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Defective work: The nightmare scenario of buying a dental practice and discovering the patients are in a poor state of dental health.
Wednesday 7th September 2016

Despite the significant research you and your dental solicitor will undertake before going ahead with the purchase of practice, unless you have been working as an associate at the practice you are buying it is difficult to really know how the practice operates at a clinical level. While a dental lawyer will assist you in asking all the right questions, and will uncover any potential regulatory or management issues, from a clinical perspective it is difficult to know what standards are being upheld without seeing the patients themselves.

However, there are ways you can protect yourself. Firstly, consider what type of practice you are buying. Does the practice treat NHS, private or capitation scheme patients?

NHS Practices

Where defective work has been carried out by a previous practice owner on the NHS, then remedial work will be carried out under the NHS guarantee scheme and, for the most part, any repair work would be eligible for you to claim UDAs. You should therefore not be out of pocket if you are required to carry out remedial work.

Denplan or other capitation scheme practices

Denplan Care patients (or patients on similar schemes) are the biggest problem for dentists buying a practice who discover defective treatment. This scheme works on the basis that the dentist receives a set monthly amount in return for maintaining patients at a certain standard of dental health. Problems can arise where patients have either been incorrectly banded under the scheme, or the standard of dental health promised has not been achieved or maintained by the outgoing dentist. It is a particular concern you will not receive any additional recompense beyond the standard monthly payment for the time you spend remedying the issues.

Denplan recommends that, when Denplan Care patients are transferred, a sum is kept aside equating to 10% of annual Denplan turnover.

The idea behind this is that the retained sum can be claimed by a buyer if any additional work is required. Your solicitor should include provisions within the sale contract which provide for such a retained sum being set aside. They should also ensure that the contract clearly sets out the circumstances in which a claim on those funds can be made and the procedure for making such a claim.

Private patients

For purely private patients, you are likely to need to repair any defective work carried out by your predecessor. A sale agreement should include a clause that the seller pays the buyer to carry out any remedial work to private patients.

Even where funds are set aside for potential claims, it is important to remember that claims are not usually limited to the amount set aside, and may be subject to other limitations. Sale agreements often include minimum values before a claim can be made, in order to avoid disputes over small sums. Contracts often also have a maximum limit of either the full purchase price of the practice or the price paid for goodwill and equipment. Sale contracts will also set out the timescales for making claims under any defective work warranty. It is important that you are aware of these, as a claim will not be allowed if it is brought too late. 

If claims are made against a seller for defective work, the sale agreement may set out a process for either:

i) the seller to carry out remedial treatment themselves;
ii) the seller to examine the patients to ascertain whether the work is really required; or
iii) the seller to have an independent third party examine the patients to verify the claim.

The seller and the buyer, usually via their solicitors, would negotiate on these points and agree any suitable options in the circumstances.  Although your dental solicitor will negotiate the provisions relating to payments to remedy defective work, there are still other significant disadvantages to buying a practice where it is common, which are more difficult to safeguard against.

If patients who have been treated poorly in the past, the reputation of the business you are buying may have been damaged. It may also mean that during the first year of practice ownership you spend all of your time remedying problems left by your predecessor, rather than concentrating on new business and growth. You should consider whether you will have enough staff should extensive remedial work become necessary. Where the practice is staffed by associates, are they the right people to help you fix the problems of the past, given that they may have been aware of, or worse, part of the problem in a failure to maintain clinical standards?

From a seller’s perspective, the issue is also problematic. Often a seller will feel that a buyer is looking to make spurious claims just to increase their cash flow. Many dentists will appreciate that a patient returning with a complaint is, more often than not, encountering difficulties due to a failure to follow the advice given, rather than a defect in their initial treatment. In such circumstances, it hardly seems fair to make the seller pay the buyer for such remedial works. There can also be stylistic approaches and differing (but equally valid) clinical opinion on the treatment of a patient.

To avoid problems further down the line, it is important that you consider the ‘what if’ scenarios with your solicitor. The correct advice from a specialist dental solicitor, and some solid negotiation with the seller, can help protect you from the nightmare. 


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Restraints on bringing warranty claims after buying a dental practice
Tuesday 30th August 2016

When acquiring a dental practice, a specialist dental lawyer will negotiate promises, known as warranties, given by the seller of the practice to the buyer in respect of various aspects of the business. The warranties give a buyer peace of mind that the business has been properly run and is worth the price being paid.

If, following the acquisition, the buyer discovers that the warranties have been breached, they will be able to pursue a claim against the seller. However, the sale agreement is also likely to include provisions which restrict the ability of the buyer to make a claim. It is important that the buyer is aware of these restrictions to ensure they have an adequate remedy should a warranty be breached.

A sale contract will often set out a time limit for making the warranty claim. These can vary from three months to three years, but in dental acquisitions a twelve to eighteen month time period is common. The time limit is often set on the basis of how long it would take for the buyer to see the practice’s full cycle of patients. Tax warranties often have longer timeframes on the basis that it may take the buyer or its advisors longer to establish that a warranty has been breached. Given the time limits, it is important for a buyer to notify the seller or their solicitor as soon as they become aware of a potential claim.

A sale agreement will often include minimum and maximum values for a claim. A minimum value is often set to avoid the seller and the buyer getting into disputes over relatively minor figures; for example, the seller doesn’t want to be pursued by the buyer for a £20 claim. There will often be a minimum threshold of a set sum for both single claims and an accumulative threshold for many small claims together. Maximum claim values are also often set in the agreement. The maximum figure is often taken as either the price paid for the practice, or the price paid for the elements of the practice excluding the property (because even if there is a breach of a warranty, the property will still be saleable).

There are also likely to be a series of other restrictions within the agreement which stipulate when a warranty claim can and cannot be bought. These could for example, include provisions preventing a buyer from claiming where the funds can or have been recovered from a third party or where the buyer is already aware of the breach of warranty prior to deciding to buy the practice. It is important for a buyer to both understand the extent and scope of the warranties that are being given in relation to the business and the restrictions which could prevent them from making a claim.

The parties should also be aware that the restrictions on warranty claims may not apply to other claims available under a contract. For instance, warranty restrictions may not prevent indemnity claims. An indemnity is a promise within the contract for the seller to protect the buyer from any loss arising from a particular circumstance. An indemnity therefore may fall outside of the limitations on warranties.

When purchasing a dental practice it is important to seek the advice of a specialist dental lawyer who can ensure that the terms of the contract are fair and reasonable. They will also ensure that a buyer understands both the warranties being offered by a seller and any restrictions on pursuing a claim under them. 


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Apportionments of income when buying a dental practice
Tuesday 16th August 2016

When buying a dental practice, it seems relatively simple to say that, when the purchase is finalised, the fees for treatments should stop going to the seller, and should instead be paid to the buyer.

In principle, this makes sense, but in reality a specialist dental lawyer can help in setting out how this should work in practice.

Firstly, the time at which the purchase will actually be finalised can be difficult to predict. Although we can estimate that transactions are likely to be finalised before 3.30 pm, it is not unheard of for matters to complete well into the evening or early in the morning. Common practice among specialist lawyers has been to set the time for calculating apportionments to be the close of business on the day of completion. This means that the seller will continue to run the practice as normal on the day that the sale is finalised, they close up at the end of the day and the buyer opens up on the new day. This makes for a neat arrangement in terms of paying staff and apportioning income and outgoings.

If the practice in question operates an NHS contract with UDAs to be performed, then a dental solicitor will be able to assist with apportionments of the NHS income. Many practices don’t see an equal number of patients from month to month and, on a pro-rata basis, the UDA target may be either overperformed or underperformed at the completion date. A sale agreement between a seller and a buyer should set out how the fees are to be divided on completion covering both an overperformance and an underperformance scenario. What the agreement will say is a matter of negotiation, however, a common arrangement is for the seller to make a deduction from the purchase price in relation to UDAs that should have been performed on a pro-rata basis but have not yet been achieved. This gives the buyer the funds to effectively catch up on the underperformed units. Where the practice has over performed, the most common arrangement is (unfortunately for the seller) not for the buyer to pay the seller extra for the additional work they have carried out. Whilst this may seem slightly unfair as the buyer will then effectively receive payment from the NHS for the work that the seller has carried out, the reality is that when a buyer acquires a practice they are paying for the ability to carry out the treatment to patients. If the seller has carried out the treatment so the buyer cannot do so then this would diminish the value in the business. The trick for a seller is to be as close as possible to, but without exceeding, the pro-rata UDA target at the projected completion date.

Where an NHS contract exists, it is possible that the buyer receives a payment from the seller for underperformed UDAs for previous financial years that have not been subject to clawback. Investigations by the buyer’s solicitors will reveal where this is relevant and appropriate provisions can be included in the contract documentation.

A complicating factor where the practice carries out NHS dentistry can be the collected patient charges revenues. Sums which are collected by the seller can be deducted from the NHS contract following completion, which in real terms means that the buyer’s NHS payments following completion are reduced due to funds being received by the seller. A fair solution to this issue would be that the seller repays to the buyer any deductions for patient charges revenues made following completion where the sums relate to funds received by the seller.

Where the practice in question operates with either Denplan Care or another similar capitation scheme the amounts received can usually be divided between seller and buyer on a simple pro-rata basis. However, where the scheme differs from a standard monthly amount it may be necessary for the seller and buyer’s solicitors to examine the rules of the scheme and establish a fair and reasonable way forward.

The procedures for dividing fees for purely private patients are potentially more complicated, particularly where there are uncompleted courses of treatment which may have been paid for in advance. A sale agreement can be prepared in a way which covers the particular types of treatment offered by the practice and providing for set percentage apportionment of fees dependant on the stage the treatment has reached. Again, a specialist dental lawyer will be able to guide you as to what is reasonable and assist you in negotiating this.

Many dentists do attempt to ensure that all courses of treatment are complete and that there are no ongoing matters when the business changes hands. However, completion dates can be changeable and occasionally difficult to predict. It is therefore not always possible to ensure that all ongoing courses of treatment are finished.

As well as apportioning the income between seller and buyer, it is also important that a contract covers the split in the outgoings of the practice. This needs to cover lab costs, payroll, holiday allowances and other day to day costs of the practice such as utility bills. Although a sale contract can cover how the calculations are due to be made, it is often recommended that either on the day of completion or in the days immediately surrounding the completion date, that the seller and buyer sit down together to work out the apportioned figures. 


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Disclosing against warranties - advice for sellers of dental practices
Monday 25th July 2016

Selling a dental practice can be a tricky process. Like everything else, the buyer wants to get the maximum value for their money and the seller wants to get the most money in exchange for the minimum obligation. Negotiations as to the exact extent of a seller’s obligations to a buyer can be extensive.

In most cases, a buyer will look for ‘warranties’ from a seller. These are promises that are made by the seller relating to the business. For example the seller may promise (i.e. warrant) to the buyer that the practice is not subject to any pending claims  or that any Denplan patients have been correctly banded.

When selling a dental practice, it is wise to limit the warranties that you, as a seller, offer to a buyer, as any breaches of those promises could lead to a claim against you following the sale. However, it is all a matter of negotiation. From a buyer’s perspective they want some certainty that the practice is worth the money that they are handing over to you, which is why they will try to obtain extensive warranties from the seller.

From a seller’s perspective, the trick is to negotiate the warranties to a level that you are comfortable with. Give only those promises that you are able to deliver. Where there are problems with your practice honesty really is the best policy.

Read through the warranties that your solicitor is suggesting very carefully. If there is a fact or piece of information that you are aware of that goes against any of the warranties then the best course of action would be to formally ‘disclose’ it. A disclosure is a way of handing the information to the buyer or the buyer’s solicitors. Following disclosure of information, you can be protected against breaches of the warranty arising from such fact.  

For example, you may be asked to warrant that there have been no negotiations for pay increases with any staff members at the practice. However, it could be that two weeks earlier your practice manager came to you and said that she needed a substantial rise or she would consider leaving. The practice manager’s desire for a pay increase isn’t your fault, but the fact that the conversation has taken place could be construed to be a breach of the promise that you are making to the buyer. In instances such as this, it is imperative that you tell your solicitor. Your solicitor can then either negotiate the warranty to avoid any breach or alternatively formally disclose to the buyer’s solicitor the fact that the conversation has taken place. Either way, you would be protected from any claim for breach of warranty from a buyer.

A specialist dental lawyer will be able to protect your interests going forward and understand the consequences of warranties that a buyer will expect. With the right advice and a bit of honesty, you can ensure that any ongoing liabilities to your buyer are kept to a minimum.  


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Dental Practice Sales of Expense Sharing or Partnership Dental Practices
Tuesday 19th July 2016

Whilst undoubtedly the world would be a simpler place if you only had yourself to consider when selling a practice, many dentists have built their businesses alongside friends and colleagues and, when looking to sell up, they must also consider partners or expense sharers.

If you operate your practice through a partnership or expense sharing arrangement, there will be some additional considerations to be given some thought.

As a specialist dental law practitioner, it is not uncommon to encounter expense sharers or partnerships with either no documentation governing their relationship or alternatively agreements that have not been professionally prepared and may not be fit for purpose. For example, they may not cover a retirement or sale scenario.  Before considering the idea of selling your business or share of a business it might be sensible to put some ground work in place and have an agreement prepared which sets out a clear pathway to retirement or sale. It isn’t always essential (unless your current agreement ties you in with no prospect of leaving) but it might make your life easier when you come to sell.

If you do have an agreement already in place, it is vitally important that you review this document to ascertain whether it clearly sets out the procedure for sale or retirement. The agreement may require you to offer to sell your share of the practice to colleagues in the first instance before you can market it externally.

Property considerations are also important. You should establish whether the property from which you operate the practice is occupied under a lease or a freehold. In most instances, there will need to be some form of transfer of the property to the new occupier. It is likely that your colleagues will need to be a party to any transfer documents and you may need to contribute towards the costs of them obtaining independent legal advice.  

You would need to establish whether your partners or expense sharers also want to sell? It may be that you can achieve a better price if you sold the entire group as a single business, rather than just your share.

If you are selling as a group, you need to carefully consider who is going to be responsible to the buyer and for what. You will each be receiving money for your respective interests in the business. However, do you want to give warranties as to the standard of care provided by your colleagues or accept responsibility for the past actions and behaviour of your colleagues?

If your solicitor has a good understanding of your group structure, expense sharers can give their own warranties to a buyer, so that they are only responsible for matters within their control. This could result in what is seemingly more work- as each seller will need to give their own full and complete set of responses to enquiries. However, this should not be a cause for concern as this will be for your own benefit, as you don’t want to be held legally responsible for promises made by your colleagues without your knowledge or consent.  

If you are selling just your part of the practice (or your own business within an expense sharing arrangement), although not essential, it is often important to find a buyer that will fit in. This is not so much a legal consideration but a practical one. If you discover that your buyer and colleagues cannot get on half way through the selling process, the buyer may withdraw from the transaction, which will mean wasted fees and expenses.

Your buyer will also probably need to enter into new partnership and expense sharing agreements with your current colleagues as part of the completion process, which is something you may wish to address early in the negotiations.

Brabners have a specialist dental law team and will be able to assist with reviewing or preparing partnership or expense sharing arrangements which can ensure that future plans for retirement or sales run smoothly. Whether you are looking to make the move now or at some point in the distant future getting the right advice can mean fewer disputes and lower stress levels when it comes to selling. 


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Markets react to appointment of new Prime Minister
Friday 15th July 2016

UK Stock Markets rallied significantly following the announcement that Teresa May had been appointed as the next Prime Minister of the UK, as investors reacted positively to a new administration being formed without a lengthy leadership campaign. In addition to the FTSE 100 rising by 20% compared to its position at the close of the previous week, markets in the US also rallied in anticipation that the new administration will be able to bring an element of certainty to the UK’s post-Brexit position sooner than expected.

Sterling also recovered slightly against the dollar following the announcement of the new Prime Minister, but still remained significantly down from its pre-referendum position.  While this is bad news for people looking to holiday abroad, the weaker pound will be a significant boost to exporters and to large listed companies that have significant revenue streams realised in US dollars.  The weaker pound will also make UK companies more attractive as acquisition targets to US and foreign buyers, the South African group Steinof’s acquisition of discount retailer Poundland shows that the new currency position could provide a much needed boost to M&A activity in the UK.


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Venture Capital Trusts - continuing challenges and potential opportunities
Monday 20th June 2016

Six months on from the dramatic change to the Venture Capital Trust (VCT) regime, we look back at the continuing challenges facing VCT managers and examine the potential opportunities for both VCT funds and investee companies.

In November 2015, the Government introduced two dramatic changes to the VCT regime:

1. The Buyout Bar

The first of the significant changes was the introduction of a restriction on VCTs funding corporate acquisitions (i.e. the acquisition of companies and businesses). This change barred VCTs out of one of their main historic routes for investing funds, namely backing MBO and MBI transactions. A number of fund managers are continuing to struggle with this drastic change and the subsequent repositioning of their investment focus from buyout transactions to development capital investments (now subject to a new age limit, discussed below). This change has also had the effect of significantly reducing the funding market for buyout transactions, presenting funding challenges to management teams looking to undertake MBOs and MBIs.

The UK buyout market has historically been the strongest in Europe, valued at £19.9 billion in 2014. Approximately half of these transactions are “secondary buyouts” (where the funder of a previous buyout transaction is bought out by a new funder). The buyout restriction on VCTs has left a substantial gap in £2-£10 million buyout funding market, leading to a contraction in the number of buyout transaction undertaking in the lower-mid market. This contraction will ultimately reduce the number of candidates for future secondary buyouts, impacting on the upper end of the buyout market and the opportunities available for larger private equity houses.

2. The Company Age Limit

The second significant change was the introduction of a maximum age limit for potential investee companies. VCTs now may only invest in companies within a period of seven years from the date of first commercial sale (increasing to 10 years from the date of first commercial sale for knowledge intensive companies).  This change significantly reduces the pool of potential investee companies which VCTs can consider investing into. Traditionally, entrepreneurs have used their own capital and the support of friends and family to fund developing businesses, only turning to venture capitalists and private equity houses once these sources of funds have been depleted. The new age limit restricts the ability of companies to seek VCT funding for further growth, after the funding from owners, friends and family has been exhausted in the early years of development.

One significant exemption to the maximum age limit is where the investee company received a VCT, EIS, SEIS or other state aid permitted risk finance investment in the initial seven year period. This exemption extends to a number of the European backed venture capital funds, which have provided significant funding in the UK regions for a number of years.  VCTs have a significant opportunity to provide second round funding to companies which have received European backed venture capital money in the past, particular where the company’s development needs have outgrown the funding available from their existing funders.

This exemption may also provide an important opportunity for investee companies if the UK votes to leave the European Union on 23 June, as a leave vote could deprive the European backed venture capital funds of further capital for follow-on investments.

Opportunities for the future

While the above changes have presented significant challenges to VCT managers and buyout candidates, they do represent an opportunity for companies looking to raise early stage development capital. While the UK recovery has been strong in a number of areas, the funding market for sub-£5 million development capital investment has remained one of the most challenging for investee companies. As VCT fund managers reposition their funding offering, investee companies may now find increasing opportunities to raise early stage development capital to achieve their business goals.


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Unpicked and resewn
Thursday 18th February 2016

February appears to be the month the clothing and fashion industries have decided to make use of pre-pack administrations to keep struggling business alive.

Some of the names who have decided to use this method of corporate restructure include the historic British fashion label, Ben Sherman, and out of town shoe retailer, Brantano.

American company Marquee Brands (backed by private equity finance) has just completed the successful sale of its Ben Sherman UK operations to BMB Clothing, a Leeds-based company, while retaining ownership of the brand. Marquee will licence the brand to BMB which will in turn run those shops which remain open. The restructure has seen the closure of the London shops but all other stores are intended to remain open and the brand will live to see another day.

Brantano owner, Alteri, has also just used this sometimes controversial restructuring option (which enables the company placed into administration to shed a number of its debts) to buy a total of 140 (out of 200) shops from the Company’s administrators PWC. 628 jobs have been put as risk but 1,372 have been saved.

Although sometimes criticised, the benefits of a pre-pack sale include, jobs being saved, minimising damage to a brand and it often being the last option where the alternative would be liquidation and the immediate cessation of a company's business.

If you would like to discuss any matters regarding corporate restructure please contact a member of the Brabners LLP insolvency and corporate restructure team.


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Who to sell your business to?
Friday 12th February 2016

In the final edition of this series of blogs looking at selling your business, we are going to focus on the question of “Who to sell your business to?”. This follows on from our previous editions looking at the “When to sell your business”, "Why you should sell your business" and "How to sell your business".

When considering who to sell your business to the obvious and in most cases critical question is that of price and how to maximise it. However there are other factors to take into account, some of which will be of more importance to some sellers than others. These might include confidentiality, speed, competition law and ongoing liability under the sale agreement. Below we look at some of the different categories of buyers that may be considered and some typical traits that those buyers have.

1.         Trade sale: Typically a sale of your business to a competitor or a third party that wants your business for complementary reasons is likely to result in the highest sale price. However, concerns about confidentiality will prey upon some sellers’ minds as, whilst the release of information should always be controlled, the buyer will as part of any due diligence process want to delve into information that may well be business critical. The last thing a seller wants to do is to be giving away that information and for the sale to then fall through. Whilst any well advised seller will have a proposed buyer sign a confidentiality agreement, once information is out there then it is very difficult to control.

In relatively rare cases it may also be necessary to consider competition law issues when selling to a direct competitor in circumstances where the buyer and/or the seller hold a dominant position in the market. We certainly have been in a position of having to advise a client to market the business other than to European based buyers for this reason.

2.         Overseas buyers: We are seeing an increasing number of sales to overseas buyers and these can demand a premium for the seller.  What does have to be borne in mind, however, is that buyers from some overseas jurisdictions, the US in particular, have more stringent “conventional” provisions within their acquisition agreements than in the UK and therefore the risk of a subsequent warranty claim under the sale agreement may be greater.  We are also seeing overseas buyers regarding a retention as being normal.

3.         Private equity:  Private equity houses are very much on the lookout for good opportunities in the current market as they are acquisitive and looking to grow. Therefore, for the appropriate business, they should be considered. It needs to be borne in mind, however, that they may well need to find a management team to back if the sellers are not willing to stay on and the price they may offer may not be as high as a trade sale as, unless they have a portfolio in the same sector, they may not have the ability to generate economies of scale in the same way that a trade buyer might.

4.         Management Team:  Identifying a management team to acquire the business from a retiring owner can work very well.  Such an approach has advantages of confidentiality and the seller may be able to give less in the way of warranties and indemnities than it would have to give to a third party trade buyer or a private equity house. On the other hand, a seller will want to be sure that the proposed management team will be reasonably certain of being able to raise the necessary funds. In addition, the seller may be asked to defer some of the consideration payable to assist the management team in funding the acquisition itself. The risk of that deferral may, however, also be an opportunity in that the seller may be able to retain a shareholding in the hope that the acquiring management team increases the value of the business further and gives a second pay out for the seller when that management team exits.

Which type of buyer is right to approach is something unique to each and every transaction and should therefore only be undertaken in consultation with your advisers. The golden rule is not to simply tout the business to anybody and everybody but to have a focused, targeted and controlled process over who you approach having had regard to the above factors.

We very much hope that you enjoyed these series of blogs and would recommend you to also read our series of articles looking at directors’ duties and responsibilities. In the first edition look at "Directors' duties and responsibilities under the Companies Act 2006", and in the second "Directors duties and responsibilities where shareholders are in dispute".

If you would like to discuss any matters regarding selling your business please contact Rupert Gill on 0151 600 3106 or by email at rupert.gill@brabners.com.


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The Only Way is Ethics
Wednesday 27th January 2016

A recent survey conducted by Close Brothers Asset Finance (Close), the results of which were published on 11 January 2016, has indicated that over half of UK SMEs surveyed do not have a formal ethics policy in place in their organisations.

Close surveyed 500 SMEs finding that 55% of the businesses questioned had no formal ethics policy in place whilst, on the other hand, 52% of UK SMEs surveyed had been questioned regarding ethics in their supply chain with 56% stating that they have been on the receiving end of unethical business practices. If this survey is representative of the entire UK SME market that would mean that approximately 2.96m businesses do not have a formal ethics policy in place.

Whilst not a document formally required by law, an ethics policy, sometimes known as an anti-bribery and corruption policy, can be a useful means to communicate, to staff, the way in which people within the business should communicate with clients, suppliers and colleagues.

Under UK law a commercial organisation which fails to prevent bribery committed by an associated person on its behalf is guilty of an offence under the Bribery Act 2010. If convicted, the organisation may face an unlimited fine and the negative publicity associated with such a conviction is likely to be harmful to ongoing commercial relationships.

An organisation’s primary defence in these circumstances is to show that, at the time of the infringement, it had "adequate procedures" in place to prevent bribery. The MOJ has produced detailed guidance on procedures that can be considered “adequate” by the UK courts, and an ethics policy can be a cheap but effective way of demonstrating that a company has taken steps to introduce "adequate procedures".

Numerous studies have been conducted to establish the financial value attributable to maintaining a high standard of business ethics, and whilst this is difficult to say with certainty, it seems that formally setting out an ethics policy can help both protect the business and point towards a level of business practices exceeding those of the majority of SMEs in the UK market.


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