LPC COMMERICAL LAW SUMMARY
Commercial law arises in the following topics:
• Intellectual Property
• Agency
• Distributorship
• Franchising
INTELLECTUAL PROPERTY RIGHTS
• IP rights give you a monopoly for a specified period of time
• There is a tension between IP rights and competition law because IP rights create monopolies and
competition authorities try to prevent monopolies
• IP rights are territorial or domestic – this means you need to decide where you need IP protection and
then register it in that country
• There is no real cohesive European system, so you usually need to think about registering in each
country
o Note: You are not expected to know about protections outside the EU
• Exam Tip: Always consider all IP rights - a particular object/feature may have multiple IP rights
MAIN TYPES OF INTELLECTUAL PROPERTY RIGHTS
1. Patent
2. Copyright
3. Trademark
4. Registered Design
5. Unregistered design
*See the Intellectual Property Rights Summary Chart for a detailed breakdown of each IP right.
EXHAUSTION OF IP RIGHTS – a judge created concept
• Occurs if:
1. A consignment of good are put on the market within the EU
2. With the consent of the owner
3. Then the goods must be allowed to move freely within the EU and across national borders
• Once IP rights have been exhausted, the owner of those IP rights cannot stop another person from
moving their products freely within the EU
• There is no global of exhaustion of IP rights, so it cannot be applied to imports from US – Auth: Tesco v
Levi Strauss Inc.
COMPANY & BUSINESS SALES
• 2 types of acquisitions:
1. Share Sale (aka Company Acquisition) - occurs when seller transfers all their shares in a company to
purchaser
• Target company remains the same – only shareholders change
• Buyer gets all parts of the company
• Only thing transferred are shares
• Stock Transfer Form must be executed by the vendor to transfer title to shares
• Key document: Share Purchase Agreement
1
, • Consideration will not be known until after completion, but it must be paid for the contract to the
completed.
• The purchase price is determined by the Net Asset Value (NAV) at completion
o The problem is that the parties will not know the NAV at the time of negotiation, so they
don’t know the value prior to exchange. So, the accountants will need to calculate the
NAV at completion immediately after completion.
Completion of a Share Acquisition
• Coordinated via completion agenda – sets out steps to take and documents that need to complete
the acquisition
• Seller must call completion board meeting to:
o implement any decisions buyer needs to take control of company
o approve share transfer, service contracts for directors
o appoint/terminate directors, secretary and company’s auditors
o change registered office, update register of members
• Directors will need to resign from service contracts and get shareholders to waive any claims they
would have against shareholder
• Buyer doesn’t become member of target company until they are entered into register of members
or exercise voting rights until after completion of acquisition
Stock Transfer Form
• A stock transfer form is the instrument that is used to transfer shares to buyers in a share sale
• Is needed whenever you are transferring shares
• If value of shares is MORE THAN 1,000, buyer must pay Stamp Duty Land Tax at rate of half a
percent (0.005) rounded up to the nearest £5 and get form stamped at the top
• If value of shares is LESS THAN £1,000, buyer does NOT have to pay SDLT but must complete
Certificate 1 at back
• If shares are a gift, no SDLT is payable
How to Complete A Stock Transfer Form
1. CONSIDERATION MONEY – amount buyer is paying for share (nil if it’s a gift)
2. NAME OF UNDERTAKING – name of seller/company transferring shares
3. DESCRIPTION OF SECURITY – this is the type of share (e.g. ordinary shares)
4. NUMBER/AMOUNT OF SHARES – put number of shares in numbers (TEN) and figures (10 units of
£1)
5. NAME OF REGISTERED HOLDER – put seller’s full name and address
6. SIGNATURE OF TRANSFEROR – Seller must sign to indicate that are selling shares
* Don’t forget to cross out “I/We hereby...’
7. STAMP OF SELLING BROKER – Put date seller decided to sell shares or write ‘insert date of
completion’
8. Put full name and address of buyer at the bottom in BLOCK LETTER
9. Put name and address of person lodging the form (aka BUYER) in the box at the bottom-right hand
of the page
*Only complete Certificate 1 on the back page if value of consideration is LESS THAN £1,000
2. Business Sale (aka Asset Acquisition) - occurs when seller sells business/assets to another
company/person
• Purchaser can pick and choose the assets its wants
• The consideration for each asset will be specified in the agreement
2
Commercial law arises in the following topics:
• Intellectual Property
• Agency
• Distributorship
• Franchising
INTELLECTUAL PROPERTY RIGHTS
• IP rights give you a monopoly for a specified period of time
• There is a tension between IP rights and competition law because IP rights create monopolies and
competition authorities try to prevent monopolies
• IP rights are territorial or domestic – this means you need to decide where you need IP protection and
then register it in that country
• There is no real cohesive European system, so you usually need to think about registering in each
country
o Note: You are not expected to know about protections outside the EU
• Exam Tip: Always consider all IP rights - a particular object/feature may have multiple IP rights
MAIN TYPES OF INTELLECTUAL PROPERTY RIGHTS
1. Patent
2. Copyright
3. Trademark
4. Registered Design
5. Unregistered design
*See the Intellectual Property Rights Summary Chart for a detailed breakdown of each IP right.
EXHAUSTION OF IP RIGHTS – a judge created concept
• Occurs if:
1. A consignment of good are put on the market within the EU
2. With the consent of the owner
3. Then the goods must be allowed to move freely within the EU and across national borders
• Once IP rights have been exhausted, the owner of those IP rights cannot stop another person from
moving their products freely within the EU
• There is no global of exhaustion of IP rights, so it cannot be applied to imports from US – Auth: Tesco v
Levi Strauss Inc.
COMPANY & BUSINESS SALES
• 2 types of acquisitions:
1. Share Sale (aka Company Acquisition) - occurs when seller transfers all their shares in a company to
purchaser
• Target company remains the same – only shareholders change
• Buyer gets all parts of the company
• Only thing transferred are shares
• Stock Transfer Form must be executed by the vendor to transfer title to shares
• Key document: Share Purchase Agreement
1
, • Consideration will not be known until after completion, but it must be paid for the contract to the
completed.
• The purchase price is determined by the Net Asset Value (NAV) at completion
o The problem is that the parties will not know the NAV at the time of negotiation, so they
don’t know the value prior to exchange. So, the accountants will need to calculate the
NAV at completion immediately after completion.
Completion of a Share Acquisition
• Coordinated via completion agenda – sets out steps to take and documents that need to complete
the acquisition
• Seller must call completion board meeting to:
o implement any decisions buyer needs to take control of company
o approve share transfer, service contracts for directors
o appoint/terminate directors, secretary and company’s auditors
o change registered office, update register of members
• Directors will need to resign from service contracts and get shareholders to waive any claims they
would have against shareholder
• Buyer doesn’t become member of target company until they are entered into register of members
or exercise voting rights until after completion of acquisition
Stock Transfer Form
• A stock transfer form is the instrument that is used to transfer shares to buyers in a share sale
• Is needed whenever you are transferring shares
• If value of shares is MORE THAN 1,000, buyer must pay Stamp Duty Land Tax at rate of half a
percent (0.005) rounded up to the nearest £5 and get form stamped at the top
• If value of shares is LESS THAN £1,000, buyer does NOT have to pay SDLT but must complete
Certificate 1 at back
• If shares are a gift, no SDLT is payable
How to Complete A Stock Transfer Form
1. CONSIDERATION MONEY – amount buyer is paying for share (nil if it’s a gift)
2. NAME OF UNDERTAKING – name of seller/company transferring shares
3. DESCRIPTION OF SECURITY – this is the type of share (e.g. ordinary shares)
4. NUMBER/AMOUNT OF SHARES – put number of shares in numbers (TEN) and figures (10 units of
£1)
5. NAME OF REGISTERED HOLDER – put seller’s full name and address
6. SIGNATURE OF TRANSFEROR – Seller must sign to indicate that are selling shares
* Don’t forget to cross out “I/We hereby...’
7. STAMP OF SELLING BROKER – Put date seller decided to sell shares or write ‘insert date of
completion’
8. Put full name and address of buyer at the bottom in BLOCK LETTER
9. Put name and address of person lodging the form (aka BUYER) in the box at the bottom-right hand
of the page
*Only complete Certificate 1 on the back page if value of consideration is LESS THAN £1,000
2. Business Sale (aka Asset Acquisition) - occurs when seller sells business/assets to another
company/person
• Purchaser can pick and choose the assets its wants
• The consideration for each asset will be specified in the agreement
2
