If you run your business as a partnership you might want to take a look at the article on shareholder agreements as a way of protecting your rights. And as always we have snippets of advice about protecting your business from potential legal pitfalls.

We welcome your feedback – if there is any particular legal issue you’d like to see covered send the details through to marketing@e-lawfirm.co.uk.

So what’s the difference between a partnership and a limited liability company and why do you need an agreement? Well, in a partnership all the partners are entitled to a share in management and to know what is going on. In a company - whoever owns 51% of the shares effectively runs the business. This means that if for example there are three equal shareholders any two can exclude the third from, say, being a director.

A partner can dissolve a partnership at any time and take out his share of the assets that have been built up. If a shareholder leaves he cannot force anyone to buy his shares. This means if he leaves, dies or is thrown out his capital may be very difficult to get out of the company and the other shareholders can continue using it as an interest free loan forever.

Our advice is to have a shareholder agreement that sets out the following:

• Who is to work in the company and on what basis? All the shareholders will usually be entitled to be directors.
• A list of matters which cannot change unless all the shareholders agree.
• An agreement to insure shareholders’ lives so that if they die the others have a fund to buy their shares.
• How to retire in a way that gives the others a chance of buying the retiring shareholders shares.

Educating your employees about this is important if you are to avoid contractual difficulties later. Many think that a “contract” is a formal, legal-looking document but this is not so. You will want to tell your employees what contracts (if any) they may make over the web and which they cannot - e.g. you might be happy that they order stationery but not make a contract with a major client/customer.

It’s always sensible to have a formal policy to cover this respect, perhaps part of your policy about the ways you can check your employees’ use of the web. This is a very complex area and one to take advice on as there are no less than 7 Codes, Acts and Regulations that apply to how you may do so.

In brief your policy should set out what you are going to check and how and the extent to which employees may use the web for personal use.

For advice on drafting a policy for the use of the internet by your employees contact Andrew Woolley – aw@e-lawfirm.co.uk.

Newsflash

Woolley launches new divorce information and advice site – www.divorce-lawfirm.co.uk.

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