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Clickdocs legal glossary
Category: Business and Law
Date & country: 11/11/2007, UK
Words: 260

Redemption of Shares
Under Chapter VII of Part V of the Companies Act 1985, a company can redeem shares which are issued as redeemable shares by repaying the nominal value to the shareholder, whereupon the shares are cancelled. Redemption must normally be from distributable profits, but a procedure exists to allow shares to be redeemed from capital. As this amounts to a reduction of capital, an amount equivalent to the reduction of issued capital may need to be transferred to a capital redemption reserve.

Redundancy arises if the employer ceases to carry on or closes the business in which the employee was engaged, if the employer no longer needs the skills of the employee or needs fewer to carry out the work.

Register of Members
One of the statutory registers required to be maintained by the company under Section 352 of the Companies Act 1985. It shows the name and address of the shareholder, the number of shares held, the amount paid up, the number of relevant transfers and any transfers or acquisition of shares. It determines who is and who is not a shareholder at any given time.

Registered Office
The Company address notified to the Companies Registry where a company's records will normally be kept. Under the Companies Act 1985 the registered office is to be quoted on company correspondence and is where official correspondence will be sent.

Registered Trade Mark
Under the Trade Marks Act 1994, any sign which is capable of being represented graphically and is capable of distinguishing goods and services of one business from those of another may be a registered trade or service mark subject to certain exceptions including resemblance to existing marks. Such signs include brands, names, designs, titles, and shapes of goods or packaging. The applicant must specify one or more of the 42 classes of goods or services in which the mark is to be used.

Rent Review
The landlord may have reserved the right to review the rent at intervals during the period of the lease. There is usually a mechanism that can be invoked to determine a new rent which will reflect changes in the market since the lease was originally granted. The lease usually specifically states that the rent may only be reviewed upwards to avoid the rent being reduced if the market has fallen.

The Latin term 'Res' means, in a UK legal context: 'matter, affair, thing, circumstance'.

Res Gestae
The Latin term 'Res gestae ' means, in a UK legal context: 'the thing done'.

Res nulis
The Latin term 'Res nulis ' means, in a UK legal context: 'nobody`s property'.

A decision of (a) the members of a company; or (b) the board of directors of a company. Resolutions may be (i) ordinary resolutions; (ii) special resolutions; and (iii) extraordinary resolutions. In certain circumstances a resolution by the members of a company may be required by them to be circulated by the company. A copy of every special resolution and of every extraordinary resolution must within 15 days of its being passed, be forwarded to the Registrar of Companies and must be recorded by him: Companies Act 1985, section 380(1).

Restrictive Covenant
A restrictive covenant is where an obligation is imposed on an employee or director either in an employment contract or financing document preventing the employee/director from doing something during or after his employment has terminated. This usually covers engaging in competitive businesses or poaching staff or customers. Particularly where post-employment issues are addressed (e.g. competition), care is required in drafting as the terms may be unenforceable if they are unreasonably wide.

The Latin term 'Sciens ' means, in a UK legal context: 'knowlingly'.

Se defendendo
The Latin term 'Se defendendo ' means, in a UK legal context: 'in self defence'.

The Latin term 'Secus ' means, in a UK legal context: 'the legal position is different, it is otherwise'.

An employer is obliged under the Social Security Act 1992 to pay Statutory Sick Pay (SSP) for the first 28 days of absence if the employee has been incapacitated for four or more working days. Employees self-certify for the first seven days of absence but thereafter a Continuation Form should be sought from the employee's General Practitioner. Statutory Sick Pay can generally be recovered by an employer through deductions from National Insurance Contributions.

Service Contract
An agreement between a company and its directors or senior managers setting out their terms of service, in particular the minimum term and notice period. It differs from the normal conditions of employment in that it is more detailed and includes terms which are usually the subject of more arms length negotiation such as restrictive covenants. The principal feature of a service contract is the length of the term as dismissal can give the employee a damages claim based on the value of his salary and benefits, or the period up to the time when the Agreement could have been terminated.

Sexual Harassment
Under the Sexual Discrimination Act 1975, sexual harassment occurs when a person is subject to abuse, hostile behaviour or other unwanted conduct because of his/her sex. The person may be awarded compensation in an industrial tribunal even where there has been no financial loss. Employers should put in place the necessary policies, training, discipline and monitoring to limit such risks. The employer avoids such liability if he shows he did all that was reasonable to prevent such conduct.

The unit of economic value of a company to which are attached rights to vote and to participate in dividends and capital distributions of the company. Each share has a nominal capital value usually £1, which is paid into the company on issue.

Share Capital
Under the Companies Act 1985 shares may be issued by the company to shareholders in return for cash or other value equal to or greater than its nominal value. Shares in the authorised share capital are available to be issued. The issued share capital refers to shares which have been allotted and issued and held by shareholders. Not all of the authorised share capital needs to be issued. When shares are issued the person subscribing must pay cash or equivalent value of at least the nominal amount. Where the share is worth more than its nominal amount, a premium may also be paid.

Share Certificate
A printed certificate issued by a company when a person is entered onto the register of members as the holder of the shares in the company. The certificate, which is under seal, shows the name and address of the holder and the number and type of shares held. It is evidence of the registered person's title to the shares. On a transfer the share certificate should be delivered to the company with the share transfer to allow a new certificate to be issued to the new shareholder (Companies Act 1985).

Shareholders Agreement
An agreement between shareholders of a company containing their agreement on the regulation of their relationship and on the administration of the company. There will be an overlap with the Articles of Association but it is not, unlike the Articles of Association, subject to public scrutiny.

Sick Pay
An employer is obliged under the Social Security Act 1992 to pay Statutory Sick Pay (SSP) for the first 28 months of absence if the employee has been incapacitated for four or more working days. Employees self-certify for the first seven days of absence but thereafter a Continuation Form should be sought from the employee's General Practitioner. Statutory Sick Pay can generally be recovered by an employer through deductions from National Insurance Contributions.

The term is applied to a range of corporate issues. A company in liquidation is not solvent unless the directors can declare that it can pay all creditors within twelve months. A company is commonly assumed to be solvent if the value of the company's assets is more than its liabilities, taking account of contingent and future claims or that it will generate sufficient surplus revenue from its operations to make up the deficit.

Special Notice
Where special notice is required, as in the case of resolutions to remove directors under Section 303 Companies Act 1985, notice of the intention to move the resolution must be given by shareholders to the company (not its members) at least 28 days before the meeting at which it is to be moved. The company must then give notice of the resolution when it calls the relevant meeting (for an ordinary resolution fourteen days notice is required). If that is not practicable, notice can be given in newspapers at least 21 days before the meeting. Note: Special Notice and Special Resolutions are not connected. One does not require the other. (Section 379 Companies Act 1985).

Special Resolution
In relation to a company, a resolution passed by a majority of not less than three-fourths of such members as, being entitled to do so, vote in person or where proxies are allowed, by proxy at a general meeting of which not less than 21 days` notice, specifying the intention to propose the resolution as a special resolution has been duly given: Companies Act 1985, section 378(2). Special resolutions are required (i) to alter the Articles of Association of the company; (ii) to alter the objects of the company; (iii) to change the name of the company; and (iv) to reduce the capital of the company with the leave of the court. A copy of every special resolution must within 15 days after it has been passed be forwarded to the Registrar of Companies and recorded by him.

Stamp Duty
A tax on documents relating to specific transactions, share transfers and property transactions. The rates of duty are as follows:

The Latin term 'Stet ' means, in a UK legal context: ' do not delete, let it stand'.

Sub modo
The Latin term 'Sub modo ' means, in a UK legal context: 'within limits'.

Sub nomine
The Latin term 'Sub nomine ' means, in a UK legal context: 'under the name of'.

Sub silentio
The Latin term 'Sub silentio ' means, in a UK legal context: 'in silence'.

When a tenant sublets, he usually needs to obtain the landlord's prior written consent or licence to do so. A business lease usually contains a term preventing the tenant sub-letting or parting with possession of the property by allowing a third party to occupy all or part of the premises. This absolute prohibition can be subject to subletting being permitted with the landlord's specific consent. For subletting, the landlord's greatest concern will be to ensure that the sub-tenant has no greater security that the tenant himself - for example that he does not obtain the tenant's statutory renewal rights. Since the existing tenant remains directly liable under the lease for rent, the landlord ought not to be particularly concerned over the credit worthiness of the sub-tenant. In any event the landlord will charge the tenant for his legal and other costs in considering and granting a licence.

The first subscribers are those who sign the Memorandum and Articles of Association submitted to the Companies Registry to incorporate a company and agree to subscribe for shares in the company. On incorporation they become the first shareholders (or in the case of a company limited by guarantee, its first members). Otherwise subscribers are persons who apply to a company for new shares to be issued to them and pay the subscription price.

Subsidiary Company
A company controlled by another company. A company is deemed to be a subsidiary of another if (but only if): (a) that other (i) is a member of it and controls the composition of its board of directors; or (b) holds more than half in nominal value of its equity share capital; or (b) the first-mentioned company is a subsidiary of any company which is that others subsidiary. 'Equity share capital' means its issued share capital excluding any part of it which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution. The composition of a company`s board of directors is deemed to be controlled by another company if (but only if) that other company by the exercise of some power exercisable by it without the consent or concurrence of any other person can appoint or remove the holders of all or a majority of the directorships.

Suggestio falsi
The Latin term 'Suggestio falsi ' means, in a UK legal context: 'the suggestion of something which is untrue'.

Sui generis
The Latin term 'Sui generis ' means, in a UK legal context: 'unique'.

Summary Dismissal
Gross misconduct should ideally be defined in the employment contract and, where committed should allow the employer to dismiss without notice or prior warnings ('Summary' or 'Instant' dismissal). Such conduct will normally include theft, violence, falsification of records and other serious matters. The list should be stated as being non-exhaustive to allow the employer discretion.

Suppressio veri
The Latin term 'Suppressio veri ' means, in a UK legal context: 'the suppression of the truth '.

Table A
A standard set of Articles of Association which can be incorporated by reference in the Articles of Association of any company. It is usually used to cover non-essential procedural issues. Found in the Companies (Tables A-F) Regulations 1985. Table A applies to private companies limited by shares. Tables B- F apply to other types of company such as companies limited by guarantee.

Talis qualis
The Latin term 'Talis qualis ' means, in a UK legal context: 'such as it is'.

Under a lease or tenancy agreement, the party who is given by the landlord the right to occupy the property on an exclusive basis in return for rent. The term will include a new tenant who takes an assignment of the new tenant's interest in the lease.

Terms and Conditions of Employment
Under the Employment Rights Act 1996, an employee must receive key particulars of his employment in writing within two months of commencing employment. These are known as the Terms and Conditions of Employment.

Terms and Conditions of Purchase
These, generally pre-printed, terms and conditions of purchase are provided by one trading company to another as the terms upon which they will do business (e.g. sell, supply or purchase goods or services).

Terms and Conditions of Sale
These, generally pre-printed, terms and conditions of sale are provided by one trading company to another as the terms upon which they will do business (e.g. sell, supply or purchase goods or services).

A person who makes a will is a testator.

Trade Secrets
A contract will commonly contain a clause forbidding disclosure of trade secrets and confidential information to third parties during and after the contract. It will also often require company materials to be kept secure and returned (with any copies) when the contract ends. In the case of employment contracts, post termination restraints must be reasonable.

A trademark is a name, symbol or logo which belongs to a company or person and is capable of being associated with its products or services. Its value lies in the goodwill associated with the mark in the minds of customers. Ownership and protection of trademarks is important. Those trademarks which qualify can be registered with the Trade Marks Registry. The use of trade marks can be licensed to third parties. The owner can prevent unauthorised use or infringement of trademarks which are registered - even if not registered a passing off action may be available.

Trademarks Registry
The Trademarks Registry, part of the Patent Office, administers the procedure for the registration of trademarks. It determines whether they qualify and maintains a register of trademarks which is open to public inspection.

Transfer of Shares
A transfer of shares is where an existing shareholder transfers issued shares to another person who is then registered as the holder of those shares.

Uberrima fides
The Latin term 'Uberrima fides ' means, in a UK legal context: 'good faith'.

A person promising to take up shares in accordance with an underwriting agreement is an underwriter.

Underwriting Agreement
An underwriting agreement in one under which, before a company issues shares to the public, a person undertakes in consideration of a commission to take up the whole or a portion of such (if any) of the offered shares as may not be subscribed for by the public.

Uno flatu
The Latin term 'Uno flatu ' means, in a UK legal context: 'at the same moment, with one breath'.

The Latin term 'Verbatim ' means, in a UK legal context: 'word by word, exactly'.

Vicarious Liability
An employer is vicariously liable for negligent acts or omissions by his employee in the course of employment whether or not such act or omission was specifically authorised by the employer. To avoid vicarious liability, an employer must demonstrate either that the employee was not negligent in that the employee was reasonably careful or that the employee was acting in his own right rather than on the employer's business.

Vice versa
The Latin term 'Vice Versa ' means, in a UK legal context: 'the other way around'.

The Latin term 'Vide ' means, in a UK legal context: 'see'.

The Latin term 'Volens' means, in a UK legal context: 'willing'.

A will is a legal document in which a person (the testator) directs how his property is to be distributed after his death. Such documents must be executed in due form (i.e. in England, in accordance with provisions of section 9 of the Wills Act 1837) and must be duly witnessed.

The process by which a company dies. Under Part IV of the Insolvency Act 1986, there are three separate procedures - a members voluntary winding up where a company is solvent, a creditors voluntary winding up for insolvent companies and a compulsory winding up by the court. Once the process starts the company is administered by a liquidator who disposes of all assets, and distributes the remainder to members or creditors. When the process is complete, the company is struck off the Companies Register and ceases to exist.

Wrongful Dismissal
A common-law claim based on breach of employment contract and, as such, wrongful dismissal is distinct from unfair dismissal. Where an employee is summarily dismissed in breach of his contractual entitlement to notice and other contractual entitlements he will have a claim for damages unless the dismissal was justified under the terms of his contract of employment. Damages are based on the employee's loss.