Company Secretary Update – October 2015

1. Legislation update: The Small Business, Enterprise and Employment Act 2015 (the ‘SBEEA 2015’)

On 18 September 2015, the Small Business, Enterprise and Employment Act 2015 (Commencement No 2) Regulations 2015 were published. These provide that the following provisions of the SBEEA 2015 will take effect this month:

• From 1 October 2015, various changes to the directors’ disqualification regime, including the power for the Secretary of State to apply to the Court for a disqualification order on the grounds that a director has been convicted of certain offences overseas. The matters to which the Court must have regard when determining whether a person should be disqualified as a director have also been extended.
• From 10 October 2015:
  • amendments which enable the Registrar of Companies to omit the day of birth from a director’s date of birth on the public register;
  • removal of the requirement for companies to provide the Registrar with a consent by a company director or secretary to act in that capacity. This is replaced with a requirement to state that the person has consented to act;
  • a new obligation on the Registrar to notify new directors as soon as reasonably practicable after their appointment has been registered, and to provide them with information about their duties; and
  • provisions which reduce the timescales for striking companies off the register.

2. Legislation update: The Modern Slavery Act 2015 (the ‘MSA 2015’)

The MSA 2015 consolidates offences relating to trafficking and slavery. Section 54 of the MSA 2015 requires commercial organisations (defined as those who supply goods or services and have a minimum total turnover of £36 million per year) to prepare a slavery and human trafficking statement for each financial year.

There is no prescribed form or length for the statement, but it must state either:

• the steps taken to ensure that slavery and human trafficking is not taking place in any supply chains or parts of the business; or
• that the organisation has taken no such steps.

You may wish to include this as a consideration within your procurement policies as part of your risk management of supply chains. Depending on turnover level, you could also include a requirement for the contractor to have their own anti-slavery policy or adhere to your policy into your contracts.

3.    Guidance update: ‘The Essential Trustee’

Following consultation, a new version of the Charity Commission’s guidance for trustees – ‘The essential trustee (CC3)’ – has been published and is now available on the Commission’s website.

Trustees’ basic legal responsibilities remain unchanged, as does the Commission’s role as regulator. However, the guidance provides a new explanation of what the Commission expects a trustee must and should do in an attempt to draw a clear distinction between good practice, regulatory expectations/requirements and legal duties. The guidance emphasises that the Commission will expect trustees to explain and justify their approach, especially if the decision is made to depart from good practice.

Other changes include:

• linking to other guidance to avoid repetition;
• reflecting the Commission’s current position and priorities as charity regulator;
• highlighting what can go wrong and how to avoid it; and
• emphasising that the guidance is relevant to all charity trustees, not just trustees of registered charities – the guidance is therefore relevant to board members of registered societies or community benefit societies that are also exempt charities.

Click here to view the full guidance.

Spotlight: Copyright, trademarks and company names

We have received a number of instructions recently in relation to potential disputes or breaches of intellectual property rights (‘IPR’) in names and logos. These have primarily arisen from organisations failing to:

• carry out/commission appropriate searches when selecting a name or logo (perhaps in relation to a re-brand of a new business venture); and/or
• register intellectual property rights following selection.

This quarter our spotlight therefore considers methods by which the risk of such issues arising can be minimised.

1. Design work: commissioning logos or other copyright works

The recent case of Atelier Eighty Two Ltd v Kilnworx Climbing Centre CIC and others highlights the common pitfalls for organisations commissioning logos or other copyright works.

When commissioning such works always obtain legal advice on the terms of the contract with the designer, and in particular watch out to ensure that IPR in the designs will belong to your organisation. This isn’t just limited to logos; think about it when commissioning any kind of work where copyright arises (for example, websites or ‘apps’).

To see our full briefing on the case please click here.

2. Initial searches: names and logos

Often clients are keen to keep proposed names and logos confidential until the ‘big reveal’. However, this can lead to issues if the appropriate searches are not undertaken to check whether a name or logo is either already registered (with Companies House, the Financial Conduct Authority, the Charity Commission or with the Intellectual Property Office) or is already being used by another entity.

When making a decision on a new name or logo, ensure to undertake or commission the appropriate searches. Wider internet searches should be made to ensure that the name you have chosen isn’t already being used by another organisation – keep in mind the risk of a claim against you of ‘passing off’, particularly if the existing entity is operating in the same or a related industry or geographic area. Also bear in mind the reputational damage that could be caused by the actions of a company with a similar name.

The following are some key questions to keep in mind:-

• Is it available? Check online to make sure the name is available and compliant (a number of words cannot be included in a company name and some words are ‘discounted’ when considering whether a company name is too similar to an existing registered name). Consider carrying out a trade mark search to check if the proposed name (or logo) is already registered;
• It is distinctive? Avoid the risk of administrative errors and confusion by choosing a name which is distinctive. Keep in mind the risk of reputational damage and claims of ‘passing off’. Avoid registering a name which is likely to cause confusion, taking into account the similarity of another company’s name, its location and how well known it is among your organisation’s target sector;
• How can we protect it? Seek legal advice on how best to protect your IPR. The cost of registering a trade mark can often put organisations off, but when weighed against the cost of a claim it is certainly worth considering. A registered trade mark will put you in a much stronger position to either make or defend such a claim. Continue to monitor the registers and the internet more widely to ensure you are alerted as to any potential conflicts at the earliest opportunity.

Contact Sarah Greenhalgh.

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