023 has recently been scrapped by the new UK government.
Capital Allowances
Companies are able to claim capital allow- ances on certain capital expenditure used to purchase assets for use in the business. The resulting tax deduction varies between an 8% annual allowance on amounts spent on ‘integral features’ and 100% for certain qualifying investments with a 130% ‘super deduction’ applicable to qualifying expenditure incurred prior to April 2023.
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Annual Tax on Enveloped Dwellings (ATED)
ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000. The current charges range from £3,800 to £244,750 depending on the value of the property. Companies can claim relief from the charge if the property is let to a third party on a commercial basis and in some other circumstances.
"WHILE THE REGISTER OF OVERSEAS ENTITIES IS A RELATIVELY NEW REQUIREMENT, THE UK TAX AUTHORITIES HAVE INDICATED THAT IT IS AN AREA THEY WILL BE ENFORCING AND STRICT PENALTIES WILL APPLY FOR NON-COMPLIANCE."
Stamp Duty Land Tax (SDLT)
Stamp Duty is payable on the purchase of property. Different rates apply to commercial and residential properties and are calculated using a tiered basis. The actual SDLT payable can vary based on the circumstances and the availability of reliefs and appropriate legal advice should be taken.
Value Added Tax (VAT)
Generally, land is exempt from VAT, however, particularly with respect to commercial property, the owner can opt to tax the property and charge VAT on rental income and on the subsequent disposal of the property. Where a property is within the VAT regime, VAT can be reclaimed on relevant expenditure. The current rate of VAT is 20% with reduced rates applica- ble to certain types of construction work. VAT returns are generally required to be submitted, and payments made, on a quarterly basis.
For more information about investing in UK property or other tax matters please contact Yedidya Zaiden.
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THE INTERNATIONAL ASSOCIATION OF PRACTISING LAWYERS AGM HOSTED IN LONDON
BY NITEN CHAUHAN Partner Restructuring & Insolvency / International
conflicts with the law. In such circumstances can we say that the law still has primacy, particularly where there might be fraud, illegality and other disputes, or where there are consumer issues? The answer from law-makers and legal gatekeepers has been a resounding “yes”, supported by a flurry of government papers on how to regulate blockchain technologies and cryptocurrencies, and what the legal precedents might be. Whilst there are questions over access to redress, and enforcement processes generally, it is important to note that crypto assets, be they coins or other types of non-fungible tokens (NFTs), have been recognised in the UK as being property assets and accordingly practitioners are able to seek legal redress to recover and secure digital assets in much the same way as other types of assets. This is important, for example, to family practitioners in contested proceedings needing to raise questions about assets; for private client lawyers who are drafting wills and other documents for clients; or those advisors who are undertaking asset-tracing enquiries, and many more. Though decentralised technologies pose a real challenge to the bureaucracy and jurisdictions of traditional legal systems, Harold Benjamin's active networks, such as the IAPL, help us to share global best practice and keep pace with the latest developments in international commercial law - ensuring we will always understand what our clients need today and what they will need tomorrow. But as well as grappling with the latest challenges facing commercial law, attendees at the IAPL event also understood the importance of strong relationships and mutual support. Some two years after the global COVID pandemic, IAPL lawyers strengthened their ties and shared legal insights and practices late into the evenings during a host of social gatherings. It is this forward thinking and collaborative approach that current IAPL President Niten Chauhan believes brings tangible benefits to our company’s clients.
The International Association of Practising Lawyers is a network with members around the world, working to build a mutual understanding of overseas legal systems and customs, a global perspective on legal matters and collaboration amongst experienced professionals. Niten Chauhan, our Head of Restructuring and Insolvency, is the current President and board member of the organisation. Explaining the benefit this network brings to our practice he said: “Harold Benjamin can act for clients from most countires who may require legal services in the UK or recommend UK clients to solicitors in other countries because we have a global reach through our international networks.” Harold Benjamin was pleased to have hosted the IAPL for its annual conference, a long-anticipated event that brought together nearly 20 lawyers from countries ranging from Switzerland, through to the United States. The weekend long conference kicked off with a tour of Inner Temple and Temple Garden, including a visit to Temple Church, famous for having featured in the best-selling book and film “The Da Vinci Code”. Fittingly, barristers’ chambers 4 Stone Buildings, presented a keynote discussion centered on the legal issues raised by cryptocurrencies and blockchain and the global prominence of these technologies. Boosted by Elon Musk to a loyal online audience, officially adopted by Venezuela and with even the former Chancellor of the Exchequer tasking the Royal Mint with delivering an ‘NFT for Britain’, the impact of these technologies in commercial processes, finance and the law urgently need to be understood. Whilst some argue that blockchain technology offers mechanisms for both participation and independence, its self-regulating characteristics and ideals means that there are inherent
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“Our international networks allow us to provide a truly worldwide service. We can act for transnational businesses, from most countries, dealing with legal matters in the UK whilst also connecting UK SMEs operating abroad to legal practices who can provide advice in their foreign markets.” If you have enquiries about our international practice and offer, or about IAPL, please do not hesitate to contact Niten Chauhan.
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€70M CROSS-BORDER REFINANCE DEAL FOR DUBLIN HOTEL Harold Benjamin Case Study
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BY JOHN O'DONOVAN Partner Banking & Finance
The Banking and Finance department at Harold Benjamin were instructed on a €70m cross-border refinance deal for a hotel in Dublin, Ireland earlier this year. The HB Banking and Finance team led by Partner John O’Donovan and Associate Ozan Zorba provided further assistance to Dublin based practice Mason Hayes & Curran LLP (MHC), in order to complete the transaction. The Borrower was an Irish entity to which MHC provided advice to, however, the particulars of this transaction required the Borrower’s parent company (a company incorporated in England & Wales) to provide further security to the Lender - a require- ment which Harold Benjamin was asked to advise on.
Reviewing the English Law Security Agree- ment in relation to the hedging agreement
Providing the draft release for the existing English security
Facilitating the signing and engrossment of documentation in readiness for completion, including all requisite notary requirements. With the Borrower’s directors based in Harrow, London, our Banking and Finance depart- ment facilitated the signing of the finance documents which included over fifty separate documents for the clients to execute. Having received the Irish company seal for the Bor- rower, Harold Benjamin conducted a signing ceremony within our offices in College Road, Harrow, HA1 1BE, and put together an executed pack of documents to forward to the Lender’s solicitors to aid completion of the matter. This matter highlighted once again the expert and logistical support Harold Benjamin can offer in high value, cross-border transactions. If you would like to find out more, please contact John O’Donovan in our banking and finance team.
The work carried out by our team encom- passed:
Arranging the Corporate authorisations/ Board Resolutions for the English Obligors
Advising on constitutional documents for English entities and provision of English cor- porate certificates Providing and reviewing amendments to subordinated intra-company loans involving English entities and English Law loans Reviewing/amending/negotiating the In- tercreditor Agreement with the Company’s existing lender Reviewing/amending/negotiating the Eng- lish Subordinated Creditor’s Security Agree- ment and Subordination Agreement with the incoming Security Agent
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If you are a property or funding specialist and would like to contribute to this magazine we would love to hear from you. To submit an article, or for other ways in which your business can feature in this magazine, please send an enquiry to marketingteam@haroldbenjamin.com
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