Data Protection Law and Your Business-An Overview

data protection law ireland

Data protection laws can cause significant headaches for business owners and employers.

As a business owner and/or employer you can easily fall foul of the law.

This piece aims to give you an overview of the most important obligations on business and employers in relation to data protection.

Everyone has strong rights when it comes to the data that is held on them thanks to the Data Protection (Amendment) Act 2003 and Data protection act of 1988.

And it is up to the data protection commissioner to uphold those rights.

The role of the data protection commissioner in protecting your privacy rights when it comes to data being held about you is critical.

Data Controllers and Data Subjects

Firstly though, it is important to understand what a data controller and what a data subject is as defined under the legislation. Many data controllers do not understand the vital responsibility that they have when it comes to retaining data on employees, customers, clients, etc.

data controller” means a person who, either alone or with others, controls the contents and use of personal data;

data subject” means an individual who is the subject of personal data;

People who control and use data about others are called ‘data controllers’ and are recognised in the acts above as having certain obligations imposed on them by law.

Individuals should know when they provide personal information to any organisation

  1. Who is gathering the data
  2. What use this data will be put
  3. Who the data will be disclosed to.

If a data controller has the data for a specific purpose but in the future decides to use it for a new purpose he must ask the person whose information he has whether they are agreeable to that new use or not as the data shall only be held for specified purposes.

Data Protection for Employers

All businesses should be concerned about data protection and the Data Protection Acts 1988 and 2003. These 2 acts attempt to balance the rights of individuals in relation to personal data that is stored by various organisations about them.

Learn more about data protection and employers at EmploymentRightsIreland.com.

As an employer you should be concerned with other aspects of your role as a data controller such as the usefulness of online backup services which can provide online backups of your valuable data or offsite backup if that is more convenient for you.

The Data Protection Acts 1988 and 2003 also impose stringent requirements on the data kept by employers about employees and in particular in respect of sensitive personal data. Employers are of course data controllers and processors within the legislation.

The Data Protection Commissioner can impose fines of up to €100,000 and employees can succeed in claims in relation to breaches of data protection law.

The principle obligations on the employer in respect of sensitive personal data is to collect and process it fairly, is accurate and up to date, and is kept no longer than necessary. For this reason employers should ensure that they have a data protection policy in the workplace.

Employee as Data Subject

The employee, as a data subject, has a general right to know what personal data is held about him/her, to whom it is disclosed, and to have it deleted or amended if incorrect. A written data request from an employee should be responded to within 40 days.

The Data Protection Acts, section 8 in particular, set out the circumstances where the employer may disclose the employee’s data to a third party.

Whether the 3rd party is a member of the EEA (European Economic Area) or not will determine whether the request can be complied with or not by the employer. If the data is being disclosed to a 3rd party within the EEA then a written contract is required.

If not, the transfer of data is prohibited (subject to exceptional safeguards).

Registration with the Data Protection Commissioner

Data controllers fall into 3 categories for the purpose of registration

  1. Categories of persons who are always obliged to register-this includes Banks and financial institutions, insurance companies, internet service providers, phone companies
  2. Categories of persons who may be required to register –this includes data controllers who process personal data relating to mental and physical health
  3. Categories who are excluded- not for profit organisations, elected representatives, data processed for the normal course of personnel administration, solicitors and barristers, data for journalistic, literary or artistic material

Please note that these are not exhaustive lists and you may need to consult the legislation or a solicitor who has an expertise in this area if you are in doubt.

Personal data should not be excessive in relation to the purpose for which it is held and should not be kept for longer than is necessary for that purpose.

Non compliance with data protection law

Non-compliance with data protection law may lead to a complaint to the Data Protection Commissioner and the Data Controller can be held liable under normal common law principles (eg the law of contract, confidential information etc.)

It should be noted that Irish data protection legislation only applies to data controllers who are established here.

Data Protection Law and Direct Marketing

Many direct marketers are blissfully unaware of the significant conditions in the Data Protection Acts 1988 and 2003 concerning the use of personal data for direct marketing purposes.

For example the Data Protection Act 1988 provides that the data controller/direct marketer has forty days to agree to a request from the recipient to stop using his data for direct marketing.

There is also a positive obligation on the data controller/direct marketer to let the recipients (data subjects) know that they can object in writing and free of charge to the data controller using their data for direct marketing purposes.

The significance of this is that there is a real obligation on the marketer to let the “target” know that they are being targeted for direct marketing purposes.

The basic rule is this:

The basic rule that applies to direct marketing is that you need the consent of the individual to use their personal data for direct marketing purposes.

The Electronic Communications Regulations 2003 (SI 535 of 2003)

These regulations (subsequently revoked-see below) provide further protection to the consumer/recipient of direct marketing messages and cover, amongst other things

  • Email marketing
  • SMS messaging
  • Processing of location data.

These regulations aim to protect recipients from unwanted and unsolicited SMS messages and email.

In summary the Electronic Communications Regulations provide that

  1. The use of email, fax, automatic dialling machines, and SMS messaging for direct marketing purposes to individuals without the advance consent of the recipient is prohibited
  2. The use of these methods of direct marketing to businesses is prohibited if the business (or non-natural person) had recorded their objection in the National Directory Database or has told the sender that they do not consent
  3. The use of telephone marketing is also prohibited if the phone subscriber has recorded their objection in the National Directory Database or advised the caller that they do not consent
  4. Unsolicited telephone callers must provide their name and, if requested, their address and phone number
  5. The same situation applies in relation to sending SMS messages or emails for direct marketing purposes
  6. If a customer gives their contact details in the course of a transaction or purchase then their details can be used for direct marketing purposes only if it is made clear to the recipient that they are provided with an easy and free way of objecting. And this direct marketing is only permissible in respect of similar goods or services to the original purchase.

Breach of all of the activities 1-6 above is actually a criminal offence, unlike much of Data Protection Law breaches.

It is worth noting also for example that the Data Protection Commissioner has found that unsolicited political soliciting of support has been found to be unlawful direct marketing.

For further useful information and frequently asked questions in this potentially dangerous area for direct marketers take a look at http://www.dataprivacy.ie which is the website of the Data Protection Commissioner.

UPDATE

The above statutory instrument and SI 526 of 2008 were revoked by statutory instrument, 336/2011, European Communities (Electronic Communications Networks and Services) (Privacy and Electronic Communications) Regulations 2011.

SI 336/2011-European Communities (Electronic Communications Networks and Services) (Privacy and Electronic Communications) Regulations 2011

Different rules apply to phone, fax, text message and e-mail marketing.

Direct Marketing by Post

The Data Protection Acts determine how you can market by direct mail through the postal service.

For the protection of the Data Protection Acts to apply, the letter must be addressed to a named individual.

Unaddressed mail or post addressed to the ‘householder’ or ‘homeowner’ for example is not covered as this type of mail is deemed not to use ‘personal data’.

In addition, post addressed to corporate entities and/or named office holders in those entities is not covered by data protection legislation.

In order to use personal data for direct postal marketing, you must firstly tell the person that you intend using their personal data for this purpose and give them the opportunity to ‘opt out’.

A person can withdraw their consent at any time.

Electronic Marketing

The rules surrounding marketing by email, text, phone, fax are more stringent than those applying to direct marketing by post.

And certain more restrictive rules apply to marketing to corporate entities than applies re marketing by post.

You cannot make a marketing call to a person or business if they have indicated their preference to not receive such calls in the National Directory Database. The same rule applies to a person or business that has made it known to you that they do not consent to such calls.

You cannot make a call to a mobile phone unless the person has consented to such calls or the person has indicated his/her willingness generally to receive such calls on the National Directory database.

Electronic Mail

Electronic mail includes email, phone text, MMS messages, voice messages, image messages, and sound messages.

Individual and business customers : Consent is again required; in addition the offer you are making must be of a kind similar to that which you sold the person to begin with, you must have given them the opportunity to object to such marketing in an easy manner, every time you send a marketing message you must give the person the opportunity to opt out again, and the original sale must have occurred in the last 12 months.

Individuals who are not customers: consent is required to send marketing messages.

Business contacts: you cannot send marketing messages where the business has advised you that they do not consent to such messages.

Direct Marketing by Fax

You cannot send a fax with a marketing message to a person if they have not previously consented. However, the fax line must be used for personal/domestic purposes and any use in relation to a business will see that line being treated as part of the business and not a residential line.

You may not send a marketing fax to a business which has indicated its unwillingness to receive such messages on the National Directory Database. Nor can you send one if the business has told you they do not wish to receive them.

Generally

The onus is on you, if you are prosecuted, to prove that you had consent for the sending of marketing messages. Any consent that you have should be retained for 2 years.

The penalties for breaches of data protection legislation and electronic communications regulations are very stiff.

And each breach attracts a new penalty.

Processing of personal data

In order to process personal data the most important pre-condition to be satisfied is that the data may only be processed where the subject has given his consent.

However there is considerable debate as to what ‘consent’ in this context means-is it the opt-in procedure (where the subject must expressly consent to his data being processed)?

Or is it the opt-out procedure (where the subject is asked if they object to their data being processed)

There are additional preconditions relating to the processing of sensitive personal data such as racial or ethnic origin, political opinion, religious belief etc.

In these circumstances the data subject must expressly consent and the ‘opt out’ procedure would not be sufficient in these situations.

Rights of Data Subjects

These rights derive from the Data Protection acts and include

  • The right to be informed of data being kept on them
  • The right to access to the data (there are a number of exceptions to this right)
  • It is worth noting that the Data Protection Commissioner appears to be of the opinion that CCTV footage of a person is data within the meaning of the acts.
  • Right to prevent processing where it may cause damage or distress

The transfer of data outside the state is restricted to countries outside of the European Economic Area.

It may not occur unless that country provides an adequate level of protection and this causes problems re transfer of such data to USA as there are varying standards of protection in the USA.

Their Safe Harbour scheme is a voluntary scheme which provides similar standards of data protection to Europe but not all companies sign up.

Data Protection and Schools

Data protection legislation applies to schools even though the Freedom of Information Act does not.

The Data Protection Commissioner has stated that

CCTV may be used legitimately for security related purposes at the perimeter of a school. Any use beyond this would need to be fully justifiable and evidence-based with a very high threshold for such evidence. This is particularly the case in a school environment as most of the personal data processed will relate to minors.

Data requests can be made by parents on behalf of children or any member of staff.

Learn more about how the law applies in schools in Ireland at education law Ireland.
By Terry Gorry
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The New Bankruptcy Law in Ireland-How to Declare Bankruptcy

If you are thinking about going bankrupt in Ireland in 2014 this piece will give you the essential information you will need.

bankruptcy-ireland

This piece aims to give you the meat and potatoes of what’s involved in you choosing to go bankrupt and the procedure involved.

Debtor’s Bankruptcy

I am assuming you are the one who is choosing to go bankrupt.

This is a “debtor’s bankruptcy”. (A creditor’s bankruptcy is where a creditor of yours chooses to apply to have you made bankrupt-that procedure is covered elsewhere on the site).

Firstly, before applying for bankruptcy you need to explore the alternative solutions available to you courtesy of the Personal Insolvency Act, 2012:

  • A debt settlement arrangement or
  • A personal insolvency arrangement.

To apply for bankruptcy you don’t need a solicitor. But you would be well advised to engage one because

  1. It is a High Court application by way of a Petition verified by an Affidavit and Statement of Affairs and
  2. You need legal advice to confirm that bankruptcy is the right option for you.

There are 2 key offices you need to know about:

  1. The Office of the Examiner of the High Court. Your application for a bankruptcy order is filed in this office in the first instance.

This office is an office of the High Court.

2. The Official Assignee’s office. After your bankruptcy order is granted you will deal with the Official Assignee’s office.

The official assignee is an independent statutory officer of Court who administers your estate once you have been declared bankrupt.

Consequences of Bankruptcy

The main consequences of bankruptcy are:

  1. Your debts are wiped out
  2. All your property transfers to the Official Assignee (The only assets that do not transfer to the Official Assignee are essential assets up to a value of € 6,000 (including vehicles), or more, if the High Court allows.
  3. You are discharged from bankruptcy after 3 years
  4. You must contribute from your surplus income towards your debts for up to 5 years
  5. The Official Assignee receives and deals with the claims of your creditors-they can no longer contact you
  6. The Official Assignee administers your estate.

Eligibility for Bankruptcy

To be eligible for bankruptcy you must fulfil the following conditions:

I.            You must be insolvent

II.            You must lodge €650 with the Insolvency Service of Ireland

III.            You must swear an affidavit that you have made reasonable efforts to use the alternative debt settlement arrangements open to you-the debt settlement arrangement and the personal insolvency arrangement

IV.           Your debts must exceed your assets by more than €20,000 and you must present a Statement of Affairs setting our your financial position

V.            You must prepare a petition for bankruptcy.

Bankruptcy Fees

The fees for bankruptcy are

  • €650 for the Insolvency Service of Ireland
  • Stamp duty on the petition and affidavit of €102.50.

As I write this you would also have an advertising fee for a national newspaper of approximately €500 to advertise your petition for bankruptcy.

However this is almost certain to change as the Companies (Miscellaneous Provisions) Bill 2013, if passed into law, will do away with the requirement for advertising.

Your Duties re Your Bankruptcy

You will have to attend the High Court on the day your application for bankruptcy is listed; you will have to attend again on the Statutory Court Sitting date.

You also have to cooperate fully with the Official Assignee; attend the bankruptcy division of the Personal Insolvency of Ireland on the day you are made bankrupt.

You will also have to attend for interview with the Official Assignee’s office.

Post Bankruptcy

The Official Assignee will look for a contribution from your surplus income, if any, after deduction of reasonable living expenses.

Your pension is not transferred to the Official Assignee.

The Family Home in Bankruptcy?

Your share of the family home will transfer to the Official Assignee. You may be able to agree a schedule of mortgage repayments with your bank, provided the Official Assignee agrees that these payments are within reasonable living expenses and not for some exorbitant pile with eye watering mortgage payments.

The Official Assignee cannot sell the family home without first obtaining the consent of the High Court. The High Court will consider each case on its merits and look at your creditors, your spouse’s/civil partner’s situation, and your dependents.

If there is equity in the family home the Official Assignee will seek to sell his share to your spouse/civil partner.

If there is no equity the Oficial Assignee will consider the sale of his share to your spouse/civil partner.

Discharge from Bankruptcy

You should be discharged after 3 years.

This period could be extended if you don’t cooperate with the Official Assignee or you fail to disclose all of your property.
By Terry Gorry
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Copyright Law in Ireland-A Quick and Easy Guide to Copyright Law

copyright-law-ireland-2

What is copyright? Can you register copyright? What steps can you take if your copyright has been infringed?

Copyright is the legal term, which describes the rights given to authors/creators of certain categories of work.

Copyright protection extends to the following works:

  1. Original literary, dramatic, musical or artistic works sound recordings, films, broadcasts, cable programmes
  2. the typographical arrangement of published editions, computer programmes,
  3. original databases.

The owner of copyright is the author and within the Copyright and Related Rights Act, 2000 the author has a very specific definition

21.—In this Act, “author” means the person who creates a work and includes:
(a) in the case of a sound recording, the producer;
(b) in the case of a film, the producer and the principal director;
(c) in the case of a broadcast, the person making the broadcast or in the case of a broadcast which relays another broadcast by reception and immediate retransmission, without alteration, the person making that other broadcast;
(d) in the case of a cable programme, the person providing the cable programme service in which the programme is included;
(e) in the case of a typographical arrangement of a published edition, the publisher;
(f) in the case of a work which is computer-generated, the person by whom the arrangements necessary for the creation of the work are undertaken;
(g) in the case of an original database, the individual or group of individuals who made the database; and
(h) in the case of a photograph, the photographer

 

For example a photographer is the owner in the case of a photograph.

However, as copyright is a form of property, the right may be transferred to someone else, for example, to a publisher. Where an employee in the course of employment creates the work, the employer is the owner of the copyright in the work, unless an agreement to the contrary exists.

Copyright is a property right and the owner of the work can control the use of the work, subject to certain exceptions.

The owner has the exclusive right to prohibit or authorise others to undertake the following:

  1. copy the work
  2. perform the work
  3. make the work available to the public through broadcasting or recordings
  4. make an adaptation of the work.

Copyright takes effect as soon as the work is put on paper, film, or other fixed medium such as CD-ROM, DVD, Internet, etc.

No protection is provided for ideas while the ideas are in a persons mind; copyright law protects the form of expression of ideas, not the ideas themselves.

Rights related to Copyright

Rights are not restricted just to the creators of the works themselves but certain other rights may apply.

For example, the record company has certain rights in a sound recording of the performance of a song, in addition the author(s) of the lyrics and the music will also have certain copyrights. Similarly performing artists have certain rights in their performances. The legislation also provides for moral rights, such as the right to be acknowledged as the author of a particular work and also the right to object to derogatory treatment of that work.

The primary legislation governing copyright in Ireland is the Copyright and Related Rights Act, 2000 (No. 28 of 2000).

Copyright Protection

In Ireland, there is no registration procedure for owners of a copyright work.

Basically the act of creating a work also creates the copyright, which then subsists in the physical expression of the work.

Copyrights are protected by law and illegal use of these rights can be contested in the Courts, the technical term for this misuse is infringement.

The legislation provides for criminal offences and consequently infringers could face both civil liability and criminal convictions.

Professional advice should be sought by copyright owners with regard to the options and the remedies available where infringement of their work occurs.

It is most important that the originator of a work can show subsequently when the work and the consequential copyright were created as it may be necessary to commence or defend infringement proceedings, at some later stage.

One way of doing this is to deposit a copy of the work with an acknowledged representative who may be a bank or solicitor in such a way as to allow the date and time of the deposit to be recorded or notarised.

Alternatively, one may send a copy of the work to oneself by registered post (ensuring a clear date stamp on the envelope), retaining the original receipt of posting and leaving the envelope containing the copyright work unopened thus establishing that the work existed at that date and time.

The Copyright Notice and Symbol ©

It is important to show that copyright is claimed in a work. Works should be clearly marked to show who the copyright owner is and the date from which copyright is claimed.

The internationally recognised symbol © is normally used to indicate that a work is protected by copyright.

Example:

© Copyright Terry Gorry 2013.

Examples of more detailed copyright notices may be found in published versions of literary works. The inclusion of a copyright notice does not legally constitute proof of ownership, but does indicate a claim to copyright, which may prove useful if it is necessary to defend that claim or to deter possible infringement.

It is usually necessary to obtain permission to use copyright material. Persons with a copy of a work can look for an indication on the work regarding copyright. This can assist making contact with the author/ original creator of the work in order to obtain their permission to use the work for any act, which is prohibited by copyright legislation.

Length of Copyright Protection

The duration of copyright protection varies according to the format of the work. In respect of the following works the term of protection is:

Literary, dramatic, musical and artistic works

Copyright protection expires 70 years after the death of the author/creator.

Films

Copyright protection expires 70 years after the last of the following dies, the director, the author of the screenplay, the author of the dialogue of the film, or the author of the music composed for use in the film.

Sound recordings

Copyright protection expires 50 years after the sound recording is made or if it is made available to the public then 50 years from the date it was made available to the public.

Broadcasts

Copyright protection expires 50 years after the broadcast is first transmitted.

The typographical arrangement of a published edition

Copyright protection expires 50 years after the date it is first made available to the public.

Computer-generated works

Copyright protection expires 70 years after the date it is first made available to the public.

Chapter 3 of the Copyright and Related Rights Act, 2000 (No. 28 of 2000) deals in greater detail with the duration of copyright in Ireland.

Benefits of Copyright Protection

Copyright protection provides a vital incentive for the creation of many intellectual works.

Without copyright protection, it would be easy for others to exploit these works without paying any royalties or remuneration to the owner of the work. Copyright therefore encourages enterprise and creates a favourable climate to stimulate economic activity.

Copyright protection provides benefits in the form of economic rights which entitle the creators to control use of their literary and artistic material in a number of ways such as making copies, performing in public, broadcasting, use on-line, etc. and to obtain an appropriate economic reward.

Creators can therefore be rewarded for their creativity and investment.

Copyright also gives moral rights to be identified as the creator or author of certain kinds of material (known as the paternity right), and object to the distortion and mutilation of it.

An author’s right to object to the modification or derogatory action in relation to his or her work is known as an integrity right.

Chapter 7 of the Copyright and Related Rights Act, 2000 (No. 28 of 2000) deals in greater detail with moral rights applicable in Ireland.

Commissioned Work and Copyright

Prior to the Copyright and Related Works Act, 2000 the commissioner of certain types of work would own the copyright to that work.

That is no longer the case.

If you commission artistic work and wish to have the copyright transferred to you, it will be necessary to have a written agreement to do so.

In Irish law, the assignment of copyright in a work must be effected in writing and signed by the person assigning the copyright (section 120, Copyright and Related Rights Act, 2000).

(3) An assignment of the copyright in a work, whether in whole or in part, is not effective unless it is in writing and signed by or on behalf of the assignor.

However, if an employee creates a work in the course of his/her employment, the owner of the copyright in that work will be the employer.
By Terry Gorry
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How To Set Up a Limited Company (And the Advantages and Disadvantages of Limited Company Status)

Thinking about setting up a limited company?

set-up-limited-company
Advantages and disadvantages of limited liability

Fancy the thought of becoming a company director? And majority shareholder?

But you’re not sure whether it is a good idea or whether you need to?

This piece will take a look at how to register a limited company in Ireland, the different types of limited company and, most importantly of all, the advantages and disadvantages of setting up a limited company.

Update 2015

The law in this area is due to change on 1st June, 2015 when the Companies act, 2014 comes into force.

To form a company, also known as setting up a company or incorporating a company, you will need to submit the following documents, along with the registration fee, to the companies registration office:

  1. Memorandum of association
  2. Articles of association
  3. Form A1

To carry out your company set up you can download the forms above from the companies registration office website at CRO.ie.

Rather than do it yourself though you can engage the services of a solicitor who will probably have formed many companies on behalf of clients. Your solicitor will also probably use a reputable company formation service which will make formation easier and less likely to cause any delays.

Memorandum of association

Your company set up will involve what’s called a memorandum of association.

This memorandum of association sets out the conditions upon which the company is granted incorporation. It must contain provisions dealing with certain matters e.g. the name and objects of the company and, if it is a company with limited liability, that fact must also be stated.

The memorandum of association must be in accordance with, or as near as circumstances permit, to the appropriate table in the First Schedule to the Companies Act 1963. It must be printed and divided into paragraphs and numbered consecutively.

Types of company

To set up a company in Ireland you must decide first which is the most appropriate type of company for your enterprise-

  1. Private company limited by shares Table B
  2. Company limited by guarantee and not having a share capital Table C
  3. Company limited by guarantee and having a share capital Table D
  4. Unlimited company Table E
  5. Public limited company Second Schedule of Companies (Amendment) Act 1983

Articles of association

Your company set up will also require the use of articles of association. The articles of association is a document which sets out the rules under which the company proposes to regulate its affairs.

Articles of association are required to be registered by a company limited by guarantee and having a share capital or an unlimited company. Articles of association must be printed and divided into paragraphs and numbered consecutively.

A company limited by shares or a guarantee company not having a share capital may register articles of association with the CRO. Model form articles of association are set out in the First Schedule to the Companies Act 1963.

Samples of memorandums and articles may be obtained from legal stationers, accountants, solicitors or company formation agent.

Form A1

Form A1 requires you to give details of the company name, its registered office, details of secretary and directors, their consent to acting as such, the subscribers and details of their shares. It incorporates a statutory declaration that the requirements of the Companies Acts have been complied with, and as to the activity which the company is being formed to engage in.

Applications for company set up can be submitted under any one of three schemes, each of which has a different customer service standard:

Ordinary: while there is no guaranteed service level, in practice it takes 15 working days.

Fé Phrainn: ten working days

Companies Registration Office Disk: five working days

Documents are processed in chronological order and are subject to checks.

Documents returned for correction are processed according to their date of re-submission to the companies registration office.

Statutory declarations sworn abroad will often require further legalisation.

The Advantages and Disadvantages of a Setting Up a Limited Company

If you are thinking of starting a business in Ireland you may be considering registering a limited company rather than trading as a sole trader or partnership.

 What are the advantages of setting up a limited company?

There are three broad advantages of registering a company with the Companies Registration Office (www.cro.ie).

Advantages of a limited company

Firstly a company has a separate and distinct legal identity from its member or shareholders. This allows it to enter into contracts, sue and be sued, and so on in its own right.

Secondly a company can live forever provided it is not liquidated or struck off the companies’ register-this is called perpetual succession.

Thirdly its potential liability is limited to its paid up share capital unless it is an unlimited company but the vast majority of companies in Ireland are private limited companies.

In theory this means that you as shareholder or member are protected from creditors and banks should the company cease.

In practice however you will find that many banks and suppliers will insist on personal guarantees from directors or shareholders.

Disadvantages of a limited company

The main disadvantage of setting up your own company are

  1. Cost, although this is minimal as you can incorporate a company for between €200 and €300;
  2. Filing financial statements every year with the Companies Registration Office with those details being open to public scrutiny.

On balance, despite the limitations on the concept of limited liability and protection from creditors, setting up a company is a smart move.

The alternatives of trading as a sole trader or partner in a partnership offer no protection from creditors and can leave you open to losing everything you own and bankruptcy.

Conclusion
Company set up in Ireland is a relatively straight forward process. The companies registration office are helpful and they have quite a lot of information on their website.

Sooner or later when forming your small business or even if you choose to work from home, you will have to carry out a company set up.

This need not be a complex task but one that should not be taken for granted.

You might also be interested in the 7 critical elements of a shareholders agreement.
By Terry Gorry
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How to Register a Business Name

register business name

Do you need to register a business name?

If so, how do you register a business name?

This piece will answer those questions and tell you what forms you will need to register a business name.

The registration of a business name is obligatory if any individual or partnership (whether individual or bodies corporate) or any body corporate carries on business under a name other than their own true names.

Specifically it is required if an individual uses a business name which differs in any way from his/her true surname.

It makes no difference whether the individual’s first name or initials are added. So the registration of a business name would be required if, for example, Mr. John Smith traded as “Smith Builders” but not if he traded as “Smith” or “John Smith”).

The registration of a business name would also be required if a firm uses a business name which differs in any way from the true names of all partners who are individuals and the corporate names of all partners which are bodies corporate.

It would also be required if a company uses a business name which differs in any way from its full corporate name; or

a person having a place of business in the State carries on the business of publishing a newspaper.

Requirements to Register a Business Name

The particulars for registration must be furnished within one month of the date of the adoption of the business name.

The forms of application for registration are:

  • Form RBN1: for an individual;
  • Form RBN1A: for a partnership;
  • Form RBN1B: for a body corporate.

The filing fee is €20 if you do it online.

Business name fees, and other information, is set out here on the CRO website.

You should note that registration of a business name

1. does not give protection against duplication of the business name;

2. does not imply that the business name will necessarily prove acceptable subsequently as a company name;

3. does not authorise the use of the business name if its use could be prohibited for other reasons.

It should not for instance be taken as an indication that no rights (e.g. trade marks rights) exist in the name.

The companies registration office does not check proposed business names against names on the registers of companies or business names.

It is advisable, therefore, to investigate the possibility of others having rights in the name which it is proposed to use before incurring expenditure on business stationery, etc.

You can check the register of companies and register of business names for free using the companies registration office web search facility.

You can undertake a search of the trademark register at the Patents Office.

Requirements following registration of a business name

Certificate of registration

The registrar issues a certificate of registration for each business name registered. A copy of the certificate of registration must be exhibited in a conspicuous position:

  • in the case of a firm or individual at the principal place of business and in every branch office or place where business is normally carried on;
  • in the case of a body corporate, at its registered office in the State and in every branch office or place where business is normally carried on.

Business letters

The name(s) of the proprietor(s) of a business must be shown on all business letters, circulars etc. on which the business name appears.

If the proprietor of the business name is a body corporate the following additional information must be shown on business letters:

  1. The full name of the company (note that the only permitted abbreviation is “Ltd” for Limited, “PLC” for Public Limited Company, etc.);
  2.  The names and any former names of the directors and nationality if not Irish;
  3.  Additional particulars are required on letters and order forms for Irish registered companies (this does not apply to unlimited companies):
  4.  The place of registration (e.g. registered in Dublin, Ireland);
  5. the registered number (i.e. number of certificate of incorporation);
  6. the address of the registered office (where this is already shown on the document, the fact that it is the registered office must be indicated);
  7. if the company share capital is mentioned on the business letters and order forms, the reference must be to the paid-up share capital.

Registering changes

When a change occurs in any of the particulars of a registered business name (e.g. change of business name or business address) it should be notified to the registrar within one month of the date of the change.

The forms for notifying changes are as follows:

  1. Form RBN2: for an individual;
  2. Form RBN2A: for a partnership;
  3. Form RBN2B: for a body corporate.

Cessation of business name

When an individual, partnership or body corporate ceases to carry on business under a business name, a Form RBN3 should be filed in the companies registration office within three months after the business has ceased.

A fee does not apply to Form RBN3.

The form should be signed as follows:

  • Individual: by the individual. In the event of the death of an individual by the personal representative of the deceased;
  • Partnership: by all persons who were partners of the firm when it ceased to carry on business;
  • Body corporate: by a director or a liquidator.

Checklist for business name forms

In brief:

The appropriate fee must be lodged;

It is essential that the correct form be submitted at the time of application to register a business name.

The full name of the business must be given on all forms and forms must be dated.

Forms RBN1, RBN1A, RBN1B

The general nature of business must be completed;

The full address of the principal place of business must be stated, a PO box number will not suffice. An address outside the State is not acceptable;

The full date of adoption (i.e. day, month, year) of the business name must be given;

RBN1 : The form must be signed by the individual applying for registration;

RBN1A : The forename name and surname of every individual who is a partner in the firm together with the corporate name of every body corporate which is a partner must be given on the form. The form must be signed by either all the individuals who are partners and by a director or secretary of all bodies corporate which are partners, or by some individual who is a partner, or by a director or secretary of some body corporate which is a partner. In this case the form must be verified by a statutory declaration made by the signatory;

RBN1B : The form must be signed by a director or secretary of the company applying for registration.

Displaying the business name

Every business must paint or affix its business name on the outside of every office or place in which the business is carried on, even if it is a director’s home. The name must be both conspicuous and legible.

In addition, the company must state its business name, in legible lettering, on company letter heads, order forms, invoices, etc
By Terry Gorry
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Commercial Landlord And Tenant Disputes-The Facts You Should Know

commercial landlord tenant disputes

Landlord and tenant disputes are on the rise for obvious reasons with the downturn in the economy and landlords being faced with the choice of trying to recover outstanding rent or additionally trying to recover their premises and get the tenant out.

Generally the failure to pay rent by the tenant will be a breach of a covenant of the lease leading to a right accruing to the landlord for a straightforward breach of contract and the normal remedies available to the landlord when this occurs.

The legal proceedings that a landlord will take will depend on the amount of rent owed-if it is less than €6,348.69  it will be by way of Civil Summons in the District Court; if it is between that figure and less than €38,092.14  it will be by Civil Bill in the Circuit Court. (Note that these jurisdictional amounts have changed; the District Court has a limit now of €15,000 and the Circuit Court up to €75,000).

Higher than that and you will find yourself the subject of High Court proceedings.

Recovery of Premises

Most commercial leases will have a covenant providing for the right to recover possession of the premises when there is a breach of a covenant of the lease.

Notice To Quit

If a lease has just expired, that is the time is up, the landlord needs to serve a Notice To Quit giving whatever period of notice is stipulated in the lease itself.

After the service of the Notice To Quit the landlord should mark any rent received as “mesne rates only” as not to do so could be seen as a waiving of the Notice by the landlord.

Forfeiture

Forfeiture procedure is appropriate where the landlord wants to get the tenant out before the term of the lease is up.

He will want to do so if the rent is overdue and not being paid and the landlord thinks that he is better off trying to let the premises to someone else.

To do this the landlord must be sure that the lease makes provision for forfeiture in the event of rent not being paid or whatever other breach of covenant the landlord is alleging.

Most leases will contain such a covenant; if yours does not it will provide for forfeiture for breach of a condition of the lease.

In order to use the forfeiture procedure the landlord must first, by law, give the tenant the opportunity to remedy whatever breach has occurred.

Firstly the landlord will need to serve a Notice of Forfeiture on the tenant which will set out the alleged breach and the time within which it must be put right or that the landlord will re-enter the premises.

This is called a Section 14 notice as the requirement arises from section 14 of the Conveyancing Act 1881.

If the remedy is not forthcoming and the breach is not sorted out then the landlord can re-enter the premises peaceably-it is important that to note that anything other than the minimum damage can lead to a criminal offence being caused by the landlord.

If resistance is offered by the tenant then it would be very difficult for a landlord to enter peaceably and should withdraw.

Ejectment Civil Bill on Title Based on Forfeiture

If the landlord cannot take the premises peaceably he will need to go the Court route and it is by way of Ejectment Civil Bill on Title based on forfeiture.

Be warned that this is a slow process and the Courts have traditionally given a fair degree of latitude to tenants giving them more time to put things right.

Tenant Relief

Conveyancing Act 1881, section 14(2), provides some relief for the tenant provided that the landlord has not re-entered and the tenant has put matters right by paying the rent or whatever breach is alleged.

The courts have traditionally been very fair with tenants in these matters and a tenant who has paid up, even late, will be in a strong position to get this statutory relief from the Court.

Ejectment Civil Bill for Overholding

This procedure is used after the service of a Notice To Quit or where the original lease has expired and the tenant remains in possession.

Commercial Landlord and Tenant Issues in Insolvency

Liquidation

In a liquidation situation, any rental arrears which arose prior to the liquidation will rank as unsecured claims and participate in any dividend on a pro rata basis with other unsecured creditors.

Rent arising where the liquidator occupies the premises to wind up the failed company is deemed to be an expense of the liquidation and will rank, along with the costs of the liquidation, above all creditor claims.

Receivership

Rent accrued prior to the appointment of the receiver will rank as an unsecured debt.

Rent due during the period of receivership, the receiver is obliged to pay the rent as a priority expense of the receivership.

Examinership

Theoretically, rent accrued during examinership should be paid to the landlord. However, proceedings cannot be taken against a company when it is in examinership so it would be very difficult to enforce the payment of rent.

Repudiation of leases during examinership

Section 20(1) of the Companies (Amendment) Act 1990 allows the repudiation of any contracts of a company in examinership.

This includes leases and a Court has jurisdiction to approve the repudiation of a lease of a company in examinership. This is a discretionary power which will be exercised in each case in the particular circumstances of the case.

Disclaiming a lease

Section 290 of the Companies Act 1963 allows a liquidator to apply to Court for an order for disclaimer of onerous property or contracts.

The liquidator has 12 months within which to disclaim a lease and it is a slow process. The landlord will be able to claim as an unsecured creditor for damages as a result of the disclaimer.

However, whether there is going to be a dividend available to unsecured creditors or not will depend on the circumstances of each case.

The Entitlement to a New Lease

The Landlord and Tenant Act 1980 which was amended byLandlord and Tenant Act 1994 provide statutory entitlements to tenants in a landlord/tenant relationship.

The reliefs apply where the property that is the subject of the agreement is a tenement which is a legal description but has been interpreted fairly generously. It includes buildings which are not permanent and can include sheds erected without planning permission.

To qualify for the statutory entitlements the main purpose/use must attach to the buildings. If there is land involved then the land must be subsidiary and ancillary to the main use of the buildings.

Section 16 of Landlord and Tenant Act 1980 provides that a tenant will be entitled to a new tenancy at the expiry of his existing lease if he can prove one of the following equities

  • Business equity-if the tenant was in occupation for 5 years continuously and was using the premises/tenement for business purposes (this period used to be 3 years); temporary breaks can be disregarded by the courts. The five year period only applies to tenancies/leases which commence after 10 August 1994 and the tenant must occupy the tenement for the entire period
  • Long possession equity-this applies to both residential and business property and states that if the person was in occupation for 20 years then he/she was entitled to a new lease
  • Improvements equity-this also applies to both residential and commercial property and states that if the tenant would be entitled to compensation for improvements and they accounted for half or more than half of the letting value of the tenement when the notice of intention to claim statutory relief, then the tenant has an improvements equity

Terms of a new tenancy

These terms are to be agreed between landlord and tenant and failing that will be fixed by the court. If the tenant is entitled to a new lease based on business equity the new term shall be fixed at 20 years or such time as the tenant may nominate, provided it is over 5 years.

If the right to a new tenancy is based on long possession or improvements the term of the new tenancy will be 35 years or a lesser term that the tenant can nominate.

Rent

This will be fixed by the court at open market value if the landlord and tenant can not agree on a new rent.

Restrictions on a right to a new tenancy

Section 85 of the act prevented any provision contracting out of the Act.

However this was changed re the tenant of an office premises who could contract out of his right if he took independent legal advice and signed a renunciation under sect 4of his right and this had to be done before the commencement of the tenancy.

Other restrictions include the situation where the tenant is in breach of the lease in respect of payment of rent.

Furthermore where the landlord intends to pull the building down in order to redevelop the building/site then he can refuse to grant a new tenancy.

However if this occurs and the tenant would have been entitled to a new tenancy otherwise, then the tenant is entitled to disturbance compensation which is a right of both residential and commercial tenants.

How to claim a new tenancy

The forms required are set out in Landlord and Tenant Regulations, 1980. This notice must be served before the end of the tenancy or within 3 months of the end. (The courts have discretion to extend these time limits in limited circumstances)

Compensation for improvements

This is available to both residential and business premises. Where a tenant quits a tenement because of the termination of the tenancy he is entitled to be paid compensation for every improvement by him or any predecessors in title which adds to the letting value of the premises.

However he will not be entitled to compensation if he has surrendered the lease or the termination is for non-payment of rent.

Improvement notice

Where a tenant proposes to make improvements to the tenement he may serve an improvement notice on his landlord.

If the latter ignores it then the tenant can go ahead with the works and is entitled to compensation. However the landlord can then himself serve an improvement undertaking notice on the tenant and execute the works himself.

Or he can object to the improvement notice and the tenant can then withdraw his notice or apply to court which can allow the tenant to make the improvement or reject his claim based on the fact that he has not been in occupation for 5 years and is consequently not entitled to a new lease.

Any covenants in the lease which prohibit the selling of the building or the change of use of the building will be interpreted as only prohibiting this to occur without the landlord’s consent, and this consent must not be unreasonably withheld.

A similar interpretation will apply to any covenant in the lease prohibiting the making of improvements.

Update

The Civil Law Act 2008 has made some changes to Landlord and Tenant legislation. Previously only the occupier of an office lease could contract out of his right to a new lease as outlined above.

The Civil Law Act 2008 now allows any business user to renounce his right and furthermore allows him to renounce not just prior to the commencement of the lease but at any time. He must still receive independent legal advice.

Termination of Commercial Leases

The most common ways to terminate or end a lease are

1) Notice to quit

2) Forfeiture

Since the Residential Tenancies Act, 2004 lays down the procedure for the vast majority of residential tenancies Notice to Quit and Forfeiture now only apply to commercial tenancies.

You only use a Notice to Quit procedure where the tenant remains in possession after the expiry of the agreed term and continues to pay rent. This tenant is said to be overholding.

Where the landlord wishes to end the tenancy prior to the end of the agreed term, the appropriate procedure is Forfeiture.

Notice to Quit

Notice to quit is the most common procedure to recover the premises where the tenant is overholding.

Anybody who has received prior express authorisation may serve the notice to quit.

Where the landlord is not serving the notice to quit himself it is prudent to arrange prior written authority to be given to the server. This authority can not be given retrospectively.

There is no set form for the notice to quit but it must contain a clear and unambiguous intention to end the tenancy.

A description of the premises must be given and it must be addressed to ‘the tenant and all other persons in occupation’.

It need not be signed but it is prudent to do so.

Length of Notice

Firstly check the written agreement to see is there an agreed procedure. If not the statutory minimum is 4 weeks and the notice must end on a gale day (this is the point when one period ends and another begins).

The crucial question is how is the rent reserved in the lease (this is not the same as how is the rent paid).

A monthly tenancy requires one month’s notice expiring on a gale day.

A quarterly tenancy requires 3 months notice and this should expire on a gale day.

A tenancy from year to year requires 183 days notice expiring on the anniversary of the tenancy.

Personal service is best and in the case of a limited company on the registered office of the company.

Waiver of notice

You will be deemed to have waived the notice to quit if you

  • Serve another notice
  • Demand the rent
  • Accept the rent which falls due after the end of the notice period.

Landlords are advised therefore not to accept rent after the end of the notice to quit has expired.

Care should be taken to check the lease to see if any provision has been made for a specific method of terminating the tenancy.

Forfeiture

This is only appropriate where the term of the lease is still running. But a landlord has no right to terminate a lease prematurely unless the tenant has been in breach of one or more of it’s terms.

A landlord also loses the right to forfeiture if he does not follow certain statutory procedures which give the tenant a reasonable opportunity to remedy any breach.

It is extremely difficult in practice to forfeit a lease, especially if the parties are in court for the first time.

Grounds for forfeiture

The 3 main grounds for forfeiture are

1) Disclaimer by the tenant of the landlord’s title

2) Re-entry of ejectment where there has been a breach of a condition in the lease

3) Re-entry of ejectment where there has been a breach of a covenant which provides for re-entry for that breach.

Breach of condition of lease

Breach of a condition of a lease gives the landlord an inherent right to re-enter.

But the landlord must be careful to distinguish between a condition and a covenant.

Breach of covenant in a lease

A breach of covenant in a lease will only give rise to a right to re-enter if the covenant broken has a proviso for re-entry.

Before forfeiture can take place a ‘section 14’ notice must be served unless forfeiture is occurring for non payment of rent. In this case there is no need for a ‘section 14’ notice.

This notice calls upon the tenant to remedy the breach within a reasonable time.

If the notice is served and the time specified in the notice has elapsed without the remedy of the breach, a demand is again made for possession and the landlord may re-enter if it can be done without the use of force. There is a statutory prohibition on the use of force.

Ejectment civil bill on title

If the landlord can not re-enter peaceably the landlord’s remedy is to issue an ejectment civil bill and seek an order for possession in court.

Relief against forfeiture

There are 2 reliefs for the tenant to prevent forfeiture of the lease-statutory and equitable.

Statutory

Section 14(2) Conveyancing Act 1881 allows the tenant to apply to court for relief-it is then at the discretion of the court and there are no fixed rules for the court in exercising its discretion.

A sub-lessee will get statutory relief and his sub-lease will continue as if the superior landlord was the immediate lessor.

The Landlord and Tenant(Ground Rents) Act 1978 provides that forfeiture can not occur by reason of failure to pay ground rent in the case of a house where the tenant is entitled to buy out the freehold.

In general there is no statutory relief where the landlord forfeits the lease for non-payment of rent.

Equitable

Courts may use its equitable discretion to grant relief to the tenant, even for non-payment of rent, if it would appear to be just to do so.

Courts lean against forfeiture for non payment of rent and tend to give tenant’s plenty of opportunity to pay up. But it will look at the conduct of the parties prior to going to court.

Effluxion of time

Where the term of a lease is up there is no need to serve a notice. A letter prior prior to the end of term pointing up the end of the term and demanding possession will suffice.

Court Order

The court has jurisdiction under certain legislation to terminate a tenancy.

Exercise of an option (break clauses) in a lease

Commercial leases often have break clauses entitling either party to terminate prematurely.

Legal proceedings

It may still prove necessary to go to court, even after ending the lease by one of the methods outlined above.

Ejectment Civil Bill on Title Based on Forfeiture

The landlord’s claim is based on the fact that the tenancy has ended by forfeiture and the tenant has no right to retain possession. This is a very common procedure, especially where non-payment of rent has occurred.

The landlord may need to go to court a number of times to establish a poor track record of the tenant as the court is very reluctant to grant possession first time for non payment of rent.

Ejectment for non payment of rent

This is based on Deasy’s Act,1860. The huge disadvantage is that the landlord must wait until one years rent is due-not very popular method for this reason.

Ejectment Civil Bill for overholding

This is used following service of a notice to quit or where the original lease has ended and the tenant remains in possession.

From the tenant’s perspective under the Landlord and Tenant Act 1980 he must now serve notice to seek relief, that is to seek a renewal of the lease) within a certain period following service of the notice to quit.
By Terry Gorry
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Leasing a Commercial Premises? 10 Key Questions and 4 Vital Tasks for Your Solicitor

leasing-commercial-premises
Leasing commercial premises requires caution

Thinking about leasing a shop unit?

Coffee shop?

Office?

Other commercial premises?

If you are thinking about leasing a commercial shop unit in Ireland there are a number of key areas you need to consider before going ahead.

Set out below is a non-exhaustive list of issues that you will need to be satisfied about before investing your cash in a full repairing and insuring lease (FRI lease).

At the end of the piece I also deal with some common questions I am regularly asked by people looking to start or grow their business by taking on a commercial unit.

But before we look at the important questions there are 4 vital things to be taken care of-the conveyancing aspects of the lease. I have encountered a frightening number of tenants who entered into a lease for a commercial premises without using a solicitor.

A host of problems can then arise in relation to rent reviews, sub-letting, assigning the lease to someone else, etc. which the tenant may not have received any professional advice about when taking on the lease.

Don’t make this mistake. And here are some other issues your solicitor will need to take care of:

Conveyancing Considerations

a) Has the landlord title to grant the lease? Your solicitor should insist on seeing prima facie evidence, for example a copy of the deed to the landlord.

b) Is there planning permission?  Your solicitor needs to see proof that there is planning permission for the proposed use of the premises. He/she should also carry out a planning search.

c) Is the premises mortgaged? Your solicitor will need to check whether there is a mortgage on the premises. If there is the mortgagee may need to join in the lease as a party or give written consent to the granting of the lease.

d) Law Society standard pre-lease enquiries? Your solicitor will need to raise the standard pre-lease enquiries and requisitions with the landlord’s solicitor. These are standard queries-a check list essentially-which should be raised.

Once your solicitor has carried out these vital checks you, as proposed tenant, need to consider the following questions:

1) The term

How long will your lease be? Will you have statutory rights under the Landlord and Tenant (Amendment) Act, 1980? Will you have a break clause? Is Vat payable?

2) Repairs

Who is responsible for repairs? If it is a lease in excess of 5 years you as tenant will likely be responsible.
If it is a lease of less than 5 years you may only be responsible for internal repairs.

The question of whether it is a new building or an older building will also be significant and other issues to be addressed would include latent and inherent defects in the building, what is considered fair wear and tear and what risks are covered by insurance.

3) Insurance

If it is a full FRI lease then you as tenant will almost certainly have to pay the insurance premium held in your landlord’s name.
This will vary depending on whether you are the sole occupier of the building or if it is multi tenanted in which case you will be obliged to pay a proportion of the landlord’s premium.

You will therefore be concerned about the risks that the landlord is insuring against and whether the building is insured for reinstatement value or cost.

As tenant you will also want to insure against public liability, employers liability, plate glass and contents but this will depend very much on the nature of your business.

4) Alterations

You may need to make alterations when you take on the property to ensure that it is right for the purpose intended.
This will generally require the landlord’s consent which cannot be unreasonable withheld or delayed.

5) Alienation of the premises

Alienation is the legal term for your assignment of the lease to a third party; you will need the landlord’s consent to this but the landlord cannot unreasonably withhold or delay his consent.

However the question of reasonableness is one which might be disputed and the landlord may argue that his refusal is in the interests of “good estate management” and is therefore reasonable.

6) Service charges

Service charges may or may not arise in your particular circumstance. If there are service charges in respect of common areas you will need to ascertain exactly what is included and how much your service charges will be.

7) Rent reviews

How the rent will be reviewed will be of critical importance to you; generally rent reviews will take place at 5 yearly intervals and is an area that may require arbitration or some agreement as to how any disputes will be resolved.

8) Guarantee

Will you be obliged to provide a guarantee for rent, rates and other outgoings?

9) Break clause

Is there a break clause in the lease?

10) Stamp duty and VAT

You will be liable for the stamp duty on the lease but landlords also have an option to charge VAT or not. This is another area that you will want to check before investing as it can have a significant impact on your cash flow.

These are just some of the many factors you need to consider and be clear on before leasing a commercial premises.

Here are some questions that crop up repeatedly. If you have any questions simply send them in to me with the contact form below and I will answer them.

Stamp duty on commercial leases

If there is a premium payable stamp duty is payable on the premium at the normal non-residential stamp duty rate on a conveyance/transfer, that is, 2%.

Stamp duty is also payable on the rent as follows:

  • Lease not exceeding a term of 35 years: 1% of the average annual rent
  • Lease with a term between 35 and 100 years: 6% of the average annual rent
  • Lease with a term in excess of 100 years: 12% of the annual average rent

A rent review will also mean a fixed charge of €12.50, and each counterpart of an original lease attracts a fixed charge of €12.50

Commercial Premises F.A.Q.

‘How long should I sign a lease for?’

This very much depends on

  1. What you want and need
  2. What the landlord wants, needs, and is prepared to give you.

So, it depends on good, old-fashioned negotiation between you and the landlord, or his agent.

You need to consider your future needs and potential expansion/growth; however, you must also consider your business failing. It’s not a pleasant thought but you need to consider it. At least one break clause can give you a way out of the lease, and it could be exercised due to the growth and new needs of your business, or the failure of the business.

‘What documentation will I need?’

When you go to take a look at the premises to speak to the landlord and/or auctioneer, you don’t need any. Later on if you are going ahead, your solicitor will require some identification and anti money laundering papers, but initially when negotiating you don’t need anything.

‘What are my legal responsibilities (and the landlord’s)?’

Your main responsibilities will be to pay the rent, insurance, and any service charge. However, the location of your unit-for example in a shopping centre or multi unit development-may place some extra responsibilities on you. These will all be contained in your lease in the form of covenants and conditions; your landlord’s entitlements and obligations will also be found in the lease, and for this reason you need to negotiate a good one at the outset.

‘As the property is not finished it still needs toilets, railings walls plastered, staircases and a number of other unfinished works.  I am unsure as to what I should be asking them to finish as I don’t know what it is they will expect me to finish.’

This too is a matter for negotiation and agreement, and you want to be sure to avoid having to carry out a huge amount of renovations/refurbishments which may only benefit the landlord in the long run.

If there is work to be done, and the landlord undertakes to carry it out, get a surveyor or architect to check the work before signing a lease.

Your solicitor will also be looking for certificates of compliance with planning permission and building regulations from the landlord’s solicitor, but you need to be sure that the work is carried out to a satisfactory standard for your needs.
By Terry Gorry
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Why Some Partnerships End in Tears-What You Need to Know About Partnership Agreements

business-partnership

If you are thinking about going into business in a partnership, or perhaps you are already in a partnership, this piece will almost certainly be of interest to you.

Because partnerships can be difficult and quite often end in tears.

Written Partnership Agreement

The need for a written partnership agreement in any partnership is crucial. Because if you do not have one, then the Partnership act 1890 will govern your relations with your partner.

Partnerships are an important part of business life in Ireland for a number of reasons including taxation, accounting, and disclosure advantages over limited companies. There are other reasons too:

  1. any time 2 or more people come together to carry on business and do not form a company the law assumes they are in partnership. They are then subject to partnership law which dates back to the Partnership Act of 1890.
  2.  Professionals such as doctors, lawyers, dentists, vets, accountants are not allowed to form companies.
  3. There are advantages over forming a company from the point of view of tax, accounting and disclosure requirements.

Partnership Does Not Have a Separate Legal Identity

Unlike a company a partnership is not a separate legal identity. This means that partners have unlimited liability, unlike directors or shareholders in companies.

And partnerships do not have to go through any registration process to be formed.

The downside is that each partner is liable for the losses of his co-partner in carrying on the partnership business, even where the other partner has defrauded clients of the business.

Definition of Partnership

Partnership Act 1890 defines a partnership and states that where 2 or more people carry on business with a common view of profit, then a partnership exists.

A written partnership agreement is not necessary (but is strongly advised).

And where 2 or more companies come together to carry on business to make a profit then unless they have set up a special purpose joint venture company a partnership will be deemed to exist.

Co-Ownership of Property

Co-ownership of property alone does not mean that a partnership exists; there must be a sharing of any profits between partners.

Generally the maximum number of partners allowed is 20; however there are exceptions made for solicitors and accountants.

Types of Partnership

There are 2 types of partnership:

  1. an informal partnership (partnership at will) and
  2. formal partnership (fixed term partnership).

Written Partnership Agreement

If there is not a written partnership agreement you are leaving yourself wide open to difficulties.

Because if there is not either an implied or express agreement the partnership will be considered in the eyes of the law a partnership at will and will be governed by an act from 1890. In most cases this is wholly inappropriate for modern business.

For example without a written partnership agreement the 1890 Partnership Act will mean that:

1)  there is no right to expel a partner

2)  any partner may dissolve the partnership

3)  if a partner dies, the firm will automatically dissolve

4 ) there is no power to retire under the Partnership Act, 1890.

Business Name of Partnership

If the partnership is carried on under a name which does not consist of the surnames of the partners, then the partnership must register a business name and publish the names of the partners on the firm’s stationery.

In the event of a dispute, this may be very important as it may indicate when somebody became or ceased to be a partner.

Partners Rights under Partnership Act, 1890

  • every partner may take part in the management of the business so if this in not desired then a written agreement should reflect the wishes of the partners.
  • a simple majority of partners is all that is required to make a decision. Again if this is not desired then a written agreement is a must.

However this is tempered by the requirements that

a) all the partners must exercise their powers for the benefit of the partnership as a whole

b) there must be unanimity to change the partnership business

c) no partner may be introduced without the consent of all the partners

d) a partner may not be expelled by a majority.

Majority Rule in a Partnership

There are 2 restrictions on the capacity of partners to bind the whole partnership by a majority vote:

  1. partners have a fiduciary duty to each other and must exercise their rights for the benefit of the partnership as a whole
  2. sections 24 and 25 of the Partnership Act, 1890 limit the powers of partners to use majority rule.

Section 24 (8) requires unanimity for a change in the partnership business;

section 24 (7) provides that no partner may be introduced without the consent of all the partners

section 25 prohibits the expulsion of a partner by a majority of the partners unless all partners have expressly agree to such a power being conferred. However there is no right to expel under the default agreement situation.

Fiduciary Duty of Partners

A partner has a fiduciary duty to co-partners under common law.

However, the Partnership Act, 1890 also provides as follows:

section 28 provides that partners are bound to render through accounts and full information of all things affecting the partnership.

section 29 provides that a partner must account to the partnership for any profits made from partnership property.

section 30 provides that “If a partner, without the consent of the other partners, carries on any business of the same nature as, and competing with that of the firm, he must account for and pay over to the firm all profits made by him in that business.”

However this does not prevent a former partner from competing with the former partnership.

Considerations for a Written Partnership Agreement

It is pretty clear that having a written partnership agreement is crucial to the smooth running of the partnership and to ensure that the wishes of the partners at the outset are carried out.

The Partnership act 1890 does not prevent a former partner from competing with the firm after he leaves. For this reason it is common for modern partnership agreements to have a non compete agreement, generally for a maximum of 2 years.

Financial rights of partners

The default position from the 1890 act is that all partners are entitled to share equally in the profits and capital of the partnership and must contribute equally to the losses.

This means that even if a partner does not contribute capital in the same proportions as the other partners he is still entitled to share in the profits equally.

The 1890 Act also deals with interest on capital, interest on loans, remuneration of partners, and drawings.

Remuneration of Partners

The Partnership act 1890 states that no partner is entitled to remuneration for acting in the partnership business.For this reason a written agreement is advisable and should also set out the provisions for the drawings of partners.

Partnership Property

It is very important to decide at the outset which is partnership property and which belongs to individual partners.

It is important to note that the 1890 act presumes that property used in the partnership is partnership property and that property bought with partnership funds is partnership property.

So it should be clarified from the start who owns what; and what is partnership property and what is not.

Liability of partners to third parties

Partners are liable for the debts and obligations of the partnership without limitation.

And where a creditor cannot get money due to him from the partnership he is entitled to get his money from the partners personally.

Generally a partner acting within the scope of his authority binds the whole partnership legally. However he must act as a partner and it must be within the ordinary course of business of the partnership.

If a partner can wiggle his way out of binding his firm to an outsider then he himself will be made personally liable.

A partner can bind the partnership arising from his authority which may be

  • express authority
  • implied authority
  • ostensible authority.

However, the act must be done by a partner as partner of the partnership within the ordinary course of business of the partnership. If a partner was acting outside the partnership in a different capacity, she would not bind the firm.

Actions Between Partners

Rows and disputes between partners are, unfortunately, quite common.

Any litigation between partners will be strongly influenced by 2 factors:

  1. courts are reluctant to allow partners to sue other partners on foot of a single partnership obligation. Instead they tend to prefer that all partnership obligations be determined as part of a general settlement of accounts on the dissolution of the partnership;
  2. courts are reluctant to compel an unwilling partner to be a partner of another. Accordingly the specific performance of partnerships is only granted reluctantly and seldom.

Dissolution of Partnership

Dissolution of a partnership can occur by
1)  automatically eg on the death or bankruptcy of a partner

2 ) by notice (section 26 or 32 (c)  ie any partner can just dissolve the partnership by giving notice in the absence of any express or implied contrary agreement. The notice will take effect from the date set out in the notice, but this date cannot be before the date of receipt of the notice.

Once the partnership is dissolved, any partner can demand the sale of partnership assets in order to discharge the liabilities of the firm.

3)  illegality-partnerships formed to carry out an illegal activity or an activity contrary to public policy are automatically dissolved

4) by expiration-either at the end of the partnership term or on the completion of a specific undertaking for which the partnership was formed

5) dissolution by the court-section 35 provides statutory grounds for dissolution by a court including where

  • a partner is of unsound mind
  • a partner becomes permanently incapable of performing his part of the partnership contract
  • a partner’s behaviour is prejudicially affecting the partnership business
  • a partner is in breach of the partnership agreement
  • where the partnership can only be carried on at a loss
  • where it is just and equitable to dissolve the partnership.

Dissolution of Partnership by Court as a Remedy in a Dispute

The court can dissolve a partnership under section 35 of the Partnership Act, 1890 where it decides that

a)  a partner has carried on in a way that is damaging to the business

b)  where a partner commits a breach of the agreement consistently

c) whenever the court decides that is just and reasonable to dissolve it.

Courts can also appoint a receiver/manager to preserve partnership assets where it decides it is appropriate to do so.

Types of Partnership Dissolution

There are two types of dissolution of partnership:

  1. A general dissolution and
  2. A technical dissolution.

General Dissolution of Partnership

This occurs where the partnership is ended and the business is wound up and the partnership assets are sold. Section 39 of the Partnership Act, 1890 allows a partner to force the general dissolution of the firm.

Technical Dissolution of Partnership

A technical dissolution will occur where there is a change in partners, either by a partner leaving or a new partner joining the firm. The death or bankruptcy of a partner will also lead to a technical dissolution.

It will become a general dissolution if the remaining partners decide to sell the assets of the partnership and wind up the business.

No right to expel a partner

Under the Partnership act 1890 there is no right to expel a partner, no matter how negligent or unprofessional he is. This is another important reason to have a written partnership agreement drawn up.

Consequences of dissolution of Partnership

Where a firm goes into general dissolution the assets of the partnership will be sold to pay the debts of the partnership.

It is important to be aware that if there is insufficient funds to pay creditors then in the absence of an agreement to the contrary each partner will have to contribute equally to those losses; regardless of the contributions of capital by each partner at the outset.

In order for a partner to protect himself after dissolution he must give notice to all existing customers to avoid any liability after the dissolution.

It is vital that a former partner notifies customers of the partnership that he is no longer a partner or he could be held liable under the Partnership act 1890 for any obligations incurred by the partnership after his departure.

Any partnership agreement must provide for the share of the departing partner to be purchased by the continuing partners and must provide for what will occur on the death of a partner.

(NOTE: there are 2 other types of partnership recognised by Irish law which have not been considered here-a limited partnership and the investment limited partnership.)

You should consult a solicitor or other suitably qualified professional to have your partnership agreement drafted and which will provide for all of the issues outlined above.

You may also be interested in the problem with partnerships.
By Terry Gorry
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Passing Off, Counterfeit Goods and Confidential Information-The Essentials

passing off counterfeit goods

“Passing off” is a common law tort. (A tort is a civil wrong which can be remedied in the Courts).

It generally involves the making of a misrepresentation and there are 5 characteristics of “passing off”.

1.       A misrepresentation

2.      Made by a trader in the course of trade

3.      To prospective customers

4.      Which is calculated to injure the business or goodwill of another trader

5.      And which causes actual damage to a business or goodwill of the trader.

1.       Misrepresentation

There must be a false representation by the defendant so that an association with the plaintiff is made in the minds of the public.

2.      Made by a trader in the course of trade

The misrepresentation must be made in the course of trade.
What is considered to be a trader as far as the law of passing off is concerned is very wide-it has been held to include the BBC for example.
Anyone who makes an income from the provision of goods/services is a trader.

3.      To Prospective customers

For passing off to occur, the misrepresentation must be made to prospective customers; the courts have held that they will decide whether the general public is likely to be deceived.

4.      Business/Goodwill

It has been accepted that goodwill can be created in different ways and is not confined to simply trading within a jurisdiction.

5.      Damage

The plaintiff must prove that the action of the defendant has or is likely to cause damage to the plaintiff in order to prove passing off.

Passing off is closely connected with counterfeit goods.

Counterfeit goods

A trade mark owner can register his trade mark with the Revenue Commissioners and customs officials can destroy goods, which have been abandoned without or before determining whether an intellectual property right has been infringed.

Each consignment of goods from outside the EU will be inspected to see whether the goods are genuine. If they are found to be counterfeit, the customs authorities will destroy the consignment.

Infringement

Exceptions

A trade mark is not infringed by the use of a person of his own name or address, provided it is done honestly.

A trade mark will not be infringed by its use on goods which have been put on the market in the EU by the owner of the trade mark or with his consent. This is known as Exhaustion of Rights of a registered trade mark and stems from EU law.

Remedies

Courts have the power to grant an injunction and/or the destruction of goods and damages.

The District court has the power to request the Garda Siochana to seize goods and ultimately to have them destroyed once satisfied that an infringement has taken place.

Domain Names

A domain name will not necessarily become a trade mark and it is advisable for the owner of a domain name to also register it as a trade mark.

Confidential Information

Information such as knowhow, secret formulae, processes, customer lists are clearly of huge importance to businesses.

The protection of this information can be best protected by a confidentiality agreement with an employee from an employer’s perspective. This can be more effective than registering patents as this involves putting information into the public domain.

Once it is established that an obligation of confidentiality then the person to whom it is given has the duty to act in good faith and only use the information for the purpose for which it was intended.

Generally the law imposes a duty of confidentiality in 2 situations:

  1. The protection of trade secrets/confidential information in non-employment cases
  2. The protection of trade secrets in the course of employment

Once a contract of employment has ended and the employee has left his position he is still under a duty of confidentiality.

It has traditionally been held that in an employment situation there will be 3 types of information:

  1. Public information-not protected;
  2. Skill and experience which is not protected although it could be the subject of a restriction of trade clause in the employment;
  3. Trade secrets-protected and can only be used for the benefit of that employer.

Remedies

Breach of confidential information will lead to an injunction or damages or an account of profits or all 3.
By Terry Gorry
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Trade Marks in Ireland and Community Trade Marks (CTM)-The Facts You Should Know

trademarks ireland

Do you have a valuable trade mark? Is someone infringing your trade mark?

Are you thinking about registering a community trade mark (CTM)?

This  article will look at trade marks, community trade marks (CTM), the benefits of trade mark registration, how to register a trade mark, registered and unregistered trade marks, and more.

First: what is a trade mark?

A trade mark is the means by which a business identifies its goods or services and distinguishes them from the goods and services supplied by other businesses.

The registration of a trade mark is an important task for any small business owner.

The Trade Marks Act, 1996 defines a trade mark as

“any sign capable of being represented graphically which is capable of distinguishing the goods or services of one undertaking from those of other undertakings”.

6.—(1) In this Act a “trade mark” means any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings.

(2) Without prejudice to subsection (1), a trade mark may, in particular, consist of words (including personal names), designs, letters, numerals or the shape of goods or of their packaging.

(3) References in this Act to a trade mark include, unless the context otherwise requires, references to a collective mark within the meaning of section 54 or a certification mark within the meaning of section 55 .

A trade mark may consist of words, (including personal names), designs, logos, letters, numerals or the shape of goods or of their packaging, or of other signs or indications that are capable of distinguishing the goods or services of one undertaking from those of others.

Trade Mark Registration

Not all trade marks are capable of registration.

Registration will be refused for a trade mark which:

  • is not capable of being represented graphically or not capable of distinguishing good or services of one business from those of other businesses,
  • does not have any distinctive character,
  • consists exclusively of signs or indications that designate essential characteristics of goods or services (e.g. their quality, intended purpose, geographical origin etc.),
  • consists exclusively of signs or indications which are customary in the language in the trade,
  • consists exclusively of the shape, arising from the goods themselves, or which is necessary to obtain a technical result, or gives substantial value to the goods,
  • is contrary to public policy or principles of morality,
  • is likely to deceive the public, e.g. as to the nature, quality, or geographical origin of the goods or services,
  • is applied for in bad faith,
  • is identical with or similar to a trade mark that is already on the Register in respect of identical or similar goods.

Trade mark registration creates an official record of your rights as owner of a particular trade mark and makes it easier to prevent others from using it.

Trade mark registration grants a statutory right, subject to certain conditions, to prevent others from using the trade mark without the registered proprietor’s permission – i.e. to prevent infringement.

Trade mark registration confers an exclusive right to authorise others by means of licensing to use the trade mark for the goods and /or services for which the trade mark is registered.

You should consider registering your trade mark if it is important to you that your customers are able to identify your products and services from those of your competition.

Unauthorised use of a trade mark means the rightful owner may lose business and goodwill.

Although trade mark registration is not obligatory, registration makes it easier to prevent others from benefiting from the reputation established by the use of a trade mark by allowing the proprietor of the registered trade mark to take infringement proceedings before the court.

The fraudulent application or use of a trade mark in relation to goods without the authorisation of the proprietor and/or the possession of goods or material bearing a mark identical to or nearly resembling a registered trade mark, may in certain circumstances, be a criminal offence, and criminal proceedings may be initiated under the Trade Marks Act, 1996.

Unregistered Trade Marks

If you use a particular brand for some period of time then you may have an unregistered trade mark. If someone infringes your brand or trade mark you will still have legal recourse to protect your trade mark.

However this will involve commencing legal proceedings under the common law heading of “passing off” and the onus of proof will be upon you to establish proof of your ownership of the unregistered trade mark.

This can be costly and time consuming and you will not enjoy the protection of registration and the remedies provided by the Trade Marks Act, 1996.

Benefits of Trade Mark Registration

The principal benefits of trade mark registration are

  • Without registration you can only rely on a legal action for “passing off” to protect your rights
  • Registration will help protect your business identity and goodwill
  • It is proof of your ownership of the intellectual property rights of the trade mark
  • Protection against other businesses whose products/services are defective who trade in the industry
  • Protection against others using similar trade marks.

Types of Trade Mark

Ordinary or standard trade mark

The majority of all trade marks fall into this category.

They consist of words, slogans, logos, etc. whose purpose is to distinguish the goods and services of their proprietors from those of other undertakings.

Collective mark

A Collective trade Mark is a mark that distinguishes the goods or services of the members of an association from those of others.

Certification mark

A Certification trade Mark is a mark that “certifies” goods or services as being of a certain standard or possessing certain qualities or other characteristics.

A certification mark can only be registered in the name of the proprietors if they themselves do not produce or provide the goods or services to which the mark is applied.

Series of trade marks

A series of trade marks is a number of marks, which resemble each other in their important features and differ only in respect of non-distinctive elements that do not substantially affect their identity.

Three-dimensional mark

A three-dimensional trade mark is a trade mark that consists of the shape of a product or its packaging.

Application for a Trade Mark

Any person or company etc who uses or proposes to use a trade Mark can apply to register that trade mark.

An application may be made either before the trade mark is put in use or afterwards. Generally speaking an application should be made to register a trade mark as soon as possible to ensure priority over anyone else who applies to register the same or similar mark.

To apply, complete the application form 1 on Patents Office website. The fee for filing an application may be paid at this time or within one month of that date.

An applicant may pursue his or her application personally or choose to employ the services of a registered Trade Mark Agent. If an application meets the criteria for registration, it is registered with effect from the date of application.

The Application Process

When an application (which contains the minimum information required) is received, a filing date and application number is assigned and a filing receipt is issued.

The Minimum requirements for a filing date are –

  • A request to register the Mark (completion of the prescribed application form meets this requirement),
  • The name and address of the person requesting the registration,
  • A representation of the trade mark,
  • A statement or list of the goods and/or services for which registration of the trade mark is sought.

The application is then examined as to its registrability.

The examination process includes a search of relevant databases to ascertain whether the trade mark or a similar mark has previously been registered. If this is found to be the case, then the Office may refuse to register the trade mark.

The examination also addresses other obstacles to trade mark registration such as, for example, whether the mark is simply a laudatory statement of a product’s quality (e.g. “Best Quality”) or a sign that has become generic within a particular field of commercial activity. These are among a number of grounds on which an application for registration may be refused.

If it is proposed to refuse registration in a given case, the Applicant will be informed of the reasons why and will be afforded an opportunity to make arguments in support of the application.

Before any decision to refuse becomes final, the Applicant will have a right to attend an oral hearing before a senior official of the Patents Office.

If the application is accepted for registration, details of the mark will be published in the Official Journal. Within 3 months of the advertisement of a trade mark, any person who objects to its registration may send a notice of opposition to the Office accompanied by the prescribed fee and the Office will copy this to the Applicant. Each side (the Applicant and the Opponent) is then given an opportunity to file evidence in support of its case and the question of whether the mark should be registered is ultimately decided by a senior official of the Office.

How Long Does a Trade Mark Last?

A trade mark registration can last indefinitely provided the registration is renewed.

Registration is initially for a period of ten years (from the date of filing of the application) and it can subsequently be renewed every ten years on payment of the renewal fee.

Community Trade Mark (CTM)

A CTM (Community Trade Mark) is effective across all 27 states of the European Union.

However as it has unitary effect, that is recognised in all 27 states, if your trade mark registration application fails in one state then your application for a CTM will fail.

Benefit of a Community Trade Mark

The big benefit of the community trade mark procedure is that it allows

  • A single application for all 27 EU states and any new members
  • A single administrative centre
  • One language to be dealt with
  • Very cost effective compared to registering a national trade mark in a number of countries.

Should your application for a CTM fail you do have the option of applying to register in individual states but clearly this will require lawyers or agents in many different countries and other costs such as translation of documents, many administrative centres and files to deal with.

Maintaining your CTM

In order to maintain your community trade mark you will have to use it in at least one member state within 5 years of registration but using it in only one member state will allow you to maintain your CTM across the European community.

Enforcing your CTM

To enforce your CTM there are essentially two avenues open to you-

  1. Issue proceedings at the Community trade mark courts
  2. File requests with EU customs offices to retain allegedly counterfeit goods under their control.

The whole system of CTM (community trade marks) is administered by the OHIM (Office for Harmonisation in the Internal Market) in Alicante, Spain.

Priority of an earlier national trade mark

If you are the owner of a national trade mark for the CTM application that you now wish to make then you can claim the priority of that previous mark in your CTM application which safeguards your previous trade mark rights even if you choose not to renew the national mark.

CTM application fees

The application fee for a CTM is €900 if you do it online and €1,050 for a paper based application and this includes 3 classifications or classes of goods/services. Each extra classification costs €150.

Keep in mind that you will also have additional professional fees for a solicitor/lawyer/trade mark agent.
By Terry Gorry
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