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MAY
30

Lewis Nedas Law Commercial Department Goes Live!

shaking hands 1Welcome to the Lewis Nedas Law Commercial and Litigation Department Blog. Our goal is to keep you informed about recent legislative changes that may affect you or your business by giving you free, regular, cutting edge updates on this web page. We will also be posting about our recent successes, professional legal opinion, developing case law and other newsworthy items on a frequent basis. We feel that a Blog is a great opportunity to invite our readers and our existing clients to pose us with topics for discussion so that the Blog is as interactive as possible. Please note that for confidentiality reasons we will not be able to give any specific legal advice to you or someone you know on this public forum, but if you do have such a query please do not hesitate to get in touch with one of our commercial lawyers who will be happy to help you.

Our first topic is one that has been raised in several recent company transactions that we have been working on and so we felt we could shed some light on this complex area or encourage you to contact us for further advice.

Company Law Update – People with Significant Control

If you’re a business owner or a company director, you’ve probably heard about the new administrative changes affecting UK companies, SEs and LLPs from 6 April 2016. The most significant of these is almost certainly the requirement to keep a “Register of People with Significant Control” (and not forgetting the obligation to file a “Confirmation Statement” once a year, which replaces the obligation to file an “Annual Return” as of next month). If you do have the unenviable task of dealing with such matters yourself, you will no doubt have noticed that there is ample (and by that I mean no less than seven handbooks and hundreds of pages!) guidance on the government’s website to steer you through this complicated area of company law, and a quick Google search of the letters “PSC” reveals a multitude of websites, from laypeople to lawyers, offering fairly comprehensive advice. As such, it is not the purpose of this blog to recite this guidance chapter and verse, or to condense it into a handy how-to guide when so much information is readily available.

No, the purpose of this blog is to inform our readers that, as is the case ninety-nine per cent of the time when a new law is implemented, some confusion and some moderate debate is taking place in commercial circles as to how the rules should be interpreted. For instance, the government has published new guidance as recently as 13 May 2016 (see https://www.gov.uk/government/publications/guidance-to-the-people-with-significant-control-requirements-for-companies-and-limited-liability-partnerships) to help business owners through this legal minefield and we have also been reading other blog posts from law firms on websites such as Lexology which are potentially very confusing to a lay person. Given that the sanctions for non-compliance will be of a criminal nature (as are the sanctions for failure to keep most company information up to date), we understand (and indeed we have experienced) that many people will see this as an administrative headache that distracts them from focussing on their aspirations of running a successful business. The types of queries we hear regularly are:

  •  What is a PSC Register?
  •  How do I identify a person with significant control?
  •  How and to what extent should I contact these people?
  •  What information must I enter on to the Register?
  •  How and when do I need to enter information on to the central public register at Companies House?
  •  How often must I review the information contained on the Register?
  •  Where must the Register be kept and for how long?
  •  What restrictions can be imposed on people who refuse to respond to requests for PSC information?
  •  Where can I find further guidance on this subject and are there any updates available?

As you can see, this is an extensive list of questions that we have already had from our existing clients and we are sure there will be more on this topic until such time as the new legislation has had time to bed in.

If you are at all concerned about the new legislation and whether it affects your business, or if you would like to speak to our team about your corporate and commercial needs generally, please contact us by emailing our enquiries line and we guarantee someone will come back to you within 24 hours.

Adam Creasey

Lewis Nedas Law

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MAR
23

NCA Uncovers Drug Smuggling and Gun-Running Group Disguised as Flower Seller

The National Crime Agency assisted by the Dutch National Crime Squad, has dismantled an organized crime group which used a wholesale flower business to disguise their criminal activity.

The Lancashire based group used the flower business as a cover to hide their illegal drug and gun-running activities. The North-West network smuggled heroin, cocaine, amphetamine and cannabis as well as firearms and ammunition from continental Europe through the Channel ports and into the UK to their depot in Accrington, where they sold to drug dealers to be distributed throughout the UK.

The group was headed by Dutch National, Mohammed Imran Bhegani, who was sentenced to sentenced to 36 years in prison. His right hand, Sajid Osman, was given a prison sentence of 26 years. The lorry driver, Pieter Martens, was jailed for 24 years for his role in importing the goods.

Other co-conspirators were given sentences ranging from 27 moths to 17 years.

Seizures of Drugs and Firearms in 2014

The men were charged in relation to four separate seizures made in 2014. Three of these seizures were made at the Channel Tunnel terminal in Coquelles, northern France, and the other at the depot in Accrington. It is estimated that the drugs recovered by the NCA would have had a street value of up to £30 million.

During the first seizure in March 2014, Border Force officers discovered two firearms, a pistol and a submachine gun with a silencer and laser sight. The officers also found 28 rounds of ammunition, over 600 kilos of cannabis, one kilo of MDMA, 60 kilos of amphetamine, 50 litres of liquid amphetamine and six kilos of cocaine.

Less than two weeks following the first seizure, a second seizure was made involving a lorry at the Channel Tunnel, which contained nearly a tonne of cannabis, heroin, amphetamine and cocaine. However, the Dutch driver was cleared of the importation offences he was charged with.

Some months later on July 1, 2014, a truck was stopped at Coquelles containing30 kilos of heroin and 45 kilos of MDMA. The driver Nigel Watson from Telford was arrested.

International Cooperation

The NCA worked with its colleagues from the Netherlands to link all of the importations to the group leaders Mohammed Imran Bhegani and Sajid Osman. The agencies discovered that the men had been responsible for an additional 13 runs from continental Europe to the UK.

Greg McKenna, NCA head of investigations said:

“As this criminal network was an international one, so too was our investigation, and we have received invaluable assistance from our colleagues in the Dutch National Crime Squad and from Border Force here in the UK.”

Bhegani had been responsible for arranging the delivery of the consignments to the depot in delivered Albion Mill, Accrington. The property was rented and operated by Osman and Nizami Esshak.

The depot in Accrington was raided by NCA officers on 26 August 2014, where Osman and Essack were arrested. Two of their associates posing as ‘cistomers’, Taimur Zahid and Hussain Farooq, were also arrested when arriving at the premises to pick up drugs for sale. When raiding the premises, the NCA officers found three boxes containing flowers (part of their cover), alongside 12 kilos of cannabis in a car. Officers also seized over 200 kilos of cannabis from Albion Mill, along with notebooks evidencing their crimes which contained the details of customers and quantities to be supplied. A van outside contained a further 80 kilos of cannabis.

Bhegani was subsequently arrested at Esshak’s home in Accrington nearby the depot. The Dutch crime squad officers then raided properties that were linked to Bhegani in the Netherlands. There they discovered phones and SIM card that had been used to contact those involved in the group as contacts and drivers. They also found documents detailing their price lists and transfers of large amounts of cash. The lorry driver, Benny Planken, from the Netherlands was later arrested after being identified as the person responsible for importing cannabis discovered in Albion Mill.

All of the men were charged with offences related to importation, with. Esshak, Zahid and Farooq all pleaded guilty prior to trial. However, Bhegani, Osman, Watson and Planken were found guilty of conspiring to import drug following a jury trial Preston Crown Court on 22 February 2016.

Bhegani and Osman were also convicted of offences related to importing firearms. The men were sentenced at the same court last week, 10 March 2016.

Greg McKenna, head of investigations at the NCA said:

“In terms of organised crime, Mohammed Imran Bhegani was right at the top of the tree. He was an international drug dealer with high-level contacts in mainland Europe. Bhegani had the ability to transport vast quantities of illegal drugs and weapons from the continent and into the UK.”

This echos the recent speech made by Ms Owens, the new head of the NCA, who has made clear that the organization now intends to target the ‘untouchable’ highest level of criminals in the UK, who have international contacts.

McKenna elaborated:

“Working together we are determined to disrupt and bring to justice organised criminal groups involved in this type of smuggling.”

This appears to be the beginning of a new era for the NCA as the organization becomes more sophisticated and works together with its international partners.

How can Lewis Nedas help?

Lewis Nedas are a leading city firm with an enviable reputation for providing effective legal advice to complicated situations. Our team have experience of some of the most complicated cases concerning NCA investigations, allowing us to give our clients access to tenacious and highly knowledgable legal advisors. We have been actively involved in this field for many years, and take pride in offering our clients a comprehensive service: we will represent your interested in all discussions with regulatory bodies that are required; provide legal advice that is specific to your circumstances and interests; and, if the need should arise, protect your interests in any litigation. Contact our team now to find out how we can help you.

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MAR
07

How do I Protect my Family Assets?

Our specialist estate planning and trust lawyers are increasingly asked this question by individuals, anxious to provide for dependents after their deaths.

The ‘baby boomer’ generation in 2016 is asset rich, as a result of having lived in an era of affordable property ownership. However, as a generation, it is also dealing with ‘blended families’ as a result of increased divorce levels, the probability of having to find money to provide for the care of vulnerable/ageing relatives (1 in 4 will need the services of a care home), concerns that their children cannot afford housing, or to educate grandchildren. There are others concerned that their children may not be able to manage large amounts of money.

The answer is to consider the option of setting up a trust, which is the formal transfer of assets (e.g. property, cash, shares) to identifiable individuals, or perhaps a trust company to hold the assets for the benefit of those individuals.

You must take suitably experienced legal and tax advice from the very beginning of the process, because the consequences of a badly drafted trust deed or will trust can be horrendous, and the only possible beneficiaries in that situation would be litigation lawyers, accountants, and HMRC!

You must choose trustees, understand what the duties and discretionary powers of those trustees are to be, ensure that legal and beneficial ownership is separated, and that your wishes or any conditions that you want to have attached to the trust fund are clearly stated.

You must decide what type of trust that you wish to set up, because there are different types of trusts, for example discretionary trusts, and fixed interest or life interest trusts.

There may be property in another jurisdiction, perhaps where the legal doctrine of ‘forced heirship’ governs the division of assets upon death, a doctrine which does not prevail in England and Wales.

Contact Lewis Nedas Law Expert Estate Planning and Trust Lawyers

If you would like to speak to our specialist team headed by Myles Reback about this issue, please contact us on 0207 387 2032 complete our online enquiry form here.

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FEB
10

Stamp Duty Changes: February 2016 Update – by Richard Greenby

In accordance with the Government’s strategy for greater Home Ownership, a Five Point Plan for Housing was announced at the Autumn Statement of 2015, which included amongst its proposals charging property buyers higher rates of Stamp Duty Land Tax on the purchase of additional residential homes, such as those bought by buy to let investors and (potentially) second home owners, from 1 April 2016.

In effect the Government has targeted purchases 'where, at the end of the day of the transaction, individual purchasers own two or more residential properties and are not replacing their main residence'.

It should also be noted that 'the higher rates will also generally apply to purchases of residential property by companies'.

Accordingly, from 1 April 2016, property buyers, where applicable, shall be required to pay 3% more than the current rates of Stamp Duty on each band of their purchases. This change will mean that on relevant transactions:

  • Between £0 - £125K, the new rate will be 3%; 
  • Between £125K - £250K, the new rate will be 5%; 
  • Between £250K - £925K, the new rate will be 8%; 
  • Between £925K - £1.5m, the rate will be 13%; and 
  • Lastly, on transactions over £1.5m, the new rate will be 15%. 

Key questions/considerations for residential property buyers include:

1.    Am I replacing my main residence with a new property? 

2.    If the answer to the first question is simply ‘Yes’ because the individual is selling their only property and buying a new one, they will not be subject to the increased rates of tax. 

3.    If the answer is a qualified ‘Yes’, whether they will pay the higher rate of stamp duty is dependant on the type of buyer. 

(i)    If the buyer owns several other properties, but is replacing their main residence with a new main residence, the normal rates of stamp duty will apply. 

(ii)    If the buyer intends to rent out their current home and move to a new residence, the higher rates of stamp duty will apply. 

4.    If the existing home owner’s new property purchase does not represent their new main residence, i.e. a second home or a buy to let investment, the higher rates of stamp duty will apply. 

In addition, where a parent who already owns a property, buys a home for their child and is subsequently listed as one of the owners of the new property, the transaction will be subject to higher rates of stamp duty. 

5.    The higher rate of stamp duty shall also apply to transactions where married couples/civil partners own more than one residential property and purchase an additional one. 

‘The Government will treat married couples and civil partners living together as one unit. This is consistent with other areas of the tax system’

Therefore, (for example):

Mr A marries Mr B. They each own a property (which they purchased individually before they were married and used as their respective main homes). Mr B then sells his former main home and purchases a new property to rent out. 

At the end of the transaction, Mr A and Mr B own more than one residential property and are not replacing their main residence, so the higher rates will apply. 

6.    Exception 

If the main residence is not sold by an existing home owner and a new property is bought, the transaction is subject to the higher rates but a refund is available if the main residence is sold within 18 months. 

7.    TRANSITION RULES ALSO APPLY

The higher rates will only apply to purchases of additional residential property which complete on or after 1 April 2016. 

‘If contracts are exchanged after 25 November 2015 then the higher rates will apply if the purchase is completed on or after 1 April 2016. 

However, if contracts were exchanged on or before 25 November 2015 but not completed until on or after 1 April 2016, the higher rates will not apply’. 

The above summary is not intended as a definitive assessment of the Stamp Duty changes/exceptions and you should always seek/consider independent legal and tax advice before proceeding with a property transaction. 

In addition, the Government is still in the process of reviewing the related consultation following the publication of the proposed new measures.

Contact our Expert Property Lawyers

For further information or to speak to the author of this blog, Richard Greenby, please telephone us on 02073872032 or complete our online enquiry form here.

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DEC
11

An Overview of the Senior Managers Regime

The law as it applies to senior personnel working in financial services has been subject to a great deal of attention in previous years. The financial crisis of 2007-2008 raised a number of questions on the rules that the managing powers in banks and other financial institutions are obliged to follow. There has been a great deal of media attention on changes to the law as it applies to businesses and their employees in the financial services industry, with more to come.

 

In October this year, HM Treasury announced that the Senior Managers Regime (SMR) would be extended to apply to all firms that are authorised to work in financial services under the Financial Services and Markets Act. With the changes due to come into force in 2018, there will be a great deal of interest in the SMR, how it will apply and what the consequences of this development will mean.

Precisely what is the SMR?

The SMR is a regime designed to encourage individuals who have a significant decision-making role in financial services firms to take responsibility for their decisions. Simply put, where individuals take decisions that threaten the commercial viability of an organisation and risk its failure, they will face sanctions as a result.

What is being proposed under the SMR?

The SMR, when it is fully introduced, will take over the ‘Approved Persons Regime’ that currently applies to personnel working in the banking sector. Needless to say, any change to the rules governing activities in financial services, which is vital to the UK economy, will attract a great deal of attention. There are however certain key components of the SMR that warrant particular attention:

Accountability

When the SMR was originally introduced, it provided for a ‘presumption of responsibility’ on the part of senior managers in financial services. This resulted in a situation where a senior manager or director will be deemed guilty of misconduct where one of their staff members violated their responsibilities as an ‘authorised person’ to work in financial services. However, this has resulted in a great deal of unrest among many in the banking sector, who believed that there was no way to credibly defend against their being presumed guilty of misconduct. In its announcement of the extension of the SMR, HM Treasury also commented that the current situation is unworkable, and have agreed that the in cases of suspected misconduct, senior personnel will be presumed innocent until proven otherwise.

It should be noted however that senior individuals working in financial switches will still owe a statuary duty, in performing their duties, to take reasonable care to avoid violate the responsibilities that they owe to regulators.

Transparency of accountability

Firms that are governed by the FMCA will be obliged, under the new arrangements, to fully disclose the nature of their governance and accountability structures. Historically, there was a concern among many, both within and beyond the financial services industry, that it was difficult to determine precisely who was accountable to whom, and how this could be enforced. Under new arrangements, banks and other financial institutions will need to provide to the FCA a yearly ‘responsibility map’, outlining how the firm is run and who is responsible for its different activities.

Fitness for practice

Regulators have carefully considered the need to ensure that those who are authorised to work in financial services are capable of doing so, and will do so and take the requisite level of care and diligence required. This has resulted in the introduction of a ‘Certification Regime’, which will require firms working in financial services to actively review the ‘fitness for practice’ of their staff. Under these new arrangements, it is hoped that firms will take their role seriously, and ensure that only those who are truly capable of working effectively in financial services, in full compliance with regulatory requirements, do so. It is important to point out that the Certification Regime applies to those aspects of a firm’s business that present a significant risk either to its customers or to its continued viability, e.g. personnel involved in providing investment advice.

Who will be governed by the SMR?

For those working at senior levels in financial services, it is wise to take account of whether or not they will be governed by the SMR. As was mentioned earlier, the regime will apply to ‘senior managers’. In other words, the SMR will apply to individuals who hold a particular position or have a level of responsibility in a key or important area of the business. There will also be some applicability of the SMR to Non-Executive Directors, e.g. individuals who chair certain board committees such as the risk committee or remuneration committee. Furthermore, the SMR will also have some impact on the activities of overseas firms operating in the UK: an individual will be required to be deemed as the ‘Head’ of the UK Branch, and will owe responsibilities under the SMR.

What does this mean for financial services in the UK?

The regulatory landscape facing financial services in the UK is changing. The burden of policing activities within firms is increasingly being placed on businesses themselves, and they alone will be held responsible for failing to observe the rules that apply to them. Furthermore, individuals are under particular pressure to ensure that they do not expose the organisation to unnecessary risk. Taken together, these new changes mean that it will be more important than ever to have the assistance of specialist advisers when dealing with regulators, and other actors in the financial sector.

Lewis Nedas is a leading city law firm, providing comprehensive advice on all aspects of regulatory and financial law in the UK. Our teams are regularly involved in advising individual and corporate clients on the law that applies to them, assisting in their dealings with regulatory bodies and representing their interests in court room litigation.

Contact our Regulatory and Business Solicitors London

If you would like to know more about the work of our team, or to hear more about the impact of the SMR on financial services in the UK, contact our team today via our online contact form or give us a call on 020 3553 7916.

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