Memery Crystal attends ELITE workshop for SMEs hosted by London Stock Exchange

The panel heard from delegates from companies in the technology, fashion and retail sectors who had legal questions and commercial concerns about the challenges of internationalisation such as:

• What are the advantages and disadvantages of setting up local SPVs in-country to isolate risk from the company holding the valuable IP rights?
• What are the tax considerations of having a “permanent establishment” in another country and what constitutes a “PE” for tax purposes?
• What contractual terms allow us to exercise tight credit control when dealing with customers or suppliers in other jurisdictions?  Is it worth suing customers in developing countries for unpaid debts?
• What is the point of an arbitration clause?  Is it true that arbitration is often more expensive than court proceedings?

The Memery Crystal partners were able to offer guidance on these matters and to make suggestions about how to approach professional advisers in the UK and in other jurisdictions to ensure that the right questions are asked and the right advice is obtained.  The partners were asked to give one key “take away” point from each of their disciplines and these are set out below:

Bree Taylor (Litigation and Insolvency/Restructuring)

Make sure you know your own contractual terms inside out.  Ask your advisers the simple questions like “if someone doesn’t pay us, what will we need to do to get paid?”  Look carefully also at contractual counterparties.  Do you know which entity you are contracting with?  Does that entity have substantial assets or is it just a shell?  It might not be the same as the person you shake hands with to do the deal.

Tim Crosley (Tax)

Take early, sound and realistic tax advice.  Beautiful and complex looking structures may not fit easily with the way in which you will actually want to do business.  Make sure your chosen tax structure is and will remain practical and easily scalable.  If it looks too good be true then perhaps it is.

Stephen Milne (Technology/Media/Telecoms)

Take strategic advice early, even if only to review what is already in place.  Ensure you are fully apprised of risks and can determine how best to take your business forward.

Tim Ryan (Technology/IP)

Intellectual property is as important as ever and arguably more so in today’s global economy.  Businesses need to know what IP they have, how to protect it and how to exploit it commercially.  Those who do business online need to bear in mind the impact of national boundaries and jurisdictions, whilst keeping in mind the lack of boundaries in the digital world.

Michael Dawes (Equity Capital Markets/ M&A) When expanding internationally, think of your advisory spend in the same way that you would your advertising spend, or any other essential part of the budget. It is invariably cheaper in the long run to get good advice up front, so that things are structured correctly, than to risk it and then have to try to unwind things later on.