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No......... I only have a 7 year licencing agreement which comes to an end in two weeks but will still have as specified in the terms of the agreement, a 10% ordinary shareholding in Singapore company and a 50% part of the brand name, now used by the company worldwide. The terms of the agreement specify that I can transfer my own 50% trademark interest in the company to the other party subject to the buy back of my 10% shares should I wish to sell.
Apart from the licensing agreement the only other shareholders info I have is in the companies articles of association. The licensee has now been back to me with the info I requested and we are discussing options before the agreement finishes and maybe I should keep my 10% shares in the Singapore company and also 50% brand name and make a similar arrangement with my UK headquarters in the hope of the company growing?
So I understand what do you want to do? Sell the shares but keep your 50% interest in the registered trade mark.
If the Singapore Company has articles similar to an English company there may well include an article that says they are not obliged to serve notice of AGM's on shareholders based outside of SIngapore? Have you checked this?
When the licence agreement expires what will happen to your shares and 50% interest in the trade mark?
Ok so will all the assets effectively be sitting with the UK Company?
My apologies but I will need to ask a fewquestions until I have a full picture in my head.
No, my own original UK company has been kept going when Singapore division at the request of the Indian company licensing my brand name. Initially the UK headquarters did sell equipment into UK/Europe from the Indian partner under the terms of licensing agreement and later, when this transaction ceased, to just keep headquarters going mainly for commercial reasons. Basically I did this for free in order to help Singapore company in UK/Europe retain market presence. It is only really with the Singapore International marketing company setup by the Indian company (90% shares) in Singapore and myself (10% shares) that I have benefited in terms of royalties. These royalties now about to cease I have to decide what action I should take given I still have 10% shares in Singapore company, 50% of trademark and currently owner of non trading UK company with no assets other than brand name. I have yesterday received some positive indications from Indian company but need to decide how to proceed before agreement finishes in two weeks and any possible problems?.
If you own 50% of licensed trade mark and are currently receiving royalties for that, should the aimk not be to find another licence arrangement in order to exploit this trade mark?
Yes, in theory I could try to obtain another licensing agreement albeit since it would no longer be an exclusive license (given the Indian company now own 50% of brand as well) it would be a much less attractive option for any other companies. With the current agreement which runs out in September I don't think the Indian company would also be interested in another royalty based agreement. For the reasons previously given they seem interested in taking over my non trading UK company minus any liabilities (exist only to myself) and I think it maybe better to somehow use my 10% shares + 50% trademark + possible transfer of my UK company in order to secure some future returns? Of course this is based on the companies improving trading and given that dividends may be difficult to guarantee.
The only way to do this would be to sell these assets subject to an earn out. This is a clause in an asset sale contract whereby if certain Key Performance Indicators are met then you will be paid additional sums. The problem is dealing with a company in India enforcing such an agreement may not be so easy. You would therefore ideally require a charge or debenture over the assets of the Company you sell as security for any future payments.
The second alternative is as you say, you take shares in the company. As you would be a minority to shareholder in this company you would have to make them enter into a shareholders agreement for this arrangement to work. If you didnt they could just dilute you or sell their majority holding to a third party. The advantage of having the shareholding is you would directly participate in any success of the company as a whole and if you got the other shareholders to agree to a shareholders agreement it would require a lot less monitoring than the suggestion above.
I look forward to hearing from you.Kind regards
Thanks for all the help and just one more question please..........
The the possibility that they buy my UK company out is secondary to what I do with the Singapore Marketing Company. They have 90% ownership of the latter and with the end of the agreement imminent perhaps I should try and get them to agree to make a shareholders agreement with both Singapore and UK companies (with both companies owned by Indian company) as you suggest. If this were possible my 50% brand name ownership could also act as a incentive either directly or in reserve.....
What do you think?
They have asked me to send my latest UK company accounts with view to purchase and I can at least confirm in return if they would accept not having 100% ownership before signing a shareholders agreement...........
I will put this to them but in any event I think I will resign as a director of the Singapore company and just try and work something out on a similar basis to the one you have suggested with both Singapore and UK involvements.
I think the current agreement will in any event not be relevant to what happens.
Really helpful advice and many thanks
First point only send the accounts if they sign a non disclosure agreement first. Otherwise just send them the annual accounts which are a matter of public record anyway.
Secondly I would only resign if you are at risk of some personal liability there is no point otherwising resigning until you have agreed the terms of your deal.
In relation to the Indian company you will need to do some due diligence yourself into it to check it is something of substance before selling the shares in your English Company to it.
Will do as you advise..............
Regarding selling my English company (original agreement between my company and Indian company setting up the Singapore company was done under English Law) not sure if their intention is to buy out via the Singapore company with same trading name as my own (e.g., brand name).
Also whilst I am not in any way a signature or aware of any known liability I believe the Singapore company is generally in good shape although I don't yet have any uptodate info on either company but will try and check this out especially with the Indian one.
Will let you know the outcome and once again many thanks for your help with this
The royalties for this year since January to be received quarterly have yet to be paid but I have been reassured they will be paid in October. This will be outside the terms and period of the agreement and in common with other clauses (given the agreement concludes in 10 days), will it be possible after this date to obtain payment if payment were not made as promised under the agreement (English Law)?.
Thank you for this supplementary question
The situation has moved from previous discussions. In brief I did not receive the outstanding royalty payment for year ending 2013 or the full accounts and requested clarification as to why?. Also asked again for answers to question relating to other possible infringements made during licensing agreement, and also for the 90% Indian shareholders intensions now for the future of the Singapore International Marketing Company since its conclusion, all without any response. An offer was made earlier which I considered unacceptable and have notified them about this, indicating I will decide on their offer after receipt of royalty payment. My present expectation is that they will at some point either slightly improve their offer, or more likely do nothing, but I need to take some action to use my 50% shareholding possibly by offering it to another company if they don't pay my royalty, which obviously will mean foregoing 10% shareholding buy back?. Clearly my position with only 10% is not strong but I am still a director of the company, and as such need to see accounts to see what's happening and perhaps I need to go direct to accountant about this.
Would appreciate your follow up ideas for a strategy on my part
Not sure about Singapore accountant but I hope he will be above board and fair if I do contact him as its beginning to look to be my only option if I can't get accounts etc direct from company.
I have checked with Gov.(ACRA) in Singapore about the accounts for YE2012 but the only submission by the company was just for a 60 day extension to their presentation which is now overdue, so probably my fellow directors are still trying to decide final draft with the accountant?.
I will in any event check about shares and revert with info from articles but you maybe right about transfer restrictions. Still I do also have 50% of the brand name which could become an issue for my fellow director if only because I might do something with this in the UK, Europe and elsewhere. The market is currently mainly in the Far East and it could even cause problems there but I am really not sure whether to take some unilateral action now rather than patiently wait for some response and also the royalty payment.
I have attached articles which are fairly involved for me to be sure of situation regarding my shares?.
Also the agreement did have a clause giving other party 50% shared brand name with some restrictions requiring agreement but of course the licensing agreement has already been broken on many accounts by the other party, in that royalties, full 2012 accounts, AGM and other things were and continue to be with held after the 7 year term. The 50% I hold is registered both in the UK and EU with a normal trade mark registration in my name.
Do you think I should contact the company accountant particularly as I am being completely excluded from the companies affairs at the moment and even as a director and shareholder I am still entitled by law to have a sight of the accounts and need to be party to company financial position?.
PS. I don't know if the articles attached have been downloaded correctly as I can't open myself from this page
Since our last contact I have not received anything further except for a request to complete a service satisfaction form which feedback I completed and returned..........
Under the agreement terms and everything being equal the shares would have been transferred back to the company together with the remaining 50% trademark currently registered in my name.
However, from my prospective because of the problems with agreement terms not being met both before and after its conclusion, and also given the overall lack of transparency and non payment of royalties for this year, I now have very little confidence that the other party is looking to come to some amicable agreement. I do also of course know my own position is not so strong but if the other party simply intends to do nothing especially regarding my entitlement to payment of the fee under the terms of the agreement, I will certainly try to employ the 50% trademark I own myself somehow through the current Head Office in the UK (which I own 100%) or by transferring to a competitor and/or also similarly in Singapore and the Far East either through a distributor or via a competitor there.
It may not be the solution I was looking for but if the other party approach is to do nothing in the hope that I will just accept less than I am entitled to, then my only choice will be to try and do something with the 50% holding in trademark .....? Do you think I should also contact the accountant and indicate that without payment of the remaining royalty for 2013 I intend to take some legal action?.
Until over a year ago when I was not presented with the annual accounts for 2011 and 2012 or minutes from AGM (e.g., and increasing concerns about the lack of general transparency about the companies affairs ) I had been prepared to forego an direct contact with accountant. I therefore don't know if accountant is able to accept notices on behalf of company. Shall I make contact now to ask them if they are and if so the situation with the royalty?.
Regarding legal ownership of the registered trade mark in the UK/EU I have 50% having previously agreed to transferring the other 50% to the other party. As far as I know no other trademark applications have been made in other territories during the agreement (when agreement was required between the parties) although I have no info on situation since it finished.