Social stigma is the real punishment in corporate killing law

The Corporate Manslaughter Act has stopped short of imposing jail terms on executives if their company’s negligence should cause someone’s death. However Faizal Essat of Andersons solicitors in Nottingham, says businesses still face unlimited fines and the blaze of bad publicity if tragedy should strike.

No company would relish the prospect of deliberately publicising how it caused someone’s death through its gross negligence and how much it has been fined for its corporate failures.

That, however, is precisely what companies found guilty of corporate manslaughter can be called upon to do in future. The Corporate Manslaughter Act, which received the Royal Assent at the end of July, was criticised by some for letting directors off the hook by removing the threat of prison sentences, but the new legislation still contains much for firms to fear.

It will now be easier to convict companies of manslaughter if their gross negligence leads to someone being killed. They face unlimited fines if it’s found that they caused death due to their gross corporate health and safety failures. Firms can also be ordered to take remedial action to rectify the failures that led to the death.

The court may also order them to publicise the case giving details of what happened and how much they were fined. The damage to a firm’s reputation and brand from such bad publicity could be enormous.
The Government hopes the new law will force company executives to take their health and safety obligations seriously.
The Act removes what used to be a major stumbling block in prosecuting a company for manslaughter. To secure a conviction, it was necessary to prove that all the gross negligence that caused the death could be laid at the door of at least one senior manager or director. This made no allowance for corporate system failures. Indeed, the piecemeal management approach that may have led to the tragedy could be the very same characteristic that prevented prosecution because the responsibility could be shared between several people, none of whom could be singled out as the one guilty of gross negligence.

This was the reason that prosecutions failed in cases such as the Southall rail disaster in 1997 in which seven people were killed. It proved impossible to find one senior manager who was informed and involved enough to be held responsible.

The Act focuses on failures by senior management but that doesn’t mean that firms could avoid criminal liability by delegating responsibility for safety issues to lower or middle management. In fact, such action could be counter productive as it may be used as evidence of gross negligence in itself.

Employers concerned about the impact of the Act can be reassured that there is only a risk of prosecution for manslaughter if the company has been guilty of gross negligence.

Even if a tragedy occurs, it is still unlikely that a firm will be prosecuted if it can show that it took a responsible attitude to safety, put correct policies in place and gave staff the appropriate training. Fostering an attitude that puts safety before commercial considerations is also important. For example, if equipment should be shut down while maintenance is carried then that is what should happen. Don’t be tempted to cut corners by leaving some machinery running on the basis that “that’s how we’ve done it in the past and it’s never been a problem.”

Directors who are still tempted to cut corners should remember that although the new Act does not increase liability, they can still be held to account as individuals through health and safety laws and the common law of manslaughter.

The Corporate Manslaughter Act will come into effect on 6th April next year. Firms who haven’t already reviewed their safety policies and management systems for ensuring compliance should consider doing so as soon as possible.

Faizal Essat is part of the Commercial Litigation team at Andersons Solicitors specialising in a wide range of work including Intellectual Property, Personal Injury and Disputes to name a few. He can be contacted on 0115 988 6707 or by emailing Faizal Essat

Andersons Solicitors promotes four of its best!

Nottingham Law Firm Andersons Solicitors promotes four of its best with the promotion of Emma Dancer (Conveyancing), Catherine Wenborn (Family), Lorraine Sansom and Sally Laughton (both Employment) all promoted to Associates with immediate effect.

Andrew Kelly, Managing Partner comments “It gives me great pleasure to announce the promotion of four of our Solicitors to Associates. The firm has seen fantastic change over the last few years and we hope with the promotion of Catherine, Emma, Lorraine and Sally the firm can continue to move in the right direction as they shape the future of Andersons Solicitors. It’s exciting times ahead”.

Andrew Kelly is Managing Partner at Andersons Solicitors and can be contacted on 0115 988 6712 or by emailing akelly@andersonssolicitors.co.uk

Handing over your business can involve head and heart

Business owners dreaming of giving it all up and retiring to a life of leisure have several options open to them when it comes to handing on control of their company.

Which choices they make will depend on several factors, some of them financial but many of them are more to do with emotion and loyalty.

Those who simply want to extract the best price possible and then move on may find that private equity firms have a lot to offer. These firms have received a lot of criticism recently, mainly to do with how much tax their directors pay, but they do have a role to play.

They can provide sellers with a simple way out at an attractive price with money up front. That can be very appealing to someone who wants to bow out quickly with a bulging bank balance to finance a comfortable well-earned retirement. It’s particularly appealing when compared to the possible alternative of selling to managers or partners within the existing company structure who may have to buy in instalments over several years. No one wants to wait for their money if they can help it.

The temptation to cut and run is high but that’s when emotional ties kick in. Most businessmen become very loyal to their staff and worry about what will happen when people who’ve worked hard for the firm for several years suddenly find themselves at the mercy of hard-nosed outside owners.

It’s quite possible that a private equity firm will want to put in new management and perhaps streamline the operation leading to redundancies. Such prospects can make the seller feel disloyal. There may also be concerns that the whole nature of the company will change. That too can worry entrepreneurs who’ve spent all their lives building the business up and still feel a strong attachment to it.

These feelings can be magnified for directors running a family business. It means many people prefer to ignore the higher price offered by private equity firms and sell instead to the next generation, whether family members or long term colleagues.

In these cases, the best way to ensure a smooth succession is to start planning as early as possible, preferably several years ahead of the target retirement date.

This is particularly important for small to medium size firms where the departure of one key person can have a major impact. Hold meetings with those who will be left running the company so you can agree an exit strategy.

If you own a large share of the business, the remaining partners or directors may need to raise money to buy you out. Or if the firm is very successful, some of its profits could be used to raise part of the necessary finance. This approach would need Inland Revenue clearance but is worth exploring.
You may choose to sell your shares back over several years so the firm’s finances aren’t put under too much pressure all at once. In that case, you may need to change your will so the arrangement can continue should you die before the sales are completed. There could be tax implications whichever system you choose for withdrawing capital from the firm so professional advice should be sought.

If you own the business premises, you will need to decide whether to sell or lease them back to the firm. This could be influenced by how much capital you need to raise or whether you would be content with a monthly rent.

Throughout the succession planning it’s important to get advice from your accountant, lawyer and possibly your bank manager. They will have helpful suggestions and can ensure that the agreement is fair to everyone.

This is particularly important if you are passing the business on to family members because emotions can easily get in the way. Sons and daughters may feel guilty that they are demanding too good a deal from their parents, while parents may feel they are taking too much out of the business making it difficult for their children to succeed in the future. Independent opinions from lawyers and accountants can help guide and reassure both sides.

Once an agreement has been reached it’s important to get it all written down properly so it’s legal and everyone knows where they stand.

This will enable you to plan a proper exit strategy that will allow you to bow out gracefully without affecting the smooth running of the business.

Peter Sutherland is a Partner at Andersons Solicitors and can be contacted on 0115 988 6714 or by emailing psutherland@andersonssolicitors.co.uk.

New code of duties for directors

Firms in Nottinghamshire are being warned that they could lose control of their trademarks because of new regulations unless they take action now to protect themselves.

The problem arises because the way trademarks are monitored is changing to the European system which requires firms to be more vigilant.

In the past, a trademark application would automatically be blocked by the Patent Office if it was considered to be too similar to an existing mark. That is no longer the case because of new regulations introduced on 1st October.

The new UK Intellectual Property Office, which has replaced the Patent Office, will no longer block applications but merely inform the existing brand holder that someone else is try to register a similar trademark.

It will then be up to the existing holder to formally oppose the application.

Faizal Essat, intellectual property specialist at Andersons solicitors in Nottingham, says the new system means companies will have to be more pro-active in protecting their brand.

“The problem is even worse for the owners of European and international trade marks. Only companies with UK-registered trade marks will be automatically notified if there’s a rival application. Those with trade marks registered elsewhere won’t be informed at all unless they subscribe to the IPO’s notification service.”

The subscription costs £50 and lasts for three years.

Mr Essat said: “The IPO has asked that applications for the notification service should be filed before October 20 so firms need to hurry if they want to ensure they are fully protected.”

Faizal Essat is a Intellectual Property expert at Andersons Solicitors and can be contacted on 0115 988 6714 or by emailing fessat@andersonssolicitors.co.uk.

Firms must act now to protect their trademarks

Firms in Nottinghamshire are being warned that they could lose control of their trademarks because of new regulations unless they take action now to protect themselves.

The problem arises because the way trademarks are monitored is changing to the European system which requires firms to be more vigilant.

In the past, a trademark application would automatically be blocked by the Patent Office if it was considered to be too similar to an existing mark. That is no longer the case because of new regulations introduced on 1st October.

The new UK Intellectual Property Office, which has replaced the Patent Office, will no longer block applications but merely inform the existing brand holder that someone else is try to register a similar trademark.

It will then be up to the existing holder to formally oppose the application.

Faizal Essat, intellectual property specialist at Andersons solicitors in Nottingham, says the new system means companies will have to be more pro-active in protecting their brand.

“The problem is even worse for the owners of European and international trade marks. Only companies with UK-registered trade marks will be automatically notified if there’s a rival application. Those with trade marks registered elsewhere won’t be informed at all unless they subscribe to the IPO’s notification service.”

The subscription costs £50 and lasts for three years.

Mr Essat said: “The IPO has asked that applications for the notification service should be filed before October 20 so firms need to hurry if they want to ensure they are fully protected.”

Faizal Essat is a Intellectual Property expert at Andersons Solicitors and can be contacted on 0115 988 6714 or by emailing fessat@andersonssolicitors.co.uk.