Birmingham law firm The Wilkes Partnership has announced plans to merge with Solihull-based Williamson & Soden solicitors. The merger will come into effect on 14 May 2013.

Bucking the recent trend of law firm closures in the West Midlands, the merger of Wilkes and Williamson & Soden will form a firm with a combined turnover of £10 million, with 19 partners and 145 employees overall.

Nigel Wood, senior partner at The Wilkes Partnership, comments: “Williamson & Soden is an established and successful law firm and will be a valuable addition to The Wilkes Partnership brand. This merger brings together two complementary commercial law firms that have each successfully survived challenging economic times, with both maintaining an impressive client base throughout the recession. It will result in a bigger firm with an increased pool of expertise than can offer true excellence in client service.”

The Wilkes Partnership will retain its Birmingham city centre head office, and Williamson & Soden’s commercial and private client services will become part of The Wilkes Partnership. Williamson & Soden’s Solihull office will be rebranded and will continue to serve both new and existing clients in the Solihull area.

All employees from both firms will be retained, with Ian Williamson and John Soden both taking on consultant roles.

Ian Williamson, managing partner at Williamson & Soden, adds: “The merger with The Wilkes Partnership will create a firm with a significant presence in the Midlands, as our firms both have a strong track record of meeting the needs of our commercial clients. It will be business as usual for all existing clients, with the added benefits that an increase in available expertise can bring.”

The criminal law services provided by Williamson & Soden will continue to operate under the Williamson & Soden brand.

The Growth and Infrastructure Act 2013, which received Royal Assent on 25 April 2013, creates a new type of employment status – employee shareholder status. This will become effective in the Autumn (possibly 1 September 2013).

This is a new type of employment status, under which an employer and employee can agree that, in consideration of the individual becoming an “employee shareholder” (instead of an employee), the company will issue or allot a minimum of £2,000 worth of shares to the individual, with any gains made on the first £50,000 of shares being exempt from capital gains tax.

An employee shareholder will have the same rights as an employee except the following:

  • No right not to be unfairly dismissed (except in health and safety cases, automatically unfair dismissal cases, or cases where the dismissal is discriminatory).
  • No right to a statutory redundancy payment.
  • No right to make a flexible working request, except for employee shareholders returning from paternity leave, who will be restricted to making a formal request for flexible working to the period of 14 days beginning with their return to work.
  • No right to request time off for study or training.
  • The employee must give 16 weeks’ notice if they want to return early from statutory maternity, adoption or additional paternity leave.

The House of Lords only accepted the new clause on employee shareholder status following certain concessions made by Government including: provision of a written statement explaining to employees the rights they are giving up; employees being given independent legal advice on the offer of an employee shareholder contract (the reasonable cost of which must be met by the employer); and employees being entitled to a seven-day “cooling off” period. Employees are also protected from dismissal or other detriment if they refuse to switch to an employee shareholder contract.

Pam Sidhu, Associate in the Employment department comments: “The Government’s thinking behind this new legislation was to boost employee engagement and productivity, and incentivise businesses to hire by removing the fear of being taken to employment tribunal. However, the new status is so bogged down with red tape that the uptake is likely to be slow. One significant issue is that there are significant carve outs from the employment rights employees give up – employee shareholders can still complain of discrimination, for instance, which are costly claims to defend, as well as other rights like unfair dismissal related to “whistleblowing”. Employees will also need to receive independent legal advice on the offer of an employee shareholder contract, paid for by the employer, irrespective of whether employees actually take up the offer or not. Employers will need to carefully weigh up the pros and cons of the new status to decide whether it is worthwhile offering to their staff.”

For further information please contact Pam Sidhu on psidhu@wilkes.co.uk or 0121 710 5815

The Mental Health (Discrimination) Act 2013 came into force on 28 April 2013 bringing about important changes of which company directors should be aware.

The Act amends the model articles set out in Schedules 1 to 3 of the Companies (Model Articles) Regulations 2008 (SI 2008/3229) by removing provisions in those articles which require the automatic termination of a director’s appointment if that director’s rights or powers are restricted by a court order on mental health grounds.

Many newly incorporated limited companies (both those limited by shares and guarantee) take up the current model articles prescribed by the legislation and so may find it more difficult to terminate a director’s appointment on mental health grounds, without repercussion (such as a claim under the Mental Health (Discrimination) Act 2013 for discrimination). Equally, companies who have adopted bespoke articles of association in the past, often including provisions purporting to terminate the appointment of directors on mental health grounds, may find that such provisions are considered to be discriminatory.

Jeremy Parkin, Partner in the Corporate Department comments: “The role of company director can undoubtedly be a demanding and stressful one and mental health issues are unfortunately not uncommonly encountered in this context. The changes to the model articles bought about by this piece of legislation add a further layer of complexity to the operation of articles of association and shareholders agreements in terms of what should be considered by company directors”.

Termination of a director’s appointment on mental health grounds are common provisions in many articles of association and are often a requirement of Venture Capitalist investors. Directors should be aware that such provisions may no longer be enforceable and are encouraged to review their articles of association to check that they do not fall foul of the Mental Health (Discrimination) Act 2013. Amendments should be made to the articles where necessary. It is still possible to remove directors where there is objective justification for so doing.

The Wilkes Partnership’s Corporate team have particular expertise in assisting companies with the drafting of articles of association and shareholders agreements in order to regulate both the day to day activities of companies and the personal relationships between directors and shareholder investors.

If you would like advice or assistance in connection with your company please do not hesitate to contact us.

Following a number of BIS consultations, new regulations, Companies Act 2006 (Amendment of Part 25) Regulations 2012, came into force on 6 April 2013 changing both the requirement and the way that charges, debentures and other security are registered at Companies House.

Corporate Partner Kate Hackett commented “Whilst often the lender will take control of the registration process, it has always been and remains the primary responsibility of the Company. Both companies and lenders need to be aware of these changes”.

The aim of the changes is to:

  • provide a single scheme applicable to all UK companies for the registration, alteration and satisfaction of charges;
  • create a system that is easier to use;
  • improve access to information about registered charges.

What needs to be registered?

The old regime set out categories of charges which must be registered whereas under the new regime a company that has created a charge, or any person interested in that charge, may, subject to certain exceptions register that charge. Therefore registration is now no longer compulsory and failure to register a charge is no longer a criminal offence.

However, in practice, because of the sanctions for non-registration of a charge created by a company, a prudent charge holder will register any charge it takes from a company.

Charges that cannot be registered at Companies House are; a rent deposit, a charge created by a member of Lloyd’s and charges excluded from registration by other legislation ie financial collateral pursuant to Financial Collateral Arrangements (No 2) Regulations 2003.

Consequences of non registration:

  • security is void against a liquidator, an administrator and any creditor of the company;
  • amount secured becomes immediately payable.
  • criminal offence for failing to register a charge has been removed.

How do you register the charge?

You can either register by post (as with the old regime) (fee £13) or by a new online registration service (fee £10). You will need to apply for the necessary access codes from Companies House to register online. The Companies House forms have changed from the old ‘MG’ series of forms to ‘MR’ forms.

The new forms require a new simplified ‘statement of particulars’ (company name, number, date charge created etc). Short particulars are needed for land, ship, aircraft or intellectual property but less detail is needed on the extent of the assets charged. You do have to specify whether the charging instrument contains a floating charge (and, if so, whether it covers all the property) and whether the charge prohibits or restrict the company from creating further security that will rank equally with or ahead of the charge.

A certified copy of the charging instrument must be sent to the Registrar. An original document must not be submitted as Companies House will not return it. If filing electronically, the certified copy must be in PDF form (format 1.2 to 1.7 only and maximum file size of 10MB). Certain information may be redacted from the certified copy document, including personal information (excluding a person’s name), number/identifier of a bank and a signature.

When must a charge be registered?

The period allowed for delivery is 21 days beginning with the day after the date of creation of the charge (unless an order allowing an extended period is made).

How is registration of the charge evidenced?

A 12 digit unique reference code is allocated to the charge and a note is placed on the register recording that reference code. A copy of the registration form and charging instrument will be kept on the public record.

What information do companies have to retain?

Companies are no longer required to maintain their own registers of security with their statutory books. However, companies do need to have copies of relevant charging instruments (creating or amending a charge) available for inspection. These may be certified rather than original copies.

When do the new provisions apply?

The new provisions apply to all charges created on or after 6 April 2013. Any charges created before 6 April 2013 must be registered in accordance with the old regime even if they are registered at Companies House after 6 April 2013. The new provisions relating to amendments to charges, enforcement of security, release and satisfaction will apply to any notifications made on or after 6 April 2013, regardless of when the charge was created.

The proposed new security registration regime for LLPs is largely the same as that for companies.

If you would like to discuss any of the issues arising from the above please contact either Kate Hackett or another member of the Corporate Department.

As part of HM Government’s Red Tape Challenge, in February this year, the BIS launched the Company and Business Names Consultation to seek the opinion of the business community about the appropriateness (or otherwise) of the current regulations relating to company and business names.

At the centre of the controversy are the Company and Business Names (Miscellaneous Provisions) Regulations 2009 (SI 2009/1085) (2009 Regulations) which prescribe that certain words and expressions are to be disregarded by Companies House when making their assessment as to whether a name which has been proposed for registration is too similar to an existing name on the Register.

The legislation places restrictions (amongst others) on the registration of “sensitive” words and names which are the “same as” existing names. However this mechanism has felt by many to be lacking in transparency and concerns have been raised as to there being a disproportionate inhibition on the commercial freedom of many businesses as a result.

Rick Smyth, Partner in the Corporate Department comments: “the 2009 Regulations have given rise to a significantly harder line being taken by Companies House on name applications. This has proved to be a source of frustration for our clients who have encountered difficulties both when seeking to incorporate new companies and when they wish to swap existing company names within a corporate group.”

The legislation aims to protect the public from harm caused by the use of names which are false or misleading and to ensure sufficient clarity in the use of names, such that the public are able to locate information on a particular business with certainty.

However, in certain circumstances this has prohibited the transfer of company names (already registered prior to the coming into force of Companies Act 2006) within corporate groups, because of other (unrelated) companies having names which are now regarded as being too similar.

Rick comments: “We have had a number of clients who have recently experienced difficulties with name applications. It is counter-intuitive that established companies are being told that they cannot swap their own names between group companies, but can continue to trade under that existing name as a trademark  (if it is retained by the original company). One has to question how that is increasing transparency or protecting the public.”

“Companies do now need to check with Companies House before they perform a name swap; otherwise they could risk losing their trade name if they first rename the trade name company and the re-registration of the original trade name is subsequently refused elsewhere in the group.”

The consultation proposes various solutions including the complete repeal of regulations relating to company names and the replacement of those regulations with a post registration complaints system. Alternatively it is suggested that the list of “sensitive” and “same as” words be reduced in order to allow for greater freedom.

Responses to the consultation are invited and can be made via the Wilkes Partnership or directly through the gov.co.uk website. We would encourage all those affected to voice their concerns and would be delighted to discuss their issues with them.

Rick Smyth

A WARWICKSHIRE-based manufacturing technology firm has expanded with the acquisition of a specialist machine tools business in an undisclosed deal that will double the firm’s turnover to £30m.

Engineering Technology Group has taken on the UK-based machine tool sales, servicing and customer support business of global firm Hardinge.

The acquisition means that ETG will become the sole UK distributor for Hardinge and Bridgeport products and ETG’s annualised turnover will double from £15m.

Birmingham law firm, The Wilkes Partnership, and Leamington-based accountants, Burgis & Bullock advised ETG on the deal.

There is strong synergy for ETG as it already supplies high specification machine tools and fixtures and provides engineering services to manufacturers in the automotive, aerospace, and other specialist manufacturing sectors. The business has enjoyed strong growth in recent years, driven by the growth of Midlands automotive companies such as Jaguar Land Rover. The new business will be operated through ETG’s dedicated subsidiary company ETG Bridgeport.

Rick Smyth, partner in the corporate team at The Wilkes Partnership, led the legal team. He said: “Following the recent management buy-out of the Engineering Technology Group, which Wilkes also advised on, ETG was seen by Hardinge as the ideal partner for Hardinge’s transition towards concentrating on the development and manufacture of products.

“This acquisition considerably broadens the capabilities of ETG and brings with it the heritage and global recognition of the Bridgeport brand.”

John Temple, ETG’s managing director, added: “We are delighted that a company with the global reputation and product range of Hardinge has chosen us as its partner. The acquisition and the new arrangements to become sole distributor of Hardinge and Bridgeport products in the UK expands ETG’s offering into new areas with undoubted potential.”

Simon Chapman, of Burgis & Bullock Corporate Finance, acted as financial adviser to ETG and said: “This is a great success story for Midlands engineering. ETG is well placed for further growth, supporting UK manufacturers that are so vital to the economy of this country. We are delighted to have advised the business over the last three years through a re-financing, MBO, and now this latest transformational acquisition.”

The transaction was supported by Sally Beavan at Santander Corporate Banking in Birmingham.

The Wilkes Corporate team has advised Tamworth-based contract catering firm 7 Day Catering in the acquisition of a majority shareholding in the business by global facilities company Servest. Acquired as part of Servest’s growth and diversification strategy, the combined business is predicted to have annual sales of around £200m.

Gareth O’Hara, partner in the corporate team at The Wilkes Partnership, led the legal team including Associate Sam Forrest and new recruit, assistant solicitor Kathryn Morgan. He comments: “Growing from our longstanding relationship with Henry Watts, the managing director of 7 Day Catering, we acted for all shareholders of 7 Day Catering in this deal to advise them on the best strategy for the sale of their shares. The majority acquisition by Servest provides diversification into other service areas for 7 Day Catering, bringing with it the prospect of securing longer term contracts and offering a huge growth opportunity.”

Founded in 1990, 7 Day Catering currently employs 2,500 people and provides services to more than 170 clients in business, industry and education. It has an annual turnover of £80m.

Henry Watts, managing director of 7 Day Catering, commented: “It was all new territory for us and it was very reassuring having such a professional and knowledgeable legal team behind. The Wilkes team knew exactly what the pitfalls were going to be even before we arrived at them. When we nearly lost the will to live they kept calm and steered a steady course with good humour and professionalism.”

On the business, Mr Watts commented “The 7 Day Catering brand will remain, with the business continuing to offer a stand-alone catering service and the senior management team of myself, David Griffiths and Mark Johnson also remaining. We are delighted to be working with Servest on realising the combined potential of our businesses and look forward to providing our excellent quality and service to clients as part of an integrated facilities offering.”

Wilkes Managing partner Mark Abrol commented “We always aim to build long term, trusted advisor relationships with our clients and 7 Day Catering is no exception. Having worked closely with Henry and the team for a number of years, we were delighted to be able to assist them to achieve their objectives in this transaction.”

Servest has identified a clear trend in the UK towards multi-service facilities provision. Robert Legge, Servest group CEO UK and Europe, explains: “More and more customers recognise the cost and time-saving benefits of having one point of contact for all their facilities services, from cleaning and catering to security and pest control.”

Servest believes this acquisition will further its ambition to become a top five industry player, with the new combined entity well placed to enhance value for customers by adding additional complementary services, forming strategic alliances with other service providers and making further acquisitions.

A Warwickshire-based engineering solutions business has changed hands in a multi-million pound management buy-out funded by Santander Corporate Banking and advised by Midlands professionals.

The Engineering Technology Group Limited supplies high specification machine tools and fixtures and provides engineering services to companies in the automotive, aerospace, and other specialist manufacturing sectors. With a turnover of around £12 million, the business has enjoyed strong growth in recent years, driven by major capital investment programmes at Midlands automotive companies such as Jaguar Land Rover.

The Group has its headquarters in Southam, Warwickshire and has a separate manufacturing facility in Coventry.

Mr John Temple, operations director, has acquired a majority shareholding in the Group and becomes managing director. The former owner, Mr Paul Rhodes, retains a shareholding in the business and remains a director.

Mr Temple commented: “Paul and I have worked closely together over the last four years to manage the business through the recession and back into growth. With the buy-out now completed we are looking forward to expanding the business further; broadening the product range and increasing the Group’s capabilities in niche manufacturing and specialist engineering.”
The deal was funded by Santander Corporate Banking, Birmingham, with the debt facilities being arranged by Sally Beavan. Simon Chapman of Burgis & Bullock Corporate Finance, was lead advisor to management and structured the MBO transaction. Rick Smyth of The Wilkes Partnership, Birmingham, advised the management team and Robert Lee of Wright Hassall in Leamington advised the vendor. David Doogan of SGH Martineau LLP advised Santander.

Sally Beavan commented: “We are delighted to have provided a funding solution to an existing client which will help to further fuel its ambition. John and his team have demonstrated strong management through recent years and have the ability to significantly grow this business – our funding will enable this potential to be realised.”

Simon Chapman added: “The Group’s strategy of providing bespoke engineering solutions for advanced manufacturing in the automotive and aerospace industries has enabled it to more than double turnover over the last three years. We are delighted to have assisted in the MBO of this great example of Midlands engineering success.”

The financial terms of the transaction are not being disclosed.