Month: August 2017

How do I Structure my Business for the Long Term?

Posted on by admin in Uncategorized

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When registering your small business in Nigeria, you need to compare the needs of the business with the business entities available under Nigerian law and  determine which business structure best satisfies the needs of the business.

As a general rule, small businesses are usually structured under the following entities:

a.  Limited Liability Companies :

These are usually registered under Part A of the    Companies and Allied Matters Act. This structure may be used in a situation where any of the following conditions are present or may arise in the near future.

  1. If you have a partner and you want to protect the business and other partners from liabilities.
  2. If you have employees
  3. If the company will be signing contracts in its own name
  4. If the company has assets that it would want to protect from the liabilities of the promoters and investors
  5. If the company does not have the above, but it is likely that it will have the above, it is best that the limited liability company be registered ahead of time, in order to prevent difficulties arising from legacy issues.

b. Sole Proprietorships and Partnerships:

These may be registered as Business Names under Part B of the Companies and Allied Matters Act. This structure may be adopted where the conditions stipulated above do not currently exist or is not predicted to exist within 3 year from the date of registration of the business.

It should be however noted that the Corporate Affairs Commission permits businesses registered as Business Names to re-register as Limited Liability Companies. All the proprietors need to do is to reserve a limited liability name, draft and file the memorandum and articles of association, and pay the requisite fees.

Milton and Cross provides advisory services to individuals who wish to register or incorporate small businesses. In addition to helping you register your business we also provide support with tax registration and organizational structuring. Contact us on +2348036258312 or +2348188474167

Managing Creditor Risk through Inter-Creditor Agreements

Posted on by admin in Capital, Development, entrepreneurship, International Investment, investment advisory, real estate, Small Businesses, strategy, transaction advisory, Uncategorized, upscale, wealth

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James is the CEO of  HOC Global Logistics, a company which provides shipping solutions to large organisations. Having become tired of leasing cargo ships from large vessel owners, the company desires to purchase its own ships which they can use and also lease to 3rd parties. James approaches Lakeside Bank for a Term Loan to finance the $50 million transaction.

The Bank after reviewing the loan proposal filed by HOC Logistics, informed James that the transaction was larger than Lakeside bank could comfortable handle. However they are able to loan him $20 million on the security of the purchased ship. James accepts the terms and applies for loans from Cityscape Capital Ltd , HSCB, Shanghai Bank  and Union Finance Ltd. The individual loans have different terms, interest rates and security interests. The complexity of the transaction is so mind boggling that James sets up an appointment with his Lawyers to advise him on how to manage the relationships between the multiple creditors in such a manner as to enable the company satisfy all its loan liabilities. He is advised to structure and negotiate an intercreditor agreement among the several creditors, thereby ensuring he has a more convenient financing process.

An intercreditor agreement seeks to govern the relationship between a range of creditors providing finance to the same borrower. An intercreditor agreement entered into by senior and junior creditors can be expected to rank the senior and junior security, subordinate the debt of the junior creditors to that of the senior creditors, restrict the junior creditors’ rights of enforcement for a specified standstill period and impose payment freezes on the junior debt in prescribed default situations.

In highly leveraged transactions such as leveraged buyouts and certain acquisition finance transactions, funding may be structured into a number of different tranches of lenders who stipulate slightly different lending terms and interest rates for the funds they advance. Senior lenders and mezzanine lenders usually take security over the assets of the borrower, over shares acquired and over the target group’s assets. In addition, guarantees will be given by the borrower and may also be given by the target group.

The senior creditors tend to have a stronger negotiating position than do the junior creditors, so it is usual practice for the senior bank lenders and mezzanine lenders to appoint a single security agent (or security trustee) to hold the security package on trust for the benefit of all the secured creditors. The intercreditor agreement contains provisions dealing with enforcement of the security, usually requiring the junior creditors (the mezzanine lenders) to desist from enforcement for the standstill period so as to leave the way clear for the senior creditors (the senior lenders and any hedge counterparties) to instruct the security agent as to when and how to enforce their right to the secured assets.

 

How can you transfer your music copyrights?

Posted on by admin in corporate finance, entertainment, entrepreneurship, International Investment, investment advisory, Personal Finance, real estate, rule of law, Uncategorized

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Wale is a music producer. Recently he composed music for a hit track which enjoyed substantial airplay for over 6 months. Consequent upon the success of his track, he was approached by an international music corporation, who requested him to transfer his copyright in the music to the company in return for a one off payment of $200,000 and royalties capped at 5% of  global sales for the next 2 years. They assured him that he would enjoy more concert appearances with the allied revenue streams. Wale is confused and requires advice on his legal rights.

Of all the forms of copyright protected works, music is perhaps the most restricted and licensed. Since music was first broadcast on radio, a vast mechanism for licensing music has emerged from the opposing forces of the recording industry and the radio and TV broadcasting industries.

Copyright ownership can be transferred like any other form of property. Copyright is transmissible by assignment, by testamentary disposition, operation of law, as personal or moveable property. however, to give legal effect to that transmission there must be a written agreement signed by the assignor. Any grant by the copyright owner binds every successor in title except a bona-fide purchaser for value without notice (actual or constructive).

This doesn’t however mean that a copyright cannot be transferred verbally, as it is trite law that a verbal agreement to which both parties have agreed all the terms (i.e. has reached completion) is legally binding. It follows then that a verbal agreement to assign, provided there is no dispute as to the terms of the assignment between the assignor and assignee, is valid and copyright is transmissible by operation of basic contract. It is however advisable that the parties sign a confirmatory assignment agreement which refers retrospectively to the earlier assignment.

The transfer could be partial or total, where the rights owner can transfer all of the exclusive rights his or her grants. In partial assignment, a music author may transfer his reproduction, translation and adaptation rights to a publisher. He may also decide to split his rights between different persons.

Copyright assignment agreements can be limited in terms of duration or territory. The author of a literary work could, for example, assign their right to reproduce it in the UK, Nigeria, Ghana and the Gambia for 4 years.

Copyright assignment agreements can be reversionary, in other words, the rights can revert back to the assignor on the occurrence of an uncertain event, such as an unremedied breach of contract. This protects the assignor from the loss of their rights in the event of the occurrence of certain events which may be vitiate the transfer contract.

The transfer of copyrights contains some knotty issues, which could become highly problematic if not properly managed. When faced with a decision on copyrights, it is best that you seek advice from a qualified legal practitioner, so as to ensure that you take the best steps in the circumstances.

Milton & Cross Solicitors provides advice to entertainers, rights owners, rights administrators and merchandisers. We help them make informed decisions that facilitate high value transactions. Contact us for a free consultation.