Formative Flashcards
Your client, Thornton Plumbing Limited (‘Thornton’), is proposing to enter into a direct
outsourcing arrangement with Lucas Customer Solutions Limited (‘Lucas’). Lucas will
provide a customer helpline service, using its existing employees, on provision of
relevant information on its customers from Thornton. Both Thornton and Lucas are based
in the UK.
Which one of the following is the best advice to give to your client in relation to the
transfer of responsibility in these circumstances?
A. Thornton will need to consider UK controls on exports and whether a licence may
be required to facilitate the transfer of assets to Lucas.
B. The Transfer of Undertakings (Protection of Employment) Regulations 2006
(TUPE) will be a significant issue for Thornton, which will need to identify the pool
of its employees to be transferred under the proposed outsourcing.
C. Thornton will need to consider requirements in relation to transfer of title,
including registration at the Land Registry.
D. Transfer of data and the requirements of the UK Data Protection Regime
will be a significant issue for Thornton in this transaction.
D. Transfer of data and the requirements of the UK Data Protection Regime
will be a significant issue for Thornton in this transaction.
MCQ 2
Your client, Fresham Auto Innovation Limited (‘Fresham’), based in the UK, is proposing
to outsource its R&D for its driverless car technology systems to a Chinese company,
BATL China Ltd, (‘BATL’). Fresham has asked your advice in relation to how it should
deal with compliance issues in the proposed contract.
Which one of the following is the best compliance advice to give to your client in relation
to the proposed outsourcing?
A. The inclusion of an anti-tax evasion clause will mean that Fresham cannot face
prosecution.
B. There is a statutory requirement for Fresham to include environmental, social and
governance provisions in its contract with BATL, including specific reference to
the UN Guiding Principles on Business and Human Rights.
C. It is likely that Fresham will have to report on its due diligence processes
in relation to slavery and human trafficking under the Modern Slavery Act
2015.
D. There is no statutory requirement for Fresham to have anti-bribery policies in
place in relation to its activities with BATL because BATL are based outside the
UK.
C. It is likely that Fresham will have to report on its due diligence processes
in relation to slavery and human trafficking under the Modern Slavery Act
2015.
Your client (‘Company A’) is proposing to set up a 50/50 joint venture company (the ‘JV
Co’) with one other party (‘Company B’). The business of the JV Co will be to
manufacture and sell branded reusable coffee cups in Company A’s chain of coffee
shops in the UK. Company B specialises in the manufacture of reusable and recycled
tableware. The parties are negotiating the terms of the JV documentation. Please review
the following draft restrictive covenant:
“For the purposes of this clause “Business” means the manufacture, marketing and/or
selling of cups, mugs, saucers and/or any other tableware both in the UK or abroad.
Neither party nor any of its subsidiaries shall, in the same area of Business in which the
JV Co operates and during the times specified below, deal with or seek the custom of
any person that is, or was within the previous 18 months, a client or customer of the JV
Co or, where the party is no longer a Shareholder, any person that was a client or
customer of the JV Co at any time during the period of 12 months immediately preceding
the party in question ceasing to be a Shareholder.
The times during which the restrictions apply are:
(a) any time when the party in question is a Shareholder; and
(b) for a period of 3 years after the party in question ceases to be a Shareholder.”
Which one of the following statements represents the most appropriate advice to
give to your client?
A. To benefit from the ancillary restrictions’ exception in the Competition Act
1998, the restrictive covenant must be “directly related and necessary” to
the creation of the JV Co. The products and services in this clause should
be narrowed to only cover the products and services that would directly
or indirectly compete with the JV Co.
B. The covenant must be “reasonable” in any event, otherwise it will amount to
restraint of trade. The period of 3 years that would apply after the party ceases
to be a shareholder should amount to a “reasonable” restraint of trade.
C. The covenant must be “directly related and proportionate” to the creation of the
JV Co in order to be enforceable. The covenant as drafted is likely to prevent
Company B from being able to carry on its usual business and is therefore likely
to be unenforceable.
D. If the covenant satisfies the conditions set out in section 9(1) Competition Act
1998, it will not be subject to the Chapter 2 prohibition.
A. To benefit from the ancillary restrictions’ exception in the Competition Act
1998, the restrictive covenant must be “directly related and necessary” to
the creation of the JV Co. The products and services in this clause should
be narrowed to only cover the products and services that would directly
or indirectly compete with the JV Co.
Your client (‘Company A’) is proposing to acquire a 50% share stake in a company (the
‘JV Co’) that was initially set up as a 100% subsidiary by its other shareholder
(‘Company B’). The JV Co has been awarded a public sector contract to install the
infrastructure for a fleet of trams in Leeds: Company B is bringing Company A in as a
joint venture party because it needs additional finance and expertise to fulfil the contract.
Which one of the following statements represents the best advice to give to your
client in relation to the National Security and Investment Act 2021 (‘NSI Act’)?
A. Although the transaction involves an entity that undertakes activities within one of the
high-risk sectors, the transaction is not likely to require any prior approval or
authorisation under the NSI Act because there will be no trigger event.
B. The transaction is likely to be subject to mandatory clearance under the NSI
Act because the transaction involves the acquisition of shares by Company A
in a qualifying entity exceeding a threshold of 25%, and it appears that the JV
Co will undertake activities in a high-risk sector.
C. The transaction is likely to be subject to mandatory clearance under the NSI Act
because the transaction involves the acquisition of shares by Company A in a
qualifying entity meeting a threshold of 50%, and it appears that the JV Co will
undertake activities in a high-risk sector.
D. It is unclear whether a trigger event will occur, so the parties should consider making
a voluntary notification to the Investment Security Unit at an early stage in order to
obtain their determination.
B. The transaction is likely to be subject to mandatory clearance under the NSI
Act because the transaction involves the acquisition of shares by Company A
in a qualifying entity exceeding a threshold of 25%, and it appears that the JV
Co will undertake activities in a high-risk sector.
MCQ 5
Your client (‘Company A’) is proposing to set up a joint venture company (the ‘JV Co’)
with one other party (‘Company B’). The JV Co will provide bespoke interior design
solutions to its customers. Company B has a team of web designers. This team will not
transfer to the JV Co, but Company B has agreed that it will provide services to the JV
Co for the design and creation of the JV Co’s website, and it will provide ongoing tech
support for the website.
Company A have asked for advice in respect of the Bribery Act 2010 (the ‘Act’).
Which one of the following statements represents the best advice to give to your
client?
A. The question of whether Company B will be “associated” with Company A for the
purposes of section 7 of the Act is dependent on whether Company B is providing
services for or on behalf of the JV Co.
B. Company B will be “associated” with Company A for the purposes of section 7 of
the Act, therefore Company A could be held liable for the actions of Company B
if one of its employees bribes someone with the intention of obtaining or retaining
business or a business advantage for the JV Co.
C. Company B will be “associated” with the JV Co for the purposes of section
7 of the Act. Company A could suffer reputational damage if the JV Co is
held criminally liable for the actions of Company B under section 7 of the
Act.
D. The client does not need to be concerned because the act of setting up a joint
venture alone should not make Company A liable for any actions of the JV Co or
Company B.
Company B will be “associated” with the JV Co for the purposes of section
7 of the Act. Company A could suffer reputational damage if the JV Co is
held criminally liable for the actions of Company B under section 7 of the
Act.
Your client, Mylon Electrics Services Limited (‘Mylon’), is proposing to enter into an
outsourcing in respect of its IT infrastructure with a specialist provider. Mylon wants
advice about any specific outsourcing regulation which may apply to the arrangement.
What one of the following is the best advice to give to your client in relation to the
application of specific outsourcing regulation?
A. You should advise Mylon that there are no national laws specifically covering
outsourcing.
B. You should advise Mylon that the Network and Information Systems
Regulations 2018 (NISR) could apply to this transaction, requiring
additional IT security.
C. You should advise Mylon that there is specific regulation relating to the financial
services industry which may impact its transaction.
D. You should advise Mylon that public sector outsourcing is subject to specific
procurement rules.
B. You should advise Mylon that the Network and Information Systems
Regulations 2018 (NISR) could apply to this transaction, requiring
additional IT security.
Your client, an existing joint venture company (‘Buyer’), is negotiating with another UK
entity (‘Seller’) to purchase the entire issued share capital of the Seller’s subsidiary
(‘Target’). The Target operates one establishment in Birmingham, and it employs 23
administrative assistants (amongst other employees). The Buyer considers that these
assistants are unnecessary and is planning to make savings by providing all
administrative services to the enlarged group using its existing employees. The Buyer
therefore plans on dismissing the Target’s administrative assistants as being redundant
following the acquisition. The Target does not have its own redundancy procedure.
Your client needs advice about the timescale for making these potential redundancies
following acquisition of the Target.
5
Which one of the following statements represents the best advice for your client?
A. The Buyer will need to undertake collective consultation, which must begin at least
45 days before the first dismissal takes effect. It will not need to carry out any
individual consultation separately.
B. The Buyer will need to undertake individual consultation with each of the affected
employees. There are no statutory timescales for the length of individual
consultation, but the Buyer must ensure the consultation is genuine, so it should not
be rushed.
C. The Buyer will need to undertake collective consultation, which must begin at least
30 days before the first dismissal takes effect. It will not need to carry out any
individual consultation separately.
D. The Buyer will need to undertake both collective and individual consultation
with the affected employees. The collective consultation must begin at least 30
days before the first dismissal takes effect.
D. The Buyer will need to undertake both collective and individual consultation
with the affected employees. The collective consultation must begin at least 30
days before the first dismissal takes effect.
