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Lifecycle of a tech startup series: Directors' Duties
Luke Gregory
Sarah Turner, Angel Academe
We specialise in acting for entrepreneurs, owner managed businesses (OMBs) and investors. We advise in relation to corporate transactions, banking, financing, commercial contracts and on all aspects of running and growing a business in the UK. Our lawyers combine strong technical expertise with a track record in delivering flexible and creative solutions for our clients.
Much of our advice is for early stage companies and startups in the technology and media sectors or for those investing in such entities. We host and sponsor Angel Academe, an award-winning network of angel investors whose members are mainly women, which primarily invests in UK businesses led by women.
We also work closely with our Real Estate team to advise those investing in or developing commercial property on all of their financing, banking and related security issues.
We act for startup companies, as well as for those VCs, angel syndicates and individual angels making investments. We have particular experience of acting for founders: not only in terms of guiding them through the investment process, but also in resolving problems which may have arisen in earlier rounds. Read more about how we help startups.
We have many years of experience of advising on the legal issues which arise from running a technology business. Our advice may be of a general nature, or you may wish us to draft or comment upon technology agreements. Our aim is always to protect your rights and to allow you to realise the maximum value from your technology assets. Read more about how we advise technology businesses.
Our banking and financing advice is primarily to entrepreneurs, owner managed businesses and funds on the borrower side, though we also advise a number of smaller banks. We also advise on any related security, and in relation to acquisition finance, the leveraged loan market, and development/real estate finance. Read more about how we can advise on banking and finance.
On the corporate law side, we advise on angel/VC/private equity investments, mergers & acquisitions, re-organisations and shareholders' agreements. Much of our work relates to the technology and media sectors, although we also advise businesses operating in real estate, sport, fashion, travel, publishing and engineering. Read more about our corporate transaction services.
We will support you with commercial advice on all aspects of running your business and on your relationships with customers and suppliers, and we can draft all those contracts which you require. In particular, we advise on intellectual property, branding, data protection, agency and distribution arrangements, sponsorship, and franchising. Read more about how our commercial advice may assist you.
Our capital markets experience is primarily advising small and mid-cap companies listed on AIM, the standard segment of the Official List and the Aquis Exchange, and advising other market players such as Nomads, corporate advisers and brokers. We focus on ensuring that your transaction is completed on time and on budget, so that you can focus on the continuing success of your business. Read more about our capital markets service.
We will help you to take the necessary steps to establish your business in the UK, whether you wish to set up a new venture or expand an overseas operation. Our business services teams work closely with other specialists to take care of all your initial and ongoing legal and operational needs, allowing you to focus on selling your products or services. Read more about how we can help you set up your company or LLP.
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I wanted to thank you [Andrew Solomon] and the whole team for your diligence, hard work and attentiveness which in usual Kingsley Napley style has been utterly outstanding."
Tony Moss, Director, Cumberland Place Financial Management
Not only are James and his team highly technically able, they understand the importance of working to get a deal done. We always know we can trust their judgement."
Janet Paterson, Charter Tax
KNow Wear Limited has used the investment received to date to further develop the wearable tech product to the extent that it now has a minimum viable product with basic features to introduce to the market. The company has identified a test group of 100 consumers who will test this version of the product and provide feedback. Following the test phase the company will collate the feedback and further develop the product before releasing a final version of the product to the market.
The Government has for some time promised to introduce a register requiring overseas entities holding UK property to identify its beneficial owners, in its effort to increase transparency in UK property ownership and reduce the attraction of the UK’s property market to money launderers. Indeed, we last blogged about the potential overseas entities register in May 2019. With UK-based entities subject to strict information-sharing requirements since 2016 (in the form of the register of People with Significant Control or “PSC Register”), many have been calling for an equivalent overseas entities register to be implemented to provide a way of tracking overseas owners who ultimately own and control UK land.
In an Employment Related Securities (ERS) Bulletin for March 2022 (bulletin 40), HMRC has linked to helpful guidance on what it considers to be a reasonable excuse for failing to meet submission deadlines for annual ERS returns (due on 6th July following the end of the tax year to which they relate) and notification of EMI options (due within 92 days after grant).
In our recent blog, we explored why a Framework Agreement structure is typically the most appropriate customer contracting model for IT managed services providers (“MSPs”) and IT consultancies which offer a diverse product and service offering. Whilst our initial blog focussed on the purpose and terms of the Framework Agreement itself, that document is merely the starting point, given that a Work Order is also needed to document specific terms relating to each product or service offered by an MSP or IT consultancy. A typical service offering is a dedicated software support helpdesk, usually provided to support each of the software products offered by the MSP or IT consultancy to its customers. This blog considers a handful of the key issues to bear in mind when documenting the terms of a Work Order relating to the supply of a software support helpdesk service.
Articles are a set of rules which determine how a private company is run and they represent a contract not only between the company and its shareholders but also between the shareholders themselves. Examples of what is covered in a company’s Articles include the liability of shareholders, how shareholders make decisions and how directors operate. The Model Articles are a set of default standard articles which, unless modified or excluded, apply automatically to a private company incorporated on or after 1 October 2009.
Picture Rishi Sunak as a game show host. The spotlight is on the contestant, an employee, and Rishi asks them if they would like to: a) Keep their pay rise; b) give it all to the government; or c) give it all to charity. I expect many of us would say “Keep it please!” but, in certain situations, without some action on the employee’s part the default answer is that none of it is kept and the government enjoys it all. This post briefly discusses one such issue, and offers other suggestions for the tax year end (which are, unfortunately, unlikely to make you a millionaire).
Despite the rumours of a reduction in income tax, you may have expected that the Chancellor would keep this in his back pocket for now...
KNow Wear Limited have identified some overseas talent that they would like to hire to help to expand the business. This candidate does not currently have permission to work in the UK and therefore KNow Wear Limited is considering whether it can apply for a sponsor licence from UK Visas & Immigration (“UKVI”). Obtaining a sponsor licence, will then enable the company to go on and sponsor individuals to apply for immigration permission to work in the UK.
The FCA has published its proposals to strengthen the financial promotion rules for high-risk investments and for authorised firms which communicate and approve financial promotions in its recent Consultation Paper.
Many businesses lack comprehensive in-house IT expertise and resources to fully implement and manage all of their IT infrastructure requirements. IT managed services providers (“MSPs”) and IT consultancies plug the gaps by typically offering a diverse range of IT services and products to lighten the burden on their customers’ in-house IT teams (or to even remove the need to have an in-house IT team).
Having raised £500,000 and, in episode 8, hired a software developer, KNow Wear Limited is starting to flourish. As Ben Franklin wrote when the USA was in its infancy, nothing is certain except death and taxes. Knowledge of the UK tax system is valuable for any UK business owner, start-ups can dramatically improve their chances of success by ensuring they claim the various tax reliefs and incentives available. Episode 4 looked at the valuable tax reliefs a company can offer its investors, your focus today is on the tax relief (or repayment) available to companies carrying out research and development activities.
Social media has revolutionised the way in which we interact with businesses and each other and has shown that it can be a generous friend to business owners and entrepreneurs, helping them to harness a following, build their brand and grow a worldwide customer base.
In our previous blog in our Lifecycle of a tech startup series, KNow Wear Limited secured investment of £500,000. Having completed the raise, you, Sarah and Chris have decided that you need more help in developing and marketing the product. You are looking to create two new roles in the business - the first is a Software Developer to support Sarah’s work and the second is a Head of Marketing.
In Part 1 of our two-part series on the Department for Business, Energy and Industrial Strategy's (BEIS) White Paper on audit and corporate governance reform (Restoring Trust in Audit and Corporate Governance), we focussed on whether the proposals regarding corporate governance are likely to make the UK a more or less attractive destination for investors.
Yesterday the FCA announced new rules, the majority of which come into force today (3 December 2021), which are intended to prevent smaller companies obtaining admissions to the Standard Segment of the Official List.
In its Perimeter Report for 2020/21 the FCA has raised concerns that unauthorised persons are increasingly using, or purporting to use, exemptions from the Financial Promotions Order (FPO) to sell high risk investments and potential scams to ordinary consumers without their rules applying.
Potential reforms to UK data privacy laws will change the way that cookies work on websites - businesses need to prepare now.
AQSE is consulting the market about some changes to its rules relating to SPAC admissions.
Currently SPACs are eligible for admission to the Access segment of the AQSE growth market, as long as they have a minimum capitalisation of £700,000 and a free float of 10%. AQSE is concerned that this can result in a disorderly market and excessive volatility because a lack of liquidity arising from low market capitalisation and limited shareholder numbers.
We are pleased to announce that Matt Spencer has joined the firm as a partner to help build a new Tax practice. Matt joins from DAC Beachcroft where he has worked for the last 9 years. He advises on the efficient structuring of a wide range of corporate and real estate transactions including M&A, land transfers, developments and leases. He is also expert in employment tax issues and the structuring of employee incentive schemes as well as VAT issues in the public and private sector.
Having decided in episode 4 of our lifecycle of a tech startup series on targeting angel investors to raise £500,000 investment in the business, the founders of KNow Wear Limited researched various angel investor networks which aimed to connect start-ups like yours with angel investors. You applied to pitch at a couple of events and were invited by one network to interview with them in person. The network was very impressed with the business and invited you to pitch at their next event.
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