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This Practice Note outlines the law concerning criminal recklessness. The subjective test for recklessness Certain statutory and common law offences allow the prosecution to prove mens rea through ‘recklessness’. Put simply, recklessness is where the accused takes an unjustified risk that results in unlawful harm or damage. The House of Lords in R v G reaffirmed the subjective approach to recklessness. Before R v G, two distinct tests were used, depending on the offence charged: Subjective recklessness from R v Cunningham: the prosecution had to establish that the accused personally foresaw the risk. Objective recklessness from R v Caldwell: the prosecution only needed to show that the risk would have been obvious to a reasonable person, without proving the accused themselves foresaw it. In R v G, the House of Lords concluded that the objective test could operate unfairly where a defendant did not foresee the
This Practice Note examines the remedy of rescission, explaining when and in what manner a contract can be unwound (at common law, in equity and under statute) and thereby terminated and brought to an end. It covers the consequences and effects of rescission, the principal grounds for setting aside an agreement (misrepresentation, mistake, undue influence, duress, non‑disclosure, fiduciary misdealing and bribery) and the main obstacles to claiming rescission—affirmation, the intervention of third‑party rights and the impossibility of restitution. For further guidance on rescission in the context of misrepresentation, see Practice Note: Misrepresentation—rescission as a remedy. There are many ways in which a contract may reach its end; see: Terminating contracts—how and when a contract ends—overview for a brief and accessible summary, with links to the related further practical guidance, including Practice Note: Termination and expiry of contracts. For a table
What is a res judicata? A res judicata is a determination by a court or tribunal with jurisdiction over the cause of action and the parties, which finally disposes of the issues decided so they cannot be litigated again by those bound, save on appeal. Final judgments entered by default or by consent fall within this concept, whereas rulings on purely procedural points and any decision lacking finality do not. The doctrine’s aim is to bring litigation to an end and shield parties from being harassed by the same dispute twice. in personam—binds the parties and their privies in rem—binds all persons, privy or otherwise (ie a judgment binding the whole world) A party may rely on res judicata: as an estoppel to defeat an opponent’s claim or defence; and/or as the basis of their own claim or
The offence of causing grievous bodily harm with intent Wounding or causing grievous bodily harm (GBH) with intent can be tried solely in the Crown Court on indictment. Elements of the offence Under the Offences against the Person Act 1861 (OATPA 1861), the prosecution must establish that the defendant unlawfully and maliciously: wounded with the intention of causing GBH, or caused GBH with that intention, or wounded intending to resist or prevent the lawful arrest or detention of any person, or caused GBH intending to resist or prevent the lawful arrest or detention of any person ‘Unlawfully’ and ‘maliciously’ Unlawfully The wounding or causing of GBH must be unlawful. Such conduct may be lawful if used: in self-defence in defence of another in defence of property for the prevention of crime where the victim gave express or implied consent For further information on these defences, see below:
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The idea of ordinary share capital carries weight for UK tax purposes. This Practice Note outlines the principal tax reliefs that commonly hinge on ‘ordinary share capital’ (regardless of whether the issuer is a UK company), namely: no gain/no loss treatment on intragroup transfers corporation tax group relief substantial shareholdings exemption share for share exchanges and schemes of reconstruction business asset disposal relief (formerly entrepreneurs’ relief) and investors’ relief relief for employee share acquisitions, and enterprise investment scheme ( EIS) and seed enterprise investment scheme ( SEIS) relief This Practice Note then considers how ‘ordinary share capital’ is defined for UK tax purposes. No gain/no loss treatment on intragroup transfers Where companies are within the charge to UK corporation tax and form a 75% group, assets can pass between them without triggering tax on any profits or gains. For more...
General role and responsibility of a non-executive director ( NED) For a comprehensive overview of the duties and accountability of NEDs, consult Practice Note: Non-executive directors and the listed company board—corporate governance roles and responsibilities. Guidance on the rules, expectations and remit of NEDs is likewise set out in the UK Corporate Governance Code ( UKCG Code) and in the FRC Guidance on Board Effectiveness, both published by the Financial Reporting Council ( FRC). For further details on the Code itself, see Practice Note: The UK Corporate Governance Code. NEDs who perform SMFs under the SM& CR With effect from 7 March 2016, the Senior Managers and Certification Regime ( SM& CR) applied to UK banks, building societies, credit unions and Prudential Regulation Authority ( PRA)-designated investment firms. The regime then covered all dual-regulated insurers on 10 December 2018, and from 9 December 2019 it was...
Overview of nil paid and partly paid shares The chance to take up or buy shares on a nil or part-paid basis has long been, and remains, in practice, a fairly routine and well-used way to broaden share participation. The usual aim is to let people own shares in a company as other shareholders do, and potentially enjoy comparable rights, while postponing the cash outlay for those shares. This offers a pragmatic commercial approach and can bring both tax benefits, yet it also exposes the individual to possible liabilities for the unpaid subscription amount. These arrangements resemble an option in that payment of the whole or a portion of the price is required only later or on certain specified triggers, such as a company sale, a listing, or when the company makes a call for the outstanding sum. The crucial difference from options is that the...
The use of malus and clawback The concept that performance-based cash or share awards for executives and senior employees can be reduced (malus) or recovered (clawback) when a material adverse event occurs or later comes to light is now widely accepted and embedded in market practice. Although rooted in the financial services industry, malus and clawback are now standard elements of incentive plans operated by companies listed in the equity shares (commercial companies) category in the UK. This development flows directly from the Financial Reporting Council’s ( FRC) 2014 revisions to the UK Corporate Governance Code in response to the global financial crisis, together with the subsequent expectations of the UK’s major institutional shareholders. The Department for Business, Energy & Industrial Strategy’s ( BEIS) March 2021 consultation on modernising the UK’s audit and corporate governance regime further reinforces that deploying malus and clawback within...
Types of LTIP awards Under a long-term incentive plan ( LTIP), the forms of awards most frequently granted include the following awards: conditional share awards (which are sometimes also known as restricted stock units ( RSUs)) nil-cost options forfeitable shares, which are sometimes described as restricted stock share appreciation rights ( SARs) A standard LTIP now commonly contains both a vesting period, typically lasting three years, and an additional retention period of two years, and this Practice Note addresses the tax implications for LTIP awards that have holding periods in place. For more information on each type of award, see Practice Note: Structure of a long-term incentive plan— Types of awards......
What is a long-term incentive plan? As set out in the Practice Note: What is a long-term incentive plan?, the awards most frequently delivered under a long-term incentive plan ( LTIP) typically comprise: conditional share awards (often referred to in the US as restricted stock units ( RSUs)) nil-cost options share appreciation rights ( SARs) forfeitable shares, sometimes described as restricted stock A brief summary outline of the likely capital gains tax ( CGT) treatment on disposals of shares obtained on the vesting of each LTIP award type is set out below. For more detail and background on the different award types available under an LTIP, see Practice Note: Structure of a long-term incentive plan— Types of awards for further guidance. Please note that this Practice Note proceeds on the basis that, at acquisition of the shares or otherwise on vesting of the LTIP awards, the employee has been fully subject to...
The Companies Act 2006 ( CA 2006) sets out rules under which any loan by a company to one of its directors, or to a person linked to a director, together with any associated arrangements, must be sanctioned by the company’s members. Such member approval is required for these transactions because they involve directors (or their connected persons) and are seen as particularly prone to abuse, so it is a prerequisite before any step is taken. The way in which these statutory approval requirements sit alongside the general duties owed by directors is examined in Practice Note: Directors' duties—scope, nature, interpretation and application, which addresses their scope, nature, interpretation and application. Among those general duties is the obligation on a director to disclose whenever they have, whether directly or indirectly, any interest in a proposed transaction or arrangement with their company, and to set out to the...
Background— EU law in the UK Pre-exit day The European Communities Act 1972 ( ECA 1972) was enacted to implement the United Kingdom’s obligations, as a Member State, under the relevant EU treaties and to ensure adherence to EU law. Under ECA 1972, s 2(1), certain EU rights and obligations intended to have direct effect applied in the UK without the need for additional domestic legislation. This encompassed rights under the EU Treaties and EU regulations setting out detailed legal rules. Other forms of EU law took effect via UK regulations made under ECA 1972, s 2(2), or, in some circumstances, through separate Acts of Parliament. This pathway covered EU directives, which stipulate overarching aims or frameworks while leaving each Member State to make its own provision to secure the required legal outcome. In its operation within Member States, EU law is...
ARCHIVED: This Practice Note is archived and is no longer maintained. It covers the Finance Act 2018 ( FA 2018), which received Royal Assent on 15 March 2018. Kept for historical interest, it traces the Bill’s route through Parliament and summarises each measure in the Act, with relevant links. This Practice Note is divided into two parts: Progress of FA 2018 FA 2018—measure by measure For detailed tracking of the consultations referenced, see: Tax—consultation and legislation tracker. Progress of FA 2018 This section sets out how FA 2018 progressed through Parliament. 13 September 2017 — Draft legislation published ( Draft) 25 October 2017 — Consultation on draft legislation closed 22 November 2017 — Autumn Budget 28 November 2017 — First reading and approval of Budget Resolutions 1 December 2017 — Finance Bill 2018 published ( Bill as...
ARCHIVED This Practice Note has been archived and is not maintained. It covers the Finance ( No 2) Act 2017 ( F( No 2) A 2017), which obtained Royal Assent on 16 November 2017. Kept for historic interest, it traces the legislation’s journey through Parliament and provides an outline, with relevant links, of each measure in the Act. F( No 2) A 2017 was published on 8 September 2017. It includes provisions removed from the first Finance Bill 2017—published on 20 March 2017 and enacted as the Finance Act 2017 on 27 April 2017—following the announcement of the 2017 general election. For further background on F( No 2) A 2017, see News Analyses: Government withdraws majority of Finance Bill 2017, Amended provisions for second Finance Bill of 2017 and Publication of second Finance Bill 2017. There was no single, standard title for the...
What is a phantom award? In essence, phantom awards fall into two main types: phantom share awards and phantom options. Phantom share awards A phantom share award gives the holder a right to a cash sum mirroring the value of an actual share. These arrangements are also known as ‘shadow shares’, ‘synthetic shares’, or ‘equity appreciation units’; for simplicity, this note calls them ‘phantoms’ and ‘phantom share awards’. Phantom options A phantom option typically entitles the holder to the increase in the value of a real share above a notional exercise or base price. Practical example Big Co Limited is a rapidly expanding private UK company seeking to launch an incentive plan that allows all employees to participate and share in any future growth of the business. Its investor base, however, is reluctant to issue actual shares to employees, as that would dilute the current investor...
Introduction An initial public offering ( IPO) is a company’s first sale of shares to the public. For more on what an IPO entails, see: IPO— Main market—overview. A business heading towards an IPO must assess the effect on any employee share arrangements it runs. This analysis should begin at the earliest planning stage, as the IPO structure may need to reflect share plan considerations. An IPO also creates a chance to launch new share schemes—often extending participation to all staff for the first time—and it is usually best for those arrangements to be established before the company’s shares are officially admitted to trading. Organisations may likewise wish to make awards or run an employee offer at the point of listing. Doing so demands advance preparation, with suitable disclosures built into the prospectus. This Practice Note outlines the key points that typically arise on...
ARCHIVED: This Practice Note is archived and is not maintained. In each section of this Practice Note, links are provided to the relevant provisions of EU and/or UK legislation, as applicable, and any significant divergence between the relevant EU and UK legislation is clearly identified. EU Market Abuse Regulation—background and purpose The Market Abuse Regulation (the EU Market Abuse Regulation) annulled and superseded the former Market Abuse Directive ( Directive 2003/6/ EC) ( OJ L 96/16) ( MAD) and its implementing legislation on 3 July 2016. The EU Market Abuse Regulation established a refreshed and bolstered EU market abuse framework, introducing a broader scope and more stringent sanctions. Outside of the UK, the Market Abuse Regulation was supplemented by Directive 2014/57/ EU on criminal sanctions for market abuse ( CSMAD). The UK used its powers to opt out of CSMAD, as it already has an...
The gender pay gap reporting obligations are set out in the following pieces of legislation: Equality Act 2010 ( Gender Pay Gap Information) Regulations 2017 ( Private Sector Regulations), SI 2017/172, which apply to the private and voluntary sector and to public sector employers not covered by the public sector regulations Equality Act 2010 ( Specific Duties and Public Authorities) Regulations 2017 ( Public Sector Regulations), SI 2017/353, which apply to most public sector employers This Practice Note offers a summary of the essential points employers should know about both sets of regulations (together called in this Practice Note the Regulations) and considers their provisions in greater detail. The main emphasis is on how the gender pay gap reporting duties operate for private and voluntary sector employers, while also outlining the distinctions that apply to gender pay gap reporting by public...
What are growth shares? Growth shares, sometimes called value or hurdle shares, comprise a distinct class of shares with curtailed rights. Those rights are crafted so the holder benefits only from increases in the company’s value arising after an acquisition, and only on a capital distribution to shareholders once a preset value hurdle is met. As a result, they broadly mirror the economics of an option carrying a market-value or premium strike price. For further detail on the principal features of growth shares, and when they may suit a company seeking to incentivise staff, see Practice Note: Growth shares (value shares). To understand potential returns and tax consequences, it is helpful to set growth shares alongside enterprise management incentives ( EMI) options and unapproved options. For an overview of EMI options, see Practice Note: Introduction to enterprise management incentives ( EMI) schemes. For context on...
ARCHIVED: This Practice Note is archived and not maintained. It outlines the Finance Act 2016 ( FA 2016), which secured Royal Assent on 15 September 2016. Retained for historical interest, it traces the legislation’s passage through Parliament and sets out, with relevant links, each measure contained in the Act. This Practice Note is divided into four parts: Progress of FA 2016 FA 2016—measure by measure Items included in the Draft Finance Bill on 9 December 2015 but not in FA 2016 Items that were expected to be included in FA 2016 Progress of FA 2016 This section records how FA 2016 progressed through Parliament. 9 December 2015 — Draft legislation published 14–29 January 2016 — Lords Select Committee: inquiry into the draft FB 2016 9 December 2015–3 February 2016 — Consultation on draft clauses to be included in FB 2016 24 March 2016 — FB 2016 published ( Bill as...
The Financial Services and Markets Act 2000 ( FSMA 2000) is the primary statute overseeing the UK financial services industry and the regulation of securities and investments, and it carries various implications for running employee incentive arrangements. FSMA 2000 is bolstered by a wide suite of further statutory instruments, rules and guidance issued by the Financial Conduct Authority ( FCA) and the Prudential Regulation Authority ( PRA). This Practice Note sets out the impact of FSMA 2000 on employee incentive arrangements and highlights key considerations that employers must address when inviting employees in the UK to participate in such incentives. FSMA 2000 FSMA 2000 regulates securities and investments in the UK to protect consumers, uphold and strengthen the integrity of the financial system, and foster effective competition within the financial services sector. It achieves this by banning and limiting a wide range of...
ARCHIVED This archived Practice Note offers background reading on the key differences between the SAYE guidance in ESSUM and its new location in ETASSUM. It also highlights any material changes in the guidance. The Note reflects the position in December 2015 and is provided for background only. Background On 28 October 2015, HMRC announced a new Employee Tax Advantaged Share Scheme User Manual ( ETASSUM), available on its Gov.uk website. The previous ESSUM guidance remains, at the time of writing, live and accessible here. As the name indicates, ETASSUM covers enterprise management incentives ( EMI), company share option plans ( CSOPs), save as you earn ( SAYE) and share incentive plans ( SIPs). ETASSUM has not yet reached its final version and, when this Practice Note was written, some links were still absent. Every page carries a feedback link for notifying HMRC of issues. The table below...
ARCHIVED: This archived Practice Note supplies background reading on the key differences between the CSOP guidance in ESSUM and where it is now located in ETASSUM. It also sets out any significant changes in the guidance. This Practice Note shows the position as at November 2015 and is for background purposes only. Background On 28 October 2015, HMRC alerted its followers to a new Employee Tax Advantaged Share Scheme User Manual ( ETASSUM), available on its Gov.uk website. The previous guidance in ESSUM remains, at the time of writing, live and can be found here. As the title implies, ETASSUM covers enterprise management incentives ( EMI), company share option plans ( CSOPs), save as you earn ( SAYE) and share incentive plans ( SIPs). ETASSUM is not yet final and, at the date of this Practice Note, many links are still missing. A feedback link appears on every page and...
ARCHIVED: This Practice Note has been archived and is not maintained This Practice Note offers background reading on the principal distinctions between the EMI guidance in ESSUM and its current placement within ETASSUM. It also highlights any material changes in the guidance. The position reflected is as at December 2015 and is provided for background use only. Background On 28 October 2015, HMRC announced a new Employee Tax Advantaged Share Scheme User Manual ( ETASSUM), available on its Gov.uk site. The earlier guidance in ESSUM remains, at the time of writing, live and can be found here. As its name indicates, ETASSUM covers enterprise management incentives ( EMI), company share option plans ( CSOPs), save as you earn ( SAYE), and share incentive plans ( SIPs). ETASSUM is not yet complete and, when this Practice Note was prepared, some links were still absent. Each page includes a...
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This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...
Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...
I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...
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